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Take Note: 2008 Was the Warm Up
The 2008 crash was a warm up.
Many investors think that we could never have a crash again. The 2008 melt-down was a one in 100 years episode, they think.
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… which as it stands is north of $100 trillion… although if you include the derivatives that trade based on bonds it’s more like $500 TRILLION.
The Fed likes to act as though it’s concerned about stocks… but the real story is in bonds. Indeed, when you look at the Fed’s actions from the perspective of the bond market, everything suddenly becomes clear.
Bonds are debt. A bond is created when a borrower borrows money from a lender. And at the top of the financial food chain are sovereign bonds like US Treasuries.
These bonds are created when someone lends the US money. Why would they do this? Because the US SPENDS more money than it TAKES IN via taxes. So it issues debt to cover its extra expenses.
This cycle continued for over 30 years until today, when the US has over $11 TRILLION in size. Because we never actually pay our debt off (or rarely do), what we do is ROLL OVER debt when it comes due, so that investors continue to receive interest payments but never actually get the money back… because the US Government doesn’t have it… because it’s still spending more money than it takes in via taxes.
This is why the Fed cut interest rates to zero and will likely do everything in its power to keep them low: even a small raise in interest rates makes all of this debt MORE expensive to pay off.
This is also why the Fed had the regulators drop accounting standards for derivatives… because if banks and financial firms had to accurately value their hundreds of trillions of derivatives trades based on bonds, investors would be terrified at the amount of leverage and the margin calls would begin.
The bond bubble is also why the Fed started its QE programs. Because by buying bonds, the Fed put a floor under Treasuries… which made investors less likely to dump bonds despite bonds offering such low rates of return.
This is also why the Fed is terrified of deflation. Deflation makes future debt payments more expensive. So the Fed prefers inflation because it means the dollars used to pay off debt down the road will be cheaper than Dollars today.
Again, when you look at the Fed’s actions through the perspective of the bond market… everything becomes clear.
The only problem is that by doing all of this, the Fed has only made the bond market even BIGGER. In 2008, the global bond market was $82 trillion. Today it’s over $100 trillion. And the derivatives market, of which 80%+ of all trades are based on interest rates (Treasury yields), is at $700 TRILLION.
The REAL Crisis will be when the bond bubble bursts. When this happens, it will be clear that real standards of living have been falling since the ‘70s and that sovereign nations have been papering over this through social spending and entitlements (a whopping 47% of US households receive Government benefits in some form).
Imagine what will happen to the markets when the Western welfare states finally go broke? It will make 2008 look like a picnic.
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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Western governments cannot go broke - as long as they can print fiat and type zeroes into a computer. The challenge will come when the world loses faith - and all that liquidity created by Central Banks - comes out on the attack side.
Nothing like a Kiki economy! Hot air and bullshit are way overpriced and numbers are traitors as are little girls who don't suck bill clintons dick to stimulate productivity of slaves held in a land if pretend because truths have been made too evil to be spoken by those who need to learn to play dead while living under the leach government based on hypocrisy for judgement day. Kiki do love her witch hunts as equality. She always has since she was a little girl. But wearing ones evil intentions on ones sleeves isn't near as fun as sacrificing innocense in the process of fools to blame as victims of bad policies.
If u don't like Hillary stalking u to cover her tracks then u must be a traitor of america. Since not liking Hillary wasn't enough to appease her vicious greed. I'm sure she wants to be president only to get off the plantation she created to save us from I being the slaves she needs to look good.
Kiki (Moor) McLean would be knowhere without bullshit smiling into the face of deciet and her blackmail economy with witch hunt threats posing as equality!
When the elite control the entire board it all becomes academic. The reality is far worse than a crash. We are on a slow slide. It will continue over years, maybe decades, even centuries. It is in effect the parable of the Talents. Humanity is represented by the Talents. If the creative power and imagination are not invested wisely then humanity cannot flourish. It will stagnate like a weed choked field and consume its resources in pursuit of survival through looting. It's already begun.
It's where we were when the agricultural revolution petered out. Wealthy landowners and peasants. Neither really prospered. There was a maintenance of the status quo in which no one prospered. It was even thought that population reduction would be necessary in order to feed everyone. Something similar will be considered.
The reliance on state is identical to the reliance on the landowner. It becomes a self perpetuating malaise. It's like a depression in which everyone becomes busy but without any improvements in living standards.
The boom busts are identical to strong harvests and then crop failures. Once the crop failures have eradicated the stored grain-as is happening today with capital then forward propulsion is halted indefinitely. It becomes a hiatus of survivalism and a new dark age with all those familiar witch hunts and blaming......we can see that already.
It becomes increasingly more difficult to exit the cycle, which leads to a collapse in state control. The looser the control becomes, the greater is the possibility of breathing space and innovation. Just as we exited the agricultural age we will exit the Industrial Age. It will be a new revolution. Then the cycle will begin again as a few elite try to grab the power for themselves.
We could exit this constant cycle if we wished, but we have to do so consciously.
Just as the Jews in Financial part of government like Alan Greenspan, Ben Bernanke, Tim Geithner, and J Yell, Jack Lew, Peter Orszag, and all the rest of them opened up their lap top while relaxing by the pool, and credited 10s of trillions (we will never be told even the approximate amount let alone how many actually) to the checking accounts of Ace Greenberg at AIG, and Bank of America, et fucking al, they will simply do the same thing when the crisis is precipitous.
No worries.
"Imagine what will happen to the markets when the Western welfare states finally go broke?"
Uh, I'll take "They'll change the rules again" for $200, Alex.
The ability, the power, to make rules for everyone, punishable by heavy fines and prison, proves that when the time is critical (critical meaning when certain people in government fuck it up so bad and the government is puts itself in charge of suppoesdly fixing things which generally sound great short term but cause the suffering for the future citizens many times greater.
But as long as they are going to do that then those alive now begin to take advantage by hook and increasingly crook, and the problem worsens for those playing the game ethically.
Anarchy doesn't have a rule book.....
anarchists don't mind rules, they just dont want rulers
Anarchy and anarchist are not the same thing.....
Propping up the government so they can spend like there's no tomorrow while suppressing market discovery and true value. It's rainbows and unicorn pee forever and that giant iceberg is merely an optical illusion.....