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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
August 8, 2012
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While German Chancellor Angela Merkel returned from her vacation on August 15 to oversee a government cabinet meeting, the next scheduled move from Germany does not take place for almost a month.  The German Supreme Court has yet to hand down its ruling on the pending European bailout fund.  The Euro's so-called "permanent" rescue fund is the European Stability Mechanism (ESM).  Before that fund can take over from the "temporary" EFSF, it must be ratified by the governments of the Euro nations.  Before the German government can do that, the ESM's constitutional viability must be ruled on by the German Federal Constitutional Court.  That ruling is scheduled for September 12, which happens to be the same day that the Federal Open Market Committee (FOMC) next meets in the US. 

We are thus to be subjected to the best part of a month of steadily growing conjecture in the mainstream media on both sides of the Atlantic.  Those who remember the "progress" of the Troubled Asset Relief Program (TARP) in the US are yelling as loudly as they can that lightning cannot strike twice.  Few now remember that when the TARP was first put to the House of Representatives on September 29, 2008, it was voted down.  That vote resulted in the biggest one-day fall in history in nominal terms on US stock markets.  It was a much bigger shock than the Lehman bankruptcy.  It led directly to a horrible suspicion within the global financial establishment that the government was blinking in front of the absolute necessity to do what they
were there for - to bail out the financial system.

Of course, the TARP legislation did not remain in limbo for long.  By October 3, 2008, both House and Senate had passed a slightly "amended" version and it had been signed into law by President Bush.  The opinion of the US Supreme Court was not sought in this matter.  This is one of the many aspects of the upcoming German court vote on the ESM which so irritates financial and political potentates outside continental Europe.  But irritated as they may be, NONE of

them dare breathe a word of conjecture on the possibility of the German court actually saying "NEIN".  That would be redolent of what the US House did in late September 2008 - and NOBODY wants to go there again.

What Might The German Court Do?:

The possibility of the German court rejecting the ESM has been firmly put in the "unthinkable" basket.  That leaves the area of conjecture centered on the "conditions" which the court might put on a finding that the ESM is constitutional.  The most feared of these is the possibility that the German court might demand that the people of Germany be given a bigger "say" in exactly what their government can do with their taxes in bailing out peripheral Europe.  That would inexorably lead to a referendum.  And referendums, especially ones concerning bank and government bailouts, have had a very bad history over the course of the GFC to

date.   While Ms Merkel has spoken out against a referendum, she presides over a coalition government.  In the first week of August, all her coalition partners stated that Germany's articipation in the ESM might need to be put to the vote.  The one certainty is that if the German court decides that ESM approval requires changes in the German constitution, a referendum is required.

According to the financial world, especially that part of the world outside Europe, what the German court has to agree to so that the European Central Bank (ECB) can start acting like a real central bank is simple.  A New York banking analyst summed it up: "Policy makers should empower the ECB to rescue banks, create a deposit insurance program and allow it to print money, like the Federal Reserve."

On August 1, global markets were "disappointed" when the Fed refrained from going whole hog for the third time into sovereign debt monetisation.  They were even more disappointed the next day when the ECB didn't announce QE or even cut their interest rates.  Now, the irony of the situation is that the future is to a considerable extent in the hands of a (German) supreme court.  What a lot of trouble could have been saved by sticking to the original US Constitutional power of government to COIN money.

 

.Ó 2009 – The Privateer

http://www.the-privateer.com

capt@the-privateer.com

(reproduced with permission)

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