The bond markets will crash once global central banks stop buying debt, triggering a financial crisis much worse than the one seen in 2008, strategist David Roche told CNBC.
Roche, who has previously warned that “safe haven” government bonds are the most dangerous place for investors to be in, said Wednesday: “Yes it [a market crash] will happen and yes, it will be bigger [than the crash of 2008]. Once you re-price the burden of the world’s debt… the ugly truth will be revealed.”
Jeremy Grantham: “We Have Been Conned”
The lessons of Jeremy Grantham’s recent interview with Charlie Rose seem to be becoming increasingly prescient as the stock market surges to new highs amid a crumbling macro (and micro) economy. “Bernanke is whipping the economic donkey that can only grow at 1-2% as if it was a race horse growing above 3%,” and unfortunately he will keep doing it “until the donkey is dead.” As Grantham says, it is a “very dangerous situation to have the most powerful man in the world,” doing this as simply put, the Fed, “does not have the tools to generate employment.” But while Grantham’s clarity on Bernanke’s actions are unquestionable in their endgame, his views (below) on Keynes, debt, and wealth transfer are even more concerning. “We had this amazing experiment… but we have been conned into believing by the financial world that debt is everything.”
Brief clip on Bernanke’s actions…