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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
July 29, 2008
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Global financial stocks have led declines that have wiped about $US 11 TRILLION from world equity markets worldwide so far this year. This is immensely deflationary. As of the end of June, those who are still holding this paper can sell it today for $US 11 TRILLION less than they could late last year. If they were to sell now, their purchasing power or investment power would be less by this huge amount. Again, scaling it to size, this is like removing about three quarters of the entire US economy.

The Descending US Staircase:

The line of the descent now goes from the two US GSEs to the US Treasury and finally to the US Dollar.

Should the very threadbare "confidence" which still remains in the two US GSEs crack further - one potential cause could be the rescue plan being seen as too little too late - the entire problem would arrive on the steps of the US Treasury. A bailout would require a MASSIVE increase in the Treasury's debt ceiling which takes an act of Congress. It would be necessary to push the "ceiling" well above $US 10 TRILLION, which would badly rattle both domestic confidence in the viability of their government's debt and global confidence in the USA itself. If the rest of the world's confidence cracked badly - and it is already waning fast - it would be the international value of the US Dollar which would feel the global impact first. Many foreign holders of US Dollars would start selling them for other currencies, driving many others including central banks to do the same, simply to get something for their US Dollar holdings. If control is lost here, the result could be a global event in which the global value of the US Dollar is destroyed inside a week. Further, very early on in any global US Dollar sell-off, present international holders of US financial paper of all kinds - stocks, Treasury and Agency debt, commercial bonds and all the rest - would start selling as a precursor to selling the US Dollars gained this way. The US stock and bond markets would go into free fall with huge and sudden rallies interrupting the general decline in prices. When the dust finally cleared, the US would be bankrupt and would be SEEN to be bankrupt.

The USA Is Out Of Options:

The central thing to understand is that the US has no place to go and no place to turn to. A huge US debt write-down is already just over the horizon. Desperate actions like currency controls

are likely ahead.

Ó 2008 – The Privateer

(reproduced with permission)


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