Here Come Those Municipal Defaults That Everyone Said Couldn’t Happen, Pt 2
by Reggie Middleton
Last Wednesday I posted BS… Defined: Bernanke Seeks (BS) to Divorce QE Tapering From Interest Rates – OR – Economic Prestidigitation! wherein I ridiculed the notion of being able to withdraw economic financial aid while expecting rates not to spike. The fact of the matter is we are the at the end of a 33 year old bull market in credit. Or, to put it more accurately, we are at the end of a 5 year synthetic extension of a 28 year old credit market bull run….
I urge readers to keep in mind what I expoused in Apple Bonds Proven To Have A Nasty Taste wherein Apple bonds lose 9% in six weeks:
We Clearly & Obviously Ending A 3 Decade Bull Market, Likely At The Tail End Of The Largest Global ZIRP Experiment Ever!
And this final aspect is the kicker. We are likely culminating the end of a three decade secular bull market in bonds. Why in the world would anyone want to buy debt now, in a good, bad or mediocore company? Reference a chart of ten year rates over time, and you will see that once you get this close to zero (and the applied end to excessive ZIRP), there’s no way to go but up. As excerpted from theMarket Realist site: