The Metamorphosis of Jon Corzine

Posted on December 6, 2011 by MN Gordon

The economy gained 120,000 jobs in November, said the Labor Department last Friday.  The jobs number included 140,000 new private sector jobs and a loss of 20,000 public sector jobs.  More importantly, the unemployment rate fell to 8.6 percent – its lowest since March 2009.

Based on the headline numbers, the jobs market appears to be improving.  However, a scratch below the surface reveals a more modest picture…

For instance, November’s increase of 120,000 jobs does not keep up with population growth, which is about 200,000 people a month.  To significantly reduce the unemployment rate, new jobs must be created at a rate that exceeds population growth and, by extension, growth in the labor force.  Nonetheless, even with a gap of about 80,000 people last month, the unemployment rate still fell.

How is that possible?

Simple.  The number of people looking for jobs fell by 315,000.  Additionally, the number of people not counted in the labor force increased by 487,000.  Remember, Continue reading →

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Divided We Stand United We Fall

Posted on December 2, 2011 by MN Gordon

By the time the Vandals sacked Rome in A.D. 455 the empire of the Caesars had already receded from Western Europe.  Over several decades the vast territories of Britannia, Hispania, Gallia, and Italia gave way, piecemeal, to barbarians until imperial Rome ultimately fell in 476.

After the ignominious collapse of the Roman Empire, a decentralized feudal system of lords, vassals, and fiefs arose across Medieval Europe.  Learning and the arts were lost to simple survival and 1,000 years of darkness.

Following Medieval Europe’s emergence and Renaissance, a collection of independent nation states were established.  Over the following centuries they coexisted in symbiotic disharmony.  Then, at the dawn of the third millennium, something last seen in Roman times came to pass.  A United Europe once again ruled the continent.

Even so, it was not a real union of the sort that comes about by love or war…it was a contrived monetary union hammered out over several generations by the fists of politicians and central planners.  In other words, it was doomed from the beginning. Continue reading →

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In Defense of Government Fraud

Posted on November 29, 2011 by MN Gordon

For aging baby boomers, and their retirement accounts, the stock market over the past decade has been a severe disappointment.  Many will have to work longer, for a retirement lifestyle dramatically compromised from what they were expecting.  Some will not be able to retire at all.  But for some members of Congress the stock market’s become a supernatural boon for their wealth.

According to a study from the Journal of Financial and Quantitative Analysis titled, “Abnormal Returns from the Common Stock Investments of the U.S. Senate,” Senators outperformed the stock market by about 10 percent.  Perhaps the reason the Senate, as a whole, is so successful at investing is because it’s comprised of the smartest guys in the room.  That would explain their abnormal returns…right?

The flaw in this hypothesis, however, is that from what we’ve observed, the Senate is comprised of both idiots and morons – or a combination thereof.  Take Senate Majority Leader Harry Reid, for instance.  Not long ago he argued that paying income tax in the United States is voluntary.  This alone makes him an idiot…and a moron too.

Consequently, given that the Senate is, by and large, comprised of idiots and morons, from where do they derive their prescient stock picking abilities?  Do they count Elliott Waves?  Do they trade Bollinger Bands?  Do they study tasseography? Continue reading →

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Smiling with Gratitude

Posted on November 25, 2011 by MN Gordon

The Commerce Department reported Tuesday that the economy grew at an annual rate of 2 percent in the third quarter…a downward revision from the initial 2.5 percent estimate made last month.  More importantly, it was reported that after-tax, inflation-adjusted incomes fell by 2.1 percent.  That’s the biggest drop in incomes since the third quarter of 2009.

The incomes decline could drag down the fourth quarter’s growth numbers.  Remember, consumer spending makes up 70 percent of the economy.  Declining incomes would presumably lead to declining consumer spending, and declining economic growth.

Obviously, the cornerstone of the economic recovery is jobs.  But not any old jobs will cut it.  Profitable jobs are what are needed.  Jobs that generate more revenue than they consume, contribute to business growth, and fund further investment and hiring.

Currently the economy is not creating these jobs.  In fact, on Wednesday the Labor Department reported that applications for unemployment insurance increased last week to 393,000.  That was an increase of 2,000 applications from the 391,000 reported for the prior week.

Unfortunately, the unemployment rate has been stuck around 9 percent for over two years Continue reading →

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