(quote Martin Weiss)
Massive government borrowing and money printing have global investors stampeding for the exits: The U.S. dollar is plunging ... yields are surging ... gold and silver are on a rampage.
BEWARE: Historic stock market bloodletting just ahead — contrarian investments set to soar.
We told you this day would come; and it is dawning NOW:
Yesterday, the price of long-term Treasury bonds collapsed and they’re continuing to fall this morning. Overall, they’re down more in the last five months than at any time in decades.
Two months ago, in the April issue of our Safe Money Report, we warned about this. We told readers the next giant shoe to drop would be a fiasco in the Treasury bond market. Now it’s happening!
By absorbing trillions of dollars of toxic assets, we explained, “Washington has transformed itself into a toxic government. So it should come as no surprise that the government’s most volatile securities — bonds — will be the next victim of the market’s revenge.” We concluded:
“Now, brace yourself for the next shoe to drop in this massive debt crisis: Government bonds!”
We’ve sent you this message over and over again in all our publications.
I made it the centerpiece of the white paper I presented to the press at the National Press Club in March and then delivered to Congress the same day.
I’ve shouted it from the rooftops and distributed it to thousands in the media of all persuasions
My message was — and is — simple:
• There are severe limits on how much Washington can loan or commit to save failed corporations and stimulate the economy.
• The day will soon come when our skyrocketing federal deficits, massive Treasury borrowing and Federal Reserve money-printing turns U.S. stocks and bonds into an exploding time bomb for investors worldwide.
• When global investors begin recoiling in horror, there will be hell to pay. And when concerns about America’s top credit rating surface, we’ll see investors stampeding for the exits, crushing the U.S. dollar and stock market.
Every one of these dire forecasts
is now being fulfilled — in spades!
Just yesterday ...
• Steven Hess, lead analyst for Moody's Investors Service warned that the AAA rating on the United States is not guaranteed. "There are longer-term pressures on the rating, that's very clear," he said.
• Bill Gross, manager of the world's biggest bond fund PIMCO, warned that the United States will eventually lose its top AAA credit rating and any downgrade would crush the investment markets. “The market will recognize the problems before the rating services — just like it did today," said Gross.
• Even U.S. Treasury Secretary Timothy Geithner sounded the alarm yesterday. In testimony before Congress, Geithner warned, "We must get our fiscal house in order or risk having government borrowing crowd out productive private investment.”
• In its minutes Wednesday, the Fed said that, to reduce the tidal wave of U.S. Treasuries now flooding the market, it will probably have to kick the printing presses into overdrive and buy those Treasuries itself! But the supplies of Treasuries dumped on the market are so overwhelming, even the Fed can’t stop Treasury bond prices from collapsing.
And even though these are just the first of many voices, the investment markets are already recoiling in horror.
Treasuries plunged; yields on the benchmark 10-year treasury exploded to nearly 3.4%. The U.S. dollar plunged to a four-month low. Gold and silver took off like a pair of scalded cats. And the Dow sank.
Global investors are saying, “Enough is enough!”
Look: When China, Japan and other foreign investors cut back their buying of U.S. Treasury bonds — or sell more than are being bought — interest rates inevitably soar.
In more normal times, that might be tolerable. But at a time like this — with the U.S. economy already in the tank — higher interest rates will positively kill stocks. And, they will hand contrarian investors windfall profits.
(quote Martin Weiss)
Follow these guys for over 5 years and they have never been wrong over time. They warned about the housing collapse years before it happened and the end is not in sight.
Erik
