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The Liquidity Crisis Intensifies: ‘Prepare For A Bear Market In Bonds’

by Michael Snyder, The Economic Collapse Blog:

Are we about to witness trillions of dollars of “paper wealth” vaporize into thin air?  During the next financial crisis, a lot of “wealthy” investors are going to be in for a very rude awakening.  The truth is that securities are only worth what someone else is willing to pay for them, and that is why liquidity is so important.  Back on April 17th, I published an article entitled “The Global Liquidity Squeeze Has Begun“, but it didn’t get nearly as much attention as many of my other articles do.  But now that the liquidity crisis is intensifying, hopefully people will start to grasp the implications of what is happening.  The 76 trillion dollar global bond bubble is threatening to implode, and if it does, the amount of “paper wealth” that could potentially be lost during the months ahead is almost unimaginable.

For those that do not consider the emerging liquidity crisis to be important, I would suggest that they check out what the financial experts are saying.  For instance, the following comes from a recent Bloomberg report

There are three things that matter in the bond market these days: liquidity, liquidity and liquidity.

How — or whether — investors can trade without having prices move against them has become a major worry as bonds globally tanked in the past few months. As a result, liquidity, or the lack of it, is skewing markets in new and surprising ways.

Things have already gotten so bad that Zero Hedge says that some fund managers “are starting to panic” about the lack of liquidity in the marketplace…

Fund managers who together control trillions in assets are starting to panic in the face of an acute bond market liquidity shortage.

Dealer inventories have collapsed in the post-crisis regulatory regime, eliminating the traditional source of liquidity in secondary corporate credit markets, while HFTs and central banks have combined to create the conditions under which USTs and German Bunds can, at any given time, trade like penny stocks (October’s Treasury flash crash and May’s dramatic Bund rout are the quintessential examples).

For a moment, just imagine what would happen if someone yelled “fire” in a very crowded movie theater, and the only exit was a very small doggie door that only one person at a time could squeeze through.  According to experts, that is what the bond market could soon look like

Read More @ theeconomiccollapseblog.com

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18 comments to The Liquidity Crisis Intensifies: ‘Prepare For A Bear Market In Bonds’

  • Eric

    Trillions of dollars of “paper wealth” evaporating into thin air.

    Mom offers to buy me a flight and I’m like “MOM!!! You don’t have any money!!!!” And they still sit there.
    UNFREAKING BELIEVEABLE!!!

    I hope it happens that fast. Whatever pounds reality into them.

    Placing an order this morning.

  • Eric

    Go get the gold guys! Lots of lost treasures out there still. Especially here in the southwest.

    http://www.kitco.com/news/2015-06-23/-There-s-Still-Gold-In-Them-Hills-Lost-Treasures-Yet-To-Be-Discovered.html

    “If you want the shiny, you gotta work your hiney!” -Jeff Williams

  • Gnostic

    Off Topic…….If your squash plants develop a whitish mildew on leaves…Mix 1 tsp baking soda to 1 Qt water in spray bottle, Apply once per day until clears up.

    • Eric

      That’s interesting Gnostic. I use just a little mild dish detergent with water for the bugs. Works pretty good.

      Built a gravity water filter out of funnels, plastic bottles, old 3/4″ sprinkler PVC parts, grass, gravel, and charcoal from the stove yesterday!

      Pretty easy if you already have the knowledge on how to do it. 🙂

      • Timco

        Darn good advice Eric. When the SHTF, everyone will WISH they’d have taken the time to build one. Regret is a terrible thing.

        • TheVirginian

          I think we should all start posting “off-topic” snippets on something of merit for the major posting articles.

          • Craig escaped from Detroit

            OFF Topic items that help us to Live OK after the crash, is NOT really “Off topic”.

            Reading all the “Breaking news” about the bankster crimes, the black swan events, etc, is interesting and helpful to keep up with the evolution of events as they unfold, but it is the LIVING, gardening, surviving information that helps people to LIVE.

            I’d suggest,, to add this link to your favorite places to visit and learn about living a self sustainable life-style.

            http://www.motherearthnews.com/

            They have been promoting it for a long time. AND they have been warning of financial collapse, and the goodness of gold, silver, barter, solar, livestock, water, gardening, canning, etc.

            • Eric

              Timco- Especially around here. It’s a nice little double dripper. Well, 3 with the leak so there’s room for improvement. But I was kind of happy I whipped it up so fast and it works as well as it does.

              The Virginian-Aren’t we doing that already? When the solutions present themselves, they are kind of obvious.

              Craig-My friend has been going to that site for years, but he keeps going against the trend…moved into the city. Thanks for posting. You gotta work if you wanna eat. I wish we had more livestock around here. Just a few hens, chickens and the neighbor goat that eats everything.

    • Ed_B

      My recipe for this is: 1 tblsp H202 + 2 drops of liquid soap + 1 qt of water. Swirl to mix and apply daily for 3-4 days. This usually clears this up nicely. We saved a pepper plant that was dying from some sort of fungus with this mixture. It had lost about 90% of its leaves by the time we got to it but it is making a full recovery now.

  • Craig escaped from Detroit

    Yes. The paper, electronic and “fake” money will crash, evaporate, etc. We who visit places like this (SGT) are awake and aware.

    But preaching to those people who are NOT in the choir is much more difficult. Perhaps the NON believers will see the light when DARWIN is standing on their carcasses? Hey, it just means that there will be MORE free stuff for me to grab after all the idiots have starved to death.

    Of course, every black city will experience the standard riots, burning and looting, so there won’t be anything worth taking from those areas, but there will be plenty of nice, juicy PIT BULLS roaming the streets, waiting for the barbeque hunters to harvest them.

    As for those garden problems, mold, fungus, etc? Buy yourself a couple big bags of “wettable sulfur”. It is good for many of those things. It also is a good way to make soil more acidic when needed. It also is one of the 3 ingredients for making “black powder” for muzzle loaders.
    Charcoal & nitrate are the other 2.

    Plant those gardens, get your second crops started now,, be ready to plant your “winter crops” a little later in the year.

    Stock up on canning supplies, propane, firewood, kerosene for the lamps, solar panels, bicycles & trikes, and perhaps even a motor kit for the bike. (If you get the electric motor kit, you can recharge it from the solar panels.)

    Remember,, there might not be any working gas stations anymore,, when the grids stop working.

    Be ready, or be dead.

    • Ed_B

      Good call on all this. I’m thinking that maybe I can trade an hour’s use of my portable generator for a tank of gas when the grid fails and the gas pumps won’t work. Sound like a plan? 🙂

      • Craig escaped from Detroit

        Gallons or Quarts of Liquid fuels,, will be rare or non-existant. Solar panels, charge controllers, Deepcycle batteries, and inverters will become the VERY valuable source of electrical power.

        And NO noise,, no rebuilds,, and sunshine is delivered free on every sunny day,, it’s a super good way to keep a few things running. (or charging an electric bike-scooter), run a freezer, lights, fan,, a/c..etc.

        Gas generator,, (5kw model),, look at the real output ratings and fuel consumption.
        Output=2.5kw. 5 gallons. 10-12 hours of run time. Lots of noise to attract desperate looters.

        Ask yourself. How many (non farmers) keep 20 gallons of spare gas at home? I don’t know of a single person. Even if you have 20 gallons,, using it sparingly,, the genny will burn thru it in less than a month.
        For long term use,, how many people can legally put a 1000 gallon fuel tank at their home and then pay almost $3,000 to FILL it up?

        You can pay the $3,000 for a pretty decent SOLAR panel system with all the extras. And it will operate for DECADES without a single gallon of fuel.

  • Gnostic

    Off Topic (or maybe not) The News Behind the News (Country Western Tune)

    From the Album “Extremist” from America’s number one christian patriot

    https://youtu.be/hR6WcjwH6ok

  • glitter 1

    Yes, Money is flowing out of Bond Funds,by the Billions,hence the yields going up.Perhaps this is why the Commercials read: Bullion Banks and their Hedge Funds are shorting the snot out of Gold,Silver and their Shares.They can’t allow The PM’s and related items appear to be a “Safe Haven”/place to move assets into from the bond fund sell-off.

    Bob Chapman – “In the end the only thing left standing will be Gold,Silver and Related Items”

  • Ed_B

    “They can’t allow The PM’s and related items appear to be a “Safe Haven”/place to move assets into from the bond fund sell-off.”

    Agreed. But then for those of us who aren’t on our 1st rodeo, we already KNOW that gold and silver are safe haven assets and those manipulating them be damned. They can play with the paper price but they can’t make a single ounce we own disappear. They CAN make fiat disappear, however.

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