Sell-off in US Treasuries Raises Sovereign Debt Fears

Sell-off in US Treasuries Raises Sovereign Debt Fears

www.telegraph.co.uk

The yield on 10-year Treasuries – the benchmark price of global capital – surged 30 basis points in just two days last week to over 3.9pc, the highest level since the Lehman crisis. Alan Greenspan, ex-head of the US Federal Reserve, said the abrupt move may be "the canary in the coal mine", a warning to Washington that it can no longer borrow with impunity.
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the yield spike recalls the move in the spring of 2007 just as the credit system started to unravel.

(visit the link for the full news article)

For anyone who has been paying attention this is only the latest in a series of stories about the next phase of the economic crisis we are in the midst of weathering. Inflation caused by all that bailout money, war costs, government deficits etc.

There have been hints of interest rate hikes for a couple of months hidden in all the "recovery" happy talk we've been hearing lately and those hints are getting louder (see above).

Canadian banks have also just raised their prime rates and some central banks have done the same. In fact inflation rates (as measured by the consumer price index) have been "higher than expected" in Canada for the past couple of months.

The worm is starting to turn on interest rates and the only way is up.

There is finally too much debt to finance and the people lending the money are expecting a better return for the risk of lending to someone who is likely to default.

A couple of years ago I had called for 2009 to be the year of pain. Looks like I was off by a year. The squeeze is about to get underway. If your not already out of debt, it's almost too late.

Those who remember the late 70's and early 80's know what I'm talking about. This time there is no second wage earner to go out and get work.
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www.telegraph.co.uk
(visit the link for the full news article)

Originally posted by Gools


Those who remember the late 70's and early 80's know what I'm talking about. This time there is no second wage earner to go out and get work.

Boy do I. But many here will not. Nor will they understand how dire a warning that is.

Hopefully the geniuses in the Fed and the rest of monetary manipulation gang can come up with a recipe that won't utterly destroy what remains of our nation.

Hordes of teenagers citizens will be needed to help provide for their families as never before, all working for minimum wage.

At least their will be a surge in labor availability..... Lot's of under-the-table employment will happen... for less than minimum wage.

Perhaps this will be the tipping point, when the people decide with finality, that monetary policy is the domain of our government, and not private enterprise steeped in secrecy.

Hang on, if this is a deliberate message, this is going to be a bumpy ride. If it is fallout from global profit racketeering, well... we will surely never be told.

Well everyone I know including professional stock brokers etc. are still very surprised the market is up up and away even now. I mean economic indicators have hardly changed in the last year. The government is just out of control right now as far as spending. They are like a crack addict except money junkies. This cannot continue. Hence why I think war is on the horizon or some sort of terrorist attack. Something big to distract the people so something like the government looting of say pensions can take place and other backroom bs. Just entitlement spending alone i.e. medicare and social security we cannot keep pace with and are in the red. And what do those two things rely on? JOBS! JOBS! JOBS! Without jobs our country is finished. If the stock market is doing so well that supposedly means corporate America is doing well which should mean they are ready to hire........but as usual the stock market is in no way representative of mainstreet. There are no jobs and no one will be hiring anytime soon. Without jobs and with the current unemployment getting worse our country is finished. EVERYTHING starts to bottleneck. All these programs Obama is talking about like more funding for higher education? What's the point? There are no jobs........all these people that need help with their loans and paying for school will turn around and be sucking more money off the government through unemployment and welfare when they graduate because there are no jobs.

Why aren't there jobs? Because the government has made it absolutely impossible to run a business efficiently and productive and has obliterated manufacturing in this country. Everyday people and small businesses are moving out of California because of taxes and government. CA is a microcosm of the Federal government. Our country is heading into the direction of CA.......where the middle class turns into the rich and the poor.

reply to post by Zosynspiracy

Why aren't there jobs? Because the government has made it absolutely impossible to run a business efficiently and productive and has obliterated manufacturing in this country. Everyday people and small businesses are moving out of California because of taxes and government. CA is a microcosm of the Federal government. Our country is heading into the direction of CA.......where the middle class turns into the rich and the poor.

WE NEED TARIFFS ON OUR IMPORTS. You can put the taxes down to nothing and it will still not stop the outsourcing of jobs because our freakin tariffs are too low.

If we don't change our trade laws...we are as good as cooked.

Putting Tariffs on imports would be called "Protectionism".
Yeah, I agree, though. Without Tariffs, American companies simply can NOT compete with foreign crap that comes in without cost.

I would really like to learn from people like Maxmars what the past was like.

Those of us that were not around in the late 70's/early 80's. Do the conditions today kinda resemble that, minus the gas shortages?

reply to post by LostNemesis


U.S. corporations make more money in other countries -- most of the imported crap is from U.S. partnerships with China for example -- U.S. corporations!

That's one of the main ways to avoid taxes -- the U.S. corporation switches their profits to the low tax country and then their losses to the high tax country -- just through internal "trade."

It's all a big scam -- a global elite runs the WTO which has secret meetings -- and then the international bankers, etc.

Originally posted by Zosynspiracy
Why aren't there jobs? Because the government has made it absolutely impossible to run a business efficiently and productive and has obliterated manufacturing in this country.

It wasn't all the government's fault either.

Remeber the boom in corporate registration in the late '70's and early-to-mid '80's?


While the "Good Times" rolled, folks were jumping on all sorts of hair-brained schemes to "cash in" on the easy money promised by lax rules governing the taxation of corporations: Deleware anyone?


As I recall the was even a book out called "How To Incorporate Your Dog"!


Of course most of these failed.
But far too many of them made just enough money to be bought up by other corporations in the Nineties: Remember the "leveraged buy-outs", the "hostile take-overs", the mass "ameboa-ization" of "Diversification" that led to the expoential spawning of "Mega-Corporations"?


Those huge mega-multinationals were (and are, to this day) beholden to their shareholders: individuals and entities who could give a rat's diseased sphincter about the needs of peons like you and me.

Just as long as the dividend gravy train keeps chugging into their pockets!


And so, when greener (read: cheaper) pastures beckoned in foreign lands, the corporations naturally followed; taking thier jobs and middle-class security with them.



Face it, the Only thing that could have kept America's "manufacturing base" from jumping ship, as it where, would be if the vast majority of America's middle-class were to have decided, en mass, to lower their expected strandard of living to a level comparable to that of a child laborer in a Jakarta sweat-shop!

Everyday people and small businesses are moving out of California because of taxes and government. CA is a microcosm of the Federal government. Our country is heading into the direction of CA.......where the middle class turns into the rich and the poor.

Well, good riddence, I say!


Perhaps once they are gone, a good portion of the population will go with them this time!


Then maybe we can return what's left of the State's fertile land back into the rich farm and pasture lands that once made California a true Golden State.


Maybe California's Sustainable future lies not in Factories feeding our desire for new things, but in Food to feed our children.


And our children's children.

There will be plenty of minimum wage jobs, with no one to fill them. Everyone seems to think that a college degree will get you on the corporate ladder. Way too many of these grads feel they have a degree and are not going to work for minimum wage.

Sins Of The Fathers

Originally posted by Gools
This time there is no second wage earner to go out and get work.

Oh, I wouldn't be so sure about that...

[atsimg]http://files.abovetopsecret.com/images/member/f675a5d20338.jpg[/atsimg]

It's their debt, after all.

But we have laws Majic!

Here is a bit from the story today about Canadian mortgage rate hikes:

Banks Bump Up Mortgage Rates

CBC News

...news Monday that several Canadian banks are increasing several fixed mortgage rates by up to 6/10ths of a percentage point.

The biggest jump is attached to the popular five-year fixed closed rate, which moves from 5.25 per cent to 5.85 per cent at Royal Bank, TD Canada Trust, and Laurentian Bank.

How much difference will that make? A $200,000 mortgage amortized over 25 years costs $1,051 a month at a rate of 3.99 per cent. At 4.59 per cent, that jumps $66 a month to $1,117.

The banks also raised their three-year and four-year fixed closed rates.

Variable mortgage rates, which rise in tandem with the Bank of Canada's key overnight lending rate, are not affected by Monday's announcement. But they are likely to be heading up soon too.

Bank of Canada governor Mark Carney warned last week that inflation was higher than expected. That had some market watchers forecasting that the central bank could move to raise its key lending rate as early as June.

(visit the link for the full news article)

Almost one quarter (25%) of US mortgages are already underwater.

How much more trouble in the housing sector will be caused when mortgage rates start to increase in the battered US housing market?

Now throw in the current political climate and you start to understand my concerns.
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Australia is expected to move next week: FOREX-Euro extends bounce, Aussie firm on rate hike talk

And there are whispers in US circles as well. From today: Taylor Says Fed May Raise Rates as Economy Recovers
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reply to post by Gools


When is commercial real estate gonna implode? C'mon speculative real estate tax shelters! No consumers needed -- just ponzi construction schemes.

You too can buy a condo with the salary you get from the loan you got to build the condo!

Who cares if all the low income apartments and houses have their property tax get hiked and everyone has to move!

[edit on 29-3-2010 by drew hempel]

Originally posted by Majic
Sins Of The Fathers

Originally posted by Gools
This time there is no second wage earner to go out and get work.

Oh, I wouldn't be so sure about that...

[atsimg]http://files.abovetopsecret.com/images/member/f675a5d20338.jpg[/atsimg]

It's their debt, after all.

Majic,

you are so right my friend. this picture scares me as a father knowing that this is a reality that has happen throughout history.

So Wall Street is trying to tell us that the economy is recovering when it most manifestly is not? How long can they possibly think that will last? The more fantasies they try to load on the backs of the American people, the worse the collapse will be when it comes. And the sooner it will come. It would almost be a relief, a dissipation of all the anxiety about the future so that the rebuilding can start.

Well, that is some more sobering news! It seems the storm is on the horizon as it was during 08, fortunately for the politicians it has remained in the ocean spinning and gathering steam. According to the recent report about the sell-off of US treasuries, the storm may be on the verge of reaching landfall very shortly? Then, as some have said about all that money in circulation from the wars, bailouts, stimulus, and now HCR, inflation is going to be the "sword of damocles," to the American economy. Get the wheel barrows ready!

Then, in a knee-jerk reaction the government is going to raise taxes at the same time to get them out from under. Maybe another big war is in the works to jump start the economy as the Second World War did for the US? The economy is in no way near any kind of recovery, and sadly, what the American people are being exposed to is smoking mirrors by their leaders, economists, and the MSM. They are being duped.

As long as there are "bread and circuses," the real problems and potential calamities are out of sight and of mind. The money manipulators and the spin machine can only hold off the inevitable for so long. It is only a matter of time, before the chickens come home to roost, however, it will affect the middle class to a large degree which is troubling. The wealthy and the astute will walk away from this one unscathed as they have done in the past. We are truly in for a rough ride, so fasten the seat belts and hold on for dear life.


[edit on 30-3-2010 by Jakes51]

Originally posted by Gools

A couple of years ago I had called for 2009 to be the year of pain. Looks like I was off by a year. The squeeze is about to get underway. If your not already out of debt, it's almost too late.

Those who remember the late 70's and early 80's know what I'm talking about. This time there is no second wage earner to go out and get work.
.

Ok, I'll bite... I was born in the early 70's so please school me on why I should be out of debt before this happens.

Of course, the only debt I have is the mortgage on my house, which I am having no problems making payments on. This loan has a fixed interest rate.

I have no debt on credit cards, and both of my cars are paid off.

Am I somehow in trouble? I own my own business and damn near my own market. My clients are large private and government organizations.

Our government has been spending too much money and now needs to collect more revenue. I can tell the current officials just want to raise taxes. It's my opinion that our government has been leading policies that lead to corporations outsourcing jobs overseas. Corporations can be thought of as simple entities. They look at the bottom line and how to increase profit and decrease taxes. They don't care about what country they are in. The government solution for a long time has been to increase the corporate tax rate. Corporations in foreign countries aren't taxed as much as they are here. The government policy here drives more companies overseas.

The next thing you know, the government here wants a new environmental law that raises costs to manufacture products here in this country. Other foreign countries don't have these laws. What's the result? New manufacturing facilities are built in the countries without the extra costs. In some scenarios, the entire manufacturing process gets shut down here in the US. The reason is the US government and the policies of our government. It's too bad we don't have enough Americans understanding this and people willing to vote for officials with some common business sense.

It might seem strange to Washington officials but local state senators here in South Carolina are looking for ways to cut corporate state taxes to increase the chances of more jobs and companies locating in South Carolina. Corporations pay a lot better than service jobs like McDonald's. Those jobs and wages have provided the foundation to keep the US economy humming. Unfortunately I believe the politicians in Washington don't understand.

reply to post by Zosynspiracy


They have screwed us both north and south of the US/Canada border and you're right, it's all about jobs. The reason the stock market appears productive is not because there are no jobs for North Americans, it's because the governments have allowed corporations to export those jobs to third world countries. A perfect example in the manufacturing sector is machine shops. I have a friend with one in Toronto. Back in 1995 there were 700 machine shops in Toronto, I think there are now 6, in 2010. Bell Canada and other big@ss telecoms as well as call centers have moved 90% of their call management business overseas. And while the government is screwing us over with all this multinational pandering, they screwed us again by giving civil servants ridiculous bonuses recently, SEE HERE. Between the machine shop losses due to lost manufacturing and call centers alone, I would figure that is a loss of about a million to 2 million jobs between the US and Canada.

This is what the government has done to appease the banks and the multinationals. We have all been sacrificed on the alter of greed.

Cheers - Dave

reply to post by HunkaHunka


I am sorry but you always make such a easy target. Lets see I am fine but everything else around me is falling. Hmm and also I cant leave the country with my money and assets because of new laws.


Seriously do you need me to draw you a picture or what? It will not matter what you have or if you are debt free it will matter how much survival skills you have. Money means nothing when it is worth nothing.