Shattering the Debt Ceiling

Posted on September 24, 2013 by MN Gordon

It’s always exciting when money and politics mix.  For example, on Friday billionaire investor Warren Buffett told students at Georgetown University it would be “pretty damn dumb” if Congress and President Obama don’t reach an agreement to raise the nation’s debt ceiling.  Here at the Economic Prism we delight in the words “damn” and “dumb,” especially when used to describe the country’s leaders.

But unlike Buffett we consider not raising the debt ceiling to be pretty damn smart.  Moreover, we’re in favor of Washington gridlock stopping the Treasury from borrowing from tomorrow to pay for things bought yesterday.  We’re also supportive of any opportunity to dismantle parts – or all – of the colossal Obamacare edifice.

Similarly, we hope financial markets lose their nerve over the game of debt ceiling chicken being waged between the House and the President.  An S&P 500 at 1,700 seems irrationally high.  Nonetheless, we don’t recommend shorting it. Continue reading →

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Stock Market Shangri-La

Posted on September 20, 2013 by MN Gordon

The big news early in the week was that Larry Summers – the man so smart he lost hot breakfasts for Harvard and $2 billion of the university’s operating funds – withdrew his name from consideration for the next Federal Reserve Chairman.  The stock market loved the news.  The S&P 500 jumped a combined 13 points on Monday and Tuesday.

By Wednesday the relief of not having Summers tinkering around with monetary policy had been cast aside.  All eyes were recalibrated on current Federal Reserve Chairman Ben Bernanke, and his forthcoming utterances.  What would he do now?

Many were expecting the Fed to begin tapering back its $85 billion per month asset buying program by about $10 – $15 billion per month.  But when it came time for the monetary Caesar to taper he did nothing of the sort.  Here are some choice excerpts from Wednesday’s FOMC statement…

“Taking into account the extent of federal fiscal retrenchment, the Committee sees the improvement in economic activity and labor market conditions since it began its asset purchase program a year ago as consistent with growing underlying strength Continue reading →

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Cal Worthington RIP

Posted on September 17, 2013 by MN Gordon

Today we continue our search for clarity in the muddy waters of economics.  We want to know what will happen tomorrow…today.  Moreover, we want to consider how to use our estimations of the future to our advantage.

One way to go about it is to hold a licked index finger up to the wind to see which direction things are blowing.  Headwinds are bad.  Tailwinds are good.  Another obvious way is to look to the past and project out into the future.

Neither of these techniques will do much good for predicting the unexpected – nonlinear – occurrences.  Asset diversification and strategic guesstimations are paramount for managing risk and targeting rare opportunities when things go haywire.  Based on what our gut tells us, once again, things are about to go haywire.

In fact, economic data reports already have gone haywire.  One says the economy is improving.  Another says the economy is stagnating.

Which one is right?  Which one is wrong?  Here’s an example of what we mean… Continue reading →

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Could This Be the Next Bakken?

Posted on September 13, 2013 by MN Gordon

Could This Be the Next Bakken?
By Marin Katusa, Chief Energy Investment Strategist

Everyone is looking to make the “Big Score” in the resource sector—that one special discovery that is not just elephant- but brontosaurus-size: big enough to put you into the annals of resource exploration and make fortunes for your investors.

Everyone knows that investing in the junior resource sector can be dangerous.  In fact, there are few investments where the odds are so high that they will fail and you will lose your money.

But when you do find the “Big Score,” it can be a life-altering experience.

There’s actually a book with that title, The Big Score.  It’s a book about Doug Casey’s good friend and Casey Explorers’ League Honoree, Robert Friedland, and it details the legendary Voisey’s Bay nickel discovery.  If you can get your hands on it, I recommend you read it.

Robert’s company, Diamond Fields, was exploring for diamonds in Africa. Continue reading →

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