As I foretold at the George Galloway event: “Those who bought gilts are nursing severe losses…. With much greater losses to come.”

ONE of the greatest risks facing the world economy is a wholesale crash in government bonds markets. Yields on UK gilts, US Treasury bonds and others are still much too low – and that means that capital values are too high (the price of fixed income securities move inversely to their yield). Given the extraordinarily large size of government bond markets, and the fact that so many banks, insurers and pension funds are big holders, sometimes for regulatory reasons, this will trigger wealth destruction on a massive scale.

3 comments on “As I foretold at the George Galloway event: “Those who bought gilts are nursing severe losses…. With much greater losses to come.”
  1. JR says:

    “this will trigger wealth destruction on a massive scale”

    In terms of what Keiser? Central bank credit? If yields rise, that is, bond prices fall in terms of central bank credit, central banks can simply make whole the losses of commercial banks, just just like they did for all the junk debt that commercial banks got stuck with in ’08.

    In terms of gold, or even silver? Now that’s a whole ‘nother ball of wax, but the fact is, as you’ve learned the hard way, central bank credit retains its bid in gold & silver.

  2. Hardcore Uproar says:

    Come on Max, the only people buying UK gilts are the BoE & other institutions that are forced too. It´s the bad debt that all these central banks are sitting on that´s the main concern.

  3. icarus-schmicarus says:

    Max, what happens to TIPS when bonds tank? I’d be obliged…

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