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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 Bill Buckler
January 14, 2009
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THE CENTRAL BUBBLE - US TREASURIES

The central most important global fact over this past year is that the deflation which has swept across the world has destroyed an enormous amount of the financial wealth which people thought existed. The worldwide price and valuation crashes in stock markets, real estate and across commodities has now wiped out more than $US 70 TRILLION.

The Hard Data Shows It:

In the US, data from the Federal Reserve shows that the net worth of US households plunged by $US 2.8 TRILLION in the third quarter, the fourth consecutive quarterly decline. Over the past year, Americans' net worth has contracted by $US 7 TRILLION. Americans have started to do something they haven't done since 1952. They have reduced their debts! Reducing debts, repaying loans, is deadly to a credit money system since it contracts - DEFLATES - the quantity of credit money in circulation.

American household borrowing, mortgage and consumer credit combined, literally declined at a $US 117.4 Billion annual rate over the third quarter.

The so-called authorities panicked and hauled official interest rates down to absurd levels in the vain hope of reigniting a credit expansion. When no such expansion occurred, governments across the West stepped into the vacuum, borrowing what the public now refuses to borrow, in a global orgy of deficit spending. The civil economy has deflated at an unprecedented speed. People are now repaying past debts while not borrowing more. To try to "offset" this, the public or political economy which lives off taxes paid by the civil economy, is piling up its own debts.

Something has to give soon. That something will be US Treasury debts.

A Future U-Turn In A One Way Street:

The Federal Reserve has boxed itself into a corner. With official US rates at (effectively) zero, they have only one way to go in future - UP! As a direct consequence of this, US Treasuries are standing on a trap door. The mad stampede over the past two months into Treasuries for "safety" simply means that these holders of US official debt now stand on that trap door. US Treasuries are the main assets held by the rest of the world's central banks as reserves behind their own national currencies. US yields are certain to climb as the US Treasury tries to borrow more than $US 2 TRILLION this year. When yields climb, bonds - ALL bonds including US Treasury bonds - fall in value.

US Treasuries are the last bubble, following after stocks, real estate and commodities which have already deflated. When the US Treasury bubble bursts, the carnage on the global bond markets will be awesome.

Ó 2009 – The Privateer

http://www.the-privateer.com

capt@the-privateer.com

(reproduced with permission)

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