[1036] The Truth About . . . Bond Vigilantes

Posted on June 3, 2009 by stacyherbert| 41 Comments

Stacy Summary: The Truth About Markets New Zealand. RDU 98.5 FM. We talk about the war between savers and speculators. And the bond vigilante taking the monetary law into his own hands.

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41 Responses to [1036] The Truth About . . . Bond Vigilantes

marcus | June 3, 2009 at 3:31 am |

Thankyou for the program. in the meantime unbelievably but not surprising articles and headlines like this in australia ,……[ in the westerns don't the bad guys always lock up the sheriff in the lockup before bond vigilantes show up to rescue them ? ] we are still waiting for the vigilantes to arrive ,[where's robert de niro when you need him ? taxi driver for hire ,lets hope he gets here soon ?] ,people even at this late stage here in australia are still totally hypnotized with all things to do with the magic of so called ‘real’ estate . max keiser, taxi driver. http://business.theage.com.au/business/house-prices-not-tipped-to-slide-20090603-bv6p.html
marcus | June 3, 2009 at 3:40 am |

correction to the above reference to’ taxi driver’ comment /context real estate as a form of pornography than magic.
Mini US | June 3, 2009 at 4:03 am |

Sorry to quote P. Schiff again but he said something that made lots of sense recently.
Something like, -If you need a Govt grant/tax break to buy a house, then you really can’t afford a house and shouldn’t really buy one in that context-

Max, Hows Pirate My Film going?
When we get proper broadband in Aus we can bypass the TV networks the same way China and Brasil are bypassing the US.
Then we can make our own stuff to sell to the world. Bring it on.
Mike2liverpool | June 3, 2009 at 4:13 am |

Morning Stacy
I hope Max didn’t give investment advice to the Ayatollah………..£ is ROCKETTING up !!!!

Mike
Mini US | June 3, 2009 at 4:17 am |

Great quote from Max.
-The savers of the world are interested in saving the world-
Thats Gold!
marcus | June 3, 2009 at 4:19 am |

my 2 cents worth , i suppose economists are busy pulling dead rabbits out of a hat ?, i expect the US dollar to rally [mid to -high eighties ] before heading south , who knows ? not me.
Mother Earth | June 3, 2009 at 4:22 am |

Moneraty law? What about monetizing law?

http://www.nytimes.com/2009/06/03/business/03litigate.html?hp
Barnet Burns | June 3, 2009 at 5:10 am |

Like tertiary education the dairy sector seems to have been hijacked by the debt pushers. Take note of these ominous figures – according to NZ’s Reserve Bank agriculture debt in NZ
has risen from 130 per cent to 467 per cent of agriculture GDP since December 1990. Roughly in the same time period as the baby boomers kids took on significant debt for university tuition and then all moved to London to work in the finance sector/hedge fund industry to give themselves a chance of paying it all off. Now all moving back because being laid off!.
Anyway, recent dairy payouts have decreased, US and European dairy protectionism has kicked in, the NZ dollar is being pumped up by speculators, making exports less competitive – not good signs for an over leveraged industry on which we are over reliant.

@Max: Can you explain how a small NZ banking sector can generate the returns to payout all the speculative money flowing into the country to take advantage of interest rate arbitrage?. I naively think of the money coming in and then the banks having to decide where to invest it to be able to pay the interest ie. how is the carry trade sustained? Why no Iceland in the South Pacific?

Yep, we like our old Westerns down these parts. The noir ones, Anthony Mann and Jimmy Stewart, Robert Mitchum, Budd Boetticher. Dark, bleak, haunted by fears of a post-WTO apocalypse…
Vlado | June 3, 2009 at 5:16 am |

How about next correction in everything happens when gold hits $1000 again? How about the view that we entered another global bull market in stocks (led by China, of course) that will last minimum until 2011, which will be able to keep US and Euro stock markets afloat and uptrending (assiduously helped with their rampant inflation), until the time of reckoning, when the Anglo-American sprawl will hit new devastating lows? Oh, well, this is my cup of coffee for this cold Canadian morning (June 3rd and its barely 12ºC). As for NZTAM I haven’t heard it yet. What I like to do is store it on my MP3 player, so I can listen to it on my breaks at my workplace. Regards.
Hawk of Terror | June 3, 2009 at 5:19 am |

Hi Max and Stacy,

Great to see the Australian housing market getting some attention. Tell the people! Many people here still think that Australia is an exception and that the rules don’t apply here (this expectation no doubt bolstered with the recent news that Australia has avoided a technical recession). It is like watching the remake of a B-grade movie we have just seen all over the world, in slow motion! The rationale behind the “rush” into housing seems to be the following: “better to get into the housing market now while you can still get a First Home Owners grant,” blissfully unaware that, as Stacy points out, these subsidies have merely acted as a catalyst in this final speculative blow off. What makes the whole spectacle even more absurd is that Rudd has indicated the Home Owners grants will be phased out towards the end of the year (Cf. http://www.theaustralian.news.com.au/story/0,,25378169-5013404,00.html) Talk about a red flag! Anyway, great show
Hawk of Terror | June 3, 2009 at 5:33 am |

@ Barnet Burns

Do you have a link to those figures from the RBNZ? Those figures are truly frightening!

I’ve also heard that a lot of farm land purchases over the last year in NZ have a settlement date in June ’09 (i.e. now), but that with the crash in milk price in the mean time this could spell trouble for the rural property market (?) Although I don’t know the specific numbers, I’m under the impression that the price of farmland (e.g. in the Waikato) also experienced something of a debt-fueled boom?
Richard@lattitude30N | June 3, 2009 at 6:02 am |

@Phil: continued from 6/1/09—

http://www.asianews.it/index.php?l=en&art=15402&size=A

“…creata ex nihilo” =

Such an almost blasphemous expression refers to money created by accounting decisions and practices made by existing computerised banking methods and which do not reflect actual available goods…”

Didn’t know that there actually is a MSM article cogitating about the same potentialality that crossed my mind…and apparently yours..as always, Richard@lattitude30N

“
Phil | June 3, 2009 at 6:21 am |

Richard@lattitude30N … “creata ex nihilo”

This was a juicy piece as well …

… ” The Saudis are considered too close to the United States and thus indirectly to Israel. Gulf States, especially the UAE, favour a Euro-Asian axis that runs from China to Russia that includes Germany, a relationship best illustrated by Opel’s sale to the Austro-Canadian Magna group, which stands in for the Russian state bank Sberbank.

The Rothschild family has have been closely associated with the Zionist Movement. The 1917 Balfour Declaration was in fact addressed to Lord Rothschild in which the British government committed itself to the establishment in Palestine of a national home for the Jewish people. “….

BTW….
I also look outside the Anglo-Saxon Box for real news.
It sometimes seems they have more “free speech” than we do !

PS:
It’s no wonder that Max’s main TV presence was Al Jazeera !
Phil | June 3, 2009 at 6:24 am |

BTW … more news on Gold …

JP Morgan launches kickout on gold equity fund
http://www.structuredproductsonline.com/public/showPage.html?page=860426

… ” JP Morgan has unveiled a new autocallable note linked to the Market Vectors Gold Mining ETF. The 18-month investment will pay a coupon of 5.25-6.25% if the fund is at 100% of its initial level after three months. If not, the product will continue to its next observation date, in December, when the payout will be 10.5-12.5%. Observation dates are every three months through the life of the product, and the final payout at maturity will potentially be 31.5-37.5%, if the product does not kick out before then. Capital loss will occur if the fund falls below 60% of its initial value and fails to recover to 100% by maturity. ” ….

You should read the comments on that article here …
http://www1.investorvillage.com/iv2/smbd.asp?mb=144#top

… pretty funny !

Like this one :
… “I don’t know if it is a trick, but if I understand it correctly (and I may well not), it is a “heads I win” and “tails you lose” deal. No thanks.” …
Hawk of Terror | June 3, 2009 at 6:29 am |

Naive, misleading or downright pernicious?

“House prices NOT tipped to slide”
http://business.smh.com.au/business/house-prices-not-tipped-to-slide-20090603-bv6p.html

Some excerpts:

“What a dangerous thing an economist with a model can be, capable of scaring the horses, wrecking the financial system and generating internet traffic.

…

The are a number of reasons why the Australian housing market is fundamentally different from those of the US and UK, including our tax policies, that we had a housing boom that topped out in 2003, monetary policy that was rising ahead of this global recession, economic counter-measures put in place early in our slow-down, our banks not completely losing the plot, our home loans are not non-recourse and that we have something like a shortage of housing, as opposed to the over-building that occurred elsewhere.

…

Of course it’s not good news at the top of the market, but despite all the attention given to Mosman, Toorak, Peppermint Grove and Noosa, that’s only a small fraction of total Australian housing and doesn’t matter very much in the overall economic scheme of things.

…

Yes, rising unemployment is not good for maintaining house prices, but sharply lower interest rates are. Of those who do lose their jobs, relatively few will actually face foreclosure. Most Australian workers actually don’t have a mortgage and of the rest, most have built up a healthy equity buffer to see them through a period of unemployment – which is why our big banks are prepared to capitalise repayments for a year.

… etc.”

In other words, “It’s just a flesh wound!” (Cf. http://www.youtube.com/watch?v=zKhEw7nD9C4)
Mother Earth | June 3, 2009 at 6:52 am |

@phil What is meant by ‘to close to the US’ ? No longer deliver oil or anyting to the US?

Btw, Jim Willie thinks the Saudis have (secretly) run out of oil..
Danny | June 3, 2009 at 6:54 am |

@ Stacy and Max

Sarkozy’s Secret Plan for Mandatory Swine Flu Vaccination
by F. William Engdahl
http://globalresearch.ca/index.php?context=va&aid=13835

(!!!!!!!!!!)
Phil | June 3, 2009 at 7:03 am |

@Mother Earth … ” The Saudis are considered too close to the United States and thus indirectly to Israel. Gulf States, especially the UAE, favour a Euro-Asian axis that runs from China to Russia that includes Germany, ”

I presume you are referring to the above ?

IMHO (in my humble opinion ) :

It’s all about Oil basically.

Kissinger ( ca. 1970 IIRC ) made the deal with the Saudis to sell all Saudi ( and later OPEC ) oil in US$s only. For that, the Saudis get US Military protection and EHM mation building via US Companies and lots of debt ( money for oil ).
The Saudis will therefore always Veto any OPEC decision “not to trade oil for US$” … although most of the other OPEC members would like to !

Iran opened their oil Exchange in Feb 2008 … IIRC .. after repairing the under-sea telecoms cables that “mysteriously cut” a few weeks before Teheran’s Oil Exch. was due to open.

BTW .. Sadam wanted to trade Oil for Euros as well AFAIK!

Seeing as the non-US Oil-Consumer countries such as Russia, China , India, Europe would actually all probably benefit by not having to trade oil in US$, it seems there is now a concerted effort to achieve this goal !

Hence the ” Euro-Asian axis ” .

As I said … IMO !
FWIW
Phil | June 3, 2009 at 7:09 am |

Manipulation: How Markets Really Work

http://www.baltimorechronicle.com/2009/052909Lendman.shtml

Maybe someone posted this already ?
I remember someone asking as to whether the markets are manipulated !

Talks about the BIG manipulators, not the small-fry manipulators that they always like to catch and showcase on US TV !
FWIW
david | June 3, 2009 at 7:16 am |

Great show, one point (at the risk of being pedantic), your description of the global housing bubble scam would be more accurately described as nuerotic and not psychotic, psychosis can be better understood as a shattering of the psyche. Melanie Klein writes beautifully on the subject in her books Love, Guit and Reparation, Envy and Gratitude, and the Psychoanalysis of Children, otherwise couldn’t fault ye.

Actually that’s not quite true I not convinced at all by Obama, stick a pot on his head and let himrun round firing off his blanks. What d’ya really want is a lot of pikeys sort things out good and proper.
http://www.youtube.com/watch?v=WlBkZwiHhsQ
Youri Carma | June 3, 2009 at 7:17 am |

Crap, Peter Schiff should be in the vigilante team. HTF=Bill? Peter was the first in the mainstream media to make the call on this financial crises. His daddy is a real vigilante doing time for your sorrow asses to keep some principles high.

So, don’t let me see that an other tome letting Peter down
Richard@lattitude30N | June 3, 2009 at 7:20 am |

@Phil: Way back when I was a mere internet neophite…I found this article ( which is lost to me now ) about the history of usury in early feudal Britiain..and if my recollection is correct the king at that time issued a proclamation permitting immigrant Jews ( now this is a raw point as I am Jewish by faith ) to settle under royal protection in Britain for the first time. Their main duty was to establish an accounting service for the collection of taxes ( aprox. 1250 AD ) . Apparently the king believed this activity was below his noble personal attention …Today we have before us to the exponential nth degree an advanced form of that feudal taxation structure now as an electronic digital manipulation controlled by an inner “priest class”…( and no it is not necessary that they be Jewish!) …Actually in ancient Hebraic law, debts were expunged every seven years and at Yom Kippur –every year….So with the advent of fractional reserve banking ( 10X reserves ) with the establishment of the BOE in the 17th Century( now on steroids @ 20-30 times reserves) It behooves this priest class to fluidly rewrite the rules ( and I suggest deny ancient Biblical law at the same time) as this economic implosion continues…In Catherine Austin Fitts blog one commentor called it “magic thinking”…So I truly believe that the goal posts will keep moving…to allow this “magic thinking” to continue…Most of us might call this a fraud and lies…as I do…clearly Mr. Geithner was out in space when in China characterized the US economy as stable…Also I became aware that ancient Chinese thinking incorporated the idea that any action taken is made having the future seven generations in mind…Here it became known to me that we have taken that philosophy in reverse…indebting seven generations of future American citizens instead!!!! In reference to the House of Red Shield (Rothschild) and the association with the Shieks in the Middle East…well the Brits were in control of this region as the Ottoman Empire ended and at the onset of colonial conquest ( see Lawrence of Arabia),,,,and I am certain that these monetary contacts go way back to that time….There may also be a factor of Shia and Sunni affiliation( not completely certain about that )…thus the Rothschilds even as a promoter of Israel’s Statehood still is a safe way station for aid( imho)… The new monetarization and “basket of currencies” imho is still very much in flux…Several new nationstate groupings are forming regionally as well as within similar resource fundamentals…That’s why even though the day to day economy is in tatters…the big thinkers are still working to preserve the structures that brought us here…And since they print all the money and control all the military and law enforcement, we the average citizen is left to our own wits…as always, Richard@lattitude30N
M | June 3, 2009 at 7:29 am |

Don’t look now but the latvia financial system has collapsed (if it wasn’t before).
Phil | June 3, 2009 at 7:32 am |

@Richard@lattitude30N

Good and interesting post BTW .. agree !

Nice statement here as well :
“the goal posts will keep moving…to allow this “magic thinking” to continue”

“Catherine Austin Fitts” .. great lady IMO

On “Their main duty was to establish an accounting service for the collection of taxes ( aprox. 1250 AD ) “….

Was that Henry III ?

I really wasn’t aware of that , except of course that the Doomsday book was the first audit of the land. It was created for taxing the rich Barons etc.

On the history of the BoE …
My understanding was that England had no inflation from ca. 1100-1700 . The King’s Treasury wasa system of wooden rds that were split vertically down the middle ( to prevent fraud ) before being put into circulation. Rothschild’s “equity” on co-founding the BoE was one of these rods — showcased in the BoE today AFAIK !
Mike2liverpool | June 3, 2009 at 7:32 am |

British Goverment in Meltdown!
Not even Stacy could save them now!

We need a new PM by Friday!
Mike
Phil | June 3, 2009 at 7:37 am |

@Mike2liverpool

I thought it was only Darling’s deadline on Friday ?

BTW Mike…
… what are the “elections” being held on Thursday ?
I’m not too familiar with the Brit system, having being away so long.

PS:
My mother wanted to vote on Thurs … I said “for what?” !

PPS: Suggested she stayed at home, she’s 84 after all !
Phil | June 3, 2009 at 7:49 am |

Something for Max from Karl Denninger :

Heh Bernanke – YOU ARE A CLOWN!
http://market-ticker.denninger.net/archives/1085-Heh-Bernanke-YOU-ARE-A-CLOWN!.html
stacyherbert | June 3, 2009 at 7:50 am |

Back from recording next episode of On the Edge! The Alex Jones interview went really well. I hope you all like it . . .

Thanks for all these headlines! You’ve done a good job filling in for me while I munched on croissants all day

Right, now I shall start assembling them into a proper headlines post.
stacyherbert | June 3, 2009 at 7:53 am |

@Hawk of Terror – great article. Thanks for that. Must read.
Photoception | June 3, 2009 at 8:26 am |

Payback—Revenge!

http://www.archive.org/details/MaxKeiserRadio-TheTruthAboutMarkets-01November2008
david | June 3, 2009 at 8:40 am |

Re: my earlier comment, that should read appear pendantic and not being pendantic. TTFN
Barnet Burns | June 3, 2009 at 12:12 pm |

@ Hawk of Terror

The figures come from November 2008′s Financial Stability Report, quoted in a New Zealand Herald article recently (where I read them). Here is a link to the report, check out Figure 3.18 page 24…

http://www.rbnz.govt.nz/finstab/fsreport/3486853.pdf

“Lending to the agricultural sector is growing at near
record rates on the back of a buoyant dairy sector and
associated growth in rural land prices. This lending is dominated by the dairy sector (figure 3.16). The Reserve Bank’s annual agricultural credit survey reveals that dairy lending accounted for 61 percent of total agricultural loans outstanding as at June 2008. High dairy payouts have increased the value of dairy land directly, as well as the value of land capable of supporting dairy farming.”
Tony | June 3, 2009 at 2:44 pm |

http://www.321gold.com/editorials/willie/willie060309.html
The Chinese audience responded with loud laughter when Geithner assured them that their $2 trillion in savings was safe and secure. This was a national humiliation event, as Geithner has been muzzled. If only the USCongress had such broad wisdom and deep courage to laugh when Goldman Sachs henchmen (‘Made Men’) from the syndicate gave regular speeches laden with deception and rationalizations for their continued fraud.
Daniel S | June 3, 2009 at 4:11 pm |

And when the battered wife leaves, the US won’t know how to do it’s own laundry or cooking.
johnrot | June 3, 2009 at 4:19 pm |

more like,’ the usurped international banking cartel state.’

geithner got laughed off the stage when he said “dollar assets are safe” lol

I am an american and I appreciate MAX’s definition of the US: it is accurate.

keep it real.
johnrot | June 3, 2009 at 4:33 pm |

haven’t you heard, max? savers are the terrorists.
johnrot | June 3, 2009 at 4:41 pm |

…or the terrorists that buy physical gold .

they want to hurt the US economy and drive the dollar to oblivion.

they commit acts of evil when they buy and hold hold.
Hawk of Terror | June 3, 2009 at 5:40 pm |

@ Stacy

Just noticed ‘marcus’ already posted a link to the same article published in “The Age.” But yes, a complete farce.

@ Barnet Burns

Many thanks for the link! Makes for some sober reading, especially when reading between the lines.
Aridzonan | June 3, 2009 at 6:16 pm |

Please forgive my paranoid schizos… But, during this show you mentioned how the “Bond Vigilantes” took down Iceland’s currency. Iceland was coincedentally, on it’s way to total energy independence. Their utilization of geothermal is 2nd to none worldwide. They were planning to export H2 made from off peak power and power their fishing fleets. And then like a bolt from the blue, their krona explodes and sinks into the abyss.
Were there not other countries in the same economic condition or worse? And yet Iceland was the first to go.. Your comments, thanks.
david | June 3, 2009 at 6:23 pm |

Ooops, re: my earlier re: that should read pedantic and not pendantic. Thank you, goodnight.
stacyherbert | June 3, 2009 at 11:51 pm |

@Aridzonan – Apparently, Kaupthing invited a handful of Bear Stearns bankers to Iceland in January of 2008. Kaupthing thought they were big time. And Bear Stearns believed them. Then the BS bankers arrived and realized that Iceland was a tiny, tiny little country. They were surprised that such a small country was responsible for so many hundreds of billions of dollar in deals and allegedly decided while drinking in a local Reykjavik hotel bar that they would short the country’s currency, bonds and banks. This is the story Kaupthing alleges.

Here are a few links with more info:

http://krugman.blogs.nytimes.com/2008/04/09/the-plot-against-iceland/

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389×3086813

http://www.bloomberg.com/apps/news?pid=20601087&sid=aR1Zh_j.F83M&refer=home