"When misguided public opinion honors what is despicable and despises what is honorable, punishes virtue and rewards vice, encourages what is harmful and discourages what is useful, applauds falsehood and smothers truth under indifference or insult, a nation turns its back on progress and can be restored only by the terrible lessons of catastrophe." … Frederic Bastiat

Evil talks about tolerance only when it’s weak. When it gains the upper hand, its vanity always requires the destruction of the good and the innocent, because the example of good and innocent lives is an ongoing witness against it. So it always has been. So it always will be. And America has no special immunity to becoming an enemy of its own founding beliefs about human freedom, human dignity, the limited power of the state, and the sovereignty of God. – Archbishop Chaput


Tuesday, April 9, 2013

Japanese Money Flooding European Bond Markets

The mystery, at least in my mind, of the rising Euro is now clear. Outflows of Japanese institutional money is pouring into the European bond markets in search of higher yield.

Consider the following - the yield on a 10 year Japanese government bond has fallen to 0.525%. Yes, that is not a typographical error. If you buy one of those things, you are locking money up in an IOU for TEN YEARS to obtain a half a percentage point of interest. If that is not bad enough, the underlying currency is also freefalling in value. Now, who in the world would want to do that besides the monetary authorities in Japan who are becoming and likely are going to end up staying that way, as the largest, if not sole buyer of Japanese government debt?

Believe it or not, with all the massive problems in Spain and Italy, the yield on the Spanish 10 year bond has now fallen to its LOWEST level in a year. Italian bond yields are down to 4.36%! Dow Jones is reporting that last Friday and this Monday, the yield on the 10 year notes of France, the Netherlands, Austria and Belgium hit RECORD LOWS! This is Japanese money fleeing into European bonds.

Now here is what is even more mind boggling - the Bank of Japan's own data shows that Japanese institutions hold a gargantuan $6.34 TRILLION of domestic government bonds! This is not a tide of money, it is a tsunami looking for yield!

Bubble in the US stock market? Yes, in my opinion but the bubble is going to get even bigger. Heaven help everyone of us on the planet when this man-made disaster finally reaches its crescendo!

UNLEASH THE KRAKEN.... here it comes..... where is Perseus going to come from?


  1. Thank you for another excellently written post!

  2. This is why the world needs gold as a store of value rather than fiat currencies. Fiat/debt instruments are for daily use, gold is for wealth savings.

  3. It's time for gold-denominated chequing accounts. Or silver. Or both, if desired. There is no technological reason why they can't be offered, DDA software could calculate one CENT down to a certain amount of grams of gold to as many decimal places as desired and deduct that amount of gold in the cheque clearing process. And the now-ubiquitous debit card would make "spending" the gold a simple, easy transaction, thus putting a final nail in the ridiculous argument that "you can't buy a loaf of bread with your gold". The first bank to offer precious-metals-based DDA ( chequing ) accounts will be the premier bank of the rest of this Century.


    may as well unleash C'thulu also

    1. The kraken may only take our livelihood...
      C'thulu will also take our sanity...
      It's already happening!

  5. Over the last 90 days without any announcement, stocks of gold held at Comex warehouses plunged by the largest figure ever on record during a single quarter since eligible record keeping began in 2001 (roughly the beginning of the bull market).
    Could you please tell me how to interpret the information above and how meaningful it is. You can comment on this is another article.


  6. Nicely distilled article that clears the mist.

    I wonder what business to be in for what's coming - cigarettes and booze maybe as the worry ramps up?

  7. Agreed,

    Did you read last post from Yra Harris? (Notes from underground). He explains the "declaration of war" from BoJ to EcB...
    Have a nice day!

  8. usda report at 11am ct... looks like may corn is the better buy as basis or 'cash' is trading +70 above the may corn futures price this morning... so any dip is a buy limit will be -40.

    soybeans the people on the ground in china are saying it's bad, they are throwing poultry in the rivers due to the bird flu... that puts more risk into buying a dip in soybeans right here as usa buying can just go to zero until the buyers know the situation is over..


  9. Bernanke and Draghi getting exactly what they want.

    Spooked global investors piling into more "paper", sending the SPY to record highs and a constant bid continuing into fixed income for the doubters.

    Speculative junkies piling into electro-digit "BitCoin" to "protect their wealth", LOL!!!

    Grains and gasoline getting pummeled, giving the consumer yet another "tax cut"

    And gold getting destroyed again to make sure that the world knows that "There Is No Inflation" and to give people the green light to pile into more paper speculations, not physical items.

    Unless, of course, the physical items are vintage race cars, wine, paintings, rare wines, etc.

    Another fascinating chapter to add to the "Bernanke Fed" novel that keeps getting longer and longer and more fantastic as time moves along.

    Pretty soon that novel will be enshrined in every business school's economic department as the "Holy Grail" to wealth creation for any country whose economy gets into trouble.

    Many on Wall St. still watching this eye-popping event with their mouths agape.

  10. Well Dan you had a post that previously indicated if the S&P cleared the 1580 zone, gold was probably dead. It seems as if all the bullion banks are screaming it. It amazes me, the world is literally printing trillions, yet the gold market stands and watches. When is it we return from Bizzaro land. I was speaking to my neighbor down the street and he said the same thing, we are living in an alternative universe.Yet, Mark keeps stating the true facts as they exist today. I want to see the physical gold diverge from paper gold just to know I am not "NUTS".

  11. Hi, Its just great to find many good points over here in your post, writing is simply great. Thanks for your post.

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