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Kyle bass rocks.
I love that guy.
Has anyone ever lived through a complete and total worldwide bond market collapse? Please tell me what it's like, all the jucy details, I really want to know.
This much shit hitting the fan at one time, will result in WW3. The question is just when and where.
Bass, give us a book, a newsletter or something more then what was offered in Boomerang - which was easily the best part of the book!
to michael and interested others: the bond market from about the early beatles to the clash (combat rock) went from roughly current (last year) yields to above 15%. some credit risk but most adverse interest rate movement. hands down the worst bear market in dollar or pound bonds in history, especially in real terms.
however the template that seems more appropriate, imo, is the bond market collapse in 1930-2: http://thehousingtimebomb.blogspot.com/2009/05/great-bond-crash-of-1930s... a bit simplistic but it's a chart. that time was more credit quality and less pure interest rate movement.
O.T. and obviously a highjack...
Just out of concerned curiosity, has anyone here actually tested their gold and silver for purity on many occasions to know you have a valid source?
Ultrasonic is way easier.
seek, please expound... Especially for coins (Gold Eagles).
Ultrasonic testers measure the speed of sound in the material they are testing. There are two approaches, one is to use a UTG (ultrasonic thickness gauge, used in industry) to measure the thickness of the coin when it's set for gold; if the coin is tampered with the thickness will be off. UTGs run about $600-$900. UTGs are better for larger gold items (bars and 1 oz coins), and will detected gold-plated tungsten or lead-filled silver bars easily as the thickness indicated will be way off from what's measured with calipers. FYI, PAMP uses ultrasonic testing for quality control and Goldmoney uses it for acceptance testing.
Presumably the pure ultrasonic gold testers work as well, but I've not gotten my hands on one yet (though I recently ordered a Auracle to test out.) These rely purely on the speed of sound measured, and read out either "not gold" or the karat content. I'd stay away from the cheapies (I think Mizar is the cheap one, but reviews say it's a bit too complicated to use easily.) As a plus, it works on jewelry too. I'll let everyone know how the Auracle works out.
In any case, it's very hard to spoof ultrasonic testers because the material properties of the "fake" metals are so different. Tungsten and lead's speed of sound is way different than gold, so it really sticks out when it's gauged with one of these devices.
I would imagine that it will be cost prohibitive to manufacture fake 1 oz coins with tungsten or other materials. Especially maples or eagles.
Bearing in mind that you can not do that en masse, or too many times. Nonetheless, I love to have one of these testers.
Tungsten can easily be identified using a magnet.I would be worried only about gold plated platinum coins in the future.
Apologies for OT thread hijacking, but if ZH is to continue to be able to spread the word, we need to prevent this:
Please spread the word!
dewd, that blog is awesome. is it urs?
@Michael, far too many of the PMs now have never even seen a good bear market in bonds. Like Jeff alluded, the last real bond bear was the 87 setup for the stock crash when the long bond dropped 30% in ~6 months. I was on the sell side that year. We came in, got any clients we could talk into a short position short, and then went to drink lunch until 5 when we went back to the office to pick up our briefcases. That event was more internationally flavored as the Japanese were heralded for taking down most of the Jun 86 long bond refunding at a then rally low 7.16%. The buy and hold among them didn't get above water for seven years.
Also, as Jeff mentions, the 30's event was more credit than interest rate driven. Uncle Warren was born that year, so I doubt there are too many traders left who remember how that felt. It didn't attract as much attention because 1) most people don't understand bonds, 2) the stock jockeys are the ones who jump out of windows and they did that they year before and 3) bond traders prefer pistols to windows. Jeff, don't discount the 30's event as credit driven too greatly; the train wreck we are watching is obviously credit driven.
Love may be too strong a word for your analysis, but I have extreme liking for it.
Thanks for the info Jeff.
I love it when my plans come together.
The self destruct sequence for the international banking cartel has been initiated and there is no fail safe mechanism in place.
Complete and total destruction of the cartel is 100% guaranteed. Thank You God.
People should really and truly try to understand the laws of exponential functions.
I suggest you watch this whole series;
The Most IMPORTANT Video You'll Ever See (part 1 of 8)
Thank God China has enough spare housing already built in their country to last them a decade, even if they don't build another single house or condo till then.
That should keep them off our backs for a while cause they'll still be pretty comfortable for a while. They even got the worlds largest dam in the world out of the deal, The Three Gorges Dam.
This is great, thanks for posting.
This guy is way wrong. His reasoning for Germany to not going all in is because "it would not benefit Germany in the long run." That is terrible reasoning. When has the long run made a difference to these politicians and bankers? The question he should be asking is "if Germany goes all in, will it benefit the politicians and bankers in the SHORT RUN?" And the answer is yes, because the malinvestments will be kept hidden.
And the real consequence to Germany opting out is the collapse of the entire banking system of the western world..so there's going to be no pressure from anybody else / sarc.
Just in case anyone doesn't understand what I'm saying, I mean if Germany doesn't bail out the Euro, your money doesn't come out of the ATM, you can't get your cash at the bank, your money in the SLV will be unredeemable, you're pension is gone, you're mortgage is no longer, your student loans are taken care of, social security doesn't come, food stamps don't work, your government job can't pay you, etc.,...
Don't be silly Mr. Silver. You just print your own money. Lira, drachma, escudo, peseta etc. And Germany will go back to the Mark. The political opposition loves to see Merkel on a stake.
France will be the first bitch to reintroduce the Franc as the French banks own all those bonds that will collapse.
Excuse me sir but Dick Bove said I would be just fine.
Couldn't agree more with your logic! You can default to what would be the easiest way out and thats what the political clowns will do especially with the banksters blowing sweet nothings in their ears....It wll work for maybe six months....but that is better than the alternative to the spineless crowd in power....
The short term and the long term have melded.
It's that impending.
Even worse, it will be mostly staged. Large scale depopulation... it's in the cards.
Shh...don't ruin the (morbidly) exciting part.
The rest is just...
History is the set of lies agreed upon. - Napoleon Bonaparte
?? Looks like Celente got caught in the MF mess.
It'll start with someone asking for gold as collateral for loans. All of a sudden it won't just be tradition anymore
Hasn't Germany already been asked that?
In an honorable society, that would be the way to do it. But in this one, what is the point of bonds? Just print the f'ing money and there you go.
I think this is the elephant in the room that doesn't get enough notice. Lesser things have led to massively destructive wars in the past.
Judging from the troop movements and saber rattling, Iran.
Here's what's likely:
- Israel bombs Iran to take out nuclear facilities.
- Iran mobilizes and calls all their Arab neighbors to help them.
- US jumps in on the side of Israel, maybe even gets NATO to join.
- Russia jumps in on the side of Iran.
- A conventional 'hot war' begins. Maybe even just a proxy war. No nukes, but lots of killing on both sides.
- China sits in the back eating popcorn and selling weapons to both sides, happily watching its rivals kill eachother off and spend all their money in the process. They would, intelligently, only accept gold or Yuan as payment.
- China emerges as the sole remaining superpower in the world, similar to how the US was after WWII.
No US land war in Iran. You can rest assured that will not happen. Much of the rest of your scenario is certainly possible.
China is defaulting on it's own debt as we post, internally.
Oh, and Obama moving in to help Israel, not going to happen.
Of course if they elect some dufus repub to the office then the senerio may get a bit of a nod.
China isn't in good enough shape. It can't manage as an economy that can't export.
Read, China Finanacial Markets link at top left. Then "some predictions for the rest of the decade".
China has no internal market.
A U.S. president not "move in to help" Israel? Wha?
You saying the Commander in Chief. B. Hussein, will commit US troops and materiel in a large-scale shootin' war
a) to help the one country on earth he despises more than the US b) by bombing and killing his beloved moslem warriors on a grand scale - none of this "2 or 3 guys a week via predator" jive c) with an election coming up?
I dawn theeenk so, Luthy. Sure, dipshit-in-chief Barry takes his orders from his bankster puppetmasters just like all the assholes in D.C. do, but even as scummy as he is, there are just some Rubicons he ain't gonna cross. Your scenario has him crossing *3* of them. Not likely.
Obama binLaden will do as he is told.
Nothing more...nothing less!
You get it.
Iran might call their Arab neighbors to join them. But you have to remember that i) Iranians aren't Arabs (they're Persians), and most of the Arab states are run by despots who rely on the US for their power, and iii) Iran are Shia, so the Sunni states won't give a damn what happens to them. Syria, Iraq, Hezbollah, Hamas... yes, they might heed the call, but the other Arab states will either stay neutral or help the US, covertly or even overtly if they think the blow to Iran will be sufficiently crushing that Iran's ability to retaliate will be deferred for a generation. This is why, if there is an attack on Iran, I think Israel and the US will go 'all in' - they can't afford to do anything less, Iran's retaliation would be too costly.
Russia would never openly go to war with the US. It is too militarily weak. Supply lots of high-end anti-ship and anti-aircraft missiles to Iran, and achieve a strategic rebalancing between itself and the US, as well as some tasty revenge for the US supplying the stinger missiles that drove the Soviets out of Afghanistan? Now, that I can believe.
So Michael, your'e big picture thinking about the end game of the global fiat credit ponzi. Obviously fiat money is a confidence game. Legacy thinking of the hard money crowd has always had the end game market discipline mechanism as some populist notion of individual's sound money acceptance. But the individual is no longer the vortex of finance. In our modern system of digitized money with all it's convenient features and central government hegemonic sponsorship it is difficult to grasp the seminal event that tips the balance of the confidence game away from digitized fiat. Old habits are hard to break and the sheeple appear disengaged from monetary reality.
Recent history has afforded us strong clues of what a modern collapse of systemic confidence will look like. The institutional collateral margin call is a glaring example of system vulnerability. How easy we forget LTCM, Bear Stearns, Lehman and now MF Global. Yet, in the fiat ponzi world there appears to be no limit to sovereign collateral creation and liquidity injection.
Wether it is securitization programs, repo finance, interest rate swaps, special purpose vehicles or credit default swaps, this financialization of our economy is all just more shadow banking leverage. This on and off-balance sheet leverage must all be funded with some assigned collateral attached.
The shadow banking system lives and dies on collateral values. And the current global ponzi requires almost no buffer for sovereign assets. The shadow banking system has very little buffer. There is little or no equity buffer in repo haircuts, overcollateralization of securitizations, or collateral calls in the swaps markets. The only mechanisms sustaining institutional systemic confidence are central bank liquidity and the collateral call. And the collateral call has increasingly been met by limitless sovereign issuance.
So we are left with institutional system confidence entirely dependent on unlimited growth of sovereign collateral. But also, we are left with the assumption that sovereign collateral will not deteriorate in value. Certainly, the tax authority and the monetization ability of sovereigns appears limitless when compared to the cash flow support of collateral in the private economy-yet, we are now seeing the limits of sovereign collateral growth.
For indeed, there are limits to the growth of sovereign collateral. Having witnessed the replacement of the private sector credit bubble with a public sector credit bubble, the sovereign periphery crises warns of the end of the sovereign credit bubble. As weaker sovereign guarantees are replaced by the guarantees of reserve currencies, the relative value of the most debased reserve currencies decline versus oil, land or precious metals. This is not the type of inflation normally fought by central bankers because the crowded out real economy only allows for real appreciation in precious metals.
Ironically, the very shadow banking system that benefits those operators of the growth of financialization like global investment banks; is a system that grows dependent upon precious metal collateral to survive. Precious metals become the last collateral standing as the only collateral that cannot be debased. While many of these operators in the global fiat ponzi have found comfort in their ability to extort seemingly endless sovereign collateral to further their schemes, it's debasement will diminish it's relative use for collateral calls.
And so, it will not be the man in the street that demands sound money. It will be the institutional counter-party that ironically destroys his own fiat game as he demands the last collateral standing.
It means that we will have to have a war in order to keep our respected countries from splintering from no money, no promises kept and no one going to jail.
I for one would rather go to prison than fight for the bankers
Let's hope the soldiers feel that way too. Talk about societal upheaval if they start another war in the middle east for no reason. The American people simply won't put up with it in my opinion. I know I won't.
The longest war in American history is the current war in Afghanistan. 95% of Americans do not know the reason for the war. American people are "putting up with it" just fine.
Unfortunately, you appear to be correct. Eventually, the sheep will get the idea, and revolt, but it may take more than killing a few (hundred thousand) 'ragheads' off-stage to bring it about. Sadly.
Fantastic Writeup. Concise and clear and reasonable.
I agree with Mr. D. Jones re your really nice & concise analysis of the lack of real collateral to support our paper heavy (and electrons at the bank heavy) financial system.
Gold at FOFOA's $55,000 would be very nice collateral if it comes to that.
Probably why in the last minutes of the hardtalk interview (not posted yet) Kyle advises people to buy gold and guns (should have included grub).
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