America’s Guaranteed Living Hell

Posted on June 19, 2020 by MN Gordon

One of the consequences of expansionary monetary intervention is that it distorts the relationship between financial markets and the underlying economy.  Stimulus with the supposed intent of juicing the economy has the effect of juicing financial markets.  Sometimes – like now – these inflationary policies have the effect of completely disconnecting the stock market from the economy.

Investing legend Jeremy Grantham is “amazed” at this unprecedented stock bubble.  He recently told CNBC that investing in the U.S. stock market is “simply playing with fire.”  And he’s right.

What’s more, when you follow the money back to its origin, you find the toxic emissions of the Federal Reserve.  This bubble is the Fed’s creation.  The central bank has been huffing and puffing it up for decades.

For example, when Alan Greenspan first executed the “Greenspan put” following the 1987 Black Monday crash, financial markets were well positioned for this centrally coordinated intervention.  Interest rates, after peaking out in 1981, were still high. Continue reading →

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Should You Buy the Dip?

Posted on June 12, 2020 by MN Gordon

Something remarkable happened yesterday [Thursday].  Stocks didn’t go up.  They went down…and they went down a lot.

The S&P 500 dumped 5.89 percent.  But that was nothing.  Gannett Co. crashed 29.5 percent, Noble Corporation plunged 25.51 percent, and Denbury Resources dropped 23.65 percent.

Should you buy the dip?

To properly answer this question we must back up, so as to widen our perspective.  From this outer perch several critical factors in the retail sector come into focus.

To begin, the music has stopped for American retail companies.  Yet retail investors have kept right on dancing.  Pandemic, economic collapse, full societal breakdown.  Nothing’s holding them back.

According to Bloomberg, the month of May was the worst month for insolvencies since the Great Recession.  On the month, 27 companies with at least $50 million in liabilities sought bankruptcy protection from creditors.  Notable filings came from J.C. Penney, Neiman Marcus, and J. Crew. Continue reading →

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Pandemic, Economic Collapse, Full Societal Breakdown

Posted on June 5, 2020 by MN Gordon

“And the will of Zeus was moving towards its end.” – Homer

Symbiotic Disharmony

The recline and flail of western civilization beats on.  Pandemic, economic collapse, full societal breakdown.  The sequence grooves from one to the next with the symbiotic disharmony of a minor pentatonic scale.

Peaceful protests devolved to rioting, looting, and structure fires in our own lowly hamlet last Sunday.  The Long Beach police couldn’t stop the vandals.  So the National Guard was summoned to quell the ransacking.  Some Guardsmen even stuck around to help out with the cleanup effort the following day.

The refrain – pandemic, economic collapse, full societal breakdown – has been repeated in many cities across the country.  For each: The time is now.  The place is here.

The progression from government pandemic lockdown orders to government curfew orders has been as natural as day to night and back again.  The difference between the two is subtle; like the difference between ketchup and catsup. Continue reading →

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This is a Full Societal Breakdown

Posted on May 29, 2020 by MN Gordon

This week’s standard refrain was one of pessimism.  The quick return to economic health mantra that was popular not long ago has disappeared faster than you can say lickety-split.  But there was one notable outlier this week.  In fact, one leading economist stepped forward with assurances that renewed prosperity lays just ahead.

On Wednesday, Nobel prize economist Paul Krugman looked up from his liquidity trap graphs long enough to tell Noah Smith at Bloomberg that the 1979-82 economic slump “would suggest fast recovery once the virus is contained.  I don’t see the case for a multiyear depression.”

This sounds great and all.  A fast recovery would end a lot of financial pain and suffering.  Still, we seem to think the damage that’s been done by the government lockdown will have long-term consequences.

The glorious ascent of the concave parabola of government spending and debt won’t go away.  The budget deficit has grown by leaps and bounds – nearly $3 trillion – over the last four months.  The national debt – currently over $25.6 trillion – has overtaken the economy. Continue reading →

Posted in MN Gordon, Politics | Tagged , , , , | 31 Comments