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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
September 3, 2008
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Over the past 11 months, the US government has borrowed nearly $US 700 Billion. In the two months since the beginning of July, they have borrowed well in excess of $US 200 Billion of that. They have also nationalised in all but name the entire US mortgage industry in the form of Fannie and Freddie. The most conservative REAL estimates of what that will eventually cost US taxpayers now exceeds $US 1 TRILLION. A complete takeover, which is a distinct possibility, would cost in the region of $US 5.3 TRILLION. In fact, the possibility that the Treasury will be left holding the entire "bag" has grown substantially over recent weeks as reports proliferate that Asian investors in general and the Chinese in particular are now actually selling down their huge holdings of US "Agency" debt paper.

The Real Outlook:

The Federal Deposit Insurance Corporation (FDIC) is planning to increase its staff and add five floors to its office space in Dallas, Texas. Why Dallas? Because that is where most of the FDIC employees who handle US bank failures work. By the end of this year, the FDIC plans to increase its Dallas employees by about 140 percent. The FDIC's estimate of problem banks was recently raised from 90 to 117. Unofficial (read realistic) assessments are already way over the 300 mark. In the almost eight years since October 2000, the FDIC has closed 36 US banks. Ten, and counting, is now the score for 2008.

Between now and the end of the year, "long-term" debt paper issued by the large US "money center" banks will be reaching maturity in an ever increasing surge. There were $US 27 Billion of these bonds reaching maturity in August. The total for December will be triple that at $US 86 Billion. The total over the last five months of this year is $US 208 Billion. All of this will have to be rolled over at premiums which are presently at highs against equivalent maturity Treasury paper not seen in decades. On top of that, almost $US 800 Billion in "floating rate notes" issued by these same financial institutions will come up for "renewal" by the end of 2009. Again, the premiums to roll them over will be crippling.

To show how hard it is going to be to roll over this paper, and how big an impact it will have on the banks' ability to go on lending, sales of "high-yield" bonds across the US are plummeting. The total sold in August - by one "speculative grade" issuer (Texas Instruments) - was $US 449 million (yes "million"). Compare that to what the big New York banks will have to sell by the end of next year and you can see that not only are the "summer doldrums" over but the "eye of the storm" will soon have passed by too.

Ó 2008 – The Privateer

(reproduced with permission)


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