- Greece is the Canary In the Coal Mine for the $100 TRILLION Bond Bubble!
by Phoenix Capital Research, www.zerohedge.com
Will Greece Burst the Bond Bubble?
For over 30 years, sovereign nations, particularly in the West have been buying votes by offering social payments in the form of welfare, Medicare, social security, and the like.
When actual bills came due to fund this stuff, Governments quickly discovered that current tax revenues couldn’t cover it (see the image below)… so they issued sovereign debt to make up the difference.
And so the global bond bubble was created.
As far back as 2009, most Western nations were completely bankrupt when you consider unfunded liabilities from their social policies. But Central Banks did everything they could to paper of this fact by soaking up as much bond issuance as possible while simultaneously maintaining zero interest rates.
Throughout history, Central Banks have tried to inflate away debts for as long as possible. They do this right up until:
1) The debt loads are impossible to manage, or…
2) It becomes politically unsavory to print more money.
We have just reached #2 for Greece.
As the above chart shows, Greece has always been the worst offender as far as excessive social programs spending relative to tax revenue. And so it was not surprising that Greece was the first nation to enter a sovereign debt crisis back in 2009/2010.