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09/22/2011
European central banks become net buyers of gold
European central banks have become net buyers of gold for the first time in more than two decades, the latest sign of how the turbulence in the currency and debt markets has revolutionized the bullion market.
09/19/2011
Goldman Sachs lost 98% of Gadhafi's investments
Libya entrusted $1. 3 billion through its sovereign wealth fund to Goldman Sachs in 2007, of which the investment bank lost approximately 98%, sparking the ire of Libyan officials.
09/13/2011
USA: Senate Approves Another $500 Billion Raise in Debt Ceiling
The U.S. Senate, in an unusual procedure, cleared the way Thursday for the U.S to lift its borrowing authority by $500 billion to $15.19 trillion, enough to keep the support federal government borrowing through late January or early February.
09/12/2011
Own currency for small Italian village
The small Italian community Fiorettino in the province of Frosinone fears further spending cuts from the government in Rome - and has taken the initiative to print it's own money - the Fiorito.
08/26/2011
The logical outcomes of a Euro-liabilty-union
The EU may decide that the debts of one country in the Euro-zone will become the debts of all countries in the Euro-zone.
08/24/2011
Venezuela to pull gold out of US, Canada and Europe
Venezuela’s Ministry of Finance and the country’s Central Bank plan to gradually pull the country’s gold reserves out of the US, Canada, and Europe.
09/23/2011      share:derubg

The coming burst of the bond bubble

This text was excerpted from: This is going to hurt, Allister Heath, Spectator, 2011

There is much to be terrified about in today’s global economy. The eurozone’s death dance, China’s slowdown and America’s inability to create jobs are enough to make the most upbeat investors gloomy. But even these problems pale in comparison with the biggest threat, one with implications so hideous that financiers are reluctant to talk about it even now.

Crucially, in many cases, the interest rate for government bonds is less than the expected inflation rate. So the ‘real terms’ interest rate at which governments borrow is actually negative. Lending anyone money at zero interest is weird enough. But the bond bubble now means that many governments can be loaned money — and, in effect, be paid for the privilege.

This is crazy. It shows that the bond markets are well and truly in major bubble territory, their valuations as absurd as the rocketing subprime properties of yore. And, just like last time, hardly anyone is sounding the alarm.

The bond bubble not only helped cause the boom and subsequent crash. It then helped western governments deal with their hangover by serving another round of debt. It is extraordinary that most western countries are responding to the debt crisis by doubling their national debt. And if this pipeline of cheap debt dries up, what then?

The thing about bubbles is that you never know when they will burst. But already there are signs of strain. The governor of China’s central bank recently declared that its reserves ‘exceed reasonable requirements’ — a nod to the fact that Brazil, China, Russia and India are facing pressure to spend the cash on development at home.

After the last crash, the Queen visited the London School of Economics and asked a killer question: ‘Why did no one see it coming? ’ The answer is the same reason that no one now talks about the bond bubble: mankind is hubristic. There is a huge willingness to believe that artificial prosperity, caused by excessively cheap credit, is actually real.

This is going to hurtAllister HeathSpectator09/17/2011
These follow-up articles used this article as a reference:
Euro-bailout fund buys its own debt11/16/2011
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