Saturday, August 21, 2010

Government Bond Defaults And Currency Devaluations Coming

It’s no secret the economic data in the U.S. and other major economies have rolled over. That’s why bond yields have taken another nose dive — hitting record lows in Germany and nearing record lows in the U.K., the U.S. and Japan, as shown in the chart below.
The bond market is telling you directly …
“Forget the thoughts of recovery and hunker down for more economic pain and crisis.”
chart Clear Signals That Market Risk Is Elevating
While most of the banter through the latter part of 2009 was about an imminent run-in with inflation, the reality is, without demand, there’s no inflation!
Deleveraging is keeping demand depressed, making deflation the big threat. Indeed, especially given the world’s bloated debt problem.
The last thing you want when you’re saddled with debt is deflation. In a deflationary environment, money increases in value, but it’s much harder to come by. So those with debt tend to have a more difficult time servicing that debt.
That doesn’t bode well for economies that have recently been exposed as “at risk” of default.
When you put the pieces of the puzzle together, it seems clear that the sovereign debt problems that served as a warning signal in the first half of this year will end in government bond defaults and currency devaluations.
More here..


  1. All this means is I will have to use the same coffee grounds a few more times, taste the beer instead of guzzling it and eat like a man instead of a hog.

    I can handle that. How 'bout you...

  2. What will deflation look like to the middle class families in the United States? I am not very savy on economics but I am trying to learn and waking up to the pain and suffering ahead.

  3. 358 you had better stock up on freeze dried food and water, medical needs and means to protect yourself, if not you will be toast, quickly.


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