On Maximum Collective Welfare

Posted on March 1, 2013 by MN Gordon

“Look back over the past, with its changing empires that rose and fell, and you can foresee the future too.” – Marcus Aurelius

Gradually Reducing the Minds of Men

The Roman Republic was corrupted long before Marcus Aurelius came to be Emperor in AD 161.  The responsibility and representation of consuls had been supplanted by Caesars sometime around BC 27.  Yet the Roman Empire still ran reasonably well, for a while.

There were happy, prosperous, years enjoyed by the empire from AD 98 until Aurelius’ death in AD 180.  But, unfortunately, Aurelius’ passing was the high-water mark for the civilization.  The fortunes of the imperial power slowly receded for the next three hundred years…until its final collapse on September 4, 476, when Romulus Augustus, the last Emperor of the Western Roman Empire, was deposed by Odoacer, a Germanic soldier.

“It is scarcely possible that the eyes of contemporaries should discover in the public felicity the latent causes of decay and corruption,” said 18th century historian Edward Gibbon in The Decline and Fall of the Roman Empire.  “This long peace, and the uniform government of the Romans, introduced a slow and secret poison into the vitals of the empire.  The minds of men were gradually reduced to the same level, the fire of genius was extinguished, and even the military spirit evaporated.” Continue reading →

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Apocalyptic Revelations and Other Fictions of Government

Posted on February 26, 2013 by MN Gordon

Are you ready?  Something remarkable could happen within the next few days.  In fact, this Friday, if Congress doesn’t take action, we’ll all have the extraordinary opportunity to experience something that rarely occurs…

Apocalypse!

No kidding…  President Obama even says so…

“Emergency responders like the ones who are here today – their ability to help communities respond to and recover from disasters will be degraded.  Border Patrol agents will see their hours reduced.  FBI agents will be furloughed.  Federal prosecutors will have to close cases and let criminals go.  Air traffic controllers and airport security will see cutbacks, which means more delays at airports across the country.  Thousands of teachers and educators will be laid off.  Tens of thousands of parents will have to scramble to find childcare for their kids.  Hundreds of thousands of Americans will lose access to primary care and preventive care like flu vaccinations and cancer screenings.”

Quite frankly, the Presidents warnings don’t sound all that dire. Continue reading →

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The Best Laid Schemes of Mice and Men

Posted on February 22, 2013 by MN Gordon

Japan can’t seem to catch a break.  On Wednesday, for instance, Japan’s Finance Ministry reported that Japanese exports increased 6.4 percent to $51.2 billion in January from a year earlier.  Unfortunately, imports rose even faster…climbing 7.3 percent to $68.6 billion.

In effect, Japan, as a whole, spent $17.4 billion more on goods from abroad than they sold.  The difference was made up with debt: corporate debt, government debt, and private debt.

Naturally, this new debt will exacerbate Japan’s 230 percent government debt to GDP ratio, which is the largest percentage of any industrialized nation on the world.  This will also be compounded by the fact that Japan’s economy shrank 0.4 percent annualized during the fourth quarter of 2012…marking the third straight quarter of contraction.  If this sounds bad it’s because it is.  Yet Japan’s skid into economic oblivion is only beginning to pick up real steam.

Japan’s trade deficit for 2012 widened to $78 billion.  But that’s nothing. Continue reading →

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Warren Buffett’s Unique Problem and Solution

Posted on February 19, 2013 by MN Gordon

“Price is what you pay.  Value is what you get,” once remarked billionaire investor Warren Buffett.  These are sage words, indeed.

Unfortunately, for most investors, they only consider price.  They ignore the value part…the cash flow – or dividend per share – that the business will generate for them as an investor.  Perhaps this is why most investors over pay when purchasing shares of a company.

Generally, most stock market investors are not really investors at all.  They’re speculators.  They only consider price.  If a stock’s price is rising they consider it a good investment.  If it’s falling, it’s a bad investment.

Then, after a stock’s price falls, speculators think it’s a buy…because of how much less it costs than just several months before.  Yet, sometimes, a stock’s price falls…and then it falls more.  Nonetheless, for investors that understand value, and what they’ll be paid to own a stock, price is considered within this context.

Following Buffett’s philosophy, investing is about maximizing the price paid for an ongoing piece of a company’s wealth stream. Continue reading →

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