Heavy use of narcotics is the only reasonable explanation for what happened this morning. The Spanish 10 year bond now has a lower yield than the U.S. 10 year bond. Do you really think an investment in 10 year Spanish government debt at 2.60% is a good idea? Their rates exceeded 7% in 2012. Interest rates on government debt are supposed to reflect the risk of that country’s debt, based upon their economic policies, debt to GDP levels, economic growth, and health of their job market. Of course, that is what is supposed to happen in the real world where markets are not rigged, central bankers don’t conduct debt Ponzi schemes, and the citizens are not at the mercy of a banking cabal and billionaire oligarchs.
Spain is an absolute basket case. Their GDP growth has been below 0% for 95% of the last five years and lingers below 1% today. And this “growth” is artificially created by government spending as annual deficits have been 10% of GDP. This country has been in freefall since 2009, with GDP still 15% below levels in 2009. Home prices continue to crash. There is violence, riots, and unrest in the streets. I wonder if it has something to do with the 26% unemployment rate?
Spain is powderkeg that could explode at any moment. The percentage of people under the age of 25 who are unemployed exceeds 57%. Does that sound like a recipe for long term economic health? They are in the same position as Greece. These are the levels of unemployment that lead to revolution, bloodshed and politicians being hung from lampposts. So of course their government bonds should trade as if they are a safer bet than the U.S. Right?
Spain’s debt-to-GDP has hit 93.4% – the highest level in more than a century. We are fed the propaganda about austerity in Europe being the cause of their prolonged depression. Again it is a false storyline. Debt is the drug habit that Spain and the rest of the EU cannot break. Even the government apparatchiks admit that Spain’s debt to GDP will surge well past 100% over the next two years. There is absolutely no way Spain can reverse the course they’ve chosen. Once you pass 90% the end is in sight. The whole house of cards will collapse and debt default will be the only choice. If this criminally corrupt country is destined to experience a national bankruptcy, how could their debt possibly be trading at a yield of 2.6%?
The answer is simple. Bankers control the levers of power in Europe, the U.S. and Asia. They want more for themselves and less for you. The sycophants at the ECB, led by a Goldman Sachs progeny, have created hundreds of billions out of thin air and pumped it into the veins of the insolvent European banks like heroine. These addicts then turn around and use the new debt to buy the old government debt, thereby driving the yields on the old debt down to record lows. There is no market clearing mechanism. This isn’t a free market. This is a rigged market, designed to enrich the oligarchs and bankers. The citizens who are huddled in back alleys scrounging for food in dumpsters are of no interest to the fat cats running the Ponzi scheme.
So if you’re feeling lucky and truly believe central bankers can permanently keep the Ponzi going with more and more debt, invest your life savings in Spanish 10 year debt. If I were a gambler, I’d put my money in guillotines.
“The issue which has swept down the centuries and which will have to be fought sooner or later is the people versus the banks.”