European bonds PLUMMETING after Brexit!! AUSTRIA AND FRANCE HAVE COLLAPSED -85%

World NewsDesk 01 January 2021 Hits: 29401

Government Bond values in European Countries are PLUMMETING on a scale never before seen, as Quarter 1 of 2021 commences after the official "BREXIT."

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+1 # As per "StandingWave".... — BanjoDoug 2021-01-01 14:28

He is correct that this an interest rate change. And seems trivial, BUT IT'S NOT! Interest rate changes like this NEVER happen unless some underlying condition is about to unleash some calamity. So while many will discount this situation as a mere "fluxuation" it reflects that central banksters have pulled away from propping up markets..... Thus anything can happen before Monday..... Personally I hope they kick the can again for my own safety and comfort.... but I am prepared for alternative conditions ...

# The Arrests are coming... — watchmann 2021-01-01 13:48

The Arrests are coming.

Also we will be moving to a Gold Standard soon. To be announced.

National Guard is being rolled out in certain U.S. states already.

NG Troops arriving in LA. to assist with Covid 19 expected to be fully deployed by Jan 4th ?

https://twitter.com/GREEEN_UP/status/1344699290535354376
https://poal.co/s/QStorm/241949

Everyone ready for a TRULY EXCITING NEW YEAR???

# I can only hope you are right — Man of the Atom 2021-01-02 21:45

Zerohedge for years has been anticipating either economic collapse or major financial rest - so far neither has happened.

I know bonds are primarily loans made to companies and draw interest, while stocks are buying some perceived value or worth of a company and are riskier than bonds. Most people spread the risk across multiple companies by buying mutual funds and in the case of bonds that also includes government bonds.

The great real estate crisis of 2008 came out of mortgage bond mutual funds where you had a mixture of safe mortgages and risky ones. The Dims blamed George Bush but they were really the responsible ones by pushing home ownership on people who could not afford it and resisting Bush's effort to restrain their nonsense. When people began walking away from variable interest mortgages, the system collapsed.

+1 # RE: European bonds PLUMMETING after Brexit!! AUSTRIA AND FRANCE HAVE COLLAPSED -85% — Lloyd Barker 2021-01-01 13:38

This is BIG!

+1 # Remember ...... — BanjoDoug 2021-01-01 13:26

All financial events are engineered to fall on weekends.... So more events may appear before Monday, or maybe the Central Banks (Euro & Fed Rsv) will throw zillions at the bond markets to kick the can again...... Or maybe they will allow this to get worse & then introduce their own "NEW" solution (a solution non of us will like)....

# Link not working — unimatrix1 2021-01-01 11:36

Story must have been removed

+1 # Interest rates — Standing Wave TERMINATED 01-25-2022 2021-01-01 11:03

It isn't the bond value that is down so much; it is the interest rate on the bond. For example, at the time I looked at the link provided (~10 AM Jan. 1), the Austria 20Y bond interest rate went from -0.027 to -0.05, a change of 85%. The price went from 175.51 Euros to 174.76 Euros, a much smaller percentage change in value. The large percentage change occurs because interest rates are so small (and negative to boot!) making it appear to be extreme action when it really is not. Many rates are even much more negative. Note that Switzerland - historically known for financial sanity - is negative across all maturities. Russian bond rates appear to be the most sane of all, though there are caveats to that for sure.

+3 # Oh ! — SBGlett77 2021-01-01 11:41

Thanks, standingwave. None of the numbers were identified on the arrays Hal showed, so I thought it was showing prices, which move in opposition to interest rates on traded bonds. You really had your SWR way down today to notice that for us !

Nobody really knows the dynamics of negative interest rates, though. It's not just a mirror image of positive interest rates. CHANGES of over 100-300%% DOWN in rates that are already negative is still a very concerning development. Very concerning. It means people are willing to pay 100-300% more than they were just a few days ago, for the privilege of lending their money. Repeat: they are PAYING people to borrow their money ! That portends a rapidly collapsing perception of the value of money. Bizarro world !

# Agree — Standing Wave TERMINATED 01-25-2022 2021-01-01 14:34

Consider the Russian bonds at roughly 5% and rising, meaning the value of the Russian bond is generally declining in value. Does that make it a bad investment? For now, declining interest rates for Europe tends to push European bond values up even with negative interest rates. However, the motivation to get out of European bonds if interest rates start to rise would be much greater than the motivation to get out of Russian bonds if their interest rates rise similarly. Would a bond holder rather hold a Russian bond falling in market value but where the bond holder still gets +5% interest, or a European bond falling in value but where the bond holder is _paying_ 1%, 2%, ... for holding the bond?

Once the fall in European bonds takes hold, look out below. Everyone will want out. Where will they go?

(BTW, there appear to be some numerical errors in the table shown for Russian bonds because they do not all add up. I am assuming though most of the numbers are generally correct.)

+1 # Speculation — SBGlett77 2021-01-01 15:22

Bonds are a very arcane world, aren't they ? Thanks for digging up the Russian rates; that speaks volumes. For the Russian bonds, they are a very good investment for the ordinary savers and people who want principle growth and income ( the 'coupon clippers' ). Bond speculators, on the other hand, just want to buy low and sell high, so the Ruskies are something they don't want right now.

So having said that, bonds start to make sense as a commentary on the world economy, since the worldwide bond market is about 7-10 times as large as the worldwide stock market capitalization ( present stock bubble notwithstanding ). That sense is, historically consistent bond 4-6 % interest rates mean the issuer nation has good prospects for growth in their real economy, because the money will be put to good productive use giving a return. The GDP of such nations is a fairly accurate reflection of production activity. Hence the long-term savers' preference for them. Low or negative rates ( U.S. and Europe and some Asia ) mean most of the money is used to achieve financial or consumption goals, and the issuance will be either sold to each other or "used up" instead of returned with interest. The GDP of these nations is an ephemera of consumption and government spending, and indicates a declining prospect for any future.

Not good news for the U.S. and Europe. The Fed will have to really ramp up money-printing in 2021 to basically finance a collapsing real economy made worse by the virus lockdowns. They will concurrently hold interest rates low by directly buying or arranging the purchase of the Treasury bonds by investment banks like GS and JPM. The financial and consumer world will appear rescued, once again, and those who make their living off it ( about 75% if all are included ) will be relieved. However, the real economy will continue to suffer capital neglect or destruction until the dearth of real goods is perceived even more than it is now, then WHAM.

This is the big picture Hal's article reveals.

+2 # Another possibility — SBGlett77 2021-01-01 10:44

A planned crash is very possible, but this one is so extreme that it seems to me it could also be a result of the terrific "overhang" that has been developing since 2008's "whatever it takes" money creation.

To explain myself: it is always possible to print money for the financial system to exchange among themselves, even when they have made a bunch of bad investments in Ponzi-like schemes such as mortgage bundling, and it makes the system seem stable. However, some of this money always leaks out in the form of salaries, building expenses, lavish perks, frivolous projects, graft payments, taxes, and the like. This money goes on to steadily consume real wealth, i.e., production, in order to feed, house, and clothe the beneficiaries of the leaked-out money. When the supply of real wealth starts to get thin, owing to the neglect of REAL investment in the capital that produces it, PLUS the growing extravagance of the "upper classes" who got in on this money, then a panic can start when it becomes apparent there is tremendously more debt than true value of wealth. When that perception takes even a small hold, then a critical number of people want out of any long-term investment; even six months' worth. They want to buy stuff NOW, while it's available. Just a small amount of such debt note selling, when there is a severe overhang of debt, can trigger everyone for the door.

So, IMO, this could be the Real McCoy ( showing my age there ). But, it IS also possible to engineer such a crash on purpose, when you don't care if the whole system ends up at the bottom of a ravine, as HJ and Tek suggest below. That also aligns with the scenario Katherine Fitts and RFK, Jr. outlined on Hal's show Wednesday night - that there is a bunch of no-good, dirty social bastards who want to "reset" humanity to their liking, confiscating all wealth that has debt behind it. Eternal Hell is a heartbeat away for such people; indeed for all unrepentant, rich or poor.

+5 # The unraveling has begun — Harnaś 2021-01-01 10:35

It is so elementary that even an amateur like me can figure it out. With the collapse of the Deutsche Bank (its shares have fallen down to nearly junk bonds level, revenues down, operating income down, net income down, total assets and total equity down plus it had fired 20 000 employees several months ago. What it means is that the whole Commie EU structure is coming down. Germany is the locomotive if Europe. They make things that people in Spain and Italy and elsewhere want to buy. Since the Southerners have not enough money, they have to borrow. No problem, Deutsche Bank was very accommodating to them, but since Southerners have no money to pay back their loans now, DB is is gone and what we see now is other dominos going down. I anticipate that the Euro will now start sinking down dramatically. I don't know how long it will take, but it is likely (I imagine) that it will reach 0.5 of its value against the dollar in a few weeks, by say February 5th. Europeans will be without food, without money. It's all being orchestrated as we speak. No one will have a single Euro cent left in their pocket. Banks holidays will be declared and there will be bloodshed in the streets due to rioting. The US dollar will withstand all of this for a while, but eventually it will likewise collapse, probably as early as March once the war with China begins and we will be eased into a digital currency like Bitcoin!

+4 # Bankers game — Hillbilly Jim 2021-01-01 10:17

More than likely another contrived "crash " and then the bankers buy them up on the cheap and make out like the bandits they are.
Rinse, Wash and Repeat.

+6 # Well... — Teknikid 2021-01-01 09:52

I'm no expert on bonds, but this has the appearance of being planned, like they pulled the plug to punish everyone for what England has done.

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