Default Now

Posted on July 8, 2011 by MN Gordon

It is too bad that idiots don’t warn people before they do something really stupid.  Perhaps someone of sound mind could intercept them and redirect their misguided intentions. Instead they seem to attract other kindreds…where they thrash about with self-reinforcing laughter like a pack of wild hyenas.

Take one Philip A. Contos of Parish, NY. Last Sunday he met up with a group of his friends for a helmetless protest ride.  He was, no doubt, contemplating the absurdity of helmet laws and the liberation of helmetless riding with the rider next to him when his Harley Davidson motorcycle fishtailed, sending him over the handlebars and to his death.

According to troopers, Contos would have likely survived if only he had been wearing a helmet.  Poor Contos… He didn’t stand a chance.  He was an idiot.  What’s more, all his friends were idiots too.

But in no way was Contos’ death a waste.  It proved a valuable point…you can’t legislate away stupidity.  So why bother with helmet laws to begin with?  Of course, this lesson will be far too complex for blockhead legislators to comprehend.  They’re now likely hard at it – drafting a new law banning helmetless protest rides against helmet laws.

Here at the Economic Prism we highlight this terrible tale not for amusement or enjoyment Continue reading →

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The Path of Least Resistance

Posted on July 5, 2011 by MN Gordon

The stock market hopped like a frog last week…jumping higher than in any week in over two years.  When the week was over, the DOW had climbed 5.4 percent, the S&P500 had climbed 5.6 percent, and the NASDAQ had climbed 6.2 percent.

From what we gather, stocks were boosted up by the Institute for Supply Management’s manufacturing index, which rose from 53.5 percent in May to 55.3 percent in June.  Other factors attributed to the stock market’s surge were the apparent passage of austerity measures by Greece’s parliament and the conclusion of QE2.

On the former, European finance ministers must now follow up the Greece austerity with a bailout, as promised.  On the latter, we don’t have much of an opinion. Markets knew all along when QE2 would end.  Why would they take the official end date of QE2 as a signal to buy stocks?

Regardless, we don’t think we’ve seen the last of QE. For while the stock market jumped, the real action was over in the bond market…where treasury yields jumped even more… Continue reading →

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Independence Day Celebration

Posted on July 1, 2011 by MN Gordon

[Editor’s Note: Today we break from our customary observations on money and markets. Monday’s Independence Day, after all, and while we’re still hard at work, we hope you have already commenced your holiday weekend.  But before you hang out the flag or light up the grill…we’ll leave you with some reflections on this great nation we call home. Enjoy!]

“Myths and legends die hard in America.” – Hunter S. Thompson

America’s Endearing Government

These days the ideas that roused America’s War of Independence are, alas, just ideas. Limited government and individual liberty were long ago squandered for big government and collectivism.  Gone are the days when you could earn a living without the IRS making a federal case out of it.  So, too, gone are the days when your kids could sell a glass of lemonade to your neighbors without some city busybody shutting them down for not having an approved permit.

Over the last 100 years Washington has become a sort of money sucking vortex.  At the Capitol Building sits a cadre of legislatures and an army of staffers working up new laws to take your money. Continue reading →

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Be Like Jimmy

Posted on June 28, 2011 by MN Gordon

The DOW jumped up 108 point yesterday.  The headlines offer many reasons why this is so.  But we don’t have time to consider them today.  For we have other points to ponder…like debt.

You see, individuals and nations alike have generally tumbled far too deep in debt.  Spending more than you make is the main culprit.  So, too, is making less than you spend.  One way to get out of debt is to make more money…for the government this means increasing taxes.

Yet time and time again, it never fails, when income goes up, spending goes up too.  Often times, when income goes up spending goes up even more.  Thus, regardless of how much an individual or a nation makes, they will somehow find a way to always spend too much.

So, while making more money seems like a good solution to the debt problem, history has shown that it often just perpetuates it.  Ultimately, the solution to the debt problem is spending less than you make.

But no one likes to spend less than they make.  For that takes discipline, prudence and sacrifice to accomplish.  Who wants to do that when you can just ‘charge it’?  Continue reading →

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