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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
May 19, 2010
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On May 12, the Spanish Prime Minister announced the steps he was going to take to start winding back the deficits which threatened his government’s ability to borrow. Mr. Zapatero claimed that his government would cut civil service pay by 5.0 percent now and freeze it in 2011. He also promised to cut “investment spending” and pensions and cut 13,000 jobs out of his civil service. Just as he had phoned all the principles over the weekend leading up to the EU bailout package, Mr. Obama was on the phone to Spain the day before Mr. Zapatero gave his speech to the Spanish parliament.

What Mr. Zapatero announced was very similar to what most of the US states have been forced to do over the course of the GFC. It does not resemble anything coming out of Washington D.C. Mr. Obama is very good, it seems, at giving advice to his peers. He does not seem to think this advice applies in the U.S. The U.S. hasn’t got a sovereign debt crisis so it doesn’t need to come to the party. That’s for Europe.

A Slight Miscalculation:

On May 12, Reuters reported that the U.S. had run up a deficit of $U.S. 82.69 Billion in April 2010. April is, of course, the month when individual income taxes must be finalised and paid, these being the main source of tax revenue for the U.S. government. In April 2009, the U.S. government ran a deficit of $U.S. 20.91 Billion. A year later, that has blown out more than fourfold. Wall Street economists forecast an April 2010 deficit of $U.S. 40 Billion. The actual result was more than double that.

In April, the U.S. government spent $U.S. 327.96 Billion, a record for the month. This is a 50 percent increase over what they spent in the previous month. Total receipts (mostly income tax) in April were $U.S. 245.27 Billion. Receipts from individuals were down 28.3 percent from April 2009. Clearly, the main source of “revenue” for the U.S. government is not taxes, it is the sale of U.S. Treasury debt. Just as clearly, the U.S. government is not practising what it has been preaching to Europe. . .

In late 2008, a huge financial “rescue act” was mounted by the U.S. government to preserve the global banking system - their own, first and foremost. The purpose of this rescue was to prevent the real “worth” “toxic” sludge on the balance sheets of the banks from being exposed on the markets. That didn’t work. In March 2009, the central banks of the UK and the U.S. (the two nations which were and are most responsible for the current global credit money system) started to monetise the debt issued by their governments. That did “work”, until the end of last year. As cover for the borrowing requirements of these governments, a European “debt crisis” was created in Europe by the U.S. ratings agencies.

That crisis has now spiralled out of control. The ECB has bowed to political pressure (U.S. and UK aswell as European pressure) and followed in the footsteps of the Fed and the BoE. The ECB has
implemented sovereign debt monetisation while the EU has forced draconian spending cuts on Greece and its fellow Club Med nations, something the U.S. and the UK did NOT do in the wake of their adoption of the “nuclear option”. This time, it is NOT working, the markets are NOT “buying” it.

The backstop to the global banking system is the ability of governments to create “money” out of thin air. The backstop of this ability is policy makers clinging to the “mantra” that “what matters is not what is true or false, but exclusively what is believed.” As long as this holds, “full faith and credit” is viable. Once that “full faith and credit” has been exhausted, there is literally nowhere else to go.


 

 

Ó 2009 – The Privateer

http://www.the-privateer.com

capt@the-privateer.com

(reproduced with permission)

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