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It’s Sunday morning and I’m enjoying some quality time with my two girls. Yesterday it was a local baseball game; today they’re all excited about seeing the new “Oceans” movie. I guess you could say it’s the typical quiet family weekend.
But in the bond market, it’s been anything BUT quiet. In fact, the first major sovereign debt domino toppled this past week — in Greece.
The Mediterranean nation is buried under a massive load of debts and deficits, and the numbers are shocking.
The European Union’s (EU) statistics agency has been combing through Greece’s books, and it just revised the country’s 2009 deficit tally up to a whopping 13.6 percent of Gross Domestic Product. Further revisions could send that even higher, to 14.1 percent.
That’s more than four times the official “limit” for a country in the EU. And the nation’s total debt load is now closing in on $400 billion, or 115 percent of GDP. That’s among the worst ratios on the planet.
Greece used to be able to fund its deficits at relatively low yields. But not anymore …
Greek interest rates have exploded higher, with yields on 10-year Greek government bonds surging above 10 percent. Meanwhile, two-year note yields soared past 11 percent, more than a subprime mortgage borrower pays in the U.S.!
That’s a recipe for disaster for a country that needs to sell $72 billion in debt to cover its deficits just in the coming months.
Facing a full-scale meltdown, Greece did the unthinkable on Friday. It asked for a bailout from the EU and the International Monetary Fund. The lifeline will take the form of up to $40 billion in three-year loans from the 15 other nations that share the euro currency. Those loans will carry a below-market rate of just 5 percent. Greece can also get its hands on another $20 billion in low-rate loans from the IMF.
The market breathed a sigh of relief in the wake of the Greek aid request. Bond yields fell and stock prices rose in Athens. But …
This Is Just the Eye of the Sovereign Debt Hurricane!
I say that because Greece is far from alone.
Take another of the so-called “PIIGS” countries, Portugal.
The country’s GDP shrank 2.7 percent in 2009, the worst recession in more than six decades. The unemployment rate recently hit a 23-year high of 10.1 percent, while the budget deficit jumped to 9.3 percent of GDP. Total debt is more than 85 percent of GDP, the worst in 20 years.
Ireland? The budget deficit is almost 12 percent of GDP.
Italy? Its total debt load is on track to hit 117 percent of GDP.
Plus, Spain is battling a budget deficit of 11.4 percent of GDP.
Bottom line: Greece is just the first domino to fall. Many other European countries are next in line.
And the biggest domino of all is right here in the U.S.!
Our budget deficit is soaring. Our debt load is exploding. Our bond yields are starting to rise. And our risk premium is beginning to climb.
The folks in Washington are sticking their heads in the sand, ignoring the warning signs all around them. They believe the same kind of bond market collapse that just struck Greece can’t happen here. So they’re continuing to bail out banks, brokers, mortgage companies, insurance companies, automakers, unions, homeowners and the unemployed.
But now, with demand for U.S. Treasuries waning — as evidenced by a string of disastrous auctions and continued net selling by China — the only question that remains is, “Who will bail out Washington?”
The simple fact is, no institution or group of institutions on Earth has the resources to save Washington when the bond market finally gives up on our ability to manage our own finances. When that day dawns, the bond market will come apart at the seams. Interest rates will shoot the moon. Our feeble economic recovery could vanish.
So I have created The Great Interest Rate Explosion of 2010-2011 to give you a clear, actionable plan for protecting your wealth and also USING this great convulsion to potentially make enormous profits.
And I’m so convinced that this report may prove to be the single most crucial one you’ve read in years, I’m even offering to send it to you free.
Of course, The Great Interest Rate Explosion of 2010-2011 can’t help you if you don’t read it.
And it will help you most if you’re one of the investors who reads it first!
But the deadline for making sure
you’re one of the first to receive
The Great Interest Rate Explosion of 2010-2011
is THIS COMING TUESDAY — April 27!
At this very moment, we’re putting the finishing touches on The Great Interest Rate Explosion of 2010-2011. It will be released to the world — including our 660,000 readers — at 7:59 AM on Monday, May 3, 2010.
I expect thousands of investors to begin buying the investments I recommend in it almost immediately.
That’s why I want you to get your free copy five days early — this coming Wednesday — so you can get a head start.
But the only way for you to get your head start is to add your name to our Head-of-the-Line Pass no later than this coming Tuesday — just two short days from today!
The Great Interest Rate Explosion of 2010-2011 is your comprehensive guide to protecting your wealth and profiting as this great bond market fiasco strikes.
In this landmark report, I reveal why America is now speeding towards a financial Armageddon that could:
- Trigger a collapse in the value of ALL long-term bonds — government, corporate, state and municipal — choking off a vital source of capital for every town and city in America …
- Send interest rates on mortgages, auto loans and business loans soaring — setting off a new wave of personal and corporate bankruptcies …
- Provoke sweeping cuts to public entitlements — Medicare, Social Security and other “essential” government services, and …
- Ultimately plunge America headlong into the next, far more devastating phase of this great debt crisis.
Plus, you’ll also discover …
- The $34.7 trillion bond market bubble: Why Washington’s debt crisis has now GUARANTEED that, whether you own bonds or not, you are in for the most chilling ride of your investment lifetime …
- Five powerful catalysts that virtually guarantee surging interest rates ahead …
- Why the Fed can’t rescue the bond market … or prevent interest rates from surging …
- Why exploding interest rates can not only crush your bonds, but can also impact your fixed annuities, life insurance, pensions, and bank deposits — and how to protect yourself …
- 10 mutual funds that are most likely to get crushed when the bond market collapses and interest rates surge …
- 10 toxic ETFs set to plunge: If you own any of them, consider speed-dialing your broker and selling them NOW …
- The safest place to park your cash now …
- Three ultra-powerful “Profit Tools” — investment strategies and vehicles likely to spin off windfall profits as interest rates rise …
- Five types of investments that will get killed by rising rates. Dump them now or kick yourself later …
- Three steps to shield your family’s finances from soaring interest rates …
- How to USE this great bond market crash and interest rate explosion to go for windfall profits in 2010-2011 …
This historic report is free and adding your name to our Head-of-the-Line Pass takes only seconds. So click here to make sure you do not miss this all-important report and to give yourself a five-day head start on the investments it recommends!
Best wishes,
Mike Larson
About Money and Markets
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Money and Markets (MaM) is published by Weiss Research, Inc. and written by Martin D. Weiss along with Nilus Mattive, Claus Vogt, Ron Rowland, Michael Larson and Bryan Rich. To avoid conflicts of interest, Weiss Research and its staff do not hold positions in companies recommended in MaM, nor do we accept any compensation for such recommendations. The comments, graphs, forecasts, and indices published in MaM are based upon data whose accuracy is deemed reliable but not guaranteed. Performance returns cited are derived from our best estimates but must be considered hypothetical in as much as we do not track the actual prices investors pay or receive. Regular contributors and staff include Andrea Baumwald, John Burke, Marci Campbell, Amy Carlino, Selene Ceballo, Amber Dakar, Dinesh Kalera, Red Morgan, Maryellen Murphy, Jennifer Newman-Amos, Adam Shafer, Julie Trudeau, Jill Umiker, Leslie Underwood and Michelle Zausnig.
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