The Upside of The Great Depression of the 2020s

Posted on April 3, 2020 by MN Gordon

“The bank is something more than men, I tell you.  It’s the monster.  Men made it, but they can’t control it.” – John Steinbeck, The Grapes of Wrath

Mass Dollar Debasement

The monster of all monsters is rampaging far and wide.  The Federal Reserve, the central bank responsible for issuing U.S. legal tender notes, is going big.  But its aim is small.

The Fed’s working 24/7 with singleness of purpose.  Fed Chairman Powell’s applying what Minneapolis Fed President Neel Kashkari recently called “infinite cash” to the financial system.  The sole purpose is to destroy the dollar to save it.  The stakes are high.  The odds are higher.

The greatest asset bubble in human history, a bubble that was inflated by the Fed’s endless supply of cheap credit, has popped.  At the same time, coronavirus containment measures have collapsed the economy.  The forthcoming cascade of job losses, bankruptcies, oil gluts, and economic destruction could far exceed the Great Depression of the 1930s. Continue reading →

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Boeing’s Bean Counter Culture and Mass Financialization

Posted on March 27, 2020 by MN Gordon

“We’re not letting Boeing go out of business.” – Donald Trump, President USA

Something Stinks

On Tuesday, in anticipation of several trillion dollars of Congressional pork, the Dow Jones Industrial Average (DJIA) rallied 11.37 percent.  This marked its best day since 1933.  Some Dow 30 stocks did much better.

For example, Chevron was the top performer; closing up 22.74 percent.  American Express, which increased 21.88 percent, was a close second.  But do you know what company came in third?

None other than the posterchild for corporate financialization and cronyism: Boeing.  The company closed up 20.89 percent.

By all honest metrics, Boeing is circling the toilet bowl.  On Tuesday, for example, Fitch cut Boeing’s credit rating to BBB.  And according to Bill Ackman, head of Pershing Square Capital Management, “Boeing is on the brink [and] will not survive without a government bailout.” Continue reading →

Posted in Economy, MN Gordon | Tagged , , , , | 4 Comments

Is the Panic Worse than the Virus?

Posted on March 20, 2020 by MN Gordon

The Great Panic of 2020 is already one for the history books.  Yet the damage has only just begun.  We suspect the stock market crash, economic destruction, and forfeiture of freedoms will persist long after the coronavirus hobgoblin has been put to bed.

With respect to the stock market, the modus operandi of the last 11 years is being stood on its head.  Rather than ‘buy the dip.’  The new divine mantra is ‘sell the rip.’  Here’s why…

If you recall, the U.S. stock market commenced a multi-year swan dive in autumn of 1929.  About that time, the economy also commenced a decade long Great Depression.  Given the rapid and relentless stock market carnage over the last month, and the prospect of a lengthy depression, a closer look is in order.

From September 3, 1929 to November 13, 1929, the Dow Jones Industrial Average (DJIA) lost 48.9 percent.  Then, as rarely noted, it rallied 48.1 percent through April 17, 1930.  This had the adverse effect of luring the buy the dip crowd back into the stock market just in time for the next massacre.

The 1929 through 1932 bear market, as noted by Pater Tenebrarum, was like a rubber ball bouncing down stairs.  With each bounce, even the most savvy of investors were given another chance to lose their money. Continue reading →

Posted in MN Gordon, Stock Market | Tagged , , , , | 13 Comments

Your 12-Point Great Depression II Survival Guide

Posted on March 13, 2020 by MN Gordon

“Be anxious for nothing…” – Paul the Apostle, Philippians 4:6

Bull Market RIP

And just like that – after a magnificent 11 year run – the bull market in U.S. stocks is dead.  From its peak close of 29,551 on February 12 through yesterday’s [Thursday] close of 21,200, the Dow Jones Industrial Average (DJIA) has dropped over 28 percent – in just 30 days!  RIP.

Death may mark the end.  The completion of the circle of life.  But it also marks the beginning of something new.

The death of the bull market, for example, marks the birth of a new bear market.  By our estimation, the DJIA must fall an additional 30 percent – approximately – before the bear market dies and a new bull market is born.

Between now and then, the central planners in command at the Federal Reserve and the U.S. Treasury will do anything and everything to jumpstart the old bull market back to life. Continue reading →

Posted in Economy, MN Gordon | Tagged , , , , | 19 Comments