10/12/2022 / By Mike Adams
The global debt market is orders of magnitude larger than the stock market, and debt instruments across the globe have nearly reached the breaking point due to the Fed’s steady increase in interest rates this year (combined with seemingly endless money printing and other disastrous fiscal policies).
Because bond values have an inverse relationship with interest rates, as interest rates go up, the value of bonds and other debt instruments already issued goes down. With each Fed rate increase, bond values are cratering, leaving debt investors holding substantial losses and leading to a collapse in the number of potential buyers even willing to take possession of these bonds.
As investor Larry McDonald says in this Marketwatch article, “things are breaking.” From the article:
Pointing to the bond-market turmoil in the U.K., McDonald said government bonds with 0.5% coupons that mature in 2061 were trading at 97 cents to the dollar in December, 58 cents in August and as low as 24 cents over recent weeks.
When asked if institutional investors could simply hold on to those bonds to avoid booking losses, he said that because of margin calls on derivative contracts, some institutional investors were forced to sell and take massive losses.
McDonald said that if the Federal Reserve raises the federal funds rate by another 100 basis points and continues its balance-sheet reductions at current levels, “they will crash the market.”
In Tokyo, the Bank of Japan has been unable to find a single buyer of 10-year Japanese Government Bonds (JGB) for the last three days. As ZeroHedge reports:
Simply put, as one veteran JGB trader remarked privately to us, “there is no [cash] market anymore.”
Traders also lack the incentive to trade benchmark 10-year notes because they expect yields to rise as the Fed aggressively tightens monetary policy, according to Mitsubishi UFJ Morgan Stanley Securities.
It’s not just Japan, either. From that same article:
Bank of America analysts warned in a note this month that shrinking trading volumes in the US Treasury market may be one of the greatest threats to global financial stability.
In other words, the ability of the US Treasury to sell its own debt is rapidly dwindling. At some point there will be no buyers at all, and the Fed will have to be the buyer of last resort, which will initiate the last spiral of currency collapse that brings America to its knees.
Not to be outdone in the realm of financial panic buttons, the governor of the Bank of England, Andrew Bailey, just warned investors that they had three days to liquidate debt holdings before the BoE pulls out and stops buying up all the failing gilts (bonds) that fund pensions in the UK.
“My message to the funds involved and all the firms is you’ve got three days left now,” Bailey just said on Tuesday. In doing so, he essentially set the countdown timer on a massive debt bomb that’s going to detonate as soon as the Bank of England stops buying all the failed debt instruments that are propping up the entire UK pension system.
And what’s the explanation for why this is happening? “Market volatility went beyond bank stress tests,” Bailey explained, which essentially means something along the lines of, “We never anticipated a crash this big and can’t stop it.”
The pensions, it turns out, are headed for collapse. The Bank of England is in survival mode, and the Euro is in deeper trouble with each passing day.
As Gregory Mannarino says in a recent market analysis video, “Bond Market Very Close to Crash” according to the IMF, one of many institutions now sounding the alarm on the accelerating downfall of global debt instruments.
Despite all the damage being done to the debt market, the Fed is hell bent on raising interest rates until European financial instruments break. As Tom Luongo explained in a recent interview, the Fed is at war with European globalist banksters and is using interest rates as a weapon to collapse European industry and financial solvency.
In that interview, I compared this Fed action to chemotherapy: It’s poisoning the entire patient (the world’s economy) in order to take out a tumor (European socialist banksters). Just like with chemotherapy, the cure is often worse than the disease, as the Fed’s policy is annihilating the US economy (and eventually, the US stock market) at the same time it’s wreaking financial havoc across Europe. “Victory” may come at an extremely high cost, including the collapse of the stock market, housing market and bond market.
Higher inflation and higher debt costs are causing a collapse in consumer demand for goods and services. As Hellinic Shipping News reports, international cargo shipping rates have plunged 75%. From that article:
Trans-Pacific shipping rates have plummeted roughly 75% from year-ago levels. The transportation industry is grappling with weaker demand as big retailers cancel orders with vendors and step up efforts to cut inventories. FedEx Corp. recently said it would cancel flights and park cargo planes because of a sharp drop in shipping volumes.
It turns out that Americans have run out of stimulus money and are mired in too much debt. Now, they’re sharply curtailing purchases, causing a sharp fall in retail activity and subsequent factory orders. This will result in employers firing workers in the months ahead, accelerating unemployment across the country.
When the markets implode, most Americans will lose their investments and their pensions, causing a wave of protests to erupt across the cities as mass destitution and famine kicks in.
This collapse cannot be avoided. It is already set in motion, and now we can only watch as it plays out, taking down the western financial system (and entire nations) while leaving the people to rot in the (filthy) streets, homeless, penniless and hopeless. In Germany, people are scouring the rural areas for horse poop to burn in their wood stoves this winter.
Perhaps if they run out of horse poop, they can burn the currency. It will soon be worthless anyway.
We are watching it all unfold in real time, and it’s no coincidence that we are right in the window of crash cycles predicted by Aaron Brickman in a previous interview (he joins me again this Sunday night to give us an update on the situation).
In the mean time, here’s my analysis of what’s happening right now, via Brighteon.com:
– Global DEBT markets are on the verge of collapse
– The bond market is melting down with 75% losses of some bonds
– Bank of England warns investors they have THREE DAYS to liquidate
– Japan’s 10 year govt. bond has ZERO buyers for 3 days
– Russian troops pour into Belarus by the train load
– Russia preparing for massive attack on Ukraine
– Tulsi Gabbard leaves demonic Democrat party and bashes their insanity
– Pfizer admits covid vax NEVER tested against transmission of covid (was all fraud)
– Pentagon says biological gender counts for the draft, all those born as males must register
– French gas police won’t allow you to buy gas unless your car is near empty
– Germany to burn 800 million covid masks to produce HEAT (finally found a use for these)
– Europeans are panic buying firewood
– Some are gathering horse poop to burn for heat
Watch at these links:
Brighteon: Brighteon.com/d76dd2ca-0c4c-4158-b925-8672a7c2d3d6
Bitchute: Bitchute.com/video/80hKa73x0uQv/
Rumble: Rumble.com/v1nnejm-situation-update-10122022-global-debt-markets-are-breaking….html
Banned.Video: Banned.video/watch?id=6346ce3bfae3cc4ddba3c7fc
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Tagged Under:
banking, bonds, central banks, Collapse, currency, debt, economics, economy, Federal Reserve, finance, pensions, risk, stock market
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