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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We Are All Screwed

Posted on August 23, 2011 by MN Gordon

Travels have taken us to Pueblo, Colorado.  Until a week ago we’d never heard of the place. Yet here we are, observing life outside the Los Angeles Basin, and writing to you from the banks of the Arkansas River.

If you didn’t know, Pueblo’s located about 45 miles south of Colorado Springs.  The place was founded as a trading settlement in this mid-19th century, before Utes and Jicarilla Apaches raided the place.  But for the Native Americans it was a short victory… Steel mining and milling led to a boom several decades later and Pueblo passed from the hand of Indian tribal rule forever.

Yesterday we rode the historic Royal Gorge railroad route beneath gigantic 1,000 foot granite walls, along the winding waters of the Arkansas River.  Today we’ll be making our way to the 700 plus year old Anasazi dwellings leading to Pikes Peak.

Coincidentally, Pike’s Peak was the site of one of the greatest gold rushes of North American history.  In 1859, it was “Pike’s Peak or Bust!” for the estimated 100,000 gold seeking “Fifty-Niners” who crashed the Southern Rocky Mountains with gold fever.

Back then gold was money.  There was no Federal Reserve to print up paper notes.  To obtain money, you either had to trade a product or a service for it. Continue reading →

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