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What to Expect During the Coming Debt Collapse
Entire nations will likely default, learn what to do now
By Bob Stokes
Tue, 10 Jul 2012 15:30:00 ET
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"How did you go bankrupt?"
"Two ways. Gradually, then suddenly."
Ernest Hemingway, The Sun Also Rises
 
Greece's debt problem was in the making years before the crisis "suddenly" became news about three years ago.
 
Most nations, municipalities, corporations and even individuals come to financial grief gradually. All the while, a prosperous facade can hide the growing money problems. So when the actual bankruptcy or default arrives, it can appear sudden.
 
Consider the foreclosure of the tallest building in Atlanta: On Feb. 7, 2012, a forced public auction saw the 55-story Bank of America tower sell for half of its 2006 purchase price. Yet the majestic building's appearance would lead a passerby to see a symbol of wealth.
 
Then there's the Golden State of California and its image of overabundance. In truth, however, several of its municipalities are broke or nearly so.
 
Maybe you have a "McMansion" subdivision nearby where you live. From outward appearances, all looks tranquil. But likely more than a few residents owe more on their home than they could sell it for.
 
Or you can pick up the paper every few months and read about a once-rich and famous person who has to sell his or her home at a deep discount or is filing for bankruptcy.
 
Nations are generally no different; they, too, can default on their debt.
 
Most of us can grasp how individuals, companies and even municipalities can go bankrupt. It's less easy to conceive how a nation can default on its obligations.       
 
The second edition of the New York Times bestseller Conquer the Crash notes (p. 143):
 
In the Great Depression, bonds of many companies, municipalities and foreign governments were crushed. They became wallpaper as their issuers went bankrupt and defaulted. Bonds of suspect issuers also went way down, at least for a time. Understand that in a crash, no one knows its depth, and almost everyone becomes afraid. [emphasis added]
 
Nations have also defaulted on their debt in more recent history.
 
In a March 14, 2012, Wall Street Journal op-ed piece titled "Default and the Nature of Government," Alex J. Pollock reminds us that "The governments of country after country defaulted on their debt in the 1980s, a mere generation ago."
 
The article also states:
 
In a longer view, Carmen Reinhart and Kenneth Rogoff count 250 defaults on government debt from 1800 to the early 2000s.
 
An Elliott Wave Theorist Special Report tells you what to expect during the coming collapse in the value of debt.
 
The coming fear of default will not be misplaced...the unfolding depression will be deeper than that of the early 1930s. Most debtors around the world will default.
 
Even so, the public has been scooping up bonds with both hands since 2002. Moreover, large speculators have been buying into the bond rally. At the same time, the yield on the Treasury's 10-year note recently fell to an historic low.
 
The Theorist Special Report adds:
 
Those predicting economic expansion or hyperinflation have been unable to explain this persistent plunge.
 
The Theorist Special Report does explain. On page 1 alone, you'll find two charts of the Kondratieff Cycle as reflected in T-bond yields. Plus you'll read a forecast for bond yields that is nothing short of stunning.
 
Prepare now for what most others do not expect. 
 

 

 

 

Tags: conquer the crash, credit crisis, debt crisis, debt downgrade, deficit, deflation, economic depression, economic indicators, Elliott Wave Theorist, great depression, Greek debt, history, junk bonds, municipal bonds, soverign debt crisis, U.S. Treasuries
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