Imagine the face of Lt. George Morris. On March 8, 1862, his ship, the USS Cumberland, found itself a victim of what the economist Joseph Schumpeter called ‘creative destruction.’ The creativity came in the form of a revolutionary new technology, iron-clad ships. The destruction came in the form of cannonballs, which were smashing the poor Cumberland to bits. The Cumberland fired its cannons too. But its volleys merely ricocheted off its adversary, the CSS Virginia, like pebbles off a turtle’s back.
[Read more...]In Defense of Economic Depression
July 8, 2010 by Leave a Comment
Warning: serious thinking here…
Big rally yesterday. The Dow was up 274 points. Gold went up very slightly and still closed below $1,200.
What gives? A big change in direction? It’s probably nothing. Markets don’t go up or down all in one straight move. They play with investors like a cat with a mouse. They tempt him into bear markets and scare him away when prices are rising. They shake his courage at bottoms and addle his brains at tops.
[Read more...]US Still Spending Despite Global Shift Toward Austerity
July 7, 2010 by Leave a Comment
In the sushi again…just like we said!
The US stock market managed a weak rally yesterday. The Dow rose 56 points. Gold fell, closing the day below $1,200.
This morning, stocks are generally going down again all over the world.
Why does everything seem to be going down? Because it’s a Great Correction, what else?
[Read more...]Final Revisions of First Quarter GDP: Stimulus Not Working
June 28, 2010 by Leave a Comment
This past weekend was the G-20 meeting, and the anticipated brawl between the US and Germany on spending versus cost cutting… Well, the brawl didn’t happen, instead they agreed to say that they will “tackle deficits once economic recoveries are assuredâ€�… Which here in the US means… NEVER! Not that the economic recovery won’t eventually come along, but that our lawmakers aren’t going to stop spending… However, there are elections that might just change their minds, eh?
[Read more...]Correction Turns “Great� Thanks to Government Intervention
June 22, 2010 by Leave a Comment
The surprise at the beginning of the day yesterday was China’s announcement that it would end the dollar peg.
The surprise at the end of the day was that it didn’t make any difference. The news got investors all antsy…they spent the day preparing to drive prices higher. But at the end of the day the Dow finished lower – by 8 points.
[Read more...]Ten Benefits of Expatriation, Part II
June 17, 2010 by Leave a Comment
In yesterday’s edition of The Daily Reckoning, Casey Research shared five of the Ten benefits of expatriation. Today, we share the second five:
1) Freedom to invest without tax distortions that encourage capital misallocation. The US tax system encourages misallocation of your investment capital. It obscures the act of buying and selling securities based on a rational assessment of their value. For instance, you end up not selling a security you otherwise would simply because you don’t want to trigger taxes yet. Or you hold on longer than you might otherwise to get long-term capital gains treatment. Or you sell securities you normally would keep – for “tax loss harvesting.�
[Read more...]The Persistent Myth of American Economic Dominance
June 16, 2010 by Leave a Comment
“The great enemy of the truth,� John F. Kennedy declared in a 1962 commencement address at Yale University, “is very often not the lie – deliberate, contrived and dishonest – but the myth – persistent, persuasive and unrealistic.�
Fifty years later, a Yale education, itself, may be one small part of a vast American myth – the idea that America is forever and always the land of the free; the land of opportunity; the land of true capitalism. A degree from Yale, like so many other facets of the American economic myth, may possess more prestige than genuine economic value. But the declining value of a college education is a mere sub-plot to the de-mythologizing of American economic prowess.
[Read more...]US Budget Deficit: Another Government-Sponsored Ponzi Scheme
June 8, 2010 by Leave a Comment
Front and center today… Gold has reached a new all-time high this morning. Yesterday I kept watching the shiny metal tick higher and higher, and I would yell out across the desk each rise in gold… Gold was $1,250 when I turned on the screens this morning. It has given back $2 since, as I did some reading and research… But shoot… The move yesterday was something to admire!
[Read more...]US Deficit Spending: Greenspan and the Government Giveaway
May 6, 2010 by Leave a Comment
I have long maintained that there is, actually, nothing new under the economic sun for (checking my watch for the precisely correct time) the last few thousand years or so, and if you look deep into my Serious Mogambo Eyes (SME), you will see, as the acronym suggests, total sincerity when I tell you that there have always been the usual few things; income, taxes, spending, saving, borrowing and debt, and something along the lines of interest, which is not to forget, of course, money itself.
[Read more...]
One Business that Doesn’t Need a Bailout
Sign of the Times, Part 1: Federal bailout spending now exceeds the inflation-adjusted cost of World War II, according to our friends at the Independent Institute.
Senior Fellow William Shugart says World War II cost $3.6 trillion, but the bailouts now top $4 trillion. That’s actual money out of the taxpayer’s pocket, as opposed to the $12.8 trillion “lent, spent or guaranteed� figure you run across from time to time, a chunk of which might eventually be repaid.
[Read more...]Click for detailed story