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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 John Browne
December 11, 2012
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In perhaps one of the most foolhardy moves in recent decades, the euro currency was launched in 1999, long before the political or fiscal unification had taken hold in earnest. In retrospect, the creation of a currency in the absence of a unified state with coordinated fiscal policies seems doomed to failure. And failing it appears to be.

With each stumbling block, the invariable solution offered has been increased political integration and austerity. On November 7, German Chancellor Angela Merkel flew to London apparently to 'persuade', if not compel, Prime Minister Cameron to tone down or delay his objections to increased EU budget expenditures. She felt so confident that, for the first time, she exposed the covert plans for the European Superstate.
According to the London Telegraph, Merkel said, "Of course, the [unelected] European Commission will one day become a government, the [unelected] European Council a second chamber and the European Parliament [which currently has no effective power] will have more powers."

Clearly, a failing euro provides all the ingredients needed to knock down barriers to unity. As evidenced by massive public demonstrations in Portugal, Italy, Greece and Spain, the southern tier is desperate for rescue funds. In order to preserve bloated pensions and early retirement, many citizens would gladly accept lost sovereignty.

The failure of the euro also has provided cover for the severe debasement of the U.S. dollar. Prior to the crisis, the euro had established itself as the world's second currency. Its threatened failure has resulted in massive flights of capital into U.S. dollars. The result is that the colossal currency and debt crisis threatening the U.S. dollar and Treasury markets has been largely obscured. Today, most investors appear to be blissfully unaware that the United States faces debt problems that are worse than many countries in Europe.

However, if European politicians are successful in imposing the political unity needed to save the euro, money will flow out of the U.S. dollar. Alternatively, should the euro fail, other currencies such as a reconstituted Deutsche Mark could rise in its place. Either way, a resolution of the euro problem likely will signal a weaker U.S. dollar and higher interest rates.

Those investors who are overweight in U.S. Treasuries (or the government securities of other debtor nations) could likely suffer when either resolution is reached. Investors should prepare by acquiring assets that will stand and fall on their own merits. Being the least ugly contestant at a beauty pageant is not a strategy for long term success.