On Savages and Perpetual Infancy

Posted on June 14, 2011 by MN Gordon

Last Tuesday Federal Reserve Chairman Ben Bernanke said the economic recovery was “frustratingly slow.”  By Wednesday the yield on the 10-Year Treasury Note had dropped below 3 percent.  At the same time, stocks, oil, and gold were shellacked in unison.

Obviously, people are getting a little down on the economy.  For several years now the recovery has been trudging along like a camel in quicksand and, after all this time, jobs are still scarcer than ice cubes in the Sahara desert.  What’s more, there’s nothing to show for the record stimulus, bailouts, and government gimmicks except for a national debt that has expanded well beyond what the economy can support.

All debt involves risk.  When used with caution and care, debt can help build wealth and prosperity.  Debt applied to a venture that will likely generate profitable revenue for years into the future is a risk worth taking.  Debt that’s applied to fancy dinners and exotic vacations will lead to bankruptcy.

When the financial market’s frosted over in late 2008, the Fed rained down a 100-year flood of money without reservation.  Would the money restore prosperity?  Would the spending be directed into profitable ventures?  Would it create jobs to replace the one’s being vaporized by the economic crash? Continue reading →

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How to Accumulate Wealth

Posted on June 10, 2011 by MN Gordon

On Wednesday we drove out to San Bernardino to meet with a client.  It was warm, gray, and gloomy.  Nothing like the blue sunny skies and cool breezes we left behind us at the beach.  Nonetheless, it wasn’t the dreary weather producing the melancholy aura as we entered the city…it was the economy.  For we’d passed into what has been called the Detroit of southern California.

If you’ve never been to San Bernardino, you can count it a blessing.  In statistical terms, the place falls two standard deviations left of mean on a normal bell curve distribution of the range between heaven and hell.  In common terms, the place is a hell hole.

Had there been an economic recovery, San Bernardino would’ve been the last place to know it.  Thus, any sign of recovery over the last two years had not graced the empty storefronts and blighted street corners of the downtown business area.  Still, hear at the Economic Prism we have a helpful heart and a soft spot for the down and out, so we made the trek out to the depths of the Inland Empire to offer our time and our talents…at market price.

Even though we were honoring a commitment to a project we wish we’d have passed on, we went about our business with curiosity. Continue reading →

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Let the Fun Begin

Posted on June 7, 2011 by MN Gordon

Last week Wall Street finally realized something that everyone else has known for some time…this economy stinks worse than rotten tomatoes.  After rising 14 points on Tuesday, the S&P500 dropped 45 points to close out the week.  Then, yesterday, it dropped 14 more…losing 4.6 percent over the last four trading days.

If the market’s supposed to be a forward looking animal, in this instance, it was blind to the obvious.  Namely, that the recovery is a fraud.  Anyone who works in the real world for a living knows that the recovery has been a sham since it began.

Economic growth has hardly budged.  Jobs creation has been nonexistent.  The only thing that’s improved over the last two years is the stock market, which has been boosted up by nearly $2 trillion dollars of funny money from the Federal Reserve.

Without all the heavy handed intervention by the Fed stock prices would be a lot lower.  So, too, it’s possible, after suffering a swift decline, the economy would have landed on solid ground and a real economic recovery would have begun.

Instead, following a two year delay of the inevitable, the government’s up to its eyeballs in debt, and it appears things are setting up for the great double dip. Continue reading →

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Nearing the Boiling Point

Posted on June 3, 2011 by MN Gordon

There’s way more going on in this wild and whacky world than we can keep up with.  We scan the headlines with wide eyes and a gaping jaw…gawking like our four year old son when he first saw the grotesquely large pigs at the LA County fair.

Like the oversized pigs, the headlines are disturbing and hideous… Still, we can’t bring ourselves to look away.  We pinch ourselves on your behalf, collecting our thoughts and connecting the dots…all just for you.

For instance, on Tuesday we learned, according to the World Health Organization, our cell phone is a possible cancer causing agent.  In fact, the health agency’s put it in the same category as gasoline engine exhaust and coffee.  Good grief!

We intentionally drink coffee every morning.  We like the taste and, more importantly, we like its effect.  We unintentionally breathe gasoline engine exhaust every day driving on the 405 freeway during rush hour commute.  We don’t like the smell, or the effect.  But there are those that do…

Last weekend, Sarah Palin told a gathering of motorcycle-riding veterans at the Memorial Day “Rolling Thunder” event at Washington’s National Mall: “I love the smell of the emissions.”  Can you believe it…a gas huffing politician?  We couldn’t make this stuff up if we tried. Continue reading →

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