Last Tuesday, Federal Reserve Chairman Ben Bernanke described the economic recovery as “frustratingly slow.” By Wednesday, the yield on the 10-Year Treasury Note dipped below 3 percent, while stocks, oil, and gold plummeted simultaneously.
Clearly, there is growing pessimism about the economy. Over the past few years, the recovery has crawled along like a camel stuck in quicksand, with jobs remaining more elusive than ice cubes in the Sahara. Tragically, despite unprecedented stimulus and government interventions, the only tangible result has been a national debt that has ballooned beyond sustainable levels.
Debt inherently carries risk. When approached judiciously, it can foster wealth and prosperity. Borrowing to invest in ventures with promising long-term returns can be a wise risk. However, indulging in lavish dinners and extravagant vacations on credit can lead to financial ruin.
Following the financial calamity of late 2008, the Fed unleashed an overwhelming amount of money. The question remains: would this influx of cash rejuvenate the economy? Would it channel into viable ventures? Would it generate the jobs lost during the crisis? Continue reading
On Wednesday, we ventured to San Bernardino to meet with a client. The weather was warm, gray, and dreary—nothing like the clear blue skies and cool breezes we left behind at the beach. However, it wasn’t just the gloomy weather that cast a shadow over the city; it was the stark economic reality. We had entered what many refer to as the “Detroit of Southern California.”
If you’ve never been to San Bernardino, consider yourself fortunate. Statistically, the area falls two standard deviations below the mean on a normal distribution chart that ranges from paradise to purgatory. In simpler terms, it’s a challenging place to be.
Had any real economic recovery occurred, San Bernardino would likely have remained oblivious. Over the past two years, the signs of recovery have certainly not graced the empty storefronts and dilapidated corners of its downtown. Still, at the Economic Prism, we strive to help those in need, so we made our way to this beleaguered part of the Inland Empire to offer our assistance… at market price.
Even though we were honoring a commitment to a project we might have preferred to avoid, curiosity propelled us forward. Continue reading
Last week, Wall Street came to a realization that many had long understood: this economy is akin to rotten tomatoes—unpleasant and decaying. Following a brief rise of 14 points on Tuesday, the S&P 500 fell by 45 points, concluding the week on a down note. The following day, it dropped another 14, totaling a 4.6 percent loss over just four trading days.
If the market is supposed to anticipate future trends, it surprisingly overlooked a significant fact: the recovery is essentially a mirage. Anyone engaged in the real world can attest that this so-called recovery has been a farce since its inception.
Economic growth has barely shifted. Job creation has been stagnant. The only element that has seen improvement over the past two years is the stock market, artificially inflated by nearly $2 trillion of Federal Reserve stimulus.
Without the Fed’s heavy-handed intervention, stock prices would likely be much lower. Additionally, it’s conceivable that, after a dramatic decline, the economy could have found a firmer footing, paving the way for a genuine recovery.
Instead, after two years of postponing the unavoidable, the government finds itself deeply in debt, and signs suggest a looming double dip in the economy. Continue reading
There’s an overwhelming amount of activity in our unpredictable world, far exceeding our capacity to keep up. We skim the headlines with wide eyes and dropped jaws, akin to a child mesmerized by the enormous pigs at the LA County Fair.
Just like those oversized pigs, the headlines are alarming and grotesque; yet, we can’t bring ourselves to look away. We draw ourselves back to reality, gathering insights and piecing together information—all for your benefit.
For example, this past Tuesday, we learned from the World Health Organization that our cell phones may be potential cancer-causing agents. They have categorized them alongside gasoline engine exhaust and coffee. Good grief!
We happily savor our morning coffee for its flavor and effects, while we dread the unavoidable inhalation of exhaust during our daily commutes on the crowded 405 freeway. Ironically, some enjoy the very smell we detest.
Last weekend, Sarah Palin addressed a group of motorcycle-riding veterans at the Memorial Day “Rolling Thunder” event on Washington’s National Mall, exclaiming, “I love the smell of the emissions.” Can you believe it—a politician expressing such a peculiar affection? We couldn’t possibly fabricate a tale like this. Continue reading
The current climate in both economics and politics provides a complex landscape to navigate. As concerns deepen about the long-standing recovery, it becomes clear that more in-depth analysis and reflection are essential. Our journey through this turbulent environment continues, and examining these issues is increasingly crucial as we seek clarity and understanding amidst the chaos.
