The Sordid Politics of Inflation

Posted on October 28, 2022 by MN Gordon

“Some airlines, if you want six more inches between you and the seat in front, you pay more money but you don’t know it … these are junk fees, they’re unfair and they hit marginalized Americans the hardest, especially … people of color.”

– President Joe Biden, October 26, 2022

Fist Bump Agreements

President Joe Biden just crapped the bed.  Again!

The near octogenarian thought he’d struck a secret deal back in July.

You may have seen Biden’s fist bump with Saudi Crown Prince Mohammed bin Salman at the time.  The non-binding agreement called for increased oil production until at least December, after the midterm elections.

With additional Saudi Arabian oil, in combination with draining the Strategic Petroleum Reserve, now down 32 percent year-to-date, Biden planned to deliver cheap gasoline to American voters.

His calculation was that this gift would prevent a likely midterm catastrophe for the Democrat party.  What a slick political move, right?

Alas, Biden recently woke up – like a pig – rolling around in a mess of his making. Continue reading →

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Operation Break Stuff

Posted on October 21, 2022 by MN Gordon

Stagflation, sinking labor productivity, severe levels of public and private debt, a splintered real estate market…  You name it.  The economy’s crashing and burning like an old Cutlass Supreme.

There’s nothing the central planners can do to fix it.  No plans or schemes will get the tired jalopy to fire on all cylinders.  A blown head gasket is replaced and the very next day the spark plugs are fried.  Replace those and a piston ring blows.

At some point, it’s beyond salvage.  The only sensible choice left is to scrap the old buggy at the junk yard.

Similarly, scrapping the central planners that are responsible for this economic mess is the right thing to do.  They’ve created a very disagreeable situation.  One that will take several generations – or more – to reconcile.

In this vein, the time has come to purge the rot.  To reckon the mistakes of the past.  To burn off the many distortions that have piled up like dead forest wood.  We’ll have more on this in just a moment.  But first some context is in order. Continue reading →

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Debt Markets Get Trampled

Posted on October 14, 2022 by MN Gordon

Anyone with half a brain knew there would be hell to pay for locking down the economy and simultaneously printing and spewing out trillions of dollars of confetti money.  The bill has finally come due.

Did you see the latest consumer price index (CPI) report?

According to the government bean counters consumer price inflation, as measured by the CPI, increased in September at an annual rate of 8.2 percent.  While this is down slightly from several months ago, the year-over-year increase in prices is still near a 40-year high.

Stock market investors celebrated the news like mindless idiots.  On Thursday, after the CPI report was released, the S&P 500 rallied more than 2.5 percent.  Perhaps stock market investors were elated the CPI wasn’t even higher.

More important than the stock market is the debt market.  Following the CPI release, Treasury yields spiked up.  Bond investors know what’s coming.  Specifically, more rate hikes from the Federal Reserve.  They sold accordingly.

Because as interest rates rise, bond prices fall.  This inverse relationship, which has been in existence since financial markets were invented, is wreaking havoc on debt investors.  The value of the paper they’re holding is vaporizing in their hands. Continue reading →

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Who Else Bought BlackRock’s LDI Swindle Products?

Posted on October 7, 2022 by MN Gordon

Finding and filling gaps in the market is one path for entrepreneurial success.  The first to tap into an unmet consumer demand can unlock massive profits.

But unless there’s some comparative advantage, competition will quickly commoditize the market.  Profit margins will decline to just above breakeven.

“You should either be first or be better than your competition.”

We don’t know who the original source of this often-repeated business advice is.  Like most advice on the subject, it sounds smart while not being all that useful.

From our experience, finding and filling gaps in the market, and being better than the competition, is extremely difficult.  Even the most successful entrepreneurs fail more than they succeed.  And success in one endeavor doesn’t guarantee success in another.

Anyone who has ever developed and marketed a new product from concept through sale knows how difficult it is to achieve profitability.  For every good idea there must be a hundred bad ones. Continue reading →

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