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Bond Bubble Looms
- Text size
Ambrose Evans-Pritchard
Telegraph
January 12, 2008
They are betting too that debt deflation will overwhelm the effects of near-zero interest rates across the G10 and nullify a £2,000bn fiscal blast in the US, China, Japan, Britain, and Europe.
- A d v e r t i s e m e n t
Above all, they are betting that the Federal Reserve chief Ben Bernanke will fail to print enough banknotes to inflate the US money supply, despite his avowed intent to do so.
Yields on 10-year US Treasuries have fallen to 2.4pc – a level that was unseen even in the Great Depression. This is “return-free risk”, said bond guru Jim Grant.
It is much the same story across the world. Yields are 1.3pc in Japan, 3.02pc in Germany, 3.13pc in Britain, 3.26pc in Chile, 3.47pc in France, and 5.56pc in Brazil.
“Get out of Treasuries. They are very, very expensive,” said Mohamed El-Erian, the investment chief at the Pimco, the world’s top bond fund, in a Barron’s article last week.
It is lazy to think that China, Japan, the petro-powers and the surplus states of emerging Asia will continue to amass foreign reserves, recycling their treasure into the US and European bond markets.
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January 12th, 2009 at 5:11 pm
What a sleeper! Behind the flurry of housing slump and the even bigger commercial dive to come, is the real checkmate – the teetering statue of our international debt obligation. We do have an advantage not enjoyed by the Weimar Republic – our calculators have ten or so digits and exponential notation to handle the bill for a loaf of bread with no trouble. How the devil does anyone not out of breath running from the truth say, with a straight face, or without a dozen martinis, that Obama, or, for that matter, Jesus Christ himself, can prevent an utter collapse of our economy now? The wagon is over the cliff, and we could, as optimists, discuss the virtues of our recent work on the front suspension…
Even ancient Egypt knew, without the benefit of computers, airplanes and Harvard, seven years feast – seven years famine. ‘Love your neighbor’ will surely be put to the test!
January 12th, 2009 at 5:58 pm
I hope El-erian practices what he preaches because I use PIMCO as a retirement vehicle. I sold all my stocks and trusted this man with my bonds. Do you think he is saying to pull all my money out from under him? I respect this man’s opinion, but is he a fool enough to cut his own paycheck? Hank paulson and bernanke wont do that so why is El-Erian?
January 12th, 2009 at 6:50 pm
#1 Stephen O’Neal… what do you mean by prevent? Collapse the is whole idea now! The question here is controlled, the global elite have to be careful to not lose control. That’s it.
#2 What else are you going to invest in besides some gold? I mean, exclusive consideration of the international bond market is pointless without also considering the alternatives. I think you have to hold a significant fraction of bonds and it sounds like PIMCO may be the a good way to do it.
January 12th, 2009 at 7:49 pm
Waiting for the obligitory contrarian “it’s your own fault anyway” comment from the CASUAL gay sex OBSERVER.
Wait for it . . .
Wait for it . . .
January 12th, 2009 at 8:25 pm
My brother-in-law put all his cash in bonds, hoping to protect the cash value. Or did he just tell me that to watch me do it?
Same with Gold. Everybody who looks to Gold to preserve value will do so in the long term, but meanwhile, the Central Banks can buy it all up and FREEZE THE PRICE OF IT !! Making the cash value whatever they say it is. Don’t be picking your jaw up off your chest when they tell you 2 for 1 at the Amero windo ! I am shocked that more talking heads like P. Schifft and Max “the joker” Keiser haven’t had anything to say about this. My “oracle” tells me that this is exactly what will happen; and the mines will have to close down and your mining stocks will be worthless.
Face it people: it’s the next logical step in the CASHLESS SOCIETY GRID we are hearing so much about.
January 12th, 2009 at 9:36 pm
Hey Lippywhateveryourname,
BONDs are the next bubble…just another PONZI scheme.
They can manipulate GOLD and SILVER in the COMMEX all they want…but that will be the only place they can….they can not manipulate the PHYSICAL DEMAND….and pretty soon the rest of the world will wake up and ASK for delivery of the metals via COMMEX and the COMMEX will no longer be….stuff that in your mattress.
January 12th, 2009 at 10:04 pm
I have the solution to your troubles , brothers.
q:”What can you invest in that will hold its value?”
a: GUNS! lots and lots of GUNS!
January 12th, 2009 at 11:46 pm
Gold is just as vulnerable as any flat currency I love how all the conspiracy theorist claim that these bonds can be cashed it. China and Japan cant cash these bonds in unless they take a huge loss because they would have to sell them to someone. They cant go to the us government and be like we want out money
January 13th, 2009 at 12:52 am
Profesor Feteke has shown the world that gold is being manipulated with the observation of the backwarditation of the metal, along with the positions carried by GoldmanSucks and JPMorgan. When TSHTF later this year and on into 2010-11, the facts will be clear. As to speculate on chinese financial decisions, which are made by an all-powerful bank completely under the yoke of the gov’t seems rather foolhardy. They can manipulate our needs to coincide with their goals. Look for a new business called the dollar-carry trade, allowing them to borrow at no cost while using the afore mentioned treasuries as collateral. Interesting thought? The japanese have already played with the idea of forgiving some US obligations, so they can remain the big player in the global carry trade. Insolvency has many faces.
January 13th, 2009 at 1:25 am
Rusty nail. You forgot the bullets!
All of this investment bull-s---, is, well, bull-s---!
Does anyone now not see the truth of this giant Ponzi scamm we call the monitary sysem?
Money is the chain they wrap around us and inslave us with. It is not a measure of the worth ones work or the value of one thing relitive to another, as it should be.
All has been perverted by evile men running an evile system. But have heart my brothers. Their time is coming rapidly to an end. Yhey are ceazy and driven by the Devel. They will answer for what they have done. It is us who must come through the Tribulation to come.
Peace. God Save America!
January 13th, 2009 at 4:07 am
http://www.inminds.com/boycott-us-companies.html
January 13th, 2009 at 6:40 am
Yes, #3, your point is surely well made – the intent of those in real power is well established in the open now.
The application of ‘prevent’ here is meant, with the tone of the commentary, as a sarcastic plug at the many who virtually worship the incoming president, dismissing all talk of the difficulties ahead as ‘negativity.’ I believe that our greatest problem is not so much the wickedness of the few who want to impose their will over the earth, as the willingness of the many to prefer convenience as their master, with self delusion and wishful thinking mistaken for ‘positive thinking.’ The stress now evident within the people actually makes them refractory to any discussion of further difficulties. Soon, only the verbal opiates will work for them, hypnotic phrases for masses drunk on denial, and we all know who distributes that concoction. But by the very fact that we are alive here, there surely are solutions which can define a beautiful future for mankind, albeit such medicines are not commonly found upon the earth, or easily obtained by cursory efforts. Perhaps the only real ‘positivity’ is the effort, in spite of the apparent odds, to try to find them. Or so, at least, it would seem, to those for whom hope is more devoted work than wishful thinking.
January 13th, 2009 at 8:32 am
http://www.jewsagainstzionism.com/
January 13th, 2009 at 11:01 am
Well we were told this would happen. This year will see the entire collapse of the dollar I’ll bet, and the subsequent catastrophic failure of everything. I agree with rusty nail and john henke- guns and bullets. Gold wont protect you from attacking thugs (in uniform or not) and unless you plan on dropping it on a deer, elk, moose, or carribou’s head- it ain’t going to feed you either.
January 13th, 2009 at 11:11 am
I plan on trading it for food. It worked even in the dark ages.
January 13th, 2009 at 12:42 pm
Throughout Americas history, there have been some years that simply rolled into the next without much notice or fanfare. Then there are the years that come along once in a generation the kind that mark a clean break from a troubled past, and set a new course (NWO)for our nation. Barack
Obamas speech at George Mason University near Washington on January 8, 2009.
http://ca.youtube.com/user/AlexJonesCensored
January 13th, 2009 at 2:39 pm
DON’T WATCH THE OBAMA INAUGURATION
If you have a digital converter box or digital tv, i would urge you to not watch the Obama inauguration. they are going to zap your brain to be like mush using the new technology. then they will first eat the most tasty of humans, then grind the rest up into soup to feed to the other ones that are used as energizer bunnies. basically, they are going to do some matrix type s---, and BAM, before you know it, you’ll wake up and be like Damn WTF, this totally SFD with the biggest DSLs ever. I am in some goo and machines are using me as their energy source. Damn, now I know how the cows and chickens must have felt.
January 13th, 2009 at 3:47 pm
If you’re still watching TV there is no hope for you. Within 2 minutes your brain operates solely on an emotional, that’s why the telly is called drivel. Get it? You might try some eel pie flavored brain wash to fill your belly before they come to take you away.
January 13th, 2009 at 5:44 pm
FCUK O”BAAAA”MA BIN LADEN & HIS ZIO-NEO-SCUM-BLOOD-SUCKERS !!!
* ALEX JONES …..4….. PRESIDENT *
* JASON BERMAS ..4….. VICE-PRESIDENT *
* ALAN WATT ……4…. SECRETARY-OF-STATE *
* PETER SCHIFF ….4….. TREASURY *
INFO-WARRIORS ………………………………………. IT’S REVOLUTION TIME
January 14th, 2009 at 11:14 am
Additional “stimulus” will not produce an increase in GDP. Here’s why.
http://market-ticker.org/archi.....-Spin.html
January 14th, 2009 at 12:26 pm
How can these fools bet on Benake not monetizing the debt?!?!? This is EXACTLY what he is doing and will continue to do. The Bond Bubble WILL burst.
January 16th, 2009 at 2:25 pm
The looming collapse of the bond (debt) bubble of US Treasuries is what will make Summer 2009 the “Summer from Hell”.
Without Asian slave states using their surplus dollars to buy US paper, the current game of the Federal Reserve giving money to US banks to buy government paper will collapse in on itself like all schemes do.
Ya think Maddoff had a Ponzi Scheme?
It’s nothing compared to Bernake’s!