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As the Personal Finance specialist at Weiss Research, I have been watching unfolding events and tracking Dr. Weiss’ work very closely.
And no matter what your investment persuasion, there can be no question that, with nearly $14 trillion spent, lent and guaranteed to bail out troubled companies and to stimulate the economy, Washington’s spending spree has spun out of control.
Nor is there any question that the U.S. Treasury is now engaged in the greatest borrowing binge in history.
Our once-proud Uncle Sam is now the world’s largest ubiquitous panhandler — begging and borrowing every dollar he can from any government, central bank or investor with two nickels to rub together.
But as Dr. Weiss warned in his white paper opposing TARP he delivered to Congress in September of last year … and in his white paper on the dangerous consequences of bank bailouts he presented to the National Press Club in Washington in March … all these endless efforts are too little, too late to end the debt crisis — and too much, too soon for the bond markets.
According to Fed figures, Washington borrowing soared at a blistering 37 percent pace in the fourth quarter alone. Nearly $100 billion in bonds, notes, and bills are being offered at each weekly Treasury auction — the most in our nation’s history.
And to make matters even worse, Washington will have to borrow a staggering $2.5 trillion this year just to avoid running out of cash. Without it, they wouldn’t even be able to make payroll.
Now, this tsunami of new Treasury offerings is already having the impact that we have warned you about: Interest rates are surging even as the Fed tries to keep them under wraps.
The price of long-term government bonds has already plunged more quickly than at any time in history. The yield on 10-year Treasury notes has nearly DOUBLED just since December.
This not only makes it more expensive for the government to borrow. It makes it more expensive for nearly EVERYONE to borrow. And worst of all, it invokes the horrifying thought that, perhaps someday, the government will be unable to sell its long-term notes and bonds at ANY price.
In their most recent edition of Safe Money, Dr. Weiss and Mike Larson paint a vivid and alarming picture of what happens next — the headlines you’ll be reading in the weeks and months ahead …
“You have the recipe for a perfect storm in the largest debt market of all: Governments bonds.
“Investors will attack with a vengeance.
“They will not only sell bonds (long-term), but also notes (medium-term).
“They will not only dump notes and bonds issued by the Treasury, but also those issued by government agencies and government-backed entities, such as Ginnie Mae, Sallie Mae, Fannie Mae, and Freddie Mac.”
Rising Interest Rates:
The Kiss of Death for
Our Troubled Economy
Most of the interest rates you pay on your mortgage and every other type of loan you have are tied in some way to Treasury yields: When Treasury yields rise, so does the price of money in virtually every other sector of the economy.
And, right now Treasury rates are rising! That means that interest rates on mortgages, car loans, credit cards and even loans made to businesses must rise as well.
Rising interest rates are the kiss of death to any economy in crisis. Instead of saving it, Washington is administering the coup de grâce — the poison that can only undermine the economy before it can recover.
The Greater the Crisis,
The Greater the Opportunity.
But to Better Seize These Opportunities,
You’ll Need This ONE THING …
In a word, you’ll need a way to sharpen your TIMING skills — to make sure you’re using the most advanced, most effective timing tools available to make your “buy” and “sell” decisions at optimum times.
This is why Dr. Weiss and his team have agreed to host a free online video event — SOLVING THE TIMING MYSTERY: To give you the single most effective approach to market timing any of us on Dr. Weiss’ staff has ever seen.
Registration is free and takes only seconds. Just click this link to grab your complimentary registration now so we can email you the date and time of this crucial event, along with your instructions for attending.
Sincerely,
Amber Dakar
Investment Analyst
Weiss Research, Inc.
About Money and Markets
For more information and archived issues, visit http://legacy.weissinc.com
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 Kristen Adams, Andrea Baumwald, John Burke, 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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