Economic Frankenstein

According to the Department of Labor, 148,000 jobs were created in September.  The experts thought the number of new jobs would be closer to 180,000.  Still, the unemployment rate dropped a tenth of a percent to 7.2 percent.

No doubt, the weak jobs report gives the Fed additional cover to continue creating $85 billion from nothing each month to prop up mortgage and treasury markets.  The Fed believes all this funny money will, somehow, create new jobs.  This seems kind of absurd, don’t you think?

Thus, it’s no surprise the jobs the Fed promised still don’t exist.  But the side effects of their mass money debasement are sticking out further than President Obama’s ears.  At the moment, the stock market’s the most obvious deformation.  Under the thrust of extraordinary monetary policies, stocks are shooting to dizzying heights.

Here at the Economic Prism, we don’t agree with this heavy handed intrusion into markets.  But we can’t ignore it.  Nor can we stand in the way of it. Continue reading

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How to Enjoy the Magic of Rising Stock Prices

Let’s begin with the understanding that something delightful is taking place in the stock market.  The S&P 500’s up 22.33 percent year to date.  What’s more, the S&P 500 just hit a new nominal high of 1,745.  Can you believe it?

There’s something magical about an extended bull market that can’t be matched elsewhere.  The blotto of rising stock prices makes a man feel wiser, richer, and younger all at once.  Suddenly, anything – and everything – is possible.

Under the enchantment of a bull market a man finds his bald spot’s no longer getting bigger.  Instead, it’s getting smaller…along with his waist line.  Conversely, his 401k statement’s no longer getting smaller.  It’s getting bigger…along with his intelligence.

Upon opening his monthly portfolio statement, he’s greeted with the pleasing satisfaction of ballooning wealth.  He fancies his shrewd investing acumen to be equal to Warren Buffett.  Maybe even superior.

Without question, he’ll take credit for his good fortune. Continue reading

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Ten Things to Expect from Obamacare in 2014

Ten Things to Expect from Obamacare in 2014
By Elizabeth Lee Vliet, M.D.

It’s been clear to anyone paying attention that the October “rollout” of Obamacare has been a turbulent, confusing disaster.  Sloppy IT systems and technological failures combined to cripple Obamacare’s sign-up systems.  Security flaws put Americans at risk for identity theft.

In an almost comical understatement, President Obama summarized these massive failures as “a few glitches.”  I think that Luke Chung, IT expert and president of database solutions firm FMS, explained the situation much more accurately:

“What should clearly be an enterprise quality, highly scalable software application felt like it wouldn’t pass a basic code review.  It appears the people who built the site don’t know what they’re doing, never used it and didn’t test it.” Continue reading

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The New Era of Fed Activism

The basic characteristic of an overextended government is that its institutions are rotten.  Take the U.S. Post Office, for instance.  It lost $15.9 billion in 2012.  That’s over $43.5 million per day – flushed down the toilet – for an entire year.

It’s no wonder why the Postal Service recently defaulted on a 5.6 billion retiree health benefit payment.  The obvious options should be to reduce costs, privatize or close the Postal Service completely.  But for a rotten institution the obvious options are never acceptable.  Nor are they allowable.

In fact, the 220,000 member American Postal Workers Union wants to mutiny Postmaster General Patrick Donahoe for proposing ideas – like no Saturday delivery – to bring costs down.  Like the Ouroboros, the mythical serpent eating its own tail, the union would rather consume itself than accept a benefit cut or two.

It is this type of blockheaded thinking that got institutions like the Postal Service into the disagreeable place they currently find themselves to begin with.  Year after year, decade after decade, decision makers forgot to do one critically important thing.  They forgot to think. Continue reading

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