What If War Against Syria Causes China, Russia And The Rest Of The World To Stop Buying US Debt?

Can the U.S. really afford to greatly anger the rest of the world when they are the ones that are paying our bills?  What is going to happen if China, Russia and many other large nations stop buying our debt and start rapidly dumping U.S. debt that they already own?  If the United States is not very careful, it is going to pay a tremendous economic price for taking military action in Syria.  At this point, survey after survey has shown that the American people are overwhelmingly against an attack on Syria, people around the globe are overwhelmingly against an attack on Syria, and it looks like the U.S. Congress is even going to reject it.  But Barack Obama is not backing down.  In fact, ABC News is reporting that plans are now being made for a “significantly larger” strike on Syria than most experts had expected.

If Obama insists on going forward with this, it will be the greatest foreign policy disaster in modern American history.

….read more HERE

Since unemployment statistics are either suspect or blatantly bogus, we must look for other less manipulated statistics for some modicum of truth. Key statistics of employment, income and production are vital propaganda tools for the status quo, and the temptation to adjust them to manage perceptions is apparently irresistible.

CLICK HERE to read more

In my experience, markets don’t deal well with several crises emerging at the one time. Give them just QE tapering and they may be able to adapt, but throw Syria and an Asian currency mess into the mix, and it can make for a wild ride. Underlying all of the recent volatility though is the first sign that investors are starting to doubt the omnipresent powers of central bankers. Ben Bernanke says there can be QE tapering without rising interest rates and bond markets revolt against that idea. Similarly, the new Bank of England chief Mark Carney says interest rates will remain low for the next three years and bond yields jump given better economic data and rising inflation.

CLICK HERE to read more

By keeping a close eye on the Bloomberg terminal this morning, there appears to be a very focused effort to buy the 10-year US Treasury bond to keep the yield from touching 3% for the first time in over two years. In fact, this particular benchmark bond was trading at 3% going back as far as the 4^th quarter of 2008, almost five year ago. It would be further confirmation that the 30-year secular bull market in bonds is clearly in the rearview mirror (I have been on record numerous times since the beginning of the year that the secular bull market in bonds ended in July 2012).

It is pure speculation, but the motivation for all this buying this morning could be to avoid the headlines that would occur if the 10-year Treasury bond hits 3%. The expected QE “taper” from the Fed is only two weeks away and the bond market appears to be telegraphing its apparent certainty that it will occur. It is a bit like upstaging Ben Bernanke and the Federal Reserve.

Look out for the “3%” headlines if the last stand of Treasury bond-buying relents and the bond market ends up pushing the yield over that high profile threshold.

The opinions expressed in this report are the opinions of the author and readers should not assume they reflect the opinions or recommendations of Richardson GMP Limited or its affiliates. Assumptions, opinions and estimates constitute the author’s judgment as of the date of this material and are subject to change without notice. We do not warrant the completeness or accuracy of this material, and it should not be relied upon as such. Before acting on any recommendation, you should consider whether it is suitable for your particular circumstances and, if necessary, seek professional advice. Past performance is not indicative of future results. 

 Richardson GMP Limited, Member Canadian Investor Protection Fund.

 Richardson is a trade-mark of James Richardson & Sons, Limited. GMP is a registered trade-mark of GMP Securities L.P. Both used under license by Richardson GMP Limited.

They say that reality is whatever you wish it to be and I suppose that could be true. Just wish it, as Jiminy Cricket used to say, and it will come true. Reality’s relativity came to mind the other day as I was opening a box of Cracker Jacks for an afternoon snack. That’s right – I said Cracker Jacks! I can’t count the number of people who have told me during the seventh inning stretch at a baseball game to make sure I sing Cracker Jack (without the S) because that’s what the song says. I care not. No one ever says buy me some “potato chip” or some “peanut.” How about a burger and some “french fry?” In all cases, the “s” just makes it flow better. My reality is a box of Cracker Jacks, and I think little sailor Jack on the outside of the box would be nodding his approval if he could ever come to life, which maybe he can if the stars are aligned and reality is whatever we wish it to be.

CLICK HERE to read more