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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
February 21, 2008
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This Silence Is Both Deep And Ominous:

It is the combination of falling markets and politically lowered interest rates - which is the danger to insurance companies now. If even a few of them report at the end of February that they have huge losses from subprime and other "toxic waste" investments, the potential write-downs could be enormous. What is of real interest here is that while the losses of the banks and the monolines have seldom been out of the financial press for months, insurance companies with their HUGE investments in the same markets have received next to no coverage at all! If the insurance companies have suffered similar losses to the US commercial banks, even on a pro-rata basis, then today they stand with hundreds of $US Billions of write-downs. When that becomes known, THEIR credit ratings will be in the firing line. When insurance companies have falling credit ratings, the questions emerges as to whether they can meet a large call from people and other companies which have insured with them. Ticking loudly in the background of all this are the many stories to the effect that many US and other insurance companies have themselves taken out "insurance" against falling stock markets and company defaults on their corporate bonds. When it is the insurance companies themselves hedging against risks, the alarm bells should be ringing very loudly…..

On the latest figures, 24 percent of subprime mortgages loans are delinquent or in foreclosure. About 5.7 percent of home equity lines of credit were delinquent or in default at the end of last year, up from 4.5 percent a year earlier, according to Moody's. As of the end of January, about 7.1 percent of auto loans were in trouble, up from 6.1 percent. US credit card companies wrote off 5.4 percent of their prime card balances in January, up from 4.3 percent a year ago. Translated from these simple percentages to US Dollars never to be collected, all this totals untold $US Billions of write-downs for the entire US financial system. It also translates into real losses yet to arrive on the balance sheets of the lenders. Finally the tidal wave of write-downs for US lenders of all descriptions cuts straight under their solvency.

The Wilshire 5000 has lost about $US 2.5 TRILLION in value in the last two months. This is the most representative US stock market index which has the highest inclusion of US companies in it.

So Far It Is Financial - Soon It Will Be REAL:

What has happened so far in the US financial system might look like a game with large numbers. But be assured that what the US financial system looks like is what the REAL US economy will soon look like…..

Today, Gold is climbing higher on the back of an increasing fear of the credit money system itself. The fear is that the system in the US is on the verge of collapsing under the weight of the enormous debts which are the concomitant effect of expanding credit. Any expansion of credit is also and always an expansion of outstanding debts owed. A credit expansion is "safe" for as long as the climbing debts appear to be serviceable with due payments of interest AND eventually repayable by those who have borrowed. But at a certain height of debt, uncertainties arrive as to whether this is really so. When that happens, the entire credit money system totters on the edge of a debt implosion as the bad debts are written off the balance sheets of the lenders. A debt implosion is deflationary in monetary terms. As the bad debts are written off, this contracts the total sum of credit money available.

This is why government subsidies to borrowers and monetary infusions to lenders are being put in place. It is also why the US is putting into place a 30-day moratorium. It's all to stave off a debt implosion.

Gold coin in private hands is not subject to any of the above. It cannot be deflated. It is always money.

Ó 2008 – The Privateer

http://www.the-privateer.com

capt@the-privateer.com

(reproduced with permission)

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