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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
June 7, 2011
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An American Apocalypse Is Coming!

But it should come as no surprise to all of you, as it is what I have been warning about over the last few months; especially since the Media are not doing their jobs.  Insane government spending, massive debt accumulation, out-of-control money printing, all being covered up by misleading and doctored government statistics and an almost unimaginable political cowardice are about to exact a heavy toll from each of us.  Millions of Americans are about to lose their incomes, their savings, their buying power, their homes.

  • The sovereign debt crisis has now returned with a vengeance, driving Greece into a new sinkhole ... dragging Spain, Italy, and Portugal into the same abyss, while raising the specter of a similar crisis in Washington.
  • U.S. home prices — where the last debt crisis began — have just plunged AGAIN, down 5.5% in the first quarter alone. Delinquencies and home foreclosures, which some hoped were “a thing of the past,” are now affecting 6.4 million mortgages nationwide.
  • The U.S. economic recovery has suddenly sputtered, meaning that the federal deficit is going to be far larger than the government had estimated ... and that the Fed will have to print money at an even faster pace to finance it! The US Federal Reserve is adrift and relies upon deception as policy in revealing its directions. Its position is to hold steady, inflate to oblivion, support financial markets in secret, and lie about its affects on inflation and commodity prices. The US Fed has become a propaganda machine that deals with ruses as a substitute for transparent policy discussion in the public forum. They kept talking about Green Shoots, as insolvency spread across the big banks and to household equity. They lost their credibility in the process. They have lost it completely after two full years of 0% rates, the ultimate in central bank shame. I had dismissed the Green Shoots BS a long time ago. . .

To put it simply, this is fundamentally the worst and most dangerous stock market and economy I have seen or studied since my early days as an economist in the late 1960s–early 70s, a period of unprecedented political unrest, high unemployment, weak U.S. political leadership, government induced gas-line oil shortages and high and increasing inflation. Then, like now, I was told what to think and what assumptions to make. When I refused to sign my analysis, I was forced to quit. Being right had no bearing and certainly no reward.

SURGING INFLATION

Right now, places like China and India are seeing surging inflation. India’s and China’s central banks are jacking up interest rates to deal with an inflation that is rising at more than 8% per year. Inflation in China is running at an under reported (just like here in the USA) more than 5%. If these governments make even the smallest of missteps, it will not only crash their stock markets and economies, but drive inflation ever higher. (Like it or not, the Natural UNIVERSAL Laws of Economics will always win out.)

The big problem for the emerging markets is that there could be a domino effect. In the meantime, I will be compiling a list of “trophy assets” of both commodities and emerging market special situations. If the domino effect gets bad, we will find some amazing buying opportunities.

Most analysts, economists and Fed observers are baffled that Ben Bernanke decided NOT to announce QE3 a month ago. The reason for this is obvious: The Fed got hardly any real positive economic movement from QE2 and it blew Gold Silver, Oil and commodities through the roof doing it. Remember, QE2 was only just announced in November 2010. And anyone watching the US economic data knows that we took a sharp turn for the worse in Feb 2011. So all told, we spent some $600 billion and only got about three months worth of manipulated, improved numbers and economic data. Therefore the FED needs scary financial markets again so everyone will be clamoring for it to intervene. The Fed will likely let QE2 end in June, which they hope will see a collapse in stocks that could even start before then. Should the S&P 500 drop to 1,100 or so, they will announce QE3 in order to keep things “afloat”. Should that occur, the US Dollar will collapse and inflation hedges will explode across the board especially Gold and Silver.
The Fed is already setting this up. Their latest FOMC minutes make it clear that they are downplaying the negative news today so that when things get REALLY bad, they can act surprised.

At the moment, our attention is riveted on the 10-year Treasury note, which has been flirting with a major rally target, and by implication, a potentially very important low in lending rates. If so, the implied shift in Treasury paper from bull market to bear is one that we cannot afford to take lightly, since nothing would hasten the country’s descent into economic depression as certainly as the ratcheting up of key lending rates.  Try to imagine the impact of this on, for one, the residential real estate market that has already shed a third of its value since the beginning of the Great Collapse several years ago.  Commercial real estate would be in fatal jeopardy as well, since the accounting tricks that have been used to mask its true condition rival in deviousness to those the Federal government has used to conceal the fact of America’s insolvency.

Talk about insanity! The Fed presidents are basically saying that they intend to follow the same, failed money-pumping policies, but are expecting better results!  It is all well and good to kick the can down the road, but what happens when you come to the end of the road? Seems nobody at the Fed has learned the lesson that, “There Is No Such Thing as A Free Lunch” and more importantly, “You can’t print jobs!”