Three Very Disturbing Headlines

Comment:

Maybe this is the “Strategic Shocks” the U.S. Army is worried about….”We the People” deciding to capture, put on trial and then hang the thieves/traders with out permission.

Federal Reserve sets Stage for Weimar-style Hyperinflation

By F. William Engdahl, 15 December 2008

The Federal Reserve has bluntly refused a request by a major US financial news service to disclose the recipients of more than $2 trillion of emergency loans from US taxpayers and to reveal the assets the central bank is accepting as collateral. Their lawyers resorted to the bizarre argument that they did so to protect ‘trade secrets.’ Is the secret that the US financial system is de facto bankrupt? The latest Fed move is further indication of the degree of panic and lack of clear strategy within the highest ranks of the US financial institutions. Unprecedented Federal Reserve expansion of the Monetary Base in recent weeks sets the stage for a future Weimar-style hyperinflation perhaps before 2010.

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Bond Market Expecting Outright Depression

J.D. Steinhilber

If equities have priced in a long, deep recession, the bond market seems to be expecting an outright depression. Despite the promise of trillion-dollar Federal budget deficits and debt monetization (i.e. “quantitative easing”) by the Fed, the 10-year Treasury is 2.75%, the lowest level in half a century.

Five-year inflation protected Treasuries (TIPs) are yielding more than nominal five-year Treasuries, suggesting that Treasury investors expect negative CPI inflation over the next five years!

Fears of default and lack of market liquidity have pushed spreads on municipal and corporate bonds to levels not seen since the Great Depression. AAA rated 30-year municipal bonds are yielding 5.47% at present, which works out to a taxable equivalent yield of 7.6% for a taxable investor in a 28% tax bracket. This is 240% of the current 3.14% yield on 30-year Treasury bonds. Junk bond yields and spreads to Treasuries have never been as high as they are today. It appears that the only remaining bubble in the markets is in Treasuries.

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Third of Hedge Funds Face ‘Wipe Out’ After Slump, Godden Says

By Tom Cahill

Dec. 15 (Bloomberg) — Almost a third of hedge funds will shut or merge after the $1.5 trillion industry posted its worst ever performance this year, according to IGS Group, which advises hedge funds on raising money.

“The failure rate is going to go up, the closure rate is going up, and the merger rate is going up,” IGS Chief Executive Officer John Godden said in an interview in London. “It’s going to be a 30 percent wipe out.”

The number of hedge funds more than tripled in the last decade to a record 10,233 at the end of June, according to Chicago-based Hedge Fund Research Inc. That number will likely tumble after funds dropped 18 percent in the year through November, the worst year since HFR started its Fund Weighted Composite Index in 1990.

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