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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 Bill Buckler
March 26, 2009
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$US 11.2 TRILLION was wiped off the net worth of Americans last year. Even worse, in the fourth quarter of last year, total US household assets dropped a record $US 5.419 TRILLION, that's a 31 percent annualised rate. This data comes from the US "flow of funds" report. This massive historic fall in the net worth of Americans is panicking the powers that be in Washington and New York since that same net worth is the real underpinnings of the loans which have been made by the US banking and financial system. Now, there is insufficient collateral inside the US to support all these loans. As a consequence, almost the entire US banking and financial system is insolvent. This is the situation which is on the other end of the "seesaw" which has already been discussed. The US banking and financial system has not one-tenth of the capital necessary to meet this huge shortfall in collateral under their loans.

That is why the Obama administration and the Fed are shovelling TRILLIONS of new US Dollars at the monetary end of the seesaw. They hope that if they place enough TRILLIONS there, they will lift all prices as well as valuations, in the process rebuilding the collateral foundation under the financial system.

When The US Seesaw Breaks:

The growing danger here is that instead of levering US valuations and prices upwards again, the US Treasury will break its own international credit standing and the US Fed will break the US Dollar.

If that happens, and the danger is VERY real, the seesaw breaks at the fulcrum. The monetary end crashes and ends up in the same predicament as the collateral foundation of the US real economy. With both of the ends of the US economic seesaw on the ground, the financial and monetary system crashes.

The Intensifying Danger Signal - US Credit Default Swaps:

The spreads on credit default swaps for US Treasury debt hit 97 basis points last week. That means that it takes $US 97,000 to buy insurance on $US 10 million of Treasury debt .

That is seven times higher than the level of a year ago and 60 percent higher than at the end of 2008. This is a HUGE danger signal.

Tic - TIC - T-I-C Goes The US Foreign Debt Bomb:

A key measure of the net foreign capital outflows that are arriving in the US is the monthly "TIC flows".

"TIC" stands for Treasury International Capital. As already mentioned, this Treasury data showed an OUTFLOW of $US 148.9 Billion in January after an inflow of $US 86.2 Billion in December. For all of 2008, the rest of the world's holdings of US financial assets increased by $US 857 Billion.

That sounds like a lot, but in 2007 the inflow was $US 2.081 TRILLION. In 2008, that flow decreased by almost 59 percent. The US needs an ongoing inflow of foreign money to fund its combined trade and current account deficits. The US Treasury needs it so that it can fund its budget deficits.

Demonstrable US Absurdity In Action:

This one is even too far fetched for Ripley's "Believe It Or Not". Last month, Bloomberg put the total cost of the many US bailouts so far at $US 9.7 TRILLION. That's enough to hand each US household a check for around $US 92,000, or to pay off 90 percent of home mortgages in the country! Since then, the tally of US bailouts has climbed to $US 11.9 TRILLION! This is complete fiscal and monetary madness.

Ó 2009 – The Privateer

(reproduced with permission)


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