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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

 
Commentary Of The Month
March 3, 2016
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THE BURSTING OF THE BOND BUBBLE HAS BEGUN

By Graham Summers

The bursting of the bond bubble has begun. This is the primary concern for central banks. CNBC and other financial media focus on stocks because the asset class is more volatile and so makes for better content, but the foundation of the financial system is bonds. And bonds are the focus for central banks. In the simplest of terms, the world is awash in too much debt. The bond bubble was close to $80 trillion in size going into 2008. The central banks had a choice to either let the defaults hit and clear out the garbage debt from the financial system or attempt to inflate the debts away.

They chose to attempt to inflate the debts away. All of their policies were aimed at containing debt deflation, the process through which debt becomes less and less serviceable leading to eventual insolvency and default. Globally the bond bubble has grown by more than $20 trillion since 2008. Today it is north of $100 trillion, with an additional $555+ trillion in derivatives trading based on it. Yes, $555 trillion, more than seven times global GDP, and more than 10 times the Credit Default Swap market ($50 trillion), which triggered the 2008 Crisis. By not allowing the bad debts to clear in 2008, the central banks conditioned everyone from consumers to corporations to believe that business cycles could be contained and that the bond bubble/ bull market had not ended. As a result of this, trillions of dollars of capital have been misallocated. The evidence is everywhere you look. Corporations around the globe have been issuing record amounts of debt, much of it in U.S. dollars. Few of these bonds were high quality. Indeed, globally over 50% of all corporate bonds are now “junk.”