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Jim Cook

 

RUNAWAY SOCIAL SYMPATHY

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
May 11, 2010
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The FED’S have created another Equity Bubble; they even used the same manipulated ULTRA low interest rates to do it and once again nobody noticed. To tell the truth, even I did not notice it at first since I could not believe that the analysts and investors would get sucked in by the same mistakes over and over again. But was or is it really a mistake? The Government has been using its Treasury Bonds to rape its citizens for the last 100 years by paying interest rates that were lower than the TRUE inflation rate and then taxing their miniscule returns. Even though Greenspan has now been vilified for creating the bubble by keeping rates too low for too long, we are repeating his exact same mistake all over again before even fully recovering from the last Real Estate and Financial debacles. Everyone knows that keeping interest rates too low for too long creates the perfect environment for excessive risk taking, thus creating bubbles to be followed by CRASHES.

This time it’s the stock markets that are in an EXPLODING BUBBLE.

So Why Stocks This Time?

The banks have basically found their version of NIRVANA since they now have the ability to:

1) Hide their losses via “extend and pretend.” 

2) Borrow at zero Interest Rates. They can borrow from the Government at zero and then lend it right back to the Government by buying 30 year guaranteed FHA Bonds that pay 4.6% and don’t require any reserves be held. If all that is not enough, they are then allowed to hide their losses with phony accounting. As the profits roll in, a large portion of these newly created profits (taxpayer gifts), after paying back TARP, begin to flow into highly liquid stocks.

Once the stock bubble starts, just like every other successful Ponzi scheme, it needs ever increasing amounts of money. The propaganda machine then gears up using manipulated government statistics to suck everyone else in. It certainly helps if the Fed also takes away all other investment options. Investors (especially senior citizens) are desperate for yield. By dropping rates to zero, the Fed has wiped out CDs, money markets, and Treasuries as solid, safe and reasonable yielding investment options. This essentially forces the public and fund managers into buying stocks and junk bonds in a desperate search for yield because the "safe" investments pay them nothing. The higher the market goes, the more investors get sucked in, just as they are in every Ponzi scheme.

Eventually, the ever expanding bubble turns into euphoria where everyone believes that we have entered into a New Paradigm where the market only goes one way, UP. Everyone Wins and Nobody Loses.

NIRVANA: That is until the game ends as it always must. We have already entered deep into the euphoria stage, but one thing is for sure: Bubbles never end well.
Just look at chart of the S&P 500 over the past 10 years. It looks like a giant roller coaster ride, so much so that after 10 years, long term investors are right back to where they started and that’s using non-inflation adjusted dollars. Investing in a zero interest rate environment has now changed the whole game. It turns the market essentially into a speculative casino where investors are desperately trying to find safe yield.

The average person in this country doesn't want to invest in a roller coaster ride that gives them nothing but a couple of heart attacks and zero returns.  The Fed's policies however, tell us that they could care less about the average person as they claim. It's all about taking care of themselves and their Wall Street and Banking buddies.