How to Profit from Obama’s War on Coal

Posted on June 10, 2014 by MN Gordon

Republican leaders are up in arms.  House Speaker John Boehner calls it “nuts”.  Senate Minority Leader Mitch McConnell said it’s a “lose-lose proposition”.

No, we’re not referring to President Obama’s gum chewing faux pas at the D-Day anniversary in Normandy France.  We’re referring to something much, much more absurd.  That’s right.  We’re talking about Obama’s latest attempt to control the world…with your money.

If you didn’t hear, last week Environmental Protection Agency Administrator, and Obama appointee, Gina McCarthy signed a new Clean Air Act Proposal to reduce greenhouse gas emissions by a third of 2005 levels by 2030.  “These new standards are going to help us leave our children a safer and more stable world,” explained President Obama.

Here we’ll pause to offer a modest proposal.  To counteract the deleterious effects of greenhouse gases we suggest putting millions of ice cubes in the ocean and having everyone open their windows and blast the air condition to cool the atmosphere.  Sounds ridiculous, right? Continue reading →

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Monetary Activism

Posted on June 6, 2014 by MN Gordon

Sometime in the 1950s twentieth century economist Hyman Minsky developed his Financial Instability Hypothesis.  At the cornerstone, is the notion that economic stability breeds instability.  How’s that possible?

As Minsky observed, financial crisis follow periods of economic prosperity.  These periods of prosperity encourage borrowers and lender to be progressively reckless.  Increased credit and debt lead to inflated asset prices.

Eventually, excess optimism leads to instability…lending and debt move to unsustainable levels.  Financial bubbles then burst.  Asset prices crash and the mistakes of the preceding boom are corrected.

The housing boom and bust last decade followed Minsky’s script to the letter.  A preponderance of cheap Fed credit was emanated into the financial system to soften the dot com crash.  For whatever reason, the cheap credit made its way into the housing market.

Early speculators made big returns.  Banks followed up the returns with riskier and riskier loans…because, if you recall, ‘house prices only go up.’ Continue reading →

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Economic Blasphemy

Posted on June 3, 2014 by MN Gordon

Last week the Bureau of Economic Analysis made a revision.  You may have heard about it.  According to the government statisticians, first quarter GDP didn’t decline at an annual rate of 0.1 percent as previously estimated.

Actually, when they re-counted the beans, first quarter GDP declined much, much more.  In fact, based on the new estimate, first quarter GDP declined at an annual rate of 1 percent.  What does this mean?

In short, it means the economy isn’t expanding…it’s contracting.  And because the economy’s supported by massive amounts of debt it doesn’t take much of a contraction for the debt foundations along the margins to begin to crumble.  Student loan and auto loan debt will lead the way in the next debt implosion.

But, nonetheless, nearly all news reports we came across blamed the weather for the economic lethargy.  Some even celebrated the contraction as a brief resting place to another expansion.  There were rationalizations that this is a good thing because it will inflate second quarter GDP. Continue reading →

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The Successor to Keynes

Posted on May 30, 2014 by MN Gordon

The Successor to Keynes
By Jeff Thomas, International Man

Europe is abuzz with Capital in the Twenty-First Century by French economist Thomas Piketty, released in Europe in March of this year and now a best-seller.  It has since crossed the Atlantic and is already the number-one best-seller for booksmith Amazon.  It has been called a “blockbuster” of a book, and many reviewers believe that it has the ability to revolutionise the study of economics.

Here are a few quotes from reviews:

In Piketty’s view, the solution is a measure beyond the political reach of any individual nation or international body, as they are now constituted: a global wealth tax.  Only such a tax “would contain the unlimited growth of global inequality of wealth, which is currently increasing at a rate that cannot be sustained in the long run.”

—Thomas B. Edsall Continue reading →

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