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Trusting Washington and Wall Street is bankrupting millions of Americans … and now they’re at it again!
In the 1990s, Wall Street urged you to buy Internet stocks at 500 and 1,000 times earnings — and even tried to railroad you into stocks with no earnings at all.
Result: According to the Fed, nearly $6.6 trillion vanished into thin air when those stocks crashed and burned.
Then, in 2001, Washington got into the act — driving interest rates to their lowest levels since World War II … helping to create the greatest real estate bubble in history … and doing absolutely nothing when money-hungry bankers and brokers broke every rule in the book.
Result: The Fed’s latest report reveals another $15.5 trillion in losses the great real estate bust, credit crisis and recession.
The bottom line: In less than one decade, investors who trusted Washington and Wall Street were fleeced to the tune of $22.1 TRILLION!
Now, by bailing out bankers, brokers and CEOs, Washington has created the most dangerous bubble so far: The enormous and rapidly growing explosion of federal debt — U.S. treasuries — dumped on investors worldwide.
You don’t need a Ph.D. in economics to know what’s next: Like the Tech Bubble and Real Estate Bubble that preceded it, this new bubble will also burst, wiping out trillions more dollars of invested wealth.
Three Compelling Reasons
Long-Term Bond Prices MUST Crash
Reason #1 — Exploding Federal Deficits: Washington’s current crop of drunken sailors is making some of their predecessors appear sober by comparison.
The 2009 budget deficit of $1.4 trillion was the worst in history — more than three times larger than the previous record.
Recently, the Congressional Budget Office (CBO) projected that, rather than shrinking, the 2010 deficit will be $1.4 trillion. Worse, Washington will sink a total of $7.4 TRILLION deeper in debt over the next ten years.
The White House’s Office of Management and Budget (OMB) quickly disagreed, pegging the 2010 deficit at $1.6 trillion and promising an $8.5 trillion gusher of red ink over the next decade.
The New York Times quickly chimed in, pointing out that about 80 percent of the government’s deficit forecasts over the past three decades were too optimistic.
In fact, just two years ago, the CBO said the 2010 deficit would be $241 billion. Now it’s likely to be at least $1.6 TRILLION — or over SIX TIMES MORE. Imagine if the government’s current ten-year debt estimates — already over $8 trillion — turn out to be equally far off-target!
Of course, that would be impossible. Bond investors would simply stop lending Washington money long before that could happen.
Reason #2 — An explosion in the supply of U.S. Treasury bonds: It would be bad enough if Washington only had to borrow enough to equal each year’s budget deficits. That would mean $1.6 trillion-worth of treasuries hitting the auction block this year alone, many times more than in prior record years.
But Washington also has to borrow enough to replace Treasuries that are maturing — and that means an even greater avalanche of Treasuries need to find buyers each year.
Already, total issuance of government debt already hit a stunning $922 billion in 2008. It then surged even higher to $2.1 trillion in 2009, and it’s on track to top $2.5 trillion this year. The size of just ONE WEEK’s debt auction has ballooned to almost $120 billion — more than the total supply hitting the market in a FULL year not long ago.
The laws of supply and demand dictate that when you get a massive increase in the supply of anything, its value plunges — and Treasury bonds are no exception.
Reason #3 — Global investors starting to rebel: So far, given the realities above, the U.S. treasury market has proven to be remarkably resilient because, in the global competition for investor funds, U.S. Treasuries are typically viewed as the “least ugly” alternative for many investors.
That’s why, so far, most foreign investors — now holding about 60 percent of all marketable U.S. Treasuries — have been willing to pay a relatively higher price for them and accept lower yields.
But now even that is changing! As Mike Larson reported on Friday, China, the single largest holder of U.S. debt, dumped more Treasuries than in ANY month since the government started tracking the data in 2000.
This may help explain why the Treasury auctions last week turned out to be a monumental dud, with demand extremely weak.
The 30-year auction was especially pathetic: Indirect bidders — mostly foreign governments and investors — took down just 28.5 percent of the bonds sold, compared to a ten-auction average of 43.2 percent.
Prices slumped. Yields surged. In effect, the U.S. Treasury had to bribe investors with higher yields to get them to buy.
Immediately alarm bells began ringing at the Fed. On Thursday, just a few hours after we presented Nine Shocking New Predictions for 2010-2012, the U.S. Federal Reserve raised the discount rate on loans made directly to banks. The 25-basis-point increase was the FIRST hike in the discount rate since early 2006.
Secretly, the Fed is in a panic to ward off a bond market collapse! They know that, sooner or later, they MUST send the message that they’re serious about cutting back on their mad money printing.
The danger of course, is that foreign investors will get an entirely different message: That Washington’s efforts to fight the most severe recession since the Great Depression are waning.
If that happens, you could see turmoil — not just in the bond market, but in every asset class imaginable.
This is PRECISELY why my team and I created
our Million-Dollar Rapid Growth Portfolio:
To help you protect yourself and profit
in the chaotic days ahead!
Since 1971, this time-honored, scientific portfolio-building strategy — based on the Foundation for the Study of Cycles research — has warned of virtually every major directional shift in stocks, bonds, currencies, precious metals and energy.
Simply following the Foundation’s published cyclical forecasts in a diversified portfolio could have helped you …
- Beat the S&P 500 FOUR TO ONE …
- Enjoy 18 CONSECUTIVE winning years since 1992 …
- Multiply your money more than 25 times over since 1971 …
- And turn $10,000 into more than $258,000 … $100,000 into nearly $2.6 million … or $1 million into more than $25.8 million …
- In every imaginable investing environment — even as investors who trusted Washington and Wall Street lost their shirts!
I’m so confident in this revolutionary approach to building the optimal growth portfolio, I’m putting my money where my mouth is: Using this strategy — to invest one million dollars of my own money.
The best part: As a member of the Million-Dollar Contrarian Portfolio, you get a special, members-only discount others are NOT getting.
You can actually beat me to the punch by getting two full business days’ notice before I buy or sell anything!
And in each Trading Alert Monty sends you, he’ll …
- Name the asset classes the Foundation’s signals have identified as having the richest profit potential now …
- Reveal what percentage of our capital he’ll invest in each asset class …
- Name the individual vehicles — the stocks and ETFs — he’s recommending in each asset class …
- Give you the precise percentage of your money to invest in each vehicle.
But our Early-Bird Membership Discount
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Please remember: Your membership is 100 percent guaranteed. If, as I suspect, you’re thrilled with the money we’re making together, just keep following us as we go for substantial profits. Otherwise, cancel your membership within the 90 days and we’ll promptly refund every penny you paid for your membership.
My recommendation: Click here to read my full report on this remarkable “Rapid Growth Portfolio” approach online … to activate your Early-Bird membership … and to lock in big savings while you still can!
Good luck and God bless!
Martin
P.S. The video of Thursday’s strategy briefing — Nine Shocking New Predictions for 2010-2012 — for just a few more days. If you missed any part of it or want to watch it again, it’s free: Just turn up your computer speakers and click this link.
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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
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