Worshiping Utterances

Posted on September 19, 2014 by MN Gordon

The world around us is a strange and wacky place.  Even so, it becomes ever stranger and wackier by the day.  Just when we think we’ve seen it all…something new appears and creeps us out.

For instance, have you seen Hillary Clinton’s face lately?  Holy Toledo!  What a fright that is.  We can’t quite tell what happened.  But whatever it is…its gawdawful.

Taking notice of the many absurdities out there is both the joy and misery of the objective observer.  One moment you’re doubled over with laughter.  The next you’re doubled over expelling your lunch with disgust.

Did you know the U.S government paid federal workers $400 million to do nothing?  No kidding, they really did.  In addition, the IRS provided $17.5 million in IRS tax relieve for brothels in Nevada.  There was also $1.23 million of federal money spent on apartments for deaf seniors…that can’t be used by deaf seniors.

These examples straddle the line between the hilarious and the repugnant. Continue reading →

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Why We Are All Doomed

Posted on September 16, 2014 by MN Gordon

Second quarter GDP, as reported in by the Bureau of Economic Analysis on August 28, grew at an annualized rate of 4.2 percent.  This follows up a 2.1 percent decline in the first quarter.  Just what is it that turned things around from one quarter to the next?

According to the BEA report, “this upturn in the percent change in real GDP primarily reflected upturns in exports and in private inventory investment, accelerations in personal consumption expenditures (PCE) and in nonresidential fixed investment, and upturns in state and local government spending and in residential fixed investment that were partly offset by an acceleration in imports.”  Not bad, indeed.  It sounds like the economy’s expanding at a very robust rate.

But it doesn’t feel like things are improving for most households.  The amount of money Americans earn each hour after adjusting for inflation is lower today than it was five years ago.  Yet corporate profits are at an all-time high.

You’d think with the economy expanding and corporate profits at an all-time high there would be an abundance of new jobs.  Unfortunately, this isn’t what’s happening.  Rather, new jobs are being created at a sluggish rate. Continue reading →

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Holding the Permanently High Plateau

Posted on September 12, 2014 by MN Gordon

“Stock prices have reached what looks like a permanently high plateau,” said Ph.D. economist, Irving Fisher, on October 17, 1929.  “I do not feel there will be soon if ever a 50 or 60 point break from present levels, such as (bears) have predicted.  I expect to see the stock market a good deal higher within a few months.”

At the time of Fisher’s prediction, the DOW was at 341.86…down from a high of 381.17.  Several days after Fisher offered his “permanently high plateau” thesis, the stock market’s decline accelerated.  So, too, did the reputation of America’s most famous economist.

On October 23, 1929, after stocks had dropped 20 percent, Fisher declared business was “fundamentally sound.”  You can view early video of Fisher’s ill-fated statement here, if you are interested.  Despite Fisher’s optimism and academic confidence, he was spectacularly wrong.

Neither business nor the stock market was fundamentally sound.  Stocks were not “a good deal higher within a few months,” as Fisher expected. Continue reading →

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Why the U.S. Government Should End the 40-Year Crude Oil Export Ban

Posted on September 9, 2014 by MN Gordon

An abundance of oil hides a lot of mistakes.  Just think of Saudi Arabia.  Oil accounts for 95 percent of their exports and contributes 70 percent of government revenue.

Unfortunately, the royal family’s taken this cash cow and squandered it.  After years and years of pumping and selling this precious resource they’ve been unable to empower their people to stand on their own feet.  Instead, their economy remains dependent on mass oil exports.

Oil contributes 45 percent of Saudi Arabia’s gross domestic product.  When oil prices significantly declined in the 1990’s, per capita income fell from a high of $11,700 in 1981 to $6,300 in 1998.  Conversely, when oil prices rose in the 2000s, per capita income rose to $15,000.

High oil prices, rather than helping Saudi Arabia, handicapped it.  The revenue boost it provided masked over the economy’s limitations.  Rather than diversifying its economy, Saudi Arabia continued to rely on its one great resource.

Now, Saudi Arabia and other oil export economies, face a great challenge. Continue reading →

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