Saturday , 22 October 2016

When the Bond Bubble Bursts – Its Just a Matter of Time – It Will Wipe Out Every Asset – Including Commodities

Michael Pento sees the current financial conditions as creating the most dangerous markets he hasdollar bubbles ever witnessed… suggesting that “The membrane has been stretched so wide and so tight that its about to burst.”

The comments above and below are excerpts from an article by Michael Snyder ( which may have been enhanced – edited ([ ]) and abridged (…) – by (Your Key to Making Money!)  to provide you with a faster & easier read.

Pento believes that once the bond crash happens (i.e., when policymakers signal they are set to stop buying, which will stop bond prices rising), it will trigger a cataclysmic wave of crashes saying…“When the bond market breaks, when that bubble bursts, it will wipe out every asset, everything will collapse together…I mean diamonds, sports cars, mutual funds, municipal bonds, fixed income, reits, collateralised loan obligations, stocks, bonds – even commodities – will collapse in tandem along with the bond bubble burst.”…

[Indeed,] the situation in China has grown so dire that the Bank for International Settlements is sounding the alarm… warning in its quarterly report that China’s “credit to GDP gap”…[at 30.1, is now in] a different league altogether from any other major country tracked by the institution. It is also significantly higher than the scores in East Asia’s speculative boom on 1997 or in the U.S. subprime bubble before the Lehman crisis.

…Studies of earlier banking crises around the world over the last sixty years suggest that any score above ten requires careful monitoring.

If you are not familiar with the Bank for International Settlements, just think of it as the capstone of the worldwide financial pyramid.  It wields enormous global power, and yet it is accountable to nobody…Normally the Bank for International Settlements is not prone to making extremely bold pronouncements, and so this warning about China seems a bit out of character.

Is something going on behind the scenes that we don’t know about? Without a doubt, the global financial system is shakier and more vulnerable than most people would dare to imagine.  Global central banks have been on the greatest money creation spree in recorded history, and interest rates have been pushed to ridiculously low levels. If you can believe it, approximately 10 trillion dollars worth of bonds are trading at negative interest rates right now.  This is completely and utterly irrational, and when this giant bond bubble finally explodes it is going to create a crisis unlike anything the world has ever seen before…

Never before in history have we had a stretch like this without major economic and financial consequences…History has shown that every bubble bursts eventually, and when this bubble bursts, it is going to make 2008 look like a walk in the park.

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One comment

  1. From a reader to me directly:

    The statements made by Michael Pento, are not only disturbing by their content, but by the fuzziness of their generalities.

    >Who are the “policymakers” specifically?
    >Will bond buying ever really STOP?
    >How can he state with such certainty that every asset class will suffer with a collapse in the bond market? >When he says “even commodities,” does he mean edible ones along with inedible ones? I can never be sure if experts see gold and silver as mere commodities, or if they’re regarded as the only true “money” that will not only retain its value, but may appreciate significantly.

    A little specificity by Pento would help those of us who aren’t mind-readers.

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