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The Real Crisis Will Be North of $100 Trillion
The 2008 crash was a warm up.
Many investors think that the markets could never have a crash again. They think that the 2008 meltdown was a one in 100 years crisis.
They are wrong.
The 2008 Crisis was a stock and investment bank crisis. But it was not THE Crisis. THE Crisis concerns the biggest bubble in financial history: the epic Bond bubble…
If you need proof that bonds are in a truly epic bubble… one that will implode the financial system when it breaks… consider that half of ALL government bonds in the world currently yield less than 1%.
What is clear is that the world has become addicted to central bank stimulus. Bank of America said 56pc of global GDP is currently supported by zero interest rates, and so are 83pc of the free-floating equities on global bourses. Half of all government bonds in the world yield less that 1pc. Roughly 1.4bn people are experiencing negative rates in one form or another.
These are astonishing figures, evidence of a 1930s-style depression, albeit one that is still contained. Nobody knows what will happen as the Fed tries to break out of the stimulus trap, including Fed officials themselves.
http://www.telegraph.co.uk/finance/oilprices/11283875/Bank-of-America-sees-50-oil-as-Opec-dies.html
Why are yields this low?
Because, by holdings interest rates at zero or even negative, global Central Banks have forced investors to pile into bonds in search of yield (stocks are too risky for many of the largest pools of capital).
When investors pile into bonds, bonds rally, which drives yields lower. This has been reinforced by the fact that Central Banks have been engaging in or promising QE (buying Government debt) consistently for the last five years. So investors have been front-running the Fed and other Central Banks.
After all… if you know a Central Bank will buy your bond at a price that is higher from where the market prices it… you effectively know there is a “bigger fool” waiting in the wings.
The end result?
The bond bubble today is over $100 trillion. When you include the derivatives that trade based on bonds it’s more like $500 TRILLION. And it’s growing by trillions of dollars every month (the US issued $1 trillion in new debt in the last 8 weeks alone).
When this thing bursts it’s going to be an absolute disaster as it will involve entire countries going bust.
If you’ve yet to take action to prepare for the second round of the financial crisis, we offer a FREE investment report Financial Crisis "Round Two" Survival Guide that outlines easy, simple to follow strategies you can use to not only protect your portfolio from a market downturn, but actually produce profits.
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Best Regards
Phoenix Capital Research
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If/when it collapses all lot of money wll disappear but the people that wll feel it have retirement funds. Calpers and other really big funds will implode and then we'll get to see some REAL riots.
A big Mac here is $4.19. But big kings are 2/$5. How much will Argentina beef be after the debt bubble bursts? Long cattle futures
Many of us think the bond market is a bubble, if so when it pops it will leave a massive path of destruction in its wake. Many people have been caught off guard by the collapse of oil prices and the havoc they are causing in many markets.
Even more of a concern sould be a popping of the bond market bubble. This is a disaster waiting to happen with the general public totally unaware of the ramifications it will have. The article below delves into just how big a problem it could cause.
http://brucewilds.blogspot.com/2014/12/bond-market-bubble-has-ugly.html
Hurry up already. Merika's chickens need to come home to roost.
It is a physical law that order becomes chaos. Humans never believe hard science, just folklore and the best lies money can buy.
...I'm certainly glad I'm not on the hook for any of that. Whew!
For those paying attention, they already know that the "crisis" has already been ignited with the dollar run up.
Just like in 1929, the connected and "Chosen" ones are quietly using the prearranged exits into euros and shekels. When the coast is clear it will be "look out below."
An American, not US subject.
"The ship's sinking is only a crisis if you're on the ship."
The damage dropping oil prices are feeding into the economy sure isn't helping and is adding a great deal of risk. The more and more I study derivatives it now appears the main goal of QE may have been to hold up the underlying value of assets that feed into and support the massive derivative market more than help the economy.
QE has up to now stopped an implosion of derivatives and the resulting contagion and shock that would have spread throughout the financial system. The total derivatives market includes hundreds of trillions of dollars in non-reported agreements and private contracts. Everyone paying attention knows that the size of the derivatives market is 20 times larger than the global economy. The article below explores some of its ins and outs of derivatives and why they could collapse the economic system.
http://brucewilds.blogspot.com/2014/03/derivatives-house-of-cards.html