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Guess What Happened The Last Time Bond Yields Crashed Like This?…

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Question Cube - Public DomainIf a major financial crisis was approaching, we would expect to see the “smart money” getting out of stocks and pouring into government bonds that are traditionally considered to be “safe” during a crisis.  This is called a “flight to safety” or a “flight to quality“.  In the past, when there has been a “flight to quality” we have seen yields for German government bonds and U.S. government bonds go way down.  As you will see below, this is exactly what we witnessed during the financial crisis of 2008.  U.S. and German bond yields plummeted as money from the stock market was dumped into bonds at a staggering pace.  Well, it is starting to happen again.  In recent months we have seen U.S. and German bond yields begin to plummet as the “smart money” moves out of the stock market.  So is this another sign that we are on the precipice of a significant financial panic?

Back in 2008, German bonds actually began to plunge well before U.S. bonds did.  Does that mean that European money is “smarter” than U.S. money?  That would certainly be a very interesting theory to explore.  As you can see from the chart below, the yield on 10 year German bonds started to fall significantly during the summer of 2008 – several months before the stock market crash in the fall…

German Bond Yields 2007 And 2008

So what are German bonds doing today?

As you can see from this next chart, the yield on 10 year German bonds has been steadily falling since the beginning of last year.  At this point, the yield on 10 year German bonds is just barely above zero…

German Bond Yields 2013 To Today

And amazingly, most German bonds that have a maturity of less than 10 years actually have a negative yield right now.  That means that investors are going to get back less money than they invest.  This is how bizarre the financial markets have become.  The “smart money” is so concerned about the “safety” of their investments that they are actually willing to accept negative yields.  I don’t know why anyone would ever put their money into investments that have a negative yield, but it is actually happening.  The following comes from Yahoo

The world’s scarcest resource right now is safe yield, and the shortage is getting more extreme. Most German government bonds that mature in less than 10 years now have negative yields – part of some $2 trillion worth of paper with yields below zero.

This is what happens when the European Central Bank begins a trillion-euro bond-buying binge with rates already miniscule.

Yesterday, ECB boss Mario Draghi – unfazed by the protest stunt at his press conference – reaffirmed his plan to keep bidding for paper that yields more than -0.2% – that’s minus 0.2%.

Yes, the ECB is driving a lot of this, but it is still truly bizarre.

So what about the United States?

Well, first let’s take a look at what happened back in 2008.  In the chart below, you can see the “flight to safety” that took place in late 2008 as investors started to panic…

US Bond Yield 2007 And 2008

And we have started to witness a similar thing happen in recent months.  The yield on 10 year U.S. Treasuries has plummeted as investors have looked for safety.  This is exactly the kind of chart that we would expect to see if a financial crisis was brewing…

US 10 Year Yield 2014 And 2015

What makes all of this far more compelling is the fact that so many other patterns that we have witnessed just prior to past financial crashes are happening once again.

Yes, there are other potential explanations for why bond yields have been going down.  But when you add this to all of the other pieces of evidence that a new financial crisis is rapidly approaching, quite a compelling case emerges.

For those that do not follow my website regularly, I encourage you to check out the following articles to get an idea of what I am talking about…

-“Guess What Happened The Last Time The Price Of Oil Crashed Like This?…

-“Not Just Oil: Guess What Happened The Last Time Commodity Prices Crashed Like This?…

-“10 Key Events That Preceded The Last Financial Crisis That Are Happening Again RIGHT NOW

-“Guess What Happened The Last Time The U.S. Dollar Skyrocketed In Value Like This?…

-“7 Signs That A Stock Market Peak Is Happening Right Now

-“Guess What Happened The Last Two Times The S&P 500 Was Up More Than 200% In Six Years?

Of course no two financial crashes ever look exactly the same.

The crisis that we are moving toward is not going to be precisely like the crisis of 2008.

But there are similarities and patterns that we can look for.  When things start to get bad, investors act in predictable ways.  And so many of the things that we are watching right now are just what we would expect to see in the lead up to a major financial crisis.

Sadly, most people are not willing to learn from history.  Even though it is glaringly apparent that we are in a historic financial bubble, most investors on Wall Street cannot see it because they do not want to see it.  They want to believe that somehow “things are different this time” and that stocks will just continue to go up indefinitely so that they can keep making lots and lots of money.

And despite what you may think, I actually want this bubble to continue for as long as possible.  Despite all of our problems, life is still relatively good in America today – at least compared to what is coming.

I like to refer to this next crisis as our “third strike”.

Back in 2000 and 2001, the dotcom bubble burst and we experienced a painful recession, but we didn’t learn any lessons.  That was strike number one.

Then came the financial crash of 2008 and the worst economic downturn since the Great Depression.  But we didn’t learn any lessons from that either.  Instead, we just reinflated the same old financial bubbles and kept on making the exact same mistakes as before.  That was strike number two.

This next financial crisis will be strike number three.  After this next crisis, I don’t believe that there will ever be a return to “normal” for the United States.  I believe that this is going to be the crisis that unleashes hell in our nation.

So no, I am not eager for that to come.  Even though there is no way that this bubble of debt-fueled false prosperity can last indefinitely, I would like for it to last at least a little while longer.

Because what comes after it is going to be truly terrible.

  • All of the things happening worldwide seems to converge to a new conflagration – i.e. a new World War.

    I think it is General Patton who said that there is no biggest human enterprise than war. In that sense, as cynical as it is, the aftermath (proven with Europe and Japan) would be financially and economically a multi-decades boom – everything has to be rebuild, there are less people (casualties of war) so less people for a social welfare system to take care of, etc. etc.

    As I said it is cynical, but has been the reality of the past, it could certainly be the reality of the future (on a grander and worse scale). However, I think as well that for America it could be worse than for Europe or Japan.

    The History of those two are more than 2000 years each, and they have know booms and bust, and war, civil war, plagues, etc. So, let’s say that it is part of the psyche of the people. But for America, which has been a superpower for so long without any adversary, a young nation, and an extraordinary Economy, I agree with you Michael that, in case of a big bust, the years ahead will be terrible because Americans never really went through what Japan or the Old Continent went through yet.

    • Nemnor

      Joel Peeters, what you stated above was/is, more or less, the general nature (character) of the world-wide Capitalist system, for the past 100 years or so.

      It is a history of “booms and “bursts” intermingled with TWO world wars, a series of major recessions/depressions and some major regional wars.

      This history of the world-wide Capitalist system is irrefutable proof that the system became decadent (about 100 years ago). Currently, the system is NOT able to create long-term recovery by economic means alone.

      Ultimately, the world-wide Capitalist system is unsustainable and, in due course, the system will bring about WW-III (just like it did with WW-I and WW-II), even though the ‘triggering” of the war might not seem endemic to the system. For example, you might think that WW-II was mostly due to Hitler being a power-hungry and/or racist “mad man”. However, on January 30, 1939, Hitler made his “Export or die” speech calling for a German economic offensive (“export battle”, to use Hitler’s term). So “export or die” (i.e. the NEED to expand German Capitalism at the world level) is what “compelled” Hitler to “trigger” WW-II.

      Likewise, the leading Capitalist economies of the world today, will eventually generate WW-III, as each try to maintain (or expand) their share of the LIMITED world’s market and the LIMITED world’s resource.

      The only solution is a fundamental change away form Capitalism, to a sustainable alternative system that addresses the ABUNDANT needs of the “rational” individual (and not just “the 1%”).

  • Rocketman

    Don’t worry about the economy or our standard of living. We will just raise our standards by lowering the bar.

  • K

    The indicators are there. But in the long run, does it matter? With the deal for fast track authority on Trans pacific in place. The next step will be easy passage. What nafta started, this will finish. Stick the fork in, the U.S. is done. And the grand majority have no idea, it is even happening. Some day history will look back at the U.S. in this time frame. It will be referred to as the most foolish generation.

    • Gay Veteran

      yep, BOTH parties selling out the American worker.


      • Catman

        Republicans=Democrats, with few exceptions.

        • Gay Veteran

          VERY few

  • Hans

    Do not feel alone. The economies of the Eurozone and Japan are doomed. The BRICS countries have serious problems. It has been said that if the US sneezes, the rest of the world catches a cold. Unfortunately the US seems to have Aids!
    The US outsourced most of its manufacturing capability to the East, so who has a better chance of recovering first?
    The world is overpopulated and overcrowded. Tensions are simmering all over. Everyone competes for the same limited resources with a broken economic system and money which is backed only by faith. War toys are becoming more sophisticated, but even low tech warfare with lots of available cannon fodder can cause serious problems.
    What can possibly go wrong?!!!

  • Actually, the last time US bonds almost died was during the last days of the Carter admin. He was sacrificed by Paul Volcker in order to prevent financial armageddon!

  • “And despite what you may think, I actually want this bubble to continue for as long as possible.” ~ Spoken like a true drug addict, Michael!

    • Nemnor

      The bubble and the illusion of a “recovery” can not go on forever.

      It is “normal” for many people to wish and hope that the world-wide economic system can somehow fix itself, not realizing that the world-wide system is now decadent/decaying, and is NOT, by economic means alone, permanently recover (from an on-going crisis that began since late-60s/early-70s).

      I posit that, many are hiding from what they are beginning to realize – i.e. that fundamental system change is the ONLY hope for the future. But fundamental change is painful, so many prefer to remain “drugged”.

      • Nemnor

        i.e. the system is NOT, by economic means alone, able to permanently recover (from an on-going crisis that began since late-60s/early-70s).

        • Supercalifragilisticexpialidocious. Blah, blah, blah.

          I scrolled down just to see if more crap was awaiting. No feces so far.

          Man…. I hope this is it.

      • What your nation, I am assuming it is the USA, needs to do is what Argentina did in 2001/2. Unfortunately, your nation is way too proud to do what Greece, Spain, Portugal etc. also need to do: DEFAULT.

        What the USA will do instead is use WW3 (lunching of nuclear weapons) to wipe the slate clean. Unfortunately, it will wipe out the majority of the Yankee population as well . . .

  • Genada

    How can you know at this point? So many central banks are busy buying bonds that they themselves are forcing the rates lower and lower. It’s all designed to force everyone else out of the bond market and into stocks or other higher return assets.

    We are in none normal times. The stock market, the bond market, all markets do not reflect economic conditions. We have phony numbers throw around all the time, unemployment, inflation, everything.

    • MichaelfromTheEconomicCollapse

      It is true – everything is being manipulated.


      • GSOB

        Peter did it too…

        “You are a Jew, yet you live like a Gentile and not like a Jew. How is it, then, that you force Gentiles to follow Jewish customs?”

    • Nemnor

      Genada, you said – “… The stock market, the bond market, all markets do not reflect economic conditions. We have phony numbers throw around all the time, unemployment, inflation, everything…”.

      The main purpose of all this “rigging” and manipulation of the system is to maintain the illusion of an economic “recovery” (or at best, to exaggerate a weak recovery), aimed at preventing you (they hope) from losing faith in the Capitalist system.

      However, “the 1%” is aware that this illusion can not go on forever. And hence, the reason the Police (all over the world) is being prepared with heavy military gears to deal with you – once it becomes clear to everyone (in time) that, the system is NOT working, and the system can NOT bring the Human Race into a prosperous future.

      • And……. after two questionable comments, I’m guessing you represent the 1%.

  • selaretus

    Anything goes and nothing matters.

  • Richard O. Mann

    I agree. The next crash, will be the last crash, and the US will not recover. The world as we know it, is about to come to crash and burn. And so few people believe it.

    • Nemnor

      Or, even if the next crash is not the “last”, the situation the world over will definitely be worse then now.

      It is clear to me that the current world-wide system is ultimately unsustainable, and that the permanent solution is a fundamental change away from the current world economic system to a sustainable alternative system.

      However, within the current world-wide system, ONLY a long-term recovery can (temporarily) “fix” the system. BUT, there would be NO long-term recovery without a “reconstruction boom”. And, you can have that “reconstruction boom” ONLY following a MAJOR (world) war. As you can see where I am going – the current decadent world-wide economic system would likely bring about WW-III (regardless to the danger of wiping out the Human Race).

      • Dude, three strikes and you’re out. I haven’t even read lower to see if you have any more BS comments. You’re trying to plant a seed. Go ahead…. I’ve got some gas to dump on every one you throw out.

  • jakartaman

    I believe most folks with a brain would agree -its gonna be a world wide economic collapse. I believe that there will be trip wires that will give us a little more warning.
    I can think of a few but there are many out there that could get the ball rolling

  • jaxon64

    Actually–it appears as if the Central banks–the FED and ECB–are protecting the stock market. By investing heavily into bonds right now they intentionally drive down yields and by doing so, encourage the masses to stay the course in stocks and thus avoid any exodus from the markets.
    This way they blow the bubble as big as they want because markets will be the only game in town. Plus, they don’t actually lose money with negative yield bonds since the bonds are promissory notes to pay themselves back—very clever of them.
    Now, if we see large amounts of stock holders willing to take their money from the phony market bubbles and accept negative yields in bonds as a better alternative–then it is time to streamline all of your finances into physical assets……

    • Nemnor

      jaxon64, your analysis/conclusion seems correct.

      However, regardless to how “very clever” they may seem, the Stock Market can not forever “rise” (expand) regardless to economic fundamentals. Eventually, everything will come crashing down (like a “house of cards”), as dictated by economic reality.

  • JailBanksters

    I’d like to exchange this wheel barrow of US Bonds for one sausage thanks….

  • T.

    Michael, you don’t want “strike 3” of the Global Financial Collapse to hurry-up and Arrive – Just because “Financial Hell” will arrive at the same time with it?
    Well, I’m with you Michael – Those that are calling for it to hurry and get here simply – Do Not Know What They Are Asking For! ! !

    • Revolt to save America

      exactly, someone said the same thing, to hurry up, WHAT hurry up the rest of your life being crappy, the quality of life being brutal. I’m just at odds to how we can really prepare. We can’t really hide from it, HOW IS Canada ? This going to be about the lessor of all evils. I live in the subs of Los Angles, not feeling so great about it lol,,, Everyone is getting wrestles. As we wait for the other shoe to drop, what do we do………….. anti depressants anyone !

      • Mike Smithy

        As I see it, prolonging this farce only makes the inevitable collapse less palatable. We would have been far better off allowing the TBTF to actually fail. Sure, their would have been pandamonium in the short run, but we would have been on the road to a substanitive recovery by now. As it stands now, we have a “perpetual dark” cloud hanging over us.

        • Revolt to save America

          if we where facing another 08 sure hurry, but this ones too big. Also we actually have crime and despair in front of this collapse. It’s much worse than 08, I’m in not rush yet. I guess people will think it’s time when THEY are personally reasdy. A dark cloud over us is better than sitting in crap for the rest of our lives, which is going to happen .which is better. We need the POTUS out of the white house so we can feel a bit better when it does crash. It crashing with an anti American in office makes me sick. How obummer would love to see the great USA fall and burn, I say wait for 2017

    • Nemnor

      T., while no one wants the worse to happen, especially if you have Children (or which to have Children), you will want things to fix themselves for the better, and sooner rather than later.

      However, IF it becomes clear to you (or at least you come to believe) that things will only get worse and worse towards total collapse/chaos, then you might think it best for the collapse to happen sooner (rather than a slow “grind” towards a SURE collapse), and then, IF you survive and things ironically get fixed after the collapse (like a “reconstruction boom”), then you probably can have the children you always wanted, or get on with whatever “dream” you wanted to pursue.

      • This is almost laughable now. WTF was that above???

  • Horiboyable .

    Pressure is also building in Europe with all those mortgages in Swiss Francs through Poland, Austria, Hungary, Croatia etc etc. Apparently they were connected to the Heta Bank collapse which in turn caused issues for other banks in Germany which held Heta bonds as investment grade; I know you cant make this stuff up. It has just been reported today in the Telegraph that according to the latest figures from the bloc’s official statistical
    authority, government debt in the eurozone reached nearly 92pc of GDP last year
    – the highest level since the single currency was introduced in 1999.

    This will not end well at all.

  • Revolt to save America

    Why doesn’t the local news talk about GREECE ??? their citizens money being taken 4/20, and given to the government. Fox doesn’t even have it on their program. WOW………….Keep these sites up, the sources of info are becoming fewer and fewer.

    • Genada

      I think you know the answer to that. If people started to think about what is going on in Greece, they may start to wonder if that could happen here.

    • Nemnor

      The “hiding” (or “watering down”) of information from already “DOOMED” places like Japan, Greece and from much of the Eurozone, along with the PRETEND “recovery” (or exaggeration of a weak recovery) in the USA – are all part of a MAIN agenda, which is… do whatever it takes to give you the impression/illusion of a “recovery”, so that you might not lose faith in the world-wide Capitalist system.

      The belief (the hope) that thing would eventually turn out OK, is keeping people from looking for a REAL alternative to the current world-wide Capitalist system.

      Hence, the reason for “hiding” or ignoring some of the bad news from all over the world. And hence the reason the stock market is “rigged” so that it might keep “rising” regardless to economic fundamentals. It is all about not letting you lose faith in Capitalism (they hope).

      However, this “mirage” (i.e. the pretend “recovery”) can NOT go on forever.

      • Stop slamming capitalism. Capitalism is not the problem. The crooks running it are. It seems you’re touting another “ism” as a better choice. I’ll stick with capitalism and hope the evil that is screwing it all up is “removed” from the equation.

        • Agree with you. Capitalism is not, and was NEVER the problem in the first place.
          Seems that people can not make the difference between a tool (capitalism after all is just the concept according to which you offer a share in your company in exchange of money to fund your business you want to grow) and an ideology (capitalism has never been an ideology just a way for commerce and business to work – and it is not a new concept whatsoever)

          The fact is that History shows that when a country turn toward excess of “socialism” (or any form of welfare state system) that is when an Empire or a Kingdom enters in falling mode because of the enormous cost of supporting foreign immigration or non-worker… Panem et Circenses! Panem et Circenses! said the Emperor, and to the wind went the Empire

  • Georgefromczech

    Devil’s puppets pushing the world into wors social cataclysma ever.
    the most important thing, which know very few people, is, that the force behind those people extremely powerful, supernatural an unbeatable of any kind and quality of human abilities. There is only one solution. Pray to our Lord for you and all other human beings.

  • I’m curious about your thoughts relative to 1929. Seems like yields dropped after the fact then if I read the charts correct? I suppose 2000 might be of interest too though I think our current situation is more similar to 1929, just at one degree higher so I expect it to be more severe.

  • grumpyhillbilly

    Economics is not my forte. Politics is what I understand. However the two go hand in hand. The chess game being played out is one of rushing to that century old dream of world order. I think the players know reality means a crash is coming just as their granddaddy’s dreams are about to be realized. That is why I think the bubble will go on for awhile. The aging realist in me is more than okay with that. The collapse will be violent. The idealist in me is okay with starting it now, and let the schmucks who created this mess suffer it’s consequences. Then again they probably won’t. Til then a gal can dream about an upside to the inevitable,

  • DJohn1

    This is what you get.
    The government program that qualifies people in accordance with what they make and disqualifies people because they work and make more for a living. If you work for a living you get screwed.
    If you make more than a set amount you no longer qualify.
    Chris Christy just lost my respect. He proposed limiting Social Security to those in need rather than those that have earned it.
    The entire thing of government programs based on need rather than earning them is wrong.
    And that in a few paragraphs is what is wrong with the entire system.
    Now we are going to have a massive depression based on no one being able to earn a living competing with countries that are exceptionally poor.
    That is what is really wrong.
    Everything we do to the common people compounds and backfires eventually causing all the other problems including the one described here by Michael.
    You put in mandatory insurance. In the process you pick the pocket of the common person to pay for it. Less discretionary income. Eventually retailers go broke. This is reflected in the stock market. Thus the panic selling and people going to bonds.
    The end result is what Michael predicts here. A depression to end all depressions despite laws in effect to keep it from happening.
    Bush changed a lot of those laws while in office for business.
    Now we see the house of cards come crashiing down.

  • rat28

    No crash is going to happen in the financial markets until Hillary get elected as the next president.

    • Mike Smithy

      I am not so sure of your assesment. Undoubtedly GW Bush was carrying the water for the puppet mater bankster class and they either could not, or would not stop the dam from bursting in September 2008. Surely Bush would have loved the opportunity to forestall the banking crisis a few more months so that President Zero would have been forced to accept some culpability. However, it didn’t happen for whatever reason. It will be interesting to see if the banksters decide to implode this thing on President Zero’s watch.

  • Catman

    Because the game is rigged against the average person with perhaps neither the means nor appetite to invest in the market or buy bonds, the best course may be to stay in cash- and pay close attention to the very thing Greg has pointed out: the message the German bond market is indicating. Like many on here there is a part of me that wants to see the dam burst on the market because we’re angry about the way the Fed has prioritized supporting it at the expense of the savers. On the other hand, it is what it is and we really have no idea how bad it could get if there were massive layoffs, etc. with a major crash. I suspect the tax dollars still coming in would be prioritized into tripling down on the welfare transfers to keep the mobs, looting, rioting, and mayhem to a minimum. I believe we would also see police and national guard services greatly expanded to maintain order. In the meantime I think I’ll try to find a funny classic snl skit to watch or something…

    • Nemnor

      Catman, you said- “…On the other hand, it is what it is and we really have no idea how bad it could get if there were massive layoffs…”.

      Eventually, regardless to the manipulation and rigging of the system, “massive layoffs” will become a reality. The main root of the socioeconomic issues facing the USA and the world is – world-wide Capitalism itself – which is now decadent, and is NOT able to create long-term recovery by economic means alone.

      As sure as “night follows day”, the future of the world under this world-wide Capitalist system is massive world-wide poverty and massive world-wide destruction (through wars, environmental collapse and economic collapse).

      • Damn dude, you’re frickin responding to everyone’s posts…….. Without even reading your crap, we’ll just start using the word “troll”.

        • Nemnor is a paid troll hired to inundate the blog with a marxist-leninist-socialist BS… just have to read some of his comments to realize that it is just cut and past from a pre-determined text to adapt from time to time…without thinking much about the content he post…

          This being said, coming from a socialist country myself, on the Old Continent (with a majority of socialism ideology in place in most of the European Nations) there is no way he could convince me about Socialism or an alternate of that ideology.

  • MichaelfromTheEconomicCollapse

    Many of you already know that I recent went down to Dallas, Texas to give a couple of two hour presentations. I consider them to be the most important talks that I have ever given in my life up to this point. As I promised, DVDs are being made of these two presentations, and you can now order them from the Prophecy Club. To check out the new DVDs, just follow these links…


  • GSOB


    “Since the time of Solomon, the Tribes have been divided. Michael will show you how they will be reunited in Israel as one. Israel will be victorious in WWIII and get back all her land from the Euprates to the Nile. Massive amounts of oil will be discovered in Israel. Israel will rise up to be one of the world’s richest strongest nations.” M.S.


    Solomon my son is young and tender,” David said, “and the Temple of the Lord must be a marvelous structure, famous and glorious throughout the world; so I will begin the preparations for it now.”

    So David collected the construction materials before his death. He now commanded his son Solomon to build a Temple for the Lord God of Israel.
    “I wanted to build it myself,” David told him, “but the Lord said not to do it. ‘You have killed too many men in great wars,’ he told me. ‘You have reddened the ground before me with blood: so you are not to build my Temple. But I will give you a son,’ he told me, ‘who will be a man of peace, for I will give him peace with his enemies in the surrounding lands. His name shall be Solomon (meaning “Peaceful”), and I will give peace and quietness to Israel during his reign. He shall build my Temple, and he shall be as my own son and I will be his father; and I will cause his sons and his descendants to reign over every generation of Israel.’

  • Robert

    Argentina defaulted on its external debt 7 times and internal debt 5 times yet it remains a sovereign nation. It remains a train wreck and people there have to muddle thru. The losers are always those who worked hard and saved. The wealthy have no problem and the poor notice no difference. Same everywhere. Good luck to all.

  • Marlayne Giron

    I refer you to Jonathan Cahn’s book: The Mystery of The Shemitah. Look for an enormous crash on 9/13/15. He has it thoroughly researched.

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