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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When the Stock Market Bubble will Burst

Posted on May 27, 2014 by MN Gordon

U.S. markets were closed yesterday in observance of Memorial Day.  But, nonetheless, we peered through our Economic Prism for hints and clues of what’s to come.  There are no bones about it.  We believe the bull market’s end is nigh.  And if it isn’t, it should be.

We’ve detailed various rationales…like stock valuations and average bull market durations.  We’ve made countless observations of the rough waters the economy is sailing into.  Corporate earnings are doomed.

Still, day after day, stocks continue to rise.  Higher, further, longer than we possibly could have imagined.  We can hardly believe our eyes.

Could we live in a world with only upside and no downside?  Could risk be no more?  Not unless you believe the impossible.

For with each passing day that the bull market marches on, we know it is one day closer to its end.  Moreover, the higher stocks go the harder their landing will ultimately be. Continue reading →

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Scientific Management of the Economy is Absurd

Posted on May 23, 2014 by MN Gordon

A Fed insider shattered the glass and pulled the fire alarm this week.

“A strengthening U.S. economy may force the central bank to hike rates ‘sooner rather than later’ to stay ahead of inflation,” Philadelphia Federal Reserve President Charles Plosser said on Tuesday.

Meanwhile, top Fed head Janet Yellen offered the New York University graduating class some commencement words at Yankee Stadium.  According to Yellen, success is determined more by grit and passion than sheer ability.  As an example, she noted former Fed Chair Ben Bernanke’s grit as the main quality that compelled him to bailout the financial system when it frosted over like the Alaskan tundra a few years back.

In Yellen’s mind, Bernanke’s mass counterfeiting operations were a mass success.  As taxpayers, savers, and working stiffs with young children, we find such bosh to be utterly insulting.  Like when we heard the condescending line from former Treasury Secretary Timothy Geithner, “We did save the economy, but we lost the country doing it,” we get a sharp pain in our gut. Continue reading →

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