Detroit Bankruptcy Uncovers Disastrous Pension Fund Fudge Factor

Posted on July 23, 2013 by MN Gordon

Detroit filed the largest municipal bankruptcy case in U.S. History last Thursday.  Then, on Saturday, Helen Thomas bit the dust.  No doubt, both passing were long overdue.

As far as we can tell, the demise of Helen Thomas and Motor City has no direct correlation.  Nonetheless, in certain ways, they are both rich in consequences.

For five decades Helen Thomas had the best job in the world.  As Presidential Correspondent, she was responsible for peppering the President with questions he’d rather not answer.  Who wouldn’t relish the opportunity to wag their finger at the world’s top public servant and pour salt on their flubs and flaws?  Particularly Nixon and Obama…that must have been a hoot.

Thomas, unfortunately, stuck around long after she’d lost her marbles.  She could have gracefully exited stage left a decade – or two – ago with her reputation intact.  But instead she remained in the spotlight until May 27, 2010, when she made public utterances about Israelis and Palestinians that should have been reserved for private company. Continue reading →

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The High Point of China’s Economic Boom

Posted on July 19, 2013 by MN Gordon

Sometime in the early 1980s, goes the popular lore, Chinese leader Deng Xiaoping looked out across the vast people’s communes and pronounced, “To get rich is glorious.”

Suddenly, without hesitation, the people put down their rakes, walked off the farm production teams, and entered the factory.  Implausibly one billion people came together and focused like a laser on one single task…making stuff.  Within a generation every corner of the globe was flooded with a tsunami of plastic doodads marked Made in China.

After decades of self-sabotage, people were finally getting ahead.  Some bought refrigerators.  Others ate red meat.  The future was glorious.  Everyone just knew it.

Yet when the Chinese weren’t making stuff to ship overseas, they were making skyscrapers – and brand new cities – regardless of if people would occupy them.  By the start of the second decade of the second millennium the property boom had turned to an epic property bubble.  According to one analyst, China is “building somewhere between 12 and 24 new cities every year.” Continue reading →

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Your Summer Tax Increase

Posted on July 16, 2013 by MN Gordon

Oil prices are holding above $106 per barrel.  What gives?  Wasn’t all the oil fracking supposed to increase production and decrease price?

So far, part of this equation has come to be.  In fact, the Energy Information Administration’s weekly report, for the week ending July 5, shows the U.S. produced 7.4 million barrels per day.  That’s up 18.4 percent from just one year ago.  What’s more, it’s the highest level for U.S. domestic oil production in over 21 years.

So even though the price of oil remains stubbornly high, the combination of increased domestic production and increased energy efficiency is having many positive benefits for the country…

“The increase of oil production in the U.S. is reversely driving down the amount of foreign oil the country is importing from OPEC countries because the fuel is less needed,” explains The Daily Beast.

“Meanwhile, the U.S. is reducing its use of oil—thanks to more efficient vehicles, less driving, the use of natural gas as a transport fuel, and greater investments in renewable energy.  Total liquid fuel consumption in the U.S. declined by 2.1 percent in 2012, according to the EIA, and is expected to rise by less than 1 percent in 2013. Continue reading →

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Market Moves Ahead Should be Good for Gold, Bad for the US Dollar

Posted on July 12, 2013 by MN Gordon

Market Moves Ahead Should be Good for Gold, Bad for the US Dollar
By John Williams, Shadowstats

Nothing is normal: not the economy, not the financial system, not the financial markets and not the political system.  The financial system still remains in the throes and aftershocks of the 2008 panic.  A number of underlying problems of that time, tied to the risks of a near-systemic collapse and the related, extreme economic downturn, were pushed into the future—not resolved—by the extraordinary liquidity and systemic-intervention actions taken by the Federal Reserve and federal government.  Further panic is possible, and severe US dollar debasement and inflation remain inevitable.

Nonetheless, several major misperceptions appear to have developed in the last month or two concerning an end to the Federal Reserve’s quantitative easing, the level of crisis posed by US fiscal imbalances, and an unfolding recovery in the US economy.

Contrary to currently hyped expectations in the popular financial media, chances are negligible for any serious, near-term reduction in the Federal Reserve’s purchases of US Treasury securities. Continue reading →

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