Admit Defeat of the Social Utopia

Posted on July 29, 2011 by MN Gordon

Production is the End

“The economic goal of any nation, as of any individual, is to get the greatest results with the least effort.  The whole economic progress of mankind has consisted in getting more production with the same labor,” began economist and author Henry Hazlitt in Chapter 10 of his book Economics In One Lesson, first published over 65 years ago.

According to Hazlitt, by maximizing production, full employment becomes a necessary byproduct.  In short, said Hazlitt, “production is the end, employment merely the means.”

Unfortunately, this simple and obvious insight was lost on the United States’ central planners when the economy cracked in 2008.

Goaded by academic elites, like Paul Krugman, they set about to solve the unemployment problem with massive amounts of government spending without considering what productive value it would provide.  They sought to stimulate new jobs by cranking up the printing press and directing and redistributing wealth through the visible and heavy hand of government.

Deficit spending, which had been out of control for decades, was rocketed into the fourth dimension.  Continue reading →

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Making Obese Debt Levels Possible

Posted on July 26, 2011 by MN Gordon

Make no bones about it…this economy sucks eggs.  Just ask anyone who’s looking for a job and they’ll tell you, ‘no one’s hiring.’  Despite official decree from the National Bureau of Economic Research that the Great Recession ended in June 2009, an uncanny disappointment has emerged for nearly everyone living outside the beltway.

For the middle class, their most valuable asset – their home – has become their most underwater liability.  And for the lower class, the economic current has turned against them in earnest…no matter how hard or fast they paddle, it seems, they can’t move even a short distance upstream.

What’s more, college graduates are hitting the workforce with a noose of debt around their neck and few employment options…other than hawking coffee.  According to the Labor Department the unemployment rate for 16- to 24- year olds is over 17 percent.  What gives?

No doubt, it has been a peculiar recovery for anyone who has paused to consider it.  New economic growth has not been based on the spending of savings accumulated during the recession.  Nor has it been based on capital spending and investment. Continue reading →

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Europe Doubles Down on Greek Bailout

Posted on July 22, 2011 by MN Gordon

Hot dry Santa Ana winds blow from the east across the California desert every fall.  They rip and roar their way over and down the mountain passes and rumble their way across the vast Los Angeles basin, pushing the smog trapped against the San Gabriel Mountains out to sea.

For a day or two the sunsets are magnificent from our perch in Long Beach…thick hues of oranges and pinks floating lowly above the Pacific Ocean as the sun dips behind the Palos Verdes Peninsula.  But before long the Santa Ana winds have dried the flora out to tinder kindling.  Sometimes nothing more happens. Other times, with just one spark, Malibu Canyon explodes in flames.

There’s a financial Santa Ana blowing across Europe this summer.  Hot dry winds, originating from Greece, blow west across Italy like volcanic ash from Mount Vesuvius nearly 2000 years ago.  They whip their way west across the Iberian Peninsula drying out the finances of Spain and Portugal to an explosive tinderbox.  But the winds don’t stop there…

They reach gale force as they gust across the Bay of Biscay, encircling France and Germany on the west, while blasting northward past the Celtic Sea where they parch Irelands finances like an Irish coffee…or an Irish car bomb. Continue reading →

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Broken Promises Broken Dreams

Posted on July 19, 2011 by MN Gordon

White House and Congressional efforts to reach a Grand Bargain are merely a distraction. The basis for such a bargain – reduce spending so the debt limit can be raised – is fraud and folderol.  Nothing that we’ve seen suggests the government’s even pretending to solve the debt problem.

Last week’s discussions, before they fell apart, centered on deficit cuts of $4 trillion, $2 trillion or $1.5 trillion over 10 years.  These proposals are nonsense.  For example, $2 trillion in deficit cuts over 10 years amounts to a deficit reduction of just $200 billion per year.

The government’s current deficit is $1.65 trillion.  So under that proposal the government would have to borrow $1.45 trillion per year rather than $1.65 trillion.  What this means is, either way, over the next 10 years the national debt will double.  Moreover, what this means is the big charade going on in Washington is not addressing the debt problem.

Major news organizations are not reporting this.  They are too enamored with the politicking going on…and who’s walking out of meetings.  The problem, you see, is not the need to increase the debt limit.  The problem is the government’s finances have reached and exceeded total debt saturation. Continue reading →

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