Home » Posts tagged 'mn gordon' (Page 8)

Tag Archives: mn gordon

Olduvai
Click on image to purchase

Olduvai III: Catacylsm
Click on image to purchase

Post categories

Post Archives by Category

Day of Reckoning Imminent

February 27, 2016

Day of Reckoning Imminent 

Fudging Numbers

It all seems so systematic, arranged, and orderly.  Sixty seconds make a minute, 60 minutes make an hour, 24 hours make a day, and one day equals one complete rotation of the planet earth. Roughly every 30 days the moon orbits the earth – which is one month.  Then every 12 months the earth orbits the sun – which is one year. So far so good…right?

The Gregorian calendarOldish German calendar.   Image via sciencesource.com

But here’s where the nice and neat order of it all breaks down.  For if you try to measure one of earth’s orbits of the sun in days it’s not so divinely tidy.  For it takes 365 days plus an inconvenient 6 hours to fully complete the cycle. Nonetheless, we don’t let these inconvenient 6 hours hamper our perfection.

We’re humans, after all.  We innovate, invent, and make the world in our image.  So when the numbers don’t jive, we do what must be done.  We fudge them. We create an off balance account, we concoct a new theory, we contrive negative interest rate policy…and we invent a leap year.

This coming Monday is the day the books must be reckoned.  Peering into our off balance account we find 24 accrued hours that must be tallied up and rectified. Consequently, we must have a day of correction for the disorder of the last four years.  We must resynchronize the calendar year with the astronomical year.  Moreover, we must reground our measuring system with its baseline – its reference point.

BrandoJuliusCaesarDid you really think we’d let you get away with that calendar-fudging, oh Julius? February 29? Seriously?   Photo credit: MGM/Turner Ent.

…click on the above link to read the rest of the article…

China’s $6.6 Trillion Toxic Loan Problem

February 8, 2016

China’s $6.6 Trillion Toxic Loan Problem 

Rotting Vegetables

“As long as you’re green, you’re growing.  As soon as you’re ripe, you start to rot,” once remarked Ray Kroc, mastermind of the McDonald’s franchise empire.

At the moment, no truer words can be spoken for China’s ripe economy.  The Middle Kingdom’s 30-year economic boom is being overcome with the unpleasant odor that befalls rotting vegetables.  What’s more, there’s no way to reverse it.

P1180759Photo credit: fmh

Economic activity in China is stalling out.  All of the sudden, the mistakes that were hidden by a growing economy are surfacing en masse.  Excess capacity is turning up in all corners of the economy and no one knows what to do about it.

Each day, it seems, new rot comes to bear upon Beijing’s central planners.  Somehow the miracle workers have lost their hot hand.  A slowing economy, falling stock market, exodus of wealth, and weakening currency are not conforming to the graphs and statistics reported in the latest blueprint for the planned economy.

How could it be that the professional politicians, who’d sparkled with genius all these years, so grossly missed their targets?  Aren’t the talented men, who’d lorded over a contrived capitalism all these years, capable of fixing this?  Perhaps these are the wrong questions to be asking.

China's new Politburo Standing Committee members (from L to R) Zhang Gaoli, Liu Yunshan, Zhang Dejiang, Xi Jinping, Li Keqiang, Yu Zhengsheng and Wang Qishan, line up as they meet with the press at the Great Hall of the People in Beijing, November 15, 2012. China's ruling Communist Party unveiled its new leadership line-up on Thursday to steer the world's second-largest economy for the next five years, with Vice President Xi Jinping taking over from outgoing President Hu Jintao as party chief. REUTERS/Carlos Barria (CHINA - Tags: POLITICS TPX IMAGES OF THE DAY) - RTR3AF6Q

China’s Politburo – from left to right, Zhang Gaoli, Liu Yunshan, Zhang Dejiang, president Xi Jinping, prime minister Li Keqiang, Yu Zhengsheng, Wang Qishan (Wang is running Xi’s anti-corruption effort. If you want to find him, go to Zhongnanhai and ask for Wang’s wing).

Photo credit: Carlos Barria / Reuters

Individual Preferences

Simply put, an economy cannot be executed by a central government to fulfill the objectives of a five year plan.  At times this may appear to be so.  But these instances are mere coincidence…not the result of an erudite centralized mastery.

…click on the above link to read the rest of the article…

Something’s Gone Horribly Awry

January 29, 2016

Something’s Gone Horribly Awry

The S&P 500 has fallen 7.37 percent so far this year.  What to make of it…

Naturally, some people find falling stock prices to be unpleasant.  Others find them distressing.  Another way to look at falling stock prices, however, is like a high-fiber diet.  The effect is necessary to a healthy functioning system.

The simple fact is that stock prices, fueled by speculative liquidity, have long since outrun the real economy.  The disconnect between the two has been widely observable.  The economy’s lagged, incomes have stagnated, yet stocks have soared.

Thus the present, ever so slight reduction in liquidity, and the subsequent lowering of stock prices, is having a cleansing influence.  For it will serve to eliminate marginal businesses, and trim the fat from larger businesses.

Consequently, business owners, managers, and workers of marginal undertakings will have to redirect their efforts into something new…something that’s of greater value.  For example, Walmart recently announced it would be closing 269 stores and laying off 16,000 workers.  Obviously, we don’t wish any harm to hard working Walmart employees.  But we’re also confident many of these 16,000 people will now find a new, more meaningful, and more prosperous purpose in life.

Though it can be painful at times, eliminating and minimizing wasteful activities is how the world becomes more affluent.  On the other hand, propping up negligible endeavors with cheap credit ultimately subtracts wealth from the world.

Mean Reversion

How much more stocks will fall, no one really knows for sure.  Perhaps they’ve already fallen as far as they will.  But we wouldn’t bet our life savings on it.

This is merely conjecture, of course.  But we do recognize that even with the 7.37 percent drop year-to-date, the S&P 500’s Cyclically Adjusted Price Earning (CAPE) Ratio is 23.97.  We also recognize that the CAPE Ratio’s mean, going back to 1881, is 16.65.

…click on the above link to read the rest of the article…

Chasing the Wild Goose in Davos

January 22, 2016

Chasing the Wild Goose in Davos

Despite the reformers endless efforts to encircle mankind, some persist beyond the broad extent of their casted net.  In the backwaters of the new Republic, for instance, the distant rumble and flicker of Saturday night hootenannies still befall yonder the mighty oak groves.

In defiance of all things good and proper, the unconsecrated gather under the pale moonlight and jig step to zydeco washboard rhythms while downing tipples of corn syrup and fermented grain.  These knees-ups certify that, even in this era of big government, there remain places in the lower forty-eight where freedom reigns.

Similarly, the backwoods of the old world, rare as they may be, have not been entirely defamed.  Though old world songs are more rigid – and drinks more dry – there are still places where people come together with gusto, and without interference, to dance the polka around the maypole.

Across the planet, no doubt, there are still pockets of liberty where individuals can lawfully expel into toilet bowls that use more than 1.28 gallons per flush.  These places are uniquely exceptional with their own distinct rhyme.  But, in common, they’re all places where the air smells sweet, the water flows clean, and the people can hold their chin up.

Davos, Switzerland, located along Landwasser River, in the Swiss Alps, should be one of those places.  But, alas, it is not.  Sadly, for one week each year, corporate, political and academic reformers debase the wealthy enclave and ski resort for their annual hootenanny…the World Economic Forum.

Improving the State of the World

This week the big gathering went down.  Although we didn’t receive an invitation this year – again – we won’t let that stop us from offering some reflections.

…click on the above link to read the rest of the article…

Earthquake Economics

January 16, 2016

Earthquake Economics 

Beyond Human Capacity

“The United States of America, right now, has the strongest, most durable economy in the world,” said President Obama, in his State of the Union address, on Tuesday night.  What performance metrics he based his assertion on is unclear.  But we’ll give him the benefit of the doubt.

A collapsed building is seen in Concepcion , Chile, Thursday, March 4, 2010. An 8.8-magnitude earthquake struck central Chile early Saturday, causing widespread damage. (AP Photo/ Natacha Pisarenko)Photo credit: Natacha Pisarenko / AP

Maybe this is so…right now.  But it isn’t eternal.  For at grade, hidden in plain sight, a braid of positive and negative surface flowers indicate an economic strike-slip fault extends below.  What’s more, the economy’s foundation dangerously straddles across it.

1-gdpnow-forecast-evolutionActually, it probably isn’t so – the Atlanta Fed’s GDP Now measure, which has proven surprisingly accurate thus far, indicates that the US economy is hanging by a thread – and the above chart does now yet include the string of horrendous economic data released since January 8.

 

Something must slip.  A massive vertical rupture is coming that will collapse everything within a wide-ranging proximity.  It is not a matter of if it will come.  But, rather, of when…regardless of what the President says.

Here at the Economic Prism we have no reservations about the U.S. – or world – economy.  We see absurdities and inconsistencies.  We see instabilities perilously pyramided up, which could rapidly cascade down.  We just don’t know when.

Comprehending and connecting the infinite nodes and relationships within an economy are beyond even the most intelligent human’s capacity.  Cause and effect chains are not always immediately observable.  Feedback loops are often circuitous and unpredictable.  What is at any given moment may not be what it appears.

Not Without Consequences

For instance, the Federal Reserve quadrupled its balance sheet following the 2008 financial crisis, yet consumer prices hardly budged.  Undeniably, the Bureau of Labor Statistics’ consumer price index is subject to gross manipulation.  We’re not endorsing the veracity of the CPI.

…click on the above link to read the rest of the article…

Post navigation

Newer posts →

Olduvai IV: Courage
Click on image to read excerpts

Olduvai II: Exodus
Click on image to purchase

Click on image to purchase @ FriesenPress