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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
November 5 , 2012
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The Last Four Years:

Barring a (by no means impossible) catastrophe, the inauguration of the new President in late January 2013 will not take place in the same atmosphere of market meltdown as was the case in January 2009. It will, however, take place in a MUCH worse fiscal and financial situation than was the case four years earlier.

Between March 31 and September 30, 2007 - the second half of that fiscal year - official US Treasury funded debt increased by $US 159 Billion. In the first half of fiscal 2008, the debt rose by $429 Billion. In the second half of fiscal 2008, it rose by $US 589 Billion. Then came the peak to date - the period between September 30, 2008 and March 31, 2009. In November 2008, Mr Obama was elected president. In December 2008, the Fed cut its rates to zero. In January 2009, Mr Obama was inaugurated. In the second week of March 2009, US stock markets bottomed. Just over a week later, the Fed inaugurated the first of its forays into QE. Over those six months - the first half of fiscal 2009 - official funded Treasury debt grew by $US 1.1 TRILLION. In the second half of that fiscal year, it grew by a "mere" $US 785 Billion.

The amount of new funded debt added to the US Treasury's "credit card" roughly doubled in every year between fiscal 2007 and fiscal 2009. It went from just over $US 500 Billion in 2007 to just over $US 1 TRILLION in 2008 to just under $US 2 TRILLION in 2009. Obviously, this trajectory could not be maintained. If it HAD been maintained, fiscal 2012 would have seen a $US 16 TRILLION addition to Treasury funded debt and fiscal 2013 - now just completing its second month - would see the debt rise by $US 32 TRILLION. Officially, that has not happened although funded debt has been increasing by $US 1 TRILLION plus every year. Unofficially, Professor Laurence Kolitkoff made use of the Congressional Budget Office's Alternative Fiscal Scenario to calculate the real 2012 deficit increase with the inclusion of the unfunded debt. He came up with a figure of $US 11 TRILLION - and has never been officially refuted.

The NEXT Four Years:

Of the four men (two for president and two for vice- president) who are up for election on November 6, only one has ever actually presented a concrete plan to address US government budget deficits. This is Mr Paul Ryan, Mr Romney's running mate. Mr Ryan's plan even has a budget surplus envisaged - in 28 years time from the point it is begun. Otherwise, we have the joke of various schemes to cut anywhere between 2 and 4 $US TRILLION off the deficits over the next DECADE. We even had some "laws" passed in August 2011 which were trumpeted as being the first step down this road to fiscal responsibility. These laws were to come into effect at the end of this year.

As we approach the presidential election, these 2011 laws are causing a lot of angst both on US and global markets and inside the US economy. Even the financial markets, which have had four years to become used to the idea that the government will do ANYTHING necessary to keep them functioning happily, are starting to buckle under the pressure. The economy is being held up by pious platitudes and doctored numbers. The market consensus is that "rules" (or in this case laws) are made to be broken and the faster these "rules" are broken (or postponed) - the better. The international financial agencies are unanimous in their dire warnings that the US government do what they promised to do eighteen months ago at their great peril. The issue - which has been dubbed as the "fiscal cliff" - has not been mentioned by the candidates. The phrase was not uttered by either candidate during the three presidential debates. Nor did it pass the lips of either vice-presidential candidate during their recent get- together. The closest that anyone has come was the mention of a "sequester". The "sequester" refers to the spending cuts that Congress enshrined into law in August 2011. During the third debate, Mr. Romney criticized half of the sequester, the cuts to defence spending. Mr. Obama declared that the sequester "will not happen".

By the time the new President is inaugurated in late January next year, US financial markets will have been running on the financial fumes of unprecedented central bank "accommodation" and government borrowing for almost four years. Over those same four years, the "exit strategies" which were at the top of the Fed's public agenda as recently as a year ago have utterly vanished. This is the situation which the markets will have to deal with over the next four years. Their chances of doing so unscathed are non existent.


.Ó 2009 – The Privateer

(reproduced with permission)


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