Global systemic crisis: Get ready for the meltdown of the US Treasury Bond Market (LEAP/E2020)

[Tace]

Mar. 17, 2011 -- Public announcement GEAB N°53 (LEAP/E2020) -- Beyond its tragic human consequences (1), the terrible disaster that has just hit Japan weakens the shaky U.S. Treasury Bond market a little more.

In the GEAB No. 52, our team had already explained how the sequence of Arab revolutions and the fall of the “petro-dollar” wall (2) would translate during 2011 into the cessation of the massive purchases of U.S. Treasury Bonds by the Gulf States. In this issue, we anticipate that the sudden shock experienced by the Japanese economy will lead not only to the halt in U.S. T-Bond purchases by Japan, but it will force the authorities in Tokyo to make substantial sales of a significant portion of their U.S. Treasury Bond reserves to finance the enormous cost of stabilization, reconstruction and revival of the Japanese economy (3).

With Japan and the Gulf States alone accounting for 25 percent of the total 4.4 trillion USD of U.S. federal debt (December 2010), LEAP/E2020 believes that this new situation which is asserting itself during the first quarter of 2011, against a background of China’s increasing reluctance (holding 20 percent of U.S. Treasury Bonds) to continue to invest in U.S. government debt (4), carries the seeds for the collapse of the U.S. Treasury Bond market in the second half of 2011, a market that now has only a single buyer: the U.S. Federal Reserve (5).

It is certain that the context of the crisis of U.S. local authority securities (Munis) and European government debt (the entire periphery of the EU, including the United Kingdom) that our team anticipated for this time frame (see GEAB N°50 ), will only exacerbate the event. Moreover, it is highly significant that PIMCO the world’s largest bond fund manager decided, at the end of February 2011, to liquidate its US Treasury Bond holdings. And that was before the disaster in Japan (6)!

more

http://worldnewstrust.com/all-content/global-systemic-crisis-second-half-of-2011-%E2%80%93-get-ready-for-the-meltdown-of-the-us-treasury-bond-market-leap/e2020.html

[dkf]

1. It might not even take bond vigilantes to screw us up.

Just a disaster hitting our major buyers...

[lbrtbell]

2. More good news!

:sarcasm: :cry:

[abelenkpe]

3. Love this bit

(snip)


But beyond the Japanese and Arab shocks (see GEAB N°52 ), the process of US Federal debt market implosion in the second half of 2011 is accelerating under the effect of four other events:

. the introduction of budget austerity in the US (as anticipated in GEAB No. 47) which condemns US local authorities to a major crisis in the market for their debt ("Munis")
. impossible for the Fed to introduce QE3
. the inevitable rise in interest rates against a backdrop of global inflation
. the end of safe-haven status for the US currency.

Of course, these events are related and, characteristic of a major crisis, we are entering a period that will see a mutual strengthening of their effects, leading to this sudden shock in the second quarter of 2011. Incidentally, we could add a fifth event: the complete decisional paralysis of the US powers. The daily confrontation on virtually all subjects, between Republicans (hardened by the "Tea Parties") and Democrats (demoralized by an Obama administration that has betrayed the substance of its campaign promises (7)), tends to show, a little more each day, that Washington has become a sort of "Ship of Fools ", tossed about by events, without any strategy, without willpower, incapable of action(8); in other words, according to LEAP/E2020, when the US Treasury Bond collapse begins, one cannot expect anything from Washington other than a colossal squawking that will only worsen the crisis.
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[Jack Sprat]

4. What effect will this have on bond funds

mutual bond funds invested entirely or heavily in U.S. Treasury bonds?

[Po_d Mainiac]

5. big hurt....esp the longer termed ponzi paper n/t

[pscot]

6. Rates up, prices down

Same as it ever was.