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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
August 6, 2014
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BUBBLE TROUBLE

By Mark J. Lundeen

Though the public no longer celebrates each new all-time high in the Dow Jones as they did before October 2007, the public’s trust in the best and the brightest managing the Federal Reserve is as strong today as it was in 2007.

<“One reason that monster declines are less likely now is that investors recognized something that they didn’t in 1987: The Federal Reserve is on their side.” – Andrew Bary, Barron’s 15 October 2007 issue

Exactly one year later with the Dow Jones down 40%, I’m sure Mr. Bary was having second thoughts about the Federal Reserve’s ability to prevent massive market declines.  Today, for those who still trust in the academic brilliance that controls “economic growth” and “market stability” I suspect the coming year will once again test their faith in allowing people smarter than themselves to control financial markets.  As for myself, I’m still waiting for the Dow Jones to retest the March 2009 53% decline, before it ultimately goes on to test the 89% decline of July 1932. 

Expecting the Dow Jones to decline by more than 40% from its current all-time high for the tenth time since 1885 may sound extreme to most people, but actually it’s not if we understand how inflated financial asset valuations are today.  Mr. Bear provides an important service to our economy – financial hygiene.  After a prolonged period of inflationary “economic growth” during which the financial markets have seen a substantial advance in valuations, there’s a lot of overpriced garbage assets, such as underwater mortgages and overpriced junk bonds littering the asset side of society’s balance sheets.  

When this bubble ultimately begins to deflate in earnest, as it must, it will be game over for the “best and the brightest” who now manage the markets and economy.  And in the end, after all the misery they brought into everyone’s lives, you can be sure that we won’t even get an apology from these arrogant people.    Under current circumstances, prudence demands that positions in the financial market be reduced and transferred into assets with no counterparty risk, like gold and silver.