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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

 

Condensed Articles

September 10, 2012

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QE 3 ISN’T COMING
By Graham Summers

Let me explain why QE 3 is not coming.  The Fed cannot announce QE 3 because 1) food prices are already exploding higher towards records; 2) gas prices are sharply up; 3) inflation is actually much higher than CPI claims; 4) the stock market is at or near four year highs.

If the Fed announced QE 3, or decided to monetize everything in sight, the bond market would implode.  Every time we’ve had QE, interest rates have risen.  More QE now after we’ve already had QE 1, QE lite, and QE 2 would signal that the Fed is willing to monetize everything under the sun.  The end result would be an absolute catastrophe as bonds would collapse, sending interest rates through the roof.

This in turn would take down many corporations as they’d be forced to default on their debt payments.  It would also destroy the U.S. economy as credit card defaults, mortgages, student loans, etc. would be defaulted upon.

There’s another reason QE isn’t coming.  QE sucks Treasuries out of the financial system.  Treasuries are the senior most assets against which banks make their trades.  Consider that the top four banks in the U.S. (JPMorgan, Goldman Sachs, Bank of America, and Citigroup) only have $7.12 trillion in assets backstopping over $200 trillion in derivatives.

When the Fed “monetizes” debt it is in fact pulling assets out of the system (swapping out Treasuries and other assets for cash).  With over $224 trillion in derivatives outstanding this is the last thing the Fed wants.  So QE is not coming.  That’s a fact.