Juggling Dynamite

“QE-infinity” is apparently not convincing the US bond market. After rising this summer on the expectation of more Fed easing, this month 10-year yields are once again signaling deflation for the foreseeable future. Central bank jaw-boning aside, this chart shows that capital is still flowing into the relative capital safety of US bonds.

Source: Cory Venable, CMT, Venable Park Investment Counsel Inc.

I will be speaking at the Cambridge House show this Thurs (at 1pm) and Fri (at 1:30pm) in Toronto. You can register to attend on the Cambridge House website here in advance of the show.  Do say hello if you stop by.

The table below shows that Italy’s monthly deficit is rapidly expanding from €2 billion/month in 1999 (prior to joining the EMU), to €9.5 billion/month over the last nine months. Let that one settle in: Italy is now borrowing nearly 10 billion Euros a month to fund its spending. And they are not alone or even the worst fiscal house in the world. Most of Europe, the US, Japan and even China are facing increasingly insane funding needs. These debts cannot be soaked up by central banks nor magically repaid because over-spending continues to compound the problem day after day, month after month. Time to admit facts, write off bad debts, cut entitlements across the board and stop adding interest payments to a tab that cannot be paid.

“Europe is in recession. While the northern countries, like Germany, have not yet entered recession, all of the indicators point that way. Things are going to get much worse in Europe before they get better. The first condition to heal a malady is to recognize what it is. So far, the European politicians have yet to recognize that the underlying problem is too much debt and overpromises…”  See:  The recession that won’t end