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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 Doug Noland
September 26, 2012
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I have no reason to doubt the commonly held view that Dr. Bernanke is a decent and honorable man.  I wish he was a scoundrel – then perhaps someone would do something to rein him in.  Many of our nation’s leading economists lavish praise on Dr. Bernanke latest move, while some, amazingly, say he still hasn’t done enough.  Quite regrettably, it will require a terrible crisis for the establishment to change policy doctrine, along with economic analysis more generally.

There’s no reasonable justification for Dr. Bernanke taking such extreme risks with financial and economic stability.  And I struggle to understand how he doesn’t’ see the likely consequences.  After the cult of Greenspan, I thought we had learned a lesson from having one individual exert such power and influence.  Indeed, the Federal Reserve has learned a lesson from having one individual exert such power and influence.  Indeed, the Federal Reserve has now grossly overstepped its role.  Never was it anticipated that the Fed would resort to massive purchases of Treasury bonds and mortgage-backed securities in a non-crisis environment.  Never was it contemplated that our central bank would resort to pre-committing to massive ongoing money printing in the name of reducing the unemployment rate.

I’ll state what others hesitate to admit:  this week our central bank took a giant leap from radical to virtual rogue central banking.  If Bernanke’s plan was to leapfrog the audacious Draghi ECB, our sinking currency – even against the euro – is confirmation of his success.  If his goal was to provide markets a Benjamin Strong-like “coup de whiskey” – he should instead fear the dangerous instability central bankers have wrought on global markets and economies.  And I am all too familiar to the adversities of being a naysayer in the midst of Bubble mania.  I’ve read about it, I’ve lived it and I’m OK with it – and actually am motivated by it.  I highlighted last week the ominous divergence between world fundamentals and the markets.  And this week, well, global markets enjoyed just a spectacular time of it.  Away from the Bloomberg screen , it sure seemed like a less than comforting week for the world at large.

As an analyst of Bubbles, I often quip that they tend to “go to incredible extremes – and then double.”  Timing the bursting of a Bubble is a very challenging – if not nearly impossible – proposition.  Yet this in no way should cloud the harsh reality that the longer a Bubble is accommodated the more devastating t6he unavoidable consequences.  It is, as well, the nature of speculative manias for things to turn crazy in the destabilizing terminal-phase.  The past few weeks – with more than ample Bubble accommodation and craziness – really make me fear the eventual day of reckoning.