More Public Spending Only Hastens the Demise

Posted on September 6, 2011 by MN Gordon

Kicking off Labor Day weekend last Friday was a report by the Labor Department that, on balance, the U.S. economy failed to create a single job in August.  On the bright side, this also means not a single job was lost in August either.  Unfortunately, a zero reading is actually a negative reading…125,000 jobs a month are generally needed just to keep up with population growth.

Somehow the unemployment rate stayed at 9.1 percent.  However, it is really much higher. There are 14 million people that are officially unemployed.  But there are also 11.4 million others that are unofficially unemployed.

The unofficially unemployed, who include part time workers who want full time work and people without a job who had not searched for a job in the last 4 weeks, are not counted as unemployed by the Labor Department.  Throw them into the mix and the unemployment rate jumps from 9.1 percent to over 16 percent.

President Obama paused during the holiday yesterday to tell the people of Detroit, “We’ve got a lot more work to do to recover fully from this recession.”

It is clear to everyone that more jobs are needed to improve the economy.  But from where do jobs come? Continue reading →

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Controlling Economic Diarrhea with Adhesive Tape

Posted on September 2, 2011 by MN Gordon

Some people never learn.  Give a klutz a hammer and he’ll smash his thumb every time. Give a boozehound a bottle of Strawberry Boone’s Farm and he’ll guzzle it down en route to get another and another…until it practically kills him.  Likewise, give a Princeton professor chairmanship of the Federal Reserve and he’ll print up money until the currency explodes.

Creating free money’s a good gig, if you can get it.  Particularly, when times are good. That’s when a Federal Reserve Chairman appears a maestro.  But when the economy takes a dive – or two – the truth comes to light… A central banker is nothing but a quack.

Economic growth for the first six months of 2011 is at 0.7 percent.  Factor in inflation, and the economy’s going not forwards; but backwards.  Most folks are getting squeezed.

Earlier this week we learned that the Consumer Confidence Index for August dropped 14.7 points – or nearly 25 percent – to 44.5.  The last time consumers were this unconfident was April 2009…when the economy was officially in recession.

Over the past week stocks have generally moved in the direction that makes people feel smart.  What we mean is, with the exception of yesterday’s 120 point selloff, they’ve gone up.  After briefly falling below 11,000 last Friday morning, even with yesterday’s harrowing drop, the DOW is up 571 points Continue reading →

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Clever Ideas to Fix the Economy

Posted on August 30, 2011 by MN Gordon

Yesterday’s stock market didn’t seem to give a darn but last Friday a notable revision was made.  An important economic mile marker was shifted down and to the right…realigning the economy onto the road to recession.

According to the Commerce Department, U.S. GDP increased during the second quarter at a 1 percent annual rate – not 1.3 percent as initially estimated.  While this is better than the 0.4 percent GDP increase during the first quarter of the year, this puts economic growth for the first six months of 2011 at just 0.7 percent.  Additionally, year-over-year GDP has fallen 1.5 percent.

From what we gather nine of the past 11 recessions in the post-World War II era have followed a period of GDP growth of 1 percent or less.  Perhaps we are about to make it 10 of the past 12.  Obviously, the economy’s slowing down; not speeding up.  And everyone knows it…

The Michigan Consumer Sentiment index, reported last Friday, was extraordinarily dreadful.  The index fell eight points to 55.7 in August, from 63.7 in July, to its lowest level since November 2008.  What’s more, the index has fallen almost 20 points in just three months.  In an economy where consumer spending accounts for 70 percent of growth, GDP will likely follow consumer sentiment down Continue reading →

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Hell Bent on Destroying the Currency

Posted on August 26, 2011 by MN Gordon

We’re in San Francisco today taking a break from our daily labors to ride cable cars up and down Powell Street and traverse through the city’s sundried districts, like Chinatown, North Beach and Fisherman’s Warf, with our wife and son.

Looking around we see hardly a sign of economic turmoil.  People are bustling about, the hotel rooms are dearly priced, and the restaurants are full.  Perhaps a stroll through the Tenderloin would change our opinion.  But even in good times that neighborhood’s a lost cause.

The weather’s cool and foggy.  We’ve heard breathing in the moist bay air somehow stimulates the mind and body to ideas and creativities that would otherwise go missed. Like one night in 1905, when 11-year old Frank Epperson left a stirring stick in a drink he was mixing on his porch.  The next morning he discovered the drink was frozen to the stick and, if you can believe it, he’d invented the Popsicle.

So last night we gave it a try… We took in a deep breath of the cool moist air hoping to reach our inner Kerouac or Jack London in the thick bay mist.  But, alas, wherever you go you always find yourself.

And once again we have gold on the mind. Continue reading →

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