The Beginning Of The End
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The Trigger Has Been Pulled And The Slaughter Of The Bonds Has Begun

The Bears Are Unleashed On Wall StreetWhat does it look like when a 30 year bull market ends abruptly?  What happens when bond yields start doing things that they haven't done in 50 years?  If your answer to those questions involves the word "slaughter", you are probably on the right track.  Right now, bonds are being absolutely slaughtered, and this is only just the beginning.  Over the last several years, reckless bond buying by the Federal Reserve has forced yields down to absolutely ridiculous levels.  For example, it simply is not rational to lend the U.S. government money at less than 3 percent when the real rate of inflation is somewhere up around 8 to 10 percent.  But when he originally announced the quantitative easing program, Federal Reserve Chairman Ben Bernanke said that he intended to force interest rates to go down, and lots of bond investors made a lot of money riding the bubble that Bernanke created.  But now that Bernanke has indicated that the bond buying will be coming to an end, investors are going into panic mode and the bond bubble is starting to burst.  One hedge fund executive told CNBC that the "feeling you are getting out there is that people are selling first and asking questions later".  And the yield on 10 year U.S. Treasuries just keeps going up.  Today it closed at 2.59 percent, and many believe that it is going to go much higher unless the Fed intervenes.  If the Fed does not intervene and allows the bubble that it has created to burst, we are going to see unprecedented carnage.

Markets tend to fall faster than they rise.  And now that Bernanke has triggered a sell-off in bonds, things are moving much faster than just about anyone anticipated...

Wall Street never thought it would be this bad.

Over the last two months, and particularly over the last two weeks, investors have been exiting their bond investments with unexpected ferocity, moves that continued through Monday.

A bond sell-off has been anticipated for years, given the long run of popularity that corporate and government bonds have enjoyed. But most strategists expected that investors would slowly transfer out of bonds, allowing interest rates to slowly drift up.

Instead, since the Federal Reserve chairman, Ben S. Bernanke, recently suggested that the strength of the economic recovery might allow the Fed to slow down its bond-buying program, waves of selling have convulsed the markets.

In particular, junk bonds are getting absolutely hammered.  Money is flowing out of high risk corporate debt at an astounding pace...

The SPDR Barclays High Yield Bond exchange-traded fund has declined 5 percent over the past month, though it rose in Tuesday trading. The fund has seen $2.7 billion in outflows year to date, according to IndexUniverse.

Another popular junk ETF, the iShares iBoxx $ High Yield Corporate Bond, has seen nearly $2 billion in outflows this year and is off 3.4 percent over the past five days alone.

Investors pulled $333 million from high-yield funds last week, according to Lipper.

While correlating to the general trend in fixed income, the slowdown in the junk bond business bodes especially troubling signs for investment banks, which have relied on the debt markets for fully one-third of their business this year, the highest percentage in 10 years.

The chart posted below comes from the Federal Reserve, and it "represents the effective yield of the BofA Merrill Lynch US High Yield Master II Index, which tracks the performance of US dollar denominated below investment grade rated corporate debt publically issued in the US domestic market."  In other words, it is a measure of the yield on junk bonds.  As you can see, the yield on junk bonds sank to ridiculous lows in May, but since then it has been absolutely skyrocketing...

Junk Bonds

So why should the average American care about this?

Well, if the era of "cheap money" is over and businesses have to pay more to borrow, that is going to cause economic activity to slow down.

There won't be as many jobs, part-time workers will get less hours, and raises will become more infrequent.

Those are just some of the reasons why you should care about this stuff.

Municipal bonds are being absolutely crushed right now too.  You see, when yields on U.S. government debt rise, they also rise on state and local government debt.

In fact, things have been so bad that hundreds of millions of dollars of municipal bond sales have been postponed in recent days...

With yields on the U.S. municipal bond market rising, local issuers on Monday postponed another six bond sales, totaling $331 million, that were originally scheduled to price later this week.

Since mid-June, on the prospect that the Federal Reserve could change course on its easy monetary policy as the economy improves, the municipal bond market has seen a total of $2.6 billion in sales either canceled or delayed.

If borrowing costs for state and local governments rise, they won't be able to spend as much money, they won't be able to hire as many workers, they will need to find more revenue (tax increases), and more of them will go bankrupt.

And what we are witnessing right now is just the beginning.  Things are going to get MUCH worse.  The following is what Robert Wenzel recently had to say about the municipal bond market...

Thus, there is only one direction for rates: UP, with muni bonds leading the decline, given that the financial structures of many municipalities are teetering. There is absolutely no good reason to be in municipal bonds now. And muni ETFs will be a worse place to be, given this is relatively HOT money that will try to get out of the exit door all at once.

But, as I wrote about yesterday, the worst part of the slaughter is going to be when the 441 trillion dollar interest rate derivatives time bomb starts exploding.  If bond yields continue to soar, eventually it will take down some very large financial institutions.  The following is from a recent article by Bill Holter...

Please understand how many of these interest rate derivatives work.  When the rates go against you, “margin” must be posted.  By “margin” I mean collateral.  Collateral must be shifted from the losing institution to the one on the winning side.  When the loser “runs out” of collateral…that is when you get a situation similar to MF Global or Lehman Bros., they are forced to shut down and the vultures then come in and pick the bones clean…normally.  Now it is no longer “normal,” now a Lehman Bros will take the whole tent down.

Most people have no idea how vulnerable our financial system is.  It is a house of cards of risk, debt and leverage.  Wall Street has become the largest casino in the history of the planet, and the wheels could come off literally at any time.

And it certainly does not help that a whole host of cyclical trends appear to be working against us.  Posted below is an extended excerpt from a recent article by Taki Tsaklanos and GE Christenson...

**********

Charles Nenner Research (source)

Stocks should peak in mid-2013 and fall until about 2020.  Similarly, bonds should peak in the summer of 2013 and fall thereafter for 20 years.  He bases his conclusions entirely on cycle research.  He expects the Dow to fall to around 5,000 by 2018 – 2020.

Kress Cycles by Clif Droke (source)

The major 120 year cycle plus all minor cycles trend down into late 2014.  The stock market should decline hard into late 2014.

Elliott Wave Cycles by Robert Prechter (source)

He believes that the stock market has peaked and has entered a generational bear-market.  He anticipates a crash low in the market around 2016 – 2017.

Market Energy Wave (source)

He sees a 36 year cycle in stock markets that is peaking in mid-2013 and down 2013 – 2016.  “… the controlling energy wave is scheduled to flip back to negative on July 19 of this year.”  Equity markets should drop 25 – 50%.

Armstrong Economics (source)

His economic confidence model projects a peak in confidence in August 2013, a bottom in September 2014, and another peak in October 2015.  The decline into January 2020 should be severe.  He expects a world-wide crash and contraction in economies from 2015 – 2020.

Cycles per Charles Hugh Smith (source)

He discusses four long-term cycles that bottom roughly in the 2010 – 2020 period.  They are:  Credit expansion/contraction cycle;  Price inflation/wage cycle; Generational cycle;  and Peak oil extraction cycle.

Harry Dent – Demographics (source)

Stock prices should drop, on average for the balance of this decade.  Demographic cycles in the United States (and elsewhere) indicate a contraction in real terms for most of this decade.

**********

I was stunned when I originally read through that list.

Is it just a coincidence that so many researchers have come to such a similar conclusion?

The central banks of the world could attempt to "kick the can down the road" by buying up lots and lots of bonds, but it does not appear that is going to happen.

The Federal Reserve may not listen to the American people, but there is one institution that the Fed listens to very carefully - the Bank for International Settlements.  It is the central bank of central banks, and today 58 global central banks belong to the BIS.  Every two months, the central bankers of the world (including Bernanke) gather in Basel, Switzerland for a "Global Economy Meeting".  At those meetings, decisions are made which affect every man, woman and child on the planet.

And the BIS has just come out with its annual report.  In that annual report, the BIS says that central banks "cannot do more without compounding the risks they have already created", and that central banks should "encourage needed adjustments" in the financial markets.  In other words, the BIS is saying that it is time to end the bond buying...

The Basel-based BIS - known as the central bank of central banks - said in its annual report that using current monetary policy employed in the euro zone, the U.K., Japan and the U.S. will not bring about much-needed labor and product market reforms and is a recipe for failure.

"Central banks cannot do more without compounding the risks they have already created," it said in its latest annual report released on Sunday. "[They must] encourage needed adjustments rather than retard them with near-zero interest rates and purchases of ever-larger quantities of government securities."

So expect central banks to start scaling back their intervention in the marketplace.

Yes, this is probably going to cause interest rates to rise dramatically and cause all sorts of chaos as the bubble that they created implodes.

It could even potentially cause a worse financial crisis than we saw back in 2008.

If that happens, the central banks of the world can swoop in and try to save us with their bond buying once again.

Isn't our system wonderful?

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  • Tim

    And the BIS has just come out with its annual report. In that annual report, the BIS says that central banks “cannot do more without compounding the risks they have already created”, and that central banks should “encourage needed adjustments” in the financial markets.

    Very interesting. Maybe the Federal Reserve is going to “taper” after all. Man, what an interesting time to be alive.

  • RICHARD

    The man that writes this blog and the people that read it are smarter than the people that are making all these predictions on this blog.

    • GSOB

      ? It always has been about making predictions.

      • GSOB

        Or an educated guess

      • markthetruth

        Predictions are 50/50 anyone can make one and be right half the time.

        the end…

  • GSOB

    I think Janet Yellen will get to spin the wheel.

  • seth datta

    Really need an article on how Ob@ma has just announced that he will be making the states more ‘green’ (as part of agenda 21), thereby depriving US citizens of further self-determination.

  • Bruce

    The fed will do WHATEVER it takes to kick the can down the road. Nothing is off the table for them. Even if it creates a collapse in the future they will keep the can going down the road for now at wahtever cost. Thet know a collapse would end there game and they do not wnat that. However, they can’t kick the can forever and they know it.

    • GSOB

      No one wants the carnage to come on their watch.

  • Tim

    Isn’t our system wonderful?

    I just want this fraudulent system to end!!

    • Jodi

      And all of us who have followed the rules all of our lives will pay dearly for the fraud.

      • Tim

        Yes.

      • odumbostinks

        We already have been, that is why the Middle Class has been decimated, starting with ronnie ray gun, clinton, both bush traitors and now king banana odumbo.

  • markthetruth

    Won’t happen, trust is already gone.
    and people see the risk and so does the World Central bank.

    the end…

  • MichaelfromTheEconomicCollapse

    I have just posted another article that many of you may want to check out…

    “Tempora: The Americans And The British Are Recording All Phone Calls And All Internet Activity”

    http://thetruthwins.com/archives/tempora-the-americans-and-the-british-are-recording-all-phone-calls-and-all-internet-activity

    Michael

  • Swampadash

    They’ll keep kicking the can down the road right up to the point they (and us) get hit by an oncoming truck.

  • JohnO

    If things are so bad, why are Gold and Silver being smashed on a daily basis? Why is the ASX (Australian Stock Market) up nearly 2 percent on this mornings trading?

    I am starting to feel that the ‘doom and gloom’ people are just trying to sell books and website subscriptions. If I had kept my money in shares this year i’d have made a 15% return, instead my gold and silver are 12% down from when I bought in and I am earning no dividends at all.

    I bought into the hype of silver and gold being a shield against Fiat manipulation. Ever since i’ve been waiting for this expected ‘collapse’ in the ‘financial system’ and it hasnt’ happened, all we get are more tales of the ‘next big disaster’ and ‘this will be the BIG ONE!’.

    But this whole ‘corrupt Ponzi Scheme’ just keeps rolling along, friends of mine think i’m a stupid conspiracy theorist and are watching their wealth grow.

    Meanwhilst I have a safety deposit box full of ‘metal’ that’s depreciating faster than last night’s half eaten pizza :(

    The EU situation looks to be stabilised, the US economy looks like it slowly recovering, the Chinese appear to managing an overheated property market with far more efficiency than they did in the US.

    The world keeps turning, I am begining to think I need to get outside, dump these useless coins and bars and stop thinking about doom and gloom.

    In short, I can’t help but feel i’ve allowed myself to become obsessed with doom and gloom and have made some poor decisions based on this perception.

    Unless i’m wrong? How long do we keep this gold and silver sitting around?

    • Louise in MO

      I’ve been considering the same deductions. The “doom and gloom” predictions have kept my adrenaline running on high for the last five years.

      I’ve stocked more food, water, medical supplies and bought “emergency” items that will last a lifetime if not needed for the coming financial “collapse.” I hate to think that people hyped the so called collapse for purely financial gain.

      I do think, however, that we may be in trouble in the Middle East and a war may break out.

      I am absolutely convinced that the present Obama administration is doing their best to destroy our economy and the American dream with it.

      Just today he announced the beginning of his “war on coal.” Thousands and thousands of jobs will be lost! If you believe that Obama cares about the “little guy” this alone should change your mind. Take a drive through coal country and see what this so called “war on coal” will do to entire states!

      If you take issue with that I recommend you consider the major scandals that surround the Obama administration and it’s most recent attempts to invalidate our Constitution.

      Things are not good in America . Seventy-two percent of Americans no longer trust our federal government. Is it any wonder?

      • MeMadMax

        I’m not worried about war in the middle east, I’m more worried about a financial system collapse in china. They look unsteady at the moment.

      • Sam

        We all need to get the understanding that MOST of the “doom and gloom” is disinformation designed to keep our attention focused on the left hand so the right hand can continue the illusion… Yes there is an end looming very soon but it isnt the doom and gloom that is being used to create fear in you, its something much better. The end of the system means an end to the corporate debt slavery that we are all enslaved in. The system must fall before we can know any kind of freedom. This is the truth that they try to hide from you with the fear about doom and gloom. The reality is that we Humans will live lives of peace and abundance once we throw of the shackles of debt slavery. Thats why they sell you on the doom and gloom……

        • Louise in MO

          Thanks, Sam, for the reply. What you posted makes sense to me, and I appreciate your input.

      • nygrump

        It wasn’t Obama’s administration that sent all the jobs to Mexico and China, thats been in place over many administrations and both parties indulged in the free for all.

      • Hammerstrike

        It would have already collapsed without China, Chinese companies and gov keeps lending because an economic collapse would cause international trade to be shut down but they are also gathering what ressources they need to hold a long time.
        Process is going to be slow, take years, until the dollar looses its status and even that may not happen in one go.
        Know the expectations for the future back in the 1950s and 1960s? The developped today is only a shadow of what could have been, we are already third-worlders, we just don´t know anything better.

    • MarkJacobson

      The elites purposely drove down the price of gold and silver to cause a selling panic. They knew all along about people stocking up on metals. PMetals are those in the long term. Fiat currency is good in deflation but bad in inflation!

    • MeMadMax

      You are looking at it wrong.
      Remember, gold is a popular choice as a hedge for inflation for big investors. For regular people it is a secondary source of currency if the dollar collapses. Now, when the bernanke gave a loose timeline of ending QE, he basically gave the green light for some of the big investors to sell their gold because they now know that at some time the spigot will be turned off and some of the gold can be used to cover. But on the other hand the gov’ment did not universally reciprocate, it will continue to spend spend spend. So other investors did not sell as well. In the end, for regular people, having physical gold is the way to go, because the gov’ment won’t stop spending till it can’t anymore and the shtf.

    • Joel Peeters

      John, I understand your point. We should not let ourselves fall into doom and gloom.

      However, when insiders and big names of the Economic & Financial sector begins to feel the heat, maybe we should just take heed of that fact. There would be no reason for them to “panic” if there was not something going really wrong in the Market… something which would be better for the average public not to know about until the last moment.

      Another point, about gold and silver. Keep your bar and other coins. We may wonder why the price of gold and silver goes down. But did you think of the fact that Government are not different than people in matter of finance? Gov” also knows that gold and silver will protect their butt when the shtf. Yet, if the price of gold and silver is to high it will cost big to the Gov” to buy it on the market.

      So then what’s the simple solution? Play somehow with the Market to push the price of commodities like gold and silver down. Once down enough, the Gov” could buy it for a less bigger amount of money (with less borrowing). Then you let the Market do is normal job to re-balance everything, meaning a soaring of gold and other commodities. Then you resell your commodities now at 5, 6 or 7 times the price you bought them with a huge positive margin… part of it enough to pay back your debt, or to protect your back for a time while in a depression…

      it’s just a scenario, of course, but which humanly make senses…

    • RJP

      JohnO, I’m with you man. I’ve been listening to all of these doom and gloomers for the past year or so and I’ve also bought into the hype of PM’s prices rising to the moon. Now look, silver is in the 18 dollar range this morning. Down over $1 from yesterday! But listening to the silver and gold buffs, they’re still saying “hold on, they’ll rise, just wait and see”. Like you, my friends are making money in the market while I’m losing cash like water in a leaky bucket. Funny how all of the silver and gold buffs will sell you their PM’s for fiat. I work real hard for what little money I have and now I’m watching it disappear before my eyes. The bitch is now, I can’t sell my PM’s without losing a ton of money so I need to hold on to them and HOPE prices go back up. But I know one thing for sure, I won’t be BUYING any PM’s for some time.

      • sam

        you dont lose money in PM’s until you sell. Be patient, PM’s are a long term commitment. They are trying to shake loose some of the gold that has been horded by prudent investors. Once they feel like they have shaken the tree for as much as they can, they will let the price go back up. The end result is they buy gold cheaper and you have less actual value because you traded actual physical valuable gold, for worthless digital fiat debt notes. Its a transfer of wealth tactic. Dont fall for it like all the other mindless drones.Do you not understand that this is how the market is run? Its rigged.

    • Jimbo

      I understand what you are saying mate. I bought Physical Gold two weeks ago and since I took delivery last week it has been hammered down. Do I sell it back now and and take a massive hit or do I sit on it and hope for the best? The thing to remember, is whether there is a crash today, next week or in five years, gold will crash anyway at the very start as people rush to liquidate everything for cash. The Aussie dollar crashed massively during the 2008 crisis as money poured out of commodities but then reversed to record highs as it took on a kind of safe haven status.

      There are many things wrong with the world economy. The UK’s GDP is still below 2008 levels, it has massive structural deficits and austerity measures are not working. Europe is a basket case on the verge of bankruptcy and all the gold ever mined in the history of the earth would not pay off the US governments debts (they would still owe 10.6 trillion).

      A great number of the worlds economies import far more than they export (they run at a loss). They rely on debt to stay in business. Someone has to finance that debt and bond sales are the way it is financed. To sell a bond at a low yield it has to be ultra secure. The buyer needs to know that they will get their money back 100% guaranteed. Otherwise the buyer will only take a risk if there is a good return (high yield). Rising yields mean higher interest payments for the issuer = more debt=more risk=higher yields.

      I have believed that we are up for a financial system “reset” for the last ten years. Prior to 2008, recessions and depressions could be escaped by making more stuff, growing more stuff and selling more stuff. The western economy also enjoyed imported goods such as tea and coffee produced for slave wages in far away countries with the profits going to the western economies. We made our own TV’s and Cars and that gave us work. Now the far off countries are making the TV’s and the Cars and the profits are staying in those countries.

      The western economies are like part time workers earning far less than they need and spending far more than they need to to keep up appearances. They are using one credit card to pay down another and to make things worse, they are fiddling with the books so that they can but their own debt (QE). It might work if there were massive growth in GDP and in Britain and the US the easiest way to boost GDP is with a nice fat asset bubble (housing).

      I don’t play the markets but I have been following the worlds economy and politics for 30 years and this is the closest I have seen to the end game. Everything is falling into place.

    • Sam

      Gold and silver has been used as money since trade began. Anyone who tries to convince you that gold and silver are bad investments, is simply ignorant. The only way you can lose money in gold and silver is to buy and sell at the wrong times. You need to have an understanding that the market price is rigged so any fluctuations means someone higher up the pyramid is making their money off of those who arent in the know. If the price is falling, buy buy buy. It will never ever be valueless. The bond buy back scheme the fed is doing is what is killing gold right now. It cant last much longer and when it scales back gold will skyrocket. Then all your friends with a bank account full off fiat worthless currency will find their digital money quickly being erased. And then there is the looming of a likely deposit haircut like what happened in Cyprus.

      Physical gold and silver cannot be erased… think about it….

  • defaultplayer

    I’m no expert, but I looked up the data and 2008 peaked at over 23%. It is 6.99% now. Isn’t it a bit premature to assume the bond market is imploding? No? Educate me.

    • markthetruth

      China is dumping are debt .

      the end…

  • http://www.facebook.com/debra.oneil.18 Debra Oneil

    so, the globe is on life support, and the BIS says turn the machine off… at the same time we are passing legislation to reduce the amount of energy available, causing rates to increase, while beginning to arm people who want to kill us, all under the watchful eye of an ever increasingly spooky government, that may actually be killing people. while being promised the DOJ will protect our voting rights, now that the SCOTUS has decided the old protections are outdated (hmm… where have I heard that before?) all while debating the “new civil rights” battle , immigration… anyone see an underlying theme here? … and its not good.
    (PS they go for the wealthy, educated and powerful first… because us surfs are no threat and actually useful for house and field duties)

    • defaultplayer

      I’d say Obama is fulfilling the “dreams of his father” by driving down our standard of living by flooding the country with cheap labor Democrat voters thereby “leveling the playing field” and securing 1 Party rule for generations.

      Remember, he said we can’t have our homes at 72, drive our suv’s etc. etc. and expect the rest of the world to approve. He bows to leaders of other countries, apologizes to the world for the “sins” of America. What president has ever done such things?

      Instead of increasing our supply of cheap energy, he has ordained himself King and bypasses Congress to destroy our ability to have cheap abundant energy and in the process eliminate hundreds of thousands of jobs without batting an eye. Before the election he was in Ohio and Pennsylvania lying to the coal miners.

      I’m 51, and this is not the America I remember.

      • markthetruth

        Let me tell you a short story that happened yesterday and a indication of our future gen. Went to our homes communities private Pool in which we pay good money and was just redone to like new condition with new pump. and a new pool company to take care of it and provide the life guards/pool keepers (vacuum, water chemical levels ext.) well yesterday when i got there my friend told me the water was cloudy and the jets didn’t seem to pumping the life guard said that’s its normal , i then ask him if the pump is running. Quote: yea it’s making noise ! We had to laugh but where dumbfounded by two college(jrs) kids answer . you have to be kidding. The manager was called and 2 hrs later the pool had to bevacuuming the last couple a days no one cleaned the filter. The pump was smoking hot and when he pulled the filler out the pool turned green. So remember what we are headed for ” if it makes noise it must be working” Lazy Americans (busy texting) the boss who came was not a Caucasian.

        the end…

        the end…

        • ivan67702000@yahoo.com

          Idiocracy the Movie in action, AHa I like Money, He’s a Lawyer and he is not a very good one!. Well maybe you can escape again , No they pretty much took care of that this time. Brondo
          It is Doom as far as the eye can see and we were cond into letting it happen.

      • dlcamp

        Good bye, America.
        All hail the New World Order.
        (Read Daniel and Revelations)

        • sinktheFED

          Thank the zionists who control amerika, starting with the FED

      • Gene Baugh BBA

        This is the same Obama who has spent so much building and improving our border that people are dying in the desert trying to get in, and who has deported more illegal aliens than any other president.

    • markthetruth

      1.8 GDP, how the heck can we afford a housing recovery. and a 82% consumer confidence !

      they need to add data collection to the GDP

      the end…

      • markthetruth

        Financial Stress Index Hits Scary Level.

        the end…

        • Hammerstrike

          No, it is just the beginning of the scam…

        • michaelbme

          Why do you end your comments with “the end”?

    • TooLittleTooLate

      Congress doesn’t even matter very much at this point… they’re given away all their duties to alphabet agencies…. EPA, FDA, FBI, NSA, CIA and MANY, MANY others…. there won’t even be any legislation done to enact all the new regs on the power companies… it’s done by executive fiat with the EPA now.

      The ONLY thing that has allowed so many people to survive on this earth throughout the last century is access to cheap energy.

      The energy that lights your house, runs your car, plows the fields… fertilizer for crops… brings the crops to your store where you can purchase them etc.

      If I hated this country and I were the potus, I don’t know how I could do a better job at destroying it than this administration has done…. all in the name of some fairness they proclaim.

      They go after coal… they go after oil and a country that can’t afford to power it’s infrastructure can not prosper and feed itself but, I guess to them 2 + 2 = 5

    • dlcamp

      It’s called the new normal.
      1984 on steroids!

      • Hammerstrike

        Read the Owner novels by Neal Asher.

    • Hammerstrike

      No, someone is doing the support and someone else is being supported.
      China, South-east asia and Japan in particular, due to the Plaza Accords, leads this life support.
      Detroit was an industrial city, North America or Britain have first-world living standards but production maintaining these living standards is elsewhere.
      China have empty middle-class city blocs, not because of a building boom (wouldn´t lasted 10 years) but because they are preparing for the day when they don´t lend their wealth anymore.

    • Adrian

      I agreed with your post until the last bit. They go after the wealthy…really? I guess that’s why no Wall Street bankers have gotten so much as a slap on the wrist for destroying the economy back in 2008. I guess that’s why income taxes for the wealthy are at a 90 year low, and corporate income taxes are at zero. Sure, on paper they pay about 35% in income taxes, but there are loopholes to avoid this. I also guess that’s why the wealthy are making out like bandits, while the serfs (working people) are doing the work of 2 and 3 laid off employees, only to have their benefits slashed and are constantly being threatened to work harder or get laid off. Lastly, I guess that’s why the only group who is seeing their incomes increase are the wealthy, while 2/3 of Americans report living paycheck to paycheck. No, the wealthy are the instigators…and they haven’t had it this good since the Gilded Age.

      • NoBlame

        I’m so sick of people blaming “the wealthy”. Do you know who the wealthy are? People like us who made it big due to their own hard work and ingenuity. They are the employers. If you are living paycheck to paycheck FIGURE OUT HOW TO CHANGE THAT and become wealthy.

        • Adrian

          First, I’m not blaming the wealthy, I’m blaming government for not taxing the wealthy enough to adequately fund social programs in this country. Second, this is the U.S., where people don’t blame the wealthy for anything. In fact, most Americans are dumb enough to think they’ll become wealthy themselves, and they emulate the wealthy. Third, 2/3 of Americans are living paycheck to paycheck…far too many for you to apply a simplistic, one-size-fits-all model of ‘duh, just work hard and you’ll be rich too!’. Many wealthy people work hard, and many inherited their wealth. Many also do nothing. Many working people work hard all their lives, and never get ahead. The situation is far more complex than you give it credit. Lastly, your comment is akin to saying, “if you don’t like cancer, find a way to cure it, and stop whining!” Yeah, ok…thanks for the brilliant advice!

  • 2Gary2

    I neither own stocks or bonds so who cares???

    • MichaelfromTheEconomicCollapse

      Gary:

      This is going to deeply affect all of us.

      Once the unemployment rate doubles in your community and nobody can find work it will be clear that the collapse of the bond market was a very, very big deal.

      Michael

      • defaultplayer

        What will determine if the data continues to skyrocket or calm down?

      • 2Gary2

        I know I was being somewhat tongue in cheek :)

  • rat28

    Don’t worry about all these doom and gloom..Bernanke has already created a template for future Central Banker to avoid another depression. At this point of time, any pullback is a opportunity to buy low and sell high later. Since 2008,all these doom and gloom people have already missed the boat many times..I really feel sorry that most of them are still hiding in a hole.

  • RICHARD

    I hope they do, that will be the time to get rid of this paper money and clean up.Gold and Silver will always be worth something. What do you think this paper will be worth when the economy comes crash down.

  • defaultplayer

    Sorry for multiple posts, but this BIS issue intrigues me. Is the Fed obligated to follow the dictates set forth in these “rules” set by the BIS? Have we lost sovereignty to that degree where Congress cannot reign in the Fed and prevent what amounts to a defacto hostile takeover of our monetary system?

    • Graham

      Sovereignty is a “terrorist” ideology these days. Your government now thinks for you. You are however free to join the dots and discover who the real culprits are. Many can now perform this feat “blindfolded”.

  • chilller

    This same scenario repeats itself over and over. The Fed tries to turn off the spigot, the financial system begins to reel and they turn it back on again. Like a person with pneumonia being treated with antibiotics, when the patient begins to seem better they prematurely quit administering the drug. The patient relapses and the drug is re-administered, keeping the patient endlessly ill and never recovering. Any doctor will tell you too many antibiotics are not natural nor good for you. Sometimes you just have to ride out your sickness and let nature take it’s course, or the cure will become your curse.

  • Claudio

    What I’d like to know is why the yield on 10 year U.S. Treasuries was so much higher in the 80′s, for instance, and why that didn’t cause the economic collapse predicted by this blog? What’s different this time around?

    My only beef with this blog is that it reminds me too much of environmentalists saying that the sky is falling and then nothing happening. I still remember a bunch of times that they’ve said the we’re running out of particular resources only to fill up my car this morning…

    Anyways, with financial stuff it’s a little more serious because it affects my pocket. I just sold some stocks to buy some physical metals and the prices of these metals keeps dropping like crazy.

    What gives? Why is it so bad that the yields will go up to 3% or 4% soon if they were over 15% in the past?

    • smallergovnow2

      In the 80′s we did not have $17 trillion debt. Now, every one percent rise in interest rates increases our annual interest payments by $170 billion…

    • jmac

      I believe that now you are dealing with over 16 Trillion in debt that must be serviced while the debt was a fraction of that in the 80s

    • Hammerstrike

      Higher interest rates and lower inflation means lenders could make a profit, it could pay off for them.
      Now, lending is effectively a loss of wealth. You invest 100 millions and really get back 80 or 70 millions.

  • kathy k

    To all of you people questioning the ”prepper mentality” & purchasing PM. You obviously read this blog & probably others like it;This information from these blogs is put out there for us to GET READY because whether you believe it or not IT (the collapse) is coming!! If you are buying PM’S hold on to it. The advise to purchase is not to make money now it is to have money when the collapse happens

  • GSOB

    So why should the average American care about this?

    • Guest

      Are you that daft? Why should the average American care about economic collapse, rampant unemployment, poverty, social unrest meaning riots and pillaging, currency collapse, and Zimbabwe level hyperinflation ?!??!!

      Oh, I have no F***ING IDEA WHY ANYONE SHOULD CARE!!

      Go back to MSNBC and catch up on Snookie.

      • GSOB

        At least I ain’t no troll

    • Mondobeyondo

      Are you an average American? If you are, you should care a great deal about this.

      It means your relatively easy way of life is in serious peril. Bonds will collapse. Interest rates will rise. When interest rates rise, debt rises as well. Personal debt, municipal debt, the national debt.

      Life in general is about to become a lot more difficult for everyone. Well, most Americans at least. A lucky few – the Donald Trumps and $350 million lotto winners – they’ll be fine. The rest of us? Weeelllll……

  • Ralfine

    “Well, if the era of “cheap money” is over and businesses have to pay
    more to borrow, that is going to cause economic activity to slow down.”

    It could also mean, they borrow less, work more, sell more, get more money and pay less interest.

    Yes, a brick layer company is in the business to make profit. But with higher interest they may lay more bricks and borrow less money.
    And with less money borrowed and less interest paid profit could actually rise.

    After all, there is a lot of work to do everywhere.

  • Rodster

    Hey Michael, nice interview with Charlie McGrath. :)

  • El Pollo de Oro

    Yes, the word “slaughter” does come to mind when I think of the economy of The Banana Republic of America (formerly Gli Stati Uniti). Some other words that come to mind: meltdown, depcapitation, annihilation, carnage, butchering, pummeling. What’s happening to the BRA economically is much worse than a recession. This is a depression. The BRA has been in a depression since Sept. 2008, and this is only Phase 1 of The Greatest Depression (as Gerald Celente calls it). Phase 2 is coming, and as miserable as Phase 1 has been for millions of Americans, Phase 2 is going to be much worse.

    I recently pointed out that according to economist John Williams of Shadow Statistics, the REAL unemployment rate in the BRA was 23% in April 2013. How does Williams arrive at that number? He includes all of the unemployed Americans who have been unemployed for so long that they have fallen off the government’s radar. In 1932 (the year FDR got elected for the first time), the
    unemployment rate in this country was 23%. So in other words, the BRA is experiencing Great Depression-level unemployment. But when Phase 2 of The Greatest Depression really kicks in, the suffering of 1932 will pale in comparison.

  • Jimbo

    Debt and deficit do matter. A countries economy is governed by the same basic economic math as a household or business. Debt has to be controlled to a level that is serviceable. Anyone with a mortgage knows what interest rates do to repayments. A home owner who doesn’t pay their mortgage gets foreclosed and a country is no different. Countries have a few tricks up their sleeves to stall foreclosure and that is what is happening now. A lot of the tricks are smoke and mirrors and the grand finale of the show is QE stimulus. Yes, you can grow yourself out of debt to a point where interest payments become loose change but where will the growth come from? Who would open a factory in the US today knowing that whatever they made, someone in China could make it for far less?

  • FounderChurch

    CONSERVATIVE WHINER LOSERS by FounderChurch at Gmail.

    Rush is wrong when he says Liberals are whiners, they are not. The real whiners in this country are the Conservatives. And here is why:

    No one on earth can out whine a Conservative Religious person. He whines from the moment he opens his, or her, eyes in the morning till the moment he, or she closes their eyes at night.

    Liberals do not whine, instead they demand, insist, threaten, curse, hit, and break laws. They aggressively ask for, and demand what they want, AND THEY GET IT, MOST OF THE TIME.

    Conservatives never do any of these things, instead they whine and complain, and constantly say, “Ain’t it Awful” this, and “Ain’t it Awful” that.

    And in return for their whining, they get nothing. The Bible says, Knock and the door will open to you, and Ask and it shall get what you ask for. Nowhere does it say if you whine you will be given this or that.

    LET ME HEAR WHAT ANY OF YOU HAVE TO SAY ABOUT THIS….

    • Shmeggle Marxist

      LMAO

  • Mondobeyondo

    Somewhere out there is a piper, who’s desperately asking for his money. The debt bills are coming due. We are about to reap the harvest of the false prosperity we’ve enjoyed the past few decades.

    Time to pay the piper.

  • Adrian

    What’s funny about so many on this blog is that the premise is that our economic system is about to come crashing down. Be that as it may, so many fans of this site are also rapid defenders of the capitalist system that is in decay all around the globe. They don’t seem to realize that true capitalism has been hijacked long ago, and that capitalism without serious government oversight and redistribution is unworkable. Go ahead and think what you will, but just know that your points are very inconsistent.

    • Adrian

      Anyone who disagrees, instead of voting down and running off, perhaps you’d like to debate my premise?

  • seth datta

    This is not encouraging, combined with the Chinese economic slowdown. We all know that whether it takes a few months, or in my belief a few years (quite possibly another ten or so), that the collapse of the economy, on quite possibly a global scale, is happening.

    Some people still will continue to have their heads up their proverbial arses. Even up to the very end.

  • Cincinnati Dave

    You are correct when you say that this is just the beginning. The market is so incredibly emotional. Bernanke speaks a few words to the effect that QE may begin to taper off and the market FREAKS OUT! Sound economic principles went out the window years ago. The crash is coming. It is only a matter of time. We in America are in DEEP trouble and 99% of the population has NO IDEA of what is going to transpire. It is very sad that we have sunk to this level. There is no real leadership in any branch of our government. Very very sad.

  • Cincinnati Dave

    It is not IF it is WHEN – it’s coming –

  • Shmeggle Marxist

    where are all the jew haters out there. cmon’, start blaming the jews!

    • Shmeggle Marxist

      LMAO at voting down. lmao lmao lmao

    • Hammerstrike

      Better yet, blame socialism!

    • musimann

      OK……. and Jews invented socialism too.

  • Hammerstrike

    Why would they do that?
    They are trying to pull a scam of some sort.

  • Gene Baugh BBA

    Am I being censored on this website? I never see my own posts.

  • Bob

    “Ordo Ab Chao”…..Order Out Of Chaos my friends. The stage is slowly being set to collapse the global financial system by design.

    They are planning to push the big red reset button which will enable the globalists to usher in a new world of total control. Out of the flames of chao will come a reduced number of banks which will centralize the new financial power into the hand of just a few. A new global currency will be issued from a centralized global bank backed by law from a new global government. From the inevitable civil unrest, war and subsequent starvation that will ensue from this complete collapse will result in a reduction the number of people on the planet in line with the United Nations, 1992 agenda 21 mandate. Due to the extreme conditions the people will suffer, they will be only too happy to give up all their remaining rights and liberties and will accept any new norm that will be forced upon them.

  • musimann

    I understand Obama is going to write off the 1st half of his second term as a total loss. With his endless Bush wars, arming Al Qeada fanatics to spread “democracy”, debt bombing the nations and now officially overrunning the country with hordes of undocumented democrats, there’s not much left to to do but have a gay old time with Scalia.

  • Blaming

    That’s my feeling. They will double down because they wish to slaughter the price of gold to bankrupt everyone else, buy it up cheap in vast quantities that no one else can touch. After they’ve got their hands on the bulk of it (“they” = wealthy socialists bent on a one world government), will ease off QE which will cause out of control inflation for things we need (bread, milk, energy), and cause deflation in the struggling-to-recover housing market and that just about drains every last penny from any normal person who has anything left from the last crash. The End.

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