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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
November 12, 2012
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We’re today in the midst of the manic financial Bubble phase. Especially here in the U.S., the markets will finance virtually anything.  There’s hardly a junk bond the market doesn’t love.  CDOs are back.  Relatively higher-yielding municipal debt induces salivation.  There are, then, no worries regarding the ability to finance Sandy recovery and rebuilding efforts.  Costs really don’t matter.  Wealth destruction is basically irrelevant.  If it’s “money” that’s needed, well, we’ve got the Bernanke Fed.  And why not just rebuild on the water’s edge and buy cheap flood insurance.  “Broken windows,” broken subways, broken transformers, broken communication hugs, and broken neighborhoods are sure to incite a borrowing and spending boom.  Dr. Bernanke’s “mopping up” strategy in action.

Yet caution is in order.  There will be more storms, some weather-related.  And there will come a post-Bubble environment and a profoundly altered backdrop.  Previous Credit excesses, suspect debt and market revulsion will make it profoundly more difficult to finance all types of spending.  Deeply entrenched structural shortcomings will have surfaced conspicuously.  And, importantly, I would expect previous consumption-based borrowing and spending excesses to restrict the system’s ability to finance needed investment and infrastructure, market confidence really matters.

The market’s love for all things debt today ensures a lot of hatred down the road.  Over-issuance and malfeasance risk destroying faith in money.  And when that day of reckoning finally arrives, “Keynesian” stimulus will have already exhausted its capacities in a futile effort to sustain an unsustainable Bubble.  And perhaps people, businesses and investors will belatedly contemplate risk and head to safer grounds.