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Jim Cook



Every once in a while I switch the TV channel from Fox to CNBC to see what the liberals are saying.  After listening awhile I get a deep sense of hopelessness and foreboding for our country.  The most important thing for the left is giving money to people.  They are happy to see the growth of food stamps, disability payments, housing subsidies, free healthcare and all the other welfare benefits.  They utterly fail to see the damage it is doing to the recipients.  Whole cities that once flourished have deteriorated into rotting eyesores populated with shambling hulks of chemically dependent drones.  These people are no longer employable.  They have become incompetent and helpless and the liberals can’t see that it’s their doing.

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The Best of Jim Cook Archive

Best of Aubie Baltin
March 11, 2009
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Long time readers of my writings already know that in order to understand the small stuff and be able to read the tea leaves, one must always keep one's eye on the big picture. Otherwise, one ends up confusing cause and effect and not taking into consideration the unintended consequences. The real reason why Socialism cannot possibly work and why Capitalism always will is simply because Capitalism has what Socialism is constantly trying to undermine and get rid of: Profit and competition.

Can you imagine what would happen to a city, large or small, if there were suddenly no traffic lights? Gridlock, a massive traffic jam with nobody moving and nothing happening as everything comes to a complete halt. Sure, we could place police at every corner, but is that not just another form of a traffic light, only not as efficient and a lot more costly?

Well, profit and competition are the traffic lights of a Free Market Economy. They give the proper signals to everybody (buyer, seller and manufacturer) telling exactly how to behave without anyone carrying a gun because there is never any coercion. The consumer becomes the master of the dance. Can you imagine Walmart trying to sell their customers something they do not want and overcharging for it? Under absolute Socialism, the first thing that goes is free elections. The secret police become the biggest arm of government and the standard of living drops drastically because the factories no longer know what and how much to produce. They have no traffic lights.

That is exactly what is now happening to our country as Government interferes more and more in the economy thus confusing the necessary signals. With the Republicans having lost almost all power and influence, the Democrat leadership pushed through an $800 billion Spending Bill that was completely written behind closed doors with virtually no deliberation (traffic lights), leaving politicians only 15 minutes to read the bill before voting. Upon examination, the stock market went into a 500 point fall that even the eloquence of Obama could not do anything about it; with only the Plunge Protection Team preventing a total collapse. Not only will it not work, but within 6 months there will be clamoring and fear mongering for another new multi- $ trillion Bill, only this time it will be up for discussion. Pelosi and Reid, after the failure of the 1st Bill will not be able to keep their members in line without serious input and the express backing of the people, including a lot more Republican input. Unfortunately the results will be the same. There are no free Market Economists out there. Buy Gold!


The sad truth is that Europe, especially Eastern Europe, is in far worse shape than we are. So is Japan and Korea and while China and South East Asia are in better shape, they too are in recession.

Eastern Europe has borrowed an estimated $1.7 trillion, primarily from Western European banks. And much of Eastern Europe is already in a deep recession bordering on depression. A great deal of that $1.7 trillion is at risk, especially the portion that is in Swiss francs. The Polish zloty has basically dropped in half compared to the Swiss franc. That means if you are a mortgage holder, your house payment just doubled. That same story is repeated all over the Baltics and Eastern Europe. Austrian banks have lent $289 billion (230 billion euros) to Eastern Europe. That is 70% of the Austrian GDP. Much of it is in Swiss francs they borrowed from Swiss banks. Even a10% impairment (highly optimistic) would bankrupt the Austrian financial system, says the Austrian Finance Minister. The problem is the size of the banks in terms of the GDP of the country in which they are domiciled is all out of proportion. They are as if the bank bailout package were in excess of $14 trillion. In essence, there are small countries that have very large banks (relatively speaking) that have gone outside their own borders to make loans and have done so at levels of leverage which are far in excess of the most leveraged US banks. The ability of the "host" countries to nationalize their banks is simply not there. "It is East Europe that is blowing up right now," Erik Berglof, EBRD's Chief Economist said the region may need €400bn in help to cover loans and prop up the credit system. Europe's governments are making matters worse. Some are pressuring their banks to pull back, undercutting subsidiaries in East Europe. Athens has ordered Greek banks to pull out of the Balkans.

"The sums needed are beyond the limits of the IMF, which has already bailed out Hungary, Ukraine, Latvia, Belarus, Iceland, and Pakistan -- and Turkey next -- and is fast exhausting its own $200bn (€155bn) reserve." We are nearing the point where the IMF may have to print money for the world. I could go on and on but the story is the same for each country and if one country defaults, that could set the stage for a round of trade protectionism and competing currency devaluations that would spread the depression around the world. If you want to know why the US $ has been strong in the face of our problems, the answer is simple: Except for China and Singapore, the rest of the world is far worse off.