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Bond Market Set To Destroy Euro

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http://preview.bloomberg.com/news/2010-05-15/treasuries-advance-on-speculation-the-sovereign-debt-crisis-will-sink-euro.html

Treasuries Advance on Speculation the Sovereign-Debt Crisis Will Sink Euro
By Cordell "Cord" Eddings and Susanne "Suzie" Walker - May 15, 2010
U.S. two-year notes had their first three-week winning streak since January as demand for the safest assets rose on speculation Europe’s sovereign-debt crisis will damp growth and lead to
disintegration of the euro.
Treasuries, which fell the most in nine months May 10 after European leaders announced an almost $1 trillion bailout plan, climbed yesterday even as reports showed America’s economic recovery is building momentum. The euro dropped to its weakest level since 2008, and stocks plunged. A report next week is forecast to show U.S. consumer prices rose 0.1 percent in April.
“There is a flight to quality emanating from the issues coming from Europe and the viability of their monetary union going forward,” said Christopher Sullivan, who oversees $1.6 billion as chief investment officer at United Nations Federal Credit Union in New York. “The market has looked past the short-term liquidity solution of last weekend and is looking to the long-term structural issues.”

"Speculation can do as much damage as dire circumstances can do."

The bond markets may write the Euro off a lot faster than even Sarkozy and Merkel are considering. The grim reality is that the PIIGS are too far in debt and lack the poltical will to resolve the situation. Germany and France are faced with huge bills to try to save that which cannot be saved. Le Grande Experiment de Europa has had its run and History, once again, proves itself to be the judge: nationalism always trumps idealism.

So, how does this affect the big issue "house prices." The tidal wave of economic chaos that will follow from the end of the Euro will bring on a vicious round of Japanese style-deflation as there will be austerity measures in those countries forced to reign in spending and loose credit (UK, D, F). The Zimbabwe option is not open to D and F will follow what they do. We are about to implement the austerity measures and spending will grind to a halt as pay-cuts and lay-offs start to bite. The housing market will collapse this year with further drops in the ensuing 3-5 years before any form of stability is reached. Big corrections on the SMs coming so it was wise if you dumped your stocks a week or so ago.

Edited by Realistbear

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is it the bond market, or is it the derivative CDS market thats going to cause the trouble?

I mean, you buy a bond, its long by definition.

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There are very few left who are saying "it cannot happen."

The assumption that the Euro is going to come to an end is now embedded into the market thinking.

Japanese-style deflation beckons.*

*Worst case scenario for those who hold onto gold beyond sell-by date. Oops, I have triggered a deluge of "hope it crashes 20% so I can buy more..." posts ;)

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it is not the bond market that is destroying the euro. The US treasury bond market is showing that there is a flight to perceived safety in US bonds. Safety from the problems in euro land.

However nothing new has come to light. Greece has been helped with billions, Spain & Portugal have been helped with 1 trillion. As soon as the latter was announced Spain & Portugal put in their austerity measures. I think we are seeing the decades of austerity and low interest rates. Europe and maybe the US soon realise there is no backstop for a large sovereign default. It will be belt tightening for years to come.

As with the price of Gold you are betting on a total collapse if you go long. If we do not get the collapse the price will go down like a ton of bricks due to deflationary forces.

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I think it is good for Europe to have a low euro. It will make them more competitive, this is exactly what countries like Greece, Spain, Portugal need.

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This is all Smoke & mirrors.............a "Deal" has been done....1 Euro will = $1......& then £1 will match them.......@ that point "Something" will happen...Brent Woods 2?

Mike

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This is all Smoke & mirrors.............a "Deal" has been done....1 Euro will = $1......& then £1 will match them.......@ that point "Something" will happen...Brent Woods 2?

Mike

You may be wearing a tin foil hat, but I suspect you're right to do so!

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it is not the bond market that is destroying the euro. The US treasury bond market is showing that there is a flight to perceived safety in US bonds. Safety from the problems in euro land.

However nothing new has come to light. Greece has been helped with billions, Spain & Portugal have been helped with 1 trillion. As soon as the latter was announced Spain & Portugal put in their austerity measures. I think we are seeing the decades of austerity and low interest rates. Europe and maybe the US soon realise there is no backstop for a large sovereign default. It will be belt tightening for years to come.

As with the price of Gold you are betting on a total collapse if you go long. If we do not get the collapse the price will go down like a ton of bricks due to deflationary forces.

Now, this is a possible scenario. Massive deflation to follow austerity measures? Its the best the EZ can do and it is their only option.

The problem was an inflated property bubble fuelled by speculation underwritten by Banksters and their "creative financing." The solution is to accept the consequences of a decade of imprudence (led by Brown even though it started in America) by deflating everything that inflated to regain equilibrium.

The problem is that the imbalances that have now hatched out will make it next to impossible to build a consensus for a Eurowide stability program that can work. The PIIGS are too corrupt and D & F will not be able to enforce the medicine on the rest.

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*Worst case scenario for those who hold onto gold beyond sell-by date. Oops, I have triggered a deluge of "hope it crashes 20% so I can buy more..." posts ;)

doubt it.

your gold price predictions have become a running forum joke. you couldn't have got it more wrong.

and there won't be deflation either. it should be fairly obvious now that the printing presses are going to be left running until joe 6 pack refuses to work for tenners.

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http://preview.bloomberg.com/news/2010-05-15/treasuries-advance-on-speculation-the-sovereign-debt-crisis-will-sink-euro.html

Treasuries Advance on Speculation the Sovereign-Debt Crisis Will Sink Euro
By Cordell "Cord" Eddings and Susanne "Suzie" Walker - May 15, 2010
U.S. two-year notes had their first three-week winning streak since January as demand for the
safest assets
rose on speculation Europe’s sovereign-debt crisis will damp growth and lead to
disintegration of the euro.
That's an interesting way of looking at US treasury bonds
http://www.msnbc.msn.com/id/37136518/ns/us_news-life/' rel="external nofollow">

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doubt it.

your gold price predictions have become a running forum joke. you couldn't have got it more wrong.

and there won't be deflation either. it should be fairly obvious now that the printing presses are going to be left running until joe 6 pack refuses to work for tenners.

whilst timing doesnt seem to be a particular forte of RBs at least where gold is concerned. By highlighting that it is fairly obvious that the printing presses are to be left running doesnt really add much it is just extrapolating forward todays conditions and actions ad infinitum which doesnt tend to be that useful in forecasting, in fact its why most people get rinsed, what is happening today is nearly always irrelevant to what may be happening tomorrow, markets ,conditions and actions are constantly changing.

Edited by Tamara De Lempicka

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Bond Market Set To Destroy Euro

Is it the bond market, or is it the irresponsible borrowing by a few small countries?

And will Greece destroy the Euro, or will the Euro kick Greece out?

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doubt it.

your gold price predictions have become a running forum joke. you couldn't have got it more wrong.

and there won't be deflation either. it should be fairly obvious now that the printing presses are going to be left running until joe 6 pack refuses to work for tenners.

Yes. A flight to Treasuries will set the printers at warp speed. Deflation will not be allowed, at any cost. The debt must be inflated away. Interest rates will stay low until the gap between incomes and prices narrows enough.

This thing is global. There will be global cooperation. The deflationary scenario only works in isolation.

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deflationary forces.

Are you still banging on about deflation? Deflation is impossible, the printers will print so quickly and so much money any deflation will last minutes.

The printers are the ONLY way out.

They have one choice and that is to hyperinflate their way out of it, helicopters will drop money from the sky etc etc.

Massive pay rises will occur for the public sector via printed money etc

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doubt it.

your gold price predictions have become a running forum joke. you couldn't have got it more wrong.

and there won't be deflation either. it should be fairly obvious now that the printing presses are going to be left running until joe 6 pack refuses to work for tenners.

The deflationary forces will be so severe that money printing will not help. You can see austerity coming everywhere. California is doing it in the states.

Bond yields are going down which is a sign of deflation. As for gold. If you bet on total collapse make sure you have it physical and do not tell anyone about it. After the collapse i do not know what you can do with it. Agricultural Land and ammunition are much more useful.

I reckon we will see Austerity, Deflation and Quantitative Easing go side by side.

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Even taking account of recent falls, the Euro is worth almost 50% more against the USD than when it was introduced back in 2002. As recently as 2006 it was valued below $1.20. How does $1.24 = 1 Euro constitute demise of the Euro? Demise of the USD maybe but not the Euro. After all, the debt levels of the US are much greater than Europe.

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*Worst case scenario for those who hold onto gold beyond sell-by date.

You''re like a dog with a bone when it comes to gold.

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Shame the topic headline doesn't match the article headline, but then it rarely does.

Creditors will have to take a haircut at some point.

Much as they will scream about that, they will nevertheless suck it up otherwise they have no markets to sell to.

So that's you Germany - sorry you worked so hard, but that was your choice suckers, ease up, stop hoarding and live a little.

And that means you China. Yes, you who decided to rebalance away from dollars. Oops! Thanks for all your cheap sh1t though.

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whilst timing doesnt seem to be a particular forte of RBs at least where gold is concerned. By highlighting that it is fairly obvious that the printing presses are to be left running doesnt really add much it is just extrapolating forward todays conditions and actions ad infinitum which doesnt tend to be that useful in forecasting, in fact its why most people get rinsed, what is happening today is nearly always irrelevant to what may be happening tomorrow, markets ,conditions and actions are constantly changing.

But if markets are truly unpredictable chaotic systems then the forecast that tomorrow will be the same as today may not necessarily be worse than any other.

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Even taking account of recent falls, the Euro is worth almost 50% more against the USD than when it was introduced back in 2002. As recently as 2006 it was valued below $1.20. How does $1.24 = 1 Euro constitute demise of the Euro? Demise of the USD maybe but not the Euro. After all, the debt levels of the US are much greater than Europe.

The euro was launched at $1.18 I think and then sunk to around $0.90 before climbing out again. The main problem is the rapid rate of decline, from $1.36 to $1.23 in 4 weeks, a very steep decline. Traders seem to me to be betting on a euro zone break up and will keep selling. Sterling will be sold off in tandem due to our trade links with the EU.

They have realized there is no other way out of the current southern European debt crisis and don't want to be caught of guard by a sudden French / German withdrawal which would obliterate the value of the currency.

In the long term the economic recovery of Europe will be much faster once the Eurozone gets itself restructured allowing southern europe to grow rather than be crushed by austerity and civil disorder.

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But if markets are truly unpredictable chaotic systems then the forecast that tomorrow will be the same as today may not necessarily be worse than any other.

thats fair to a point although my core belief system is that they are not random over any timescale, but its logically impossible for the market to act tomorrow the same as today once enough participants believe it will

Edited by Tamara De Lempicka

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The deflationary forces will be so severe that money printing will not help. You can see austerity coming everywhere. California is doing it in the states.

there was plenty of austerity in Weimar also, and it had nothing to do with deflation.

a handful of oligarchs buy up all the assets with freshly printed cash while joe sixpack looks on helplessly from the sidelines unable to outbid the oligarchs.

Bond yields are going down which is a sign of deflation.

:lol: x 100

low bond yields are a sign that the gov't is printing money to buy their own debt. they have admitted they are doing this so stop playing silly buggers and pretending otherwise.

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  • 259 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
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      • Even
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