Consumers Don’t Stand a Chance

Posted on October 17, 2014 by MN Gordon

Most economists don’t do any favors for the esteem of their trade.  They take ideas a third grader would know are idiotic and champion them with bluster and bravado.  Hardly a day goes by where some economist doesn’t prove he’s a moron.

Take cash for clunkers.  Everyone, with the exception of brain dead economists, knows that giving people money to scrap perfectly good vehicles is a value subtracting enterprise.  Yet economists cheer on the outward demand for new cars it stimulates…and the boost to GDP.

But if this were really the road to riches, why not give everyone cash to buy a new car?  Automaker factories would be buzzing.  So, too, why not give everyone money to buy a house?  Homebuilder payrolls would swell.  This would work perfectly well…if we were living in fantasy land.

Another popular delusion of modern day economic thought is that wealth is created by borrowing money and spending it…as opposed to saving money and investing it.  Simple logic proves this thinking is false.  Yet economists pursue it anyway. Continue reading →

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The Solution to Deflation

Posted on October 14, 2014 by MN Gordon

The stock market laid another egg yesterday.  We won’t dwell on it much.  Only enough to make the observation that change is in the air.  You can see it.  Feel it.  And even smell it.  Nonetheless, being prepared for it – both for profits and protection – is the real challenge.  Here’s what we mean…

The United States dollar has strengthened against other currencies over recent months.  The dollar index – a measure of the U.S. dollar relative to a basket of foreign currencies – was around 80 for the first half of the year.  But since July it has run up significantly.

Currently, the dollar index is around 86.  That means the dollar has increased in value by 7.5 percent on the foreign exchange market over the last three months.  What are the consequences of a stronger dollar?

Naturally, there are both advantages and disadvantages to a stronger dollar…depending on how you look at it.  A more valuable dollar is a good thing for the typical saver and consumer alike.  In general, it means imported goods become cheaper. Continue reading →

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Buyer’s Remorse

Posted on October 10, 2014 by MN Gordon

The stock market was clobbered on Tuesday.  The DOW sold off 272 points.  What did it mean?  Was it an indicator the market is finally rolling over, as we’ve anticipated for some time?  Or was it just another head fake on the way to new highs?

On Wednesday we thought we had our answer.  The DOW ran back up 274 points…recovering all of the prior day’s losses, plus two points.  It was the market’s best day of the year.  Wall Street was euphoric.

Even gold stocks rose.  Junior mining stocks, as measured by the Junior Gold Miners ETF (GDXJ), jumped up 9.61 percent.  Fixed income investors also joined in on the fun.  Yields on the 10 year treasury note fell to just 2.32 percent, nearly to their 52 week low of 2.30 percent.

What was the cause for the elation?  Is GDP soaring?  Are incomes finally rising?  Is Putin packing up Russian troops and vacating Ukraine?  Was a vaccine for Ebola discovered?

Nope.  It was nothing of the sort.  What produced the buying frenzy was something we call worshiping utterances. Continue reading →

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An Autumn Encounter with the Headless Horseman

Posted on October 7, 2014 by MN Gordon

A pleasing land of drowsy head it was,
Of dreams that wave before the half-shut eye;
And of gay castles in the clouds that pass,
Forever flushing round a summer sky.

CASTLE OF INDOLENCE

Apple Country

Oak Glen, California, located just past the outer limits of Southern California’s sea of concrete, is a world apart.  The air is clean and crisp at its mile high elevation.  The pace of play is slow and relaxed…not frenetic and mad.

There are no stoplights or franchise drive-throughs.  Billboards and transmission lines do not blight the landscape.  These, and other aesthetic lacerations to the eye, remain with the wide Euclidean Boulevards in the valley below.

The built milieu hardly scars the natural environment.  Just a windy and narrow mountain road extends upward.  Apple orchards fill the gentle slopes that are nestled between the larger and steeper topography. Continue reading →

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