Our Worldwide Free-For-All Debt Merry-Go-Round

August 15, 2010

By Jim Deeds

THE DEBT COLOSSUS...just from one week’s new debt creation as reported by Doug Noland (PrudentBear.com) continues to grow, and grow...and grow!

Debt issuance began August with a flurry. Investment grade issuers included Metlife $3.0bn, Citigroup $2.5bn, IMB $1.5bn, Pride International $1.2bn, Altria Group $1.0bn, Omnicom Group $1.0bn, AFLAC $750 million, PNC $750 million, Expedia $750 million, Corning $700 million, Newell Rubbermaid $550 million, Northern States Power $500 million, CAN financial $500 million, Magellan Midstream $300 million, AMB Property $300 million, and Public Service E&G $250 million.

Junk issuers included Mylan $1.0bn, Continental Airlines $800 million, Petrohawk Energy $825 million, Marina District $800 Million, Tenet Healthcare $600 million, Arch Coal $500 million, Trilogy International $370 million, Energy Solutions $300 million, and Ferro $250 million.

Convert issuers included Teleflex $400 million.

International dollar debt sales included Arcelormittal $3.5bn, HSBC $3.25bn, Credit Suisse $2.0bn, Volkswagen $1.65bn, Intesa Sanpaolo $1.0bn, Tech Resources $750 million, Stats Chippac $600 million, Australia & New Zealand Bank $1.5bn, Macquarie Group $500 million, and ENAP $500 million.

The accumulated size of ever-expanding debt? Unimaginable...now measured in 100 plus trillions of dollars or dollar equivalents. Each week, each month, every year the debt offerings continue to set new higher records. Old-fashioned millions become bullions, and then soon are measured in trillions. And a new high in derivatives designed to “insure the redemption of debt is now put at $1.4 Quadrillion. Bloomberg reports:

August 6 – Bloomberg (Katie Evans): “Expedia...and International Business Machines...sold bonds with coupons at historic lows this week... Debt sales reached $35.9 billion this week, the most since March 26...”

August 6 – Bloomberg (Tim Catts): “U.S. corporate bond sales in August may reach $100 billion, the most on record for the month, as companies benefit from falling borrowing costs and seek to raise debt before financial firms come to market in September, according to Aladdin Capital LLC.”

Muni Watch: August 5 – Bloomberg (Martin Z. Braum and Justin Doom): “New York City’s Transitional Finance Authority increased its offer of top-rated Build America Bonds by 31% to $614 million in its biggest sale of the taxable debt since October.”

FEELING LEFT BEHIND?

When you, or I, or someone else spends $10,000 or $100,000 of our hard-earned savings on Treasuries, Muni’s, or corporate bonds, we have to feel both individually and collectively that we’re just a flea riding on an elephant’s back. There obviously must be another “game” going on out there, and we know we’re being excluded from the main attraction: So...what’s the game?

THE GAME...ALA GOLDMAN SACHS & FRIENDS:

Unlike you and me, the “real players” in the world’s truly colossal debt and monetary markets do not buy bonds to own them. They buy bond “blocks” to SPECULATE! Income was never their goal...their goal is the biggest fastest speculative profits (always short term) in the humungous bond markets of the world. The “really big” guys now do this in short term speculation on the mountains of “sovereign debt” floating in world markets, where one well-healed speculator can actually break the bank of a nation (Soros accomplished this with the English Pound in the 90’s). Multi-billion dollar bond speculators use the most highly leverage sophisticated schemes available (thinkable) in their purchase of bond blocks, and then further “insure” their bets in the $1.4 quadrillion “derivatives” markets. This piles leverage and worthless derivative promise upon promise in the search for instant wealth...driven by insatiable GREED (again ala Goldman Sachs). Day to day volatility in bond ratings, sovereign debt status, interest rates (government rigged by QE to always edge lower), and government controlled supply gives the players huge minute to minute opportunities for multi-million dollar gains. When a speculator in bonds guesses right...this can happen in minutes.

“The Game” has re-engineered and redefined what once was a stodgy old warehouse industry of storing real money for the long term “income investors” into the absolutely biggest, fastest, most heavily leveraged game of speculation in man’s financial history using bonds as the focal point of all grand speculation. “The BANK” (Goldman Sachs), and its partners at the Fed and at the U.S. Treasury, use their huge proven worldwide power and propaganda and bribes to rig debt, interest rates, and currency markets worldwide in minute to minute manipulation in order to achieve their goals of both billion dollar a month profits for the favored players and more importantly...the continuing extension of the world’s greatest ever Ponzi (“the dollar empire”) scheme “for just one more day”! Geithner and Bernanke, coordinating their QE (quantitative easing) and interest rate rig (always lower to build instant profits into all the bonds they sold last month) satisfy Goldman Sach’s financial “controllers” and their own mistaken dream to be heroes in the “bailout” of America. The only words they know are “print more money” and “create more credit” as America’s “bailout” creates exponential growth by the trillions in search of “rebound or growth to avert the big D-word...DEPRESSION.

Sorry to be discouraging. But history (NO EXCEPTIONS) tells us a huge (biggest ever) deflationary DEPRESSION, when all debt worldwide is finally discovered to be unredeemable and worthless...overnight, now lies just over our financial and monetary horizon.

The miracle of the “conglomerates” of the 60’s and early 70’s, the penny oil and gas stocks that were offered at 25¢ a share one week and traded at $2.00 a share a week later in the late 70’s, the miracle solar and wind power stocks of the early 80’s, the DOT COM Bubble of the 90’s, and finally the housing and sub-prime mortgage boom/bust of 2000-2007 all were only preliminary minor financial “set backs” leading up to the “really big one”! THE WORLDWIDE DEBT AND MONETARY COLLAPSE OF 20____?

As we watch the frenzied and frazzled over-exuberance of all governments and the Goldman Sachs favored multi-billion dollar debt speculators in their “dance of debt”...the END (total default of all pyramided debt devices) seems very near. Time now to be ready.