The Next Contagion(Collapse of Sovereign Government Bonds)

Money and Markets ^ | 02/01/10 | Martin D. Weiss

[TigerLikesRooster]

The Next Contagion

by Martin D. Weiss, Ph.D. 02-01-10

Martin D. Weiss, Ph.D.

The next contagion is beginning to spread around the globe.

It is unexpected on Wall Street, misunderstood in Washington — and very dangerous.

It could sabotage the plans of the U.S. Treasury, the Federal Reserve, and many of their counterparts overseas.

It is …

The Collapse of Sovereign Government Bonds

This is certainly not the first financial contagion of recent memory:

Back in 1997, we witnessed a currency contagion —hatched in Thailand, spreading quickly to the rest of Southeast Asia … smacking Russia in the gut … and sinking a major player in the U.S. derivatives market.

Then, 10 years later, came the debt contagion —incubated in a subsector of America’s mortgage market … soon infecting nearly all credit instruments … striking Wall Street like a sledgehammer … and mortally wounding the global financial system.

Those contagions were bad enough. Now, however, the contagion is beginning at a much higher level, in the most important financial instruments on Earth — long-term bonds issued by sovereign governments.

The Saga Begins in Greece

[TigerLikesRooster]

P!

[DonaldC]

So much of the world is in such high debt, sooner or later there is going to be some massive write-off, economic reset, debt forgiveness kind of thing. I don’t know of any country that has balanced books, except maybe Australia, at least they used to.

[ClearCase_guy]

They tell me that Henry Paulson and Ben Bernanke saved us. It's blue skies ahead, folks. Nothing to worry about. All the bad stuff is already behind us.

Right?

[Texas resident]

Read the whole article. Good information to have.

[zeugma]

Back in 1997, we witnessed a currency contagion —hatched in Thailand, spreading quickly to the rest of Southeast Asia … smacking Russia in the gut … and sinking a major player in the U.S. derivatives market.

Soros made bundles on this. Some say he was a big driver of the whole thing.

[OneWingedShark]

Converting a large chunk of money into ammo seems to have been a good investment option for me.

[AAABEST]

Then, 10 years later, came the debt contagion —incubated in a subsector of America’s mortgage market … soon infecting nearly all credit instruments … striking Wall Street like a sledgehammer … and mortally wounding the global financial system.

i.e. we've been pushing unsustainable debt, massive bailouts and in-the-red government and private largesse up the ladder for decades in hopes that it all will somehow take care of itself, but now we've reached the final wrung.

Those who've been the beneficiaries (non-producers, international banksters, free-spending politicians, socialists etc.) of the pyramid scheme have sucked and sucked and sucked. Now we and our children will ALL pay for the booty they ran off with. It was absolutely inevitable that sooner or later someone would have to pay the tabe; the laws of gravity or, if you like, the law of E=MC2 can't be defied.

Not sure of the specifics of how it will all play out, but what's beyond certain is that it CANNOT end well.