Investment Rarities Incorporated
History |  Q & A  |  Endorsements  |  Portfolios  | Flatware | Gold Coins  |  Silver Coins  |  Contact |  Home

Products

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.

..Read More »

The Best of Jim Cook Archive

 
Commentary Of The Month
August 19, 2014
archive print

MINSKY MOMENT

By Erico Tavares

Alarm bells in the European banking system have been ringing for quite a while but nobody seems to be listening. Private sector lending is dropping sharply in the Eurozone. Bad loans are rising. European banks have loaned in excess of $3 trillion to emerging markets.

Over two decades ago, economist Hyman Minsky described in his “Financial Instability Hypothesis” the interplay between the financial markets and the wider economy, which according to him is at the heart of the business cycle in a capitalist economy with a sophisticated financial system. During the good times increases in asset values often lead to investment and speculative excesses financed through debt. At some point the resulting cash flows can no longer cover those debts, impairing loans and prompting banks to tighten credit availability, even to companies with good credit ratings. This in turn leads to a contraction in asset values and economic activity in general.

And where are we now in the Eurozone? We have already seen the general increase in asset values. And now we can also check bad debts rising and private sector credit contracting. If Minsky was right, what follows is not pretty. Whether governments and central banks have the power to push back or avoid that fateful moment remains to be seen. But equity markets in Europe are already smelling a rat.