Tag Archives: bond market collapse

An Avalanche of Treasury Debt Hit The Market In February

There are two ways to conquer and enslave a country.  One is by the sword, the other is by debt.  – John Adams

According to the U.S. Treasury TIC (Treasury International Capital) Report, foreign Central Banks reduced their holdings of U.S. Treasury bonds from $6.219 trillion in January to $6,162 Trillion as of the end of February – TIC Treasury Data.   That’s $57 billion.

Notable sellers were Japan – $14.2 billion;  China – $15.4 billion;  UK – $15.1 billion;  and Russia – $13.4 billion.

The amount of Treasury debt outstanding increased from $18.08 trillion at the end of January to $18.155 trillion at the end of February (Treasury Direct).  This was an increase of $147 billion.

Between the Treasury and Foreign Central banks, $204 billion of Treasury bonds were sold in February.  That is about 20% of the total amount of debt issued by the Treasury in 2014 (Treasury debt increased a little over $1 trillion. The question is, who the hell bought $204 billion in Treasury bonds in February?

If it weren’t for the ability of the Fed and the Treasury to print money unfettered, the United States would be in worse shape than Greece right now…

How Derivatives Will Trigger A Bond Market Melt-Down (Part 1)

Get your money out of the bond market.  Once the default-contagion starts, it will spread faster than the bubonic plague which caused the Black Death in the 14th century.  I just got off the phone this morning with a source in NYC who confirmed that several Wall Streeters he knows all believe a far bigger “Long Term Capital” collapse triggered by derivatives defaults could occur at any time:

Long Term Capital, for those of you who are unaware, was the infamous hedge fund run by an ex-Salomon Brothers bond “guru.” He assembled a Dream Team of Nobel Prize Winning professors who claimed to have figured out how to produce “alpha” (excess returns) without any “beta” (systematic risk). One of the professors was Merton Miller. I was at the University of Chicago when Miller received his Nobel Prize. We bought his snake-oil hook, line and sinker. So did the large pension funds and wealthy investors who threw their money a Long Term Capital.

To cut to the chase, it didn’t take too long before LTCM imploded. I guess the Nobel “Dream Team” had not figure out how to turn lead into gold after all. LTCM was bailed out by the Fed plus several of the big Wall Street banks who also faced collapse if LTCM was allowed to incinerate to the ground. These banks had all plugged LTCM with the derivatives trades that blew up LTCM. I was at one of them, Bankers Trust, which was one of the guiltiest perpetrators and which had been found guilty several years of earlier of ripping off Proctor and Gamble with derivatives.  Bankers Trust is now part of Deutsche Bank, one of the two most risky banks in the world (JP Morgan is the other).

Back then it was the Wall Street banks who were required to put up “equity” to keep their businesses alive. In 2008 it was the Taxpayers and the “equity” put up  by Taxpayers was 8x greater. Only that equity went into the pockets of the people running the banks.

Don’t let your “equity” sitting mutual funds and money market funds get taken from you in the next stage of bailouts, which will be the nefarious “bail-ins.” “Bail-in” means your money that will taken from your pocket and given to the entities who face collapse.

Time To Get Out Of Your Bond Fund Investments

The elite aristocracy has at least on rule of morality:   they consider it to be in poor taste to not warn in advance of doing something horrible to the middle class .  Here, middle class is defined as anyone not rich enough to own his/her own politician – that probably means you.

The latest warning involves what is likely an the eventual onset of a huge derivatives blow-up in a one or several large bond mutual funds.   There are reasons I believe that this event may be closer than any of us realize.

Pimco, Fidelity and Blackrock manage by far the largest amount of money in bond funds. In fact, I would bet good money that when the accident occurs, the White House will deem each of those as “Too Big To Fail” and find cause to bail them out using your money.

I know for a fact that Pimco’s Total Rate of Return fund is loaded with hidden derivatives risk.  Did you know that?  Does your financial advisor know that.  I’d bet that 99.5% of the advisor world does not know this.  I know because I know of a study that was done which spent a month pulling apart all of the data and information available on Pimco’s Total ROR bond fund.   I was told that it is a derivatives train wreck waiting to happen.

The money management world is “monkey see/monkey do.”  So it’s a good bet that most, if not all, big bond funds are loaded with dangerous derivatives.

So here’ s your warning:   GET OUT OF YOUR BOND FUNDS NOW

And be thankful that the elitists at least consider it rude not to signal a “heads up” before they flush the toilet when you are in the shower.  This is your chance to side-step the water before getting scalded badly.