Best of the Week
Most Popular
1.Stock Market Crash and Recession Indicator Warning: Extreme Danger Ahead - Harry_Dent
2. Is This How World War III Begins, In Almost Complete Silence? - Jeff_Berwick
3.Trump Wins 2nd Presidential Debate, Betfair Betting Markets Odds Bounce - Nadeem_Walayat
4.Why Krugman, Roubini, Rogoff And Buffett Dislike Gold - GoldCore
5.End of SPX Stock Market Correction Nears - Tony_Caldaro
6.Get Ready for the Future - Exponential Machine Intelligence Mega-trend towards Singularity - Nadeem_Walayat
7.US Housing Market Bubble II – It’s Happening Again! - Andy_Sutton
8.FTSE BrExit Stock Market Panic Crash Resolves towards New All Time Highs - Nadeem_Walayat
9.Can Trump Still Win Despite Opinion Polls, Bookmakers and Pundits all Saying Hillary has Won? - Nadeem_Walayat
10.Gold’s, Miners’ Stops Run - Zeal_LLC
Last 7 days
Establishment Mainstream Media Elite Buys US Election for Hillary Clinton, Time Running Out for Trump - 23rd Oct 16
Inflation About To Explode Higher - 22nd Oct 16
Still waiting for SPX uptrend to kick off - 22nd Oct 16
Will a Rising US Dollar Crush Gold’s Fledgling Bull? - 22nd Oct 16
Why The Global Economy Will Disintegrate Rapidly Back to Olduvai Gorge - 22nd Oct 16
GLD Bleeds Out; Weekly Gold Update - 22nd Oct 16
Stock Market Investment Success Through the “Investment Rule of 72” - 21st Oct 16
The Final Bottom in Gold - WHEN - 21st Oct 16
Gold Green Lights Upleg - 21st Oct 16
Demand for US Mints Silver Eagles has ‘Returned with a Vengeance’ - 21st Oct 16
Central Bankers Can't Stop The Death Blow Of The Post US Election Recession - 21st Oct 16
The Fortune at the Bottom of the Pyramid: Golden Opportunity for Frontier Asia - 21st Oct 16
Have You Taken These 4 Simple Steps to Improve Your Trading? - 21st Oct 16
The Stock Market is an Accident Waiting to Happen - 20th Oct 16
It's Rally Time for Gold and Silver Equities - 20th Oct 16
Cashless Society – Risks Posed By The War On Cash - 20th Oct 16
China's insane Housing Market Will Tumble and Crash in 2017 - 20th Oct 16
Donald Trump Bounces Going into 3rd and Final US Presidential Election Debate - 20th Oct 16
Attention Please: Phase Two of the Gold and Silver Train Now leaving the Station. All Aboard? - 19th Oct 16
How to Successfully Trade a Stock Market Crash - Black Monday October 19th 1987 - 19th Oct 16
Tesla, Apple and Uber Push Lithium Prices Even Higher - 18th Oct 16
Silver, Debt, and Deficits – From an Election Year Perspective - 18th Oct 16
UK Property Market: Slow Growth Does Not Equate To Decline - 18th Oct 16
Trump Election Victory is in Your Power - 18th Oct 16
Stock Market More to Come! - 18th Oct 16
This Past Week in Gold and Silver - 17th Oct 16
A Falling Stock Market Cannot Be Allowed - Financial Repression Is Now “In-Play”! - 17th Oct 16
Commodities, Forex and Stock Market Trend Forecasts - 17th Oct 16
Stock Market Crash..or No Crash? - 17th Oct 16
A perspective on risk rally – Risks abound but Stock Market is Confident - 17th Oct 16
Bank of England Blames Brexit for Sterling Drop Inflation, Masks QE Money Printing Cause - 17th Oct 16
From Piety to Pride to Pity, America's Racial Divide - 17th Oct 16
Is Obama Juicing US Government Spending To Get Hillary Clinton Elected? - 16th Oct 16
Seek Your Independence: Anything Else Will Destroy You - 16th Oct 16
SNL - US Presidential Debates, 1st, 2nd, VP - Like You've Never Seen them Before! - 16th Oct 16
End of Economic Growth Sparks Wide Discontent - 16th Oct 16
Donald Trump on Life Support, May Abandon Election Campaign and War on Republican Party - 15th Oct 16
The Gold Manipulators Not Only Will Be Punished, They Have Been Punished - 15th Oct 16
Black Votes Matter - Is the US on the Verge of Mass Race Riots? - 15th Oct 16
Gold Stocks Screaming Buy - 14th Oct 16
Brace Yourself for the Quadrillion-Dollar Reckoning - 14th Oct 16
The Next Recession Will Blow Out the Budget - 14th Oct 16
John Mauldin: My Infrastructure Plan to Save the US Economy - 14th Oct 16
World War III On The Brink: War Will Continue Until It Triggers Economic Collapse - 14th Oct 16
US T-Bill Rejection At Ports In Progress - 14th Oct 16
These 2 Debt Instruments Pose Peril to Millions of Investors - 14th Oct 16
China’s Rocketing Housing Market Real Estate Bubble - 14th Oct 16
DIY Winter Home Maintenance Money Saving 22 Point Checklist to Get Ready for Winter/Fall - 14th Oct 16
US Stock Market, Big Picture View - 13th Oct 16
Stock Buybacks Main Force Driving Bull Market; Rewards Investors and Starves Innovation - 13th Oct 16
SPX Gapping Down... - 13th Oct 16
Syria - Obama Stepped Back From Brink, Will Hillary? - 13th Oct 16
The Structure and Future of Gold in the Investment and Monetary World - 13th Oct 16
Can Trump Still Win Despite Opinion Polls, Bookmakers and Pundits all Saying Hillary has Won? - 12th Oct 16
Gold and Crude Oil - General Stock Market Links - 12th Oct 16
Samsung's Galaxy Battery Just The Tip Of The Iceberg - 12th Oct 16
Hillary: Deceit, Debt, Delusions (Part Two) - 12th Oct 16
Gold and Silver Metals Show Strength Relative to the USD Index - 12th Oct 16
Announcing Trader Education Week -- a Free Event to Help You Learn to Spot Trading Opportunities - 12th Oct 16
Confirmed Stock Market Sell Signals - 11th Oct 16
Hillary Deceit, Debt, Delusions - 11th Oct 16
Trump Support Crashes to New Low of 6.4 on Betfair Odds Betting Market - 11th Oct 16
The World Is Turning Dangerously Insular - 11th Oct 16
An American Tragedy: Trump Won Big - 11th Oct 16

Free Instant Analysis

Free Instant Technical Analysis

Market Oracle FREE Newsletter

LEARN to Trade

United States Day of Reckoning Treasury Bond Market Collapse Underway

Interest-Rates / US Bonds Feb 01, 2009 - 01:10 PM GMT

By: Money_and_Markets


Diamond Rated - Best Financial Markets Analysis ArticleMartin Weiss writes: If you read just one of my Money and Markets issues this year, make sure it's this one.

You will not hear what I'm about to say from our nation's leaders. Nor will it pour forth from talking heads on Wall Street.

They are still driven by their zeal for bigger campaign contributions or the lust for fatter year-end bonuses.

My sole mission is to help you preserve your wealth and your income — to set you free from escalating worries about how deeply this great crisis could threaten your financial security.

That done, you can actually use this massive global crisis to grow your wealth, even while millions of other investors could lose nearly everything.

My New Warning

Some will say that the new warning I'm about to give you is too outrageous; too extreme. But they've said the same about nearly every other warning I've issued in recent years:

In 2005, with real estate values still soaring by double digits each year, almost everyone was urging you to buy homes, commercial properties, real estate stocks and REITS mutual funds.

But we warned that the housing bubble was about to burst, and that real estate investors would have their heads handed to them. We begged you to sell and get your wealth to safety.

If you heeded our warning, you didn't lose a penny as real estate cratered.

In 2007 , almost everyone — including Fed Chief Ben Bernanke — was swearing that the crisis would be “contained,” only impacting the niche of subprime borrowers and lenders.

In contrast, we warned that the bloodletting would spread like wildfire to America's largest banks … and we implored you to speed-dial your broker to sell every bank stock in your portfolio.

If you heeded that warning and sold as we instructed, you didn't lose a penny as they plunged as much as 100% in value.

In 2008 , most pundits swore on a stack of Bibles that the trillions of dollars Washington was throwing at this crisis would miraculously end it; and Wall Street urged you to buy stocks they claimed were selling at “bargain” prices.

But month after month, as Washington unveiled one new handout scheme after another, we told you that they didn't have a snowball's chance of ending the crisis … and we urged you to sell ALL stocks in order to preserve your wealth.

If you heeded those warnings, you didn't lose a penny as the Dow suffered its worst one-year decline since 1932.

And now , as we put the first month of 2009 behind us, we are nearing Washington's great day of reckoning. On the not-too-distant horizon, we can already begin to see …

  • The end of Washington's futile attempts to stop the explosive collapse of the U.S. economy and stock market …
  • The end of the slow-motion disintegration we've seen in corporate earnings, stocks and bonds, plus …
  • The end of the slow, incremental rise in unemployment.

And just beyond that horizon, don't be surprised to see …

  • A massive collapse in the economy and stock market, triggering a tidal wave of bankruptcies, despair and even homelessness …
  • A massive, global cleansing of the debt that caused this crisis …
  • And, provided we avoid some major pitfalls, the first step toward rebuilding the foundations upon which our economy can grow for generations to come.

Before Washington's day of reckoning, the American people think that government resources are abundant and even unlimited; after the day of reckoning, those resources suddenly become scarce, often non-existent.

Before the day of reckoning, it's widely believed that the government has the power to prevent, end, delay or cushion this crisis; after , it's finally recognized that the government's actions merely deepen, aggravate and prolong the crisis.

Before, the government remains committed to doing everything it can to fulfill the people's belief; after, it begins to abandon its rescue efforts, allowing the economy to fall on its own weight.

Suddenly, government omnipotence is replaced by government impotence; generous largesse is replaced by miserly penny-pinching.

The Reason: Most of Washington's Big Credit Lines Will Be Severed!

If you or I spend hundreds of thousands more than we earn each year … and then borrow nearly every penny we need to pay our bills, it's called “insanity.” When Washington does it, nobody bats an eyelash.

Even before this new phase of the crisis burst onto the scene, Washington was living far beyond its means — spending hundreds of billions more than it earned each year; then borrowing hundreds of billions just to pay its bills.

Now, it's much worse. Due to massive federal bailouts, plunging tax revenues, and surging social costs, the Congressional Budget Office forecasts Uncle Sam will have to borrow $1.2 trillion in new money to fund its deficit this year, the worst of all time.

And that's assuming:

  1. no major decline in the economy,
  2. no $900 billion stimulus package, and
  3. no “bad bank” plan or other bank rescues.

The reality is that just ONE of these three new burdens to the federal budget could double the already-exploding deficit.

Washington may have to borrow $2 trillion, even $3 trillion.

Right now, Uncle Sam's sources of funds to finance its folly are already showing signs of drying up; and therein lies the limit to our government's power to finance a recovery.

Why can't Washington simply print the money it needs to pay all its bills and finance bailouts to its heart's content?
Because the mere FEAR of the consequences would turn Washington's creditors away and make it even more difficult for it to raise the funds it desperately needs to

  • meet debts coming due,
  • cover payroll, and
  • keep the government operational.

The key: It's already hard enough to persuade creditors to lend Washington funds even in the absence of inflation. If they get wind of money printing and foresee inflationary consequences — on top of the bankruptcy of America's largest institutions — it could become virtually impossible for Washington to borrow all the money it needs.

The U.S. Treasury's #1 Creditor: “We've had it!”

A bond market collapse is already under way.

Global investors are already growing skeptical that too many government agencies, corporations, states, counties and cities will be unable to make good on the interest and principal they're promising to pay.

And since December 18, we have already seen a sneak preview of what could lie ahead: A massive plunge in the price of Treasury bonds.

That price decline, however, is just ONE symptom of Washington's coming day of reckoning. Another is the sinking confidence in U.S. investments around the world.

Some prime examples:

  • Last Wednesday, at the World Economic Forum in Davos, Switzerland, China's Premier Wen Jiabao laid the responsibility for this global crisis squarely on Washington's doorstep: The financial crisis, he said, is “attributable to inappropriate macroeconomic policies and their unsustainable model of development characterized by prolonged low savings and high consumption; excessive expansion of financial institutions in blind pursuit of profit.”

The implication: A major, across-the-board reassessment in China's investments in the U.S.

  • Last year, China ended all new investments in a number of U.S. companies.
  • Also last year, China dumped $26.1 billion in Fannie Mae and Freddie Mac bonds — just in the five months ending November.
  • Major investors in Japan, Russia, Western Europe, the Middle East, and Latin America — whether politically aligned with the U.S. or not — are also showing signs of slowing down, stepping back, or even pulling out of U.S. investments.

Fast forward to Washington's day of reckoning and you will see how the bailout game could end:

On that day, Washington will have to either pay rates of interest that wound paralyze, and virtually KILL the economy … or it will have to slash and even abandon its bailout efforts.

Ultimately, it will have no choice but to step aside and let failing companies fail … collapsing industries collapse … and sinking markets sink.

The carnage will be traumatic and terrifying. But it will also be the beginning of the end of the crisis. Once trillions in toxic debt are swept away, America will finally be ready to lay the foundations upon which this economy can grow for decades to thereafter.

In the meantime, though, if you thought 2008 was a nightmare, brace yourself. The months ahead are likely to be far more brutal than anything we've seen so far.

Keep up to 90% of your money safe, following the specific instructions I have laid out here so often.

Plus, if you've been worrying about securing a recession-proof, depression-proof source of income and profit opportunities in this crisis …

Or if you've been hoping for a strategy that gives you the bona-fide power to add thousands of dollars per month to your family's bottom line …

We've just posted a full report that introduces you to all that and more.

The deadline is this coming week. So I suggest you act promptly.

Good luck and God bless,


This investment news is brought to you by Money and Markets . Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit .

Money and Markets Archive

© 2005-2016 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Catching a Falling Financial Knife