- Jim Willie: The Bond Market Is The Fuse That Will Light The Financial Markets Bonfire
by Jim Willie, http://www.goldenjackass.com/, via https://www.silverdoctors.com/
Many are the metaphors used to describe the agent that initiates a major crisis. Light the fuse, or pull the trigger, pull the rug out from under the room, or pull on the string for unraveling the sweater, these are commonly heard. What comes soon is the Bonfire of the Vanities, a term the Jackass prefers since irony is thick. Hardly the burning of objects deemed as tempting toward occasions of sin as in the 15th Century. In the present-day case, the burning would be of the massive piles of paper assets the US Federal Reserve has been illicitly supporting for the past several years. The bonfire would be of falsely valued heaps of paper. If truth be known, the Quantitative Easing was put in place in 2012 when the big US banks were all in danger of failures. They required amplified liquidity infusions in order to prevent these giant silos of insolvency from entering financial failure. Their huge bond holdings were supported. Generally, when insolvency meets illiquidity, big failures occur. The USGovt and USFed colluded to prevent the entire set of Wall Street banks from failing like Lehman Brothers did. They all had the same ugly insolvent traits. Few tell the story correctly, but Goldman Sachs and JPMorgan suffocated Lehman to death. Lehman did not fail without help. Like Chief Justice Scalia, Lehman was suffocated in a bed of unpaid bond sales. What comes next is a nasty corrosive dangerous sequence of financial market crises, where pumped paper assets suffer notable declines. It will include the stock, bond, and currency markets. The last times all three suffered simultaneous declines was 1979 and 1987. Add soon 2018.
GLOBAL SYSTEMIC LEHMAN EVENT
What comes next is what the Jackass has come to call the Global Systemic Lehman Event. For ten years, the Powers that Be, namely the banker cabal, have been supporting the entire global bond market in almost exactly the same manner as they supported the mortgage finance market in 2005 through 2007 before it erupted. The subprime bond market crisis of 2008 will be repeated, but on a global scale which includes major sovereign bonds. Recall that Greenspan justified the off-loading of risk, and Bernanke justified the asset backed bond market as sound. They were both wrong, both heathen heretics. It can accurately be said that these top-rated sovereign bonds are all subprime, with horrendous fundamentals led by grand deficits and economic recessions.
The entire Western world bond market and stock market has subprime traits. The worst offender is the United States, with its $550 billion annual trade deficit, expected to go over $600 billion this year. The USGovt deficits have been running regularly at over $1.0 trillion each of the last three years, despite fanciful adjustments and clever line items in perverse one-off attempts to conceal reality. New military budget additions and tax reforms will ensure a larger federal deficit this year, unless and until the nation enjoys a renaissance of re-industrialization with 100 thousand new businesses formed and several $trillion invested. Not likely.