Big Thinkers: Orlov's Book and Current Events - Part 1

Thu, Sep 5, 2013 - 12:47am
The Sky is Falling! Or is it?
Dmitry Orlov’s 2013 book “The Five Stages of Collapse – Survivors’ Toolkit” is required reading. I do not say that lightly. It is a must read; do not delay. It is here:
and there are reviews posted for those inclined. I am not doing a book review. I am trying to pin down a realistic time-line, and the markers of same, in order that we all can prepare accordingly. Nothing I have read to date is as well analyzed, or presented, so for that, I am in awe. But, naturally, I have my own thoughts as to the reality that all five stages of collapse actually occur. So, this is Part I. Part II will be next Wednesday, as it all should make more sense as the Syrian situation unfolds.
From the introduction of the book through the afterward, the book is mesmerizing both in its insightful analysis, and its use of examples. It is full of humor, too. While I quarrel with the constant references to global warming–I am not a believer in that theory at all–the book is simply astonishing for its clear, yet compelling, observations. Oh, did I mention that Mr. Orlov was born in Russia, having moved to the United States as a teenager? Or that Mr. Orlov is an engineer with skills in many fields including high energy physics research, e-commerce and Internet security? Or that Mr. Orlov traveled back and forth to Russia repeatedly to observe the Soviet collapse during the late 80s and mid 90s?
All of these facts cement his credentials for me, and makes this book such a compelling read. I find it extremely important that we examine Mr. Orlov’s prism through which he views the world, because he alone seems to have the unique insight to have synthesized a world view based on personal experience as well as his education and obvious intellect. One can quarrel with his conclusions, but they are based on solid facts and experiences completely foreign to me that is for sure. Hence, I absorbed the book in rapt fascination, and I now look at the world events with a nod to the possibilities that Orlov’s predictions are accurate.
Mr. Orlov was born in Russia during the Cold War era. It is fascinating to think that he then left Russia and moved to the United States, where he then got to play video games, listen to Western pop-culture music and watch Hollywood movies. Certainly he had a taste of hard living in Russia, compared to the easy life in the United States. This had to have played a huge influence upon young Orlov.
Then, as the communist experiment began its death spasms, Mr. Orlov’s family and friends and he himself were there to witness them all to include the collapse. Personally, I remember being in an airport in Alabama at the time watching CNN showing images of the Soviet Union collapse on the video monitor. It was unbelievable, shocking–I was a former soldier, inculcated to hate the evil empire, they were the enemy dammit!; yet, my plane still showed up and left on time and I got to my destination. No one seemed to mind, or notice, and life just went on.
So, it’s not like the collapse of the fiat system in general and perhaps the USA in particular will be any life altering universe changing occurrence, although it will probably feel like that to many who are directly, initially affected. No, what Mr. Orlov writes about is a steady progression of a decaying, deteriorating, behemoth of a system, which announces its deterioration in measurable, meaningful ways. It is no mystery, nor should it be.
Anything which by definition that is unsustainable will come to an end. There is no sane person presently arguing that the current fiat system is sustainable. So, the fiat system will end, and the question then becomes what will it look like when it does start to end? Can the eventual collapse be stopped mid stream, like a magic stick save? How will we know the collapse is upon us? If the collapse is gradual, then how long will it take? What should we expect, at any given point in time, then, along the collapse continuum?
Mr. Orlov provides all the tools to reach conclusions and answers for all of these questions in detail and with examples from history. He adroitly describes an orderly process marked by five discrete stages of collapse, not all of which necessarily must occur, but which stages will occur in progressive fashion should efforts not be made to stave off the final, ruinous, back to the Stone Age collapse.
Those five stages are, in order, (1) Financial Collapse; (2) Commercial Collapse; (3) Political Collapse; (4) Social Collapse, and finally, (5) Cultural Collapse.
Without taking too much time to restate history, we all pretty much know that the financial collapse is occurring as we speak, with the first hint and outward manifestation of financial collapse occurring in 2008 and continuing ever since. Here is what Orlov says about Stage 1, the Financial Collapse: “Faith in business as usual is lost. The future is no longer assumed to resemble the past in any way that allows risk to be assessed and financial assets to be guaranteed. Financial institutions become insolvent; savings are wiped out and access to capital is lost.” [p.14].
At this point, I firmly believe that the financial collapse is ongoing just as described, and accelerating. Understand that the process of the ongoing deterioration of the system is a gradual marginal process, and that there is no definitive point in time when there is at one moment a blissful, peaceful feeling that everything is perfectly fine, and then at the next moment there is sudden chaos and anarchy with rioting in the streets and images of roving bands of thugs streaming across our televisions. Instead, the financial collapse will continue its progress marginally, inexorably, step-by-step until such time as there is a commercial collapse. This is a completely different viewpoint I had when I first came to tfmr. I initially felt that collapse was IMMINENT!! Grab the weapons, food, water and gold/silver, time to bug out!
Well, I was dead wrong. Stupidly so. But how could I have been so misguided? Was it gullibility? Madison Avenue marketing? Human nature normalcy bias?
Whatever. Only now, I see things in a different, more analytical light, thanks to Mr. Orlov’s writings. Make no mistake, though. It is crystal clear that the Financial Collapse is ongoing, right now, leading soon enough I believe, though gradually to Stage 2, Commercial Collapse.
Understand that Santa told everyone to get out of the financial system. Cyprus banks initiated the bail-in. The ground work has been laid out. It is all legal and all the details worked out. Plenty has been written about the pending stealing of funds on deposit at banks, retirement accounts, name it. Look at what is happening in Argentina. If those Argentinian bond holders are stiffed, then that supposedly valuable New York paper is not so valuable now, is it? All of this is coming to pass as predicted, and the signs are obvious to anyone who wants to look.
The fiat system is broken. Risk assessment is now based on predicting the words of the Fed bankster in charge, then front run on huge computers to shear the sheep of fractions of pennies. The worlds’ unregulated derivatives dwarf the world GDP. A small hiccup will destroy the entire scheme, overnight. We are there.
This leads us to Stage 2, the Commercial Collapse. Orlov says this: “Faith that the market shall provide is lost. Money is devalued and or becomes scarce, commodities are hoarded, import and retail chains break down in widespread shortages of survival necessities become the norm.” [p.14].
It sure does not look like this Stage yet to me, but it sure seems damn close, too. But, by looking closely, the Syrian situation is telegraphing the proximity of when this Stage will occur. Many, many commentators have weighed in about Syria, and how the whole military situation, the bombing, the invasion, the troops really point in one direction;
The US President, a laughing stock, says at one moment that Syria crossed a red line, but now tries to wiggle out from under his own words, like a hack criminal defense attorney arguing for leniency for his recidivist client. The Syrian distraction is just that, a ruse. The real reason, they say, is resources, namely, gas pipelines to feed the industrialized world in general, and to perpetuate the governing structures of some middle east countries. So does this not seem to point towards the imminent arrival of Stage 2? Soon enough we will know.
Believe what you want to believe, but the next Stage, Commercial Collapse, knowing it is upon us, preparing do deal with it and live through it, is damn important to survival of us regular folks that is for sure. It is also after this Stage that I believe that a concerted effort to become politically active and strive for limited government will have the biggest effects.
So, for now, I leave you with this Part I and invite comments, criticisms, and the like. Try to focus on Orlov’s definitions of the first two Stages.
Next week I will dig into Stages 3-5, and evaluate details as well as strategies for rising up and making a difference for Stage 3. I would not be doing all this analysis if I did not believe that there is a possibility for real reform during Stage 3. So, I am not totally a doomsday believer I once was, but things sure look grim, so don’t let up on the preparation effort that is for sure.

About the Author


Sep 5, 2013 - 6:01pm

When Rates Hit 3% & Beyond...

What Is Going To Happen If Interest Rates Continue To Rise Rapidly?

By Michael Snyder

If you want to track how close we are to the next financial collapse, there is one number that you need to be watching above all others. The number that I am talking about is the yield on 10 year U.S. Treasuries, because it affects thousands of other interest rates in our financial system. When the yield on 10 year U.S. Treasuries goes up, that is bad for the U.S. economy because it pushes long-term interest rates up. When interest rates rise, it constricts the flow of credit, and a healthy flow of credit is absolutely essential to the debt-based system that we live in. Just imagine someone squeezing a tube that has water flowing through it. The higher interest rates go, the more economic activity will be squeezed. If interest rates continue to rise rapidly, it will be more expensive for the U.S. government to borrow money, it will be more expensive for state and local governments to borrow money, the housing market may crash again, consumer debt will become more expensive, junk bond investors will be in for a world of hurt, the stock market will experience a tremendous amount of pain and there is a good chance that we could see the 441 trillion dollar interest rate derivatives bubble implode. And that is just for starters.

So yes, we all need to be carefully watching the yield on 10 year U.S. Treasuries. On Friday, it opened at 2.76% and hit a high of 2.86% before closing at 2.83%. The yield on 10 year U.S. Treasuries is up nearly 120 basis points since the beginning of May, and almost everyone on Wall Street seems convinced that it is going to go much higher.

We are truly moving into unprecedented territory, because we have been in a bull market for U.S. Treasuries for the last 30 years. Many investors don't even know that it is possible to lose money on U.S. Treasuries. They have been described as "risk-free" investments, but that is far from the truth.

In fact, we could see bond investors of all types end up losing trillions of dollars before it is all said and done.

And those in the stock market will lose lots of money too. Low interest rates are good for economic activity which is good for the stock market. The chart posted below shows that stock prices have generally risen as the yield on 10 year U.S. Treasuries has steadily declined over the past 30 years...

When interest rates rise, that is bad for economic activity and bad for stocks. That is why so many stock analysts are alarmed that interest rates are going up so rapidly right now.

And as I wrote about the other day, we have just witnessed the largest cluster of Hindenburg Omens that we have seen since before the last financial crisis. The stock market already seems ripe for a huge "adjustment", and rising interest rates could give it a huge extra push in a negative direction.

By the time it is all said and done, stock market investors could end up losing trillions of dollars in the next stock market crash.

In addition, rising interest rates could easily precipitate another housing crash. As the Wall Street Journal discussed on Friday, as the yield on 10 year U.S. Treasuries goes up it will also cause mortgage rates to rise...

Higher yields will push up long-term borrowing cost for U.S. consumers and businesses. Mortgage rates will rise, and investors are keeping a close eye on whether this may derail the recovery of the housing market, which has shown signs of turning a corner this year.

In one of my previous articles, I included an example that shows just how powerful rising mortgage rates can be...

A year ago, the 30 year rate was sitting at 3.66 percent. The monthly payment on a 30 year, $300,000 mortgage at that rate would be $1374.07.

If the 30 year rate rises to 8 percent, the monthly payment on a 30 year, $300,000 mortgage at that rate would be $2201.29.

Does 8 percent sound crazy to you?

It shouldn't. 8 percent was considered to be normal back in the year 2000.

If you own a $300,000 house today, do you think it will be easier to sell it or harder to sell it if mortgage rates skyrocket?

Yes, of course it will be much harder. In fact, there is a good chance that you will have to reduce your selling price significantly so that prospective buyers can afford the payments.

Let us hope that the yield on 10 year U.S. Treasuries levels off for a while. If it says at this current level, the damage will probably not be too bad.

But if it crosses the 3 percent mark and keeps soaring, things could get messy pretty quickly. In fact, according to a Bank of America Merrill Lynch investor survey, the 3.5 percent mark is when the collapse of the bond market is likely to become "disorderly"...

Our latest Credit Investor Survey, conducted July 8-11, showed that 3.5% on the 10-year is most commonly thought of as the trigger of a disorderly rotation – i.e. higher interest rates leading to outflows and wider credit spreads – among high grade investors.

Put differently, 3.0% on the 10-year will not lead to overall wider credit spreads if there is enough buying interest from institutional investors (though note that the 10s/30s spread curve would flatten further, as mutual fund/ETF holdings are concentrated in the belly of the curve, whereas institutional demand is disproportional in the long end of the curve). However, if the probability of a further move higher in interest rates to 3.5% is high – which will be the perception if interest rate volatility is high – certain institutional investors will choose to remain on the sidelines.

Thus there may not be enough institutional buying interest to mitigate retail fund outflows and contain overall high grade spread levels.

So what is causing this?

Well, there are a number of factors of course, but one very disturbing sign is that foreigners are selling off U.S. Treasuries at a pace that we have not seen since 2007...(more)

Sep 5, 2013 - 6:06pm
Sep 5, 2013 - 6:07pm

@Bollocks,Between the late


Between the late Fifties and 2008 (that's right, half a century...), the rate on the 10 year Treasury was above 3%, sometimes way, way above 3%.

The hysterical screeching about this incipient return to interest-rate normalcy is just ridiculous...

P.S. The interest rate on my first mortgage was 12.5%, back in the Eighties--this was considered a pretty good rate, at the time. I think the sky will probably stay up for awhile yet.

Sep 5, 2013 - 6:12pm

G20: BRICS Plan $100 Billion Fund

G-20 Weighs Stimulus End as BRICS Plan $100 Billion Fund

By Ilya Arkhipov, Raymond Colitt & Ksenia Galouchko - Sep 5, 2013 12:56 PM ET

Sergei Karpukhin/AFP via Getty Images

Brazil's President Dilma Rousseff, left, India's Prime Minister Manmohan Singh, Russia's President Vladimir Putin, China's President Xi Jinping and South African President Jacob Zuma pose for a photo after the BRICS leader's meeting at the G20 summit on September 5, 2013 in Saint Petersburg.

Leaders of the world’s biggest economies grappled with fallout from potential stimulus exit as the BRICS countries said they will create a $100 billion pool of currency reserves to guard against financial shocks.

China will contribute $41 billion to the pool, with Russia, India and Brazil each adding $18 billion and South Africa providing $5 billion, according to a statement issued today at the Group of 20 summit in St. Petersburg, Russia. An exit from monetary-easing policies poses a major challenge for the world economy, Chinese Vice Finance Minister Zhu Guangyao told reporters today as the two-day forum opened.

Emerging markets, which helped pull the world out of a recession after the global financial crisis, now face an exodus of cash and sliding currencies in anticipation of the U.S. Federal Reserve’s eventual tapering of its $85 billion in monthly bond purchases in its most recent quantitative easing program. The prospect of U.S. military strikes against Syria is also adding volatility as investors gauge whether oil flows from the region will be disrupted.

“The tapering of QE will dominate the agenda,” Victor Bark, who oversees about $2.8 billion as the head of asset management at Alfa Capital in Moscow, said by phone. “The U.S. won’t look at the situation in emerging markets -- they’ll act based on their own interests.”

Developed economies are turning into global growth engines as some emerging-market counterparts decelerate, the International Monetary Fund said in a report for G-20 leaders.

‘Negative Spillovers’

German Chancellor Angela Merkel urged central banks to curb expansive policies, saying that scaling back monetary stimulus will be “necessary, step-by-step.” The BRICS countries, which also agreed to seed a new development bank with $50 billion of capital, are seeking a shield against “unintended negative spillovers” from unconventional monetary policies in developed economies, according to the statement.

“New risks have emerged in recent months," Russian President Vladimir Putin said in opening remarks at the forum. “Our partners have started to exit unconventional financial and economic policies. That can take a toll on key global risks and impact economies of other countries.”

European Central Bank President Mario Draghi said today the monetary stance for the euro area will remain accommodative for as long as necessary, with the benchmark interest rate “at present or lower levels for an extended period of time.”...(cont.)

Sep 5, 2013 - 6:24pm

Nightwatch...... via Jim Comiskey

If any of you are on Jim's daily email list, you already saw this; re: Syria. It's an enlightening read. Unfortunately, it has no paragraph breaks which makes it a little hard on the eyes. Well, on mine anyway. Jim distributed this this morning.

-----Original Message-----
From: KGS NightWatch
Sent: Thursday, September 05, 2013 12:45 AM
To: Comiskey, Jim
Subject: NightWatch, 4 September, 2013

NightWatch For the night of 4 September 2013 Russia-Syria: The Russian military news agency, Interfax-AVN, reported two more Russian ships are heading to the Mediterranean Sea. The destroyer Nastoychivyy of the Baltic Fleet and the patrol combatant Smetlivy of the Black Sea Fleet will join the Russian Navy's task force in Mediterranean in the next few days, Interfax-AVN was told at the Main Staff of the Navy on Wednesday, 4 September. "The patrol combatant Smetlivy will enter the Mediterranean for combat duty in the next few days in accordance with operational command plans. The flagship of the Baltic Fleet, the destroyer Nastoychivyy, is expected to join the group of our ships," a spokesman said. The Russian Defense Ministry also said the patrol combatant Neustrashimyy and the large landing ships Aleksandr Shabalin, Admiral Nevelskoy and Peresvet are carrying out missions in the Mediterranean in accordance with operational command plans. The large landing ships of the Black Sea and Baltic fleets, the Novocherkassk and the Minsk, will join them on 5-6 September. The medium reconnaissance ship SSV-21 Priazovye, which put out from Sevastopol on 1 September, is acting in accordance with special plans of the General Staff. Comment: The Russian navy task force in the Mediterranean Sea is supposed to comprise 16 ships of various types. Eight of them are listed above. They have the capability to harass any US naval formation of destroyers. Comments from Navy and Marine Corps veterans question the wisdom of using fleet defense assets - destroyers - in an offensive strike role. The key question is who or what protects the destroyers after they shoot, with Russian destroyers and patrol combatants around. Submarines presumably, but they are not effective in preventing harassment and disruption of surface formations. Russia-US/France: President Vladimir Putin warned the West against taking one-sided action in Syria, but also said Russia 'doesn't exclude' supporting a UN resolution on punitive military strikes if it is proven that Damascus used poison gas on its own people. In a wide-ranging interview with The Associated Press and Russia's state Channel 1 television, Putin said Russia is developing a plan of action in case the United States does attack Syria without United Nations approval, but he declined to go into specifics. He said he 'doesn't exclude' the possibility of backing force against Syria, but at this stage he does not even accept that an alleged chemical weapons attack took place." Syria and Gas: Previously, the US, France and the UK published declassified documents about the 21 August gas attack and Syrian government forces use of gas in the past. Today, Russia published a summary of its findings about a prior attack that was alleged loudly and wrongly to be a Syrian government chemical attack. This Russian study concerns a gas attack in Aleppo, also attributed to the Syrian government. The Russian document has received no coverage in Western media. NightWatch reproduces the Russian report below. "Text of "Commentary by the Information and Press Department of the Russian Ministry of Foreign Affairs in connection with the situation concerning the investigations into the use of chemical weapons in Syria" by the Russian Ministry of Foreign Affairs website on 4 September" "We note a massive injection into the information space of material of different kind with a view to make official Damascus responsible for a possible use of chemical weapons in Syria even before the publication of the results of the UN investigation. "Groundwork" is thus being prepared for the use of force against it. In view of this, we deem it permissible to share the main findings of the Russian analysis of the samples collected at the site of the incident involving the use of toxic warfare substances in Aleppo's Khan al-Assal suburb." "We recall that that the tragedy, which killed 26 civilians and Syrian army servicemen and left 86 people with injuries of varying severity, took place on 19 March of this year. The results of the analysis of samples carried out by a Russian laboratory certified by the Organization for the Prohibition of Chemical Weapons at the request of the Syrian authorities were on 9 July handed over to the UN secretary-general due to the Syrian authorities' request for him to conduct an independent investigation into that incident. The Russian specialists' main findings are as follows: - the used piece of ammunition was not a standard issue piece of Syrian army ammunition but a crudely produced one whose type and parameters were similar to those of the unguided rockets produced in Syria's north by the so-called Bashair al-Nasr brigade; - hexogen, which is not used in standard chemical munitions, was used as the charge to detonate the round; - non-industrially synthesized nerve agent Sarin and diisopropylfluorophosphate, which Western countries used for chemical weapons purposes in World War II years, were found in round and soil samples." "We stress that the Russian report is extremely specific. It represents a 100-page scientific-technical document with numerous tables and diagrams reflecting a spectral analysis of samples. We hope that it will be of significant help in the UN's investigation into this incident. Unfortunately, effectively it has not started yet." "The attention of those who wittingly, and always, seek to place all responsibility for the developments on the Syrian Arab Republic's official authorities has fully shifted to the events in eastern Al-Ghutah. However, in this respect too there is "selectiveness coupled with a shortcoming". Specifically, attempts to forget the data about the exposure of Syrian army servicemen to toxic agents during the discovery on the outskirts of the Syrian capital of materials, equipment and containers with traces of Sarin on 22, 24 and 25 August supplied by official Damascus to the UN are evident. As is known, the condition of the injured servicemen was examined by members of the group of UN experts headed by A. Sellstrom. It is clear that any objective investigation into the 21 August incident in eastern Ghutah is impossible unless these circumstances are taken into account." "In view of the above, we welcome the statement by the UN Secretary-General Ban Ki-moon that the A. Sellstrom group intends to go back to Syria in the near future to continue its work, including in the Khan al-Assal area." "4 September 2013" Comment: With this Russian document, there are four national reports about the use of gas in Syria. One each from the US, France, the UK and Russia. The three Western reports provide circumstantial evidence at best. They are not intelligence appraisals because they fail to address contradictory and contrarian evidence that is at least as strong as that which they present in support of their case. They are advocacy, not intelligence. The only report missing is the only report that really counts to establish some ground truth. That is the UN report. A prior UN report found that the Syrian opposition used gas in July 2012, precisely as described by the Russians. US- Syria: Special comment. The US government assessment on Syria is not weathering well challenges by open source reports and investigative journalists. Parts are unraveling. Today, the US admitted that US intelligence did not have intelligence about Syrian Arab Army preparations before the attack on 21 August. That flatly contradicts testimony presented to Congress this week. In the normal fashion of signals intelligence, the electrons had been intercepted, but they remained inchoate and unprocessed until after the attack. The US had data somewhere, but no information. The alleged incriminating information was reconstructed and converted into evidence of malevolent Syrian intent for the US Congress after the fact. The way that information was presented was at a minimum dishonest. Videos from government sources posted to the web showed home-made rebel rockets and a firing system to which only the Russian report refers. Those videos are not discussed by the US report. As illustrations, they are undated, like the rebel videos of casualties from 21 August. The US analysis of observed so-called symptoms of an attack by nerve agents is also weakening. Multiple reputable experts, including Feedback from six NightWatch Readers, disagree with the "assessment" that the symptoms seen in videos are those of sarin poisoning, even in diluted form. The Russians have a better explanation for the same symptoms, which they evaluated in March. The Daily Caller published an uncorroborated report that Egyptian intelligence reported the Syrian opposition advised its members of an event on 21 August that would bring the US into the Syrian conflict. No agency has provided an analysis of this report, which might not be true, but also might be highly relevant. NightWatch cannot corroborate that information, but it provides an alternative explanation for Syrian Army preparations for chemical warfare attacks. That alternative is supported by the fact that the UN visited wounded Syrian Army soldiers in hospital. The Daily Caller also published excerpts of signals intercepts that provide an alternative to the US assessment of panicky calls to a chemical warfare unit asking about the 21 August attack. The alternative reporting is that a General Staff officer asked a rocket unit commander in a brigade of the 4th Armored Division whether he had launched an attack against specific orders. The rocket regimental commander supposedly said he fired no rockets and could account for all of them. The General Staff confirmed the report of the rocket unit commander. There is more to this series of exchanges, but the point is that they raise concerns that US information might have been cherry-picked by some entity in the reporting channel and taken out of context. That is easy to do with information from radio intercepts. And so the information debate continues and should continue. The US assessment appears to have conflated information and sources; ignored time distortions and dates and misstated relevant points to support its argument. A heads up is necessary. The poor guidance that prompts intelligence supervisors to require analysts to make judgments about matters that can be scientifically established needs to be recognized by Readers. The date of an attack is not a matter of judgment. Likewise, the use of sarin is not a matter for "assessment." The presence of sarin and other dangerous materials can and will be established by UN-sponsored laboratory analysis to some degree of probability. The inability of intelligence supervisors and analysts to distinguish matters appropriate for judgment from those that may be established as facts is a significant weakness. The worst part of the three Western reports is their failure to consider reasonable alternative scenarios consistent with their information. That is a basic step in the scientific method. See R. Heuer, The Psychology of Intelligence Analysis.. Only the Russians have attempted to analyze an alternative scenario and contradictory evidence. Their analysis of the March 2013 incident proved to be the correct analysis, according to the UN. But in the 21 August crisis, senior US officials publicly have disparaged and dismissed UN findings as "irrelevant," even though highly respectable US and European laboratories do the lab work. So Readers are left with the three questions raised last week: What was the agent? How was it delivered? Who delivered it? The three Western documents are advocacy arguments, not intelligence appraisals. Every attorney knows that emotive, loud and strident oratory is the tactic to use when there is no clear and convincing evidence. The Russian document is an intelligence appraisal of a past attack that Western governments wrongly attributed to the Syrian government, according to the UN. It is a lesson in evidence: the evidence on both sides of an argument must be presented and weighed. End of NightWatch for 4 September. NightWatch is brought to you by Kforce Government Solutions, Inc. (KGS), a leader in government problem-solving, Data Confidence® and intelligence. Views and opinions expressed in NightWatch are solely those of the author, and do not necessarily represent those of KGS, its management, or affiliates. A Member of AFCEA International

Sep 5, 2013 - 6:25pm

Thanks DPH

So hitting 3% in itself doesn't really mean anything "if it crosses the 3 percent mark and keeps soaring..."

Right, so it needs to go higher than that. So we can all stop worrying about that silly number for now.

"the 3.5 percent mark is when the collapse of the bond market is likely to become "disorderly"..."

So it needs to rise another 17% or so above what it is now (3 up to 3.5). Ok, I can see it's been rising fast recently. So I get it now. Thanks.

edit: Thanks Rico. Seems to be some conflicting info here.

Howard Roark
Sep 5, 2013 - 6:34pm


Yes, the rates have been higher in the past. But the amount of debt is much higher, the liabilities are much bigger, the demographics are going red (all over the west at least) and the economic landscape is a mess... maybe that´s why the figures on the Treasuries are important. Not to speak of growing lack of trust in the ability of the state and the politicians to mend the cracks on the wall.

Do You agree?



Sep 5, 2013 - 6:41pm


Thanks for a place at the table...even if I'm on the floor.

Sep 5, 2013 - 6:54pm
Modern Alchemy
Sep 5, 2013 - 6:56pm

Re: Rico

There are a lot smarter people than me on here and I don't chime in too often, but here is my 2 cents (pre 1982 so they do have a little intrinsic value)
The rising rate signifies that in order to find buyers of the notes, there needs to be more incentive (rising rate and better return) Why anyone would agree to 3% in 10 years makes NO sense to me!
In the 80's when you had your mortgage at 12.5% the National Debt was around 2.5 trillion. So when the interest on a 10 year bond was around 10%, we the tax payers were paying 10% interest on the National Debt.
The reason 3% is so significant now is that we will be paying that on a 17 Trillion National Debt credit card. Those end up being LARGE payments, and will greatly increase the amount of funds we need to appropriate for just the National Debt Interest alone!

So even though the interest % is less than it was years ago, the principal balance is so many multiples higher that servicing the debt is harder. Even small increases will really make a difference. I'm trying to find the article I read that shows at what debt level all of our GDP would go towards debt service.

DPH post about the effect on home prices is very relevant too.

Subscribe or login to read all comments.


Donate Shop

Get Your Subscriber Benefits

Private iTunes feed for all TF Metals Report podcasts, and access to Vault member forum discussions!

Key Economic Events Week of 2/17

2/18 8:30 ET Empire St Manu Idx
2/19 8:30 ET Producer Price Idx
2/19 8:30 ET Housing Starts & Bldg Perms
2/19 2:00 ET January FOMC minutes
2/20 8:30 ET Philly Fed
2/21 Fed Goons all day at Chicago Conf.
2/21 9:45 ET Markit flash Feb PMIs

Key Economic Events Week of 2/10

2/11 10:00 ET Job Openings
2/11 10:00 ET CGP Hump-Hawk House
2/12 10:00 ET CGP Hump-Hawk Senate
2/13 8:30 ET CPI
2/14 8:30 ET Retail Sales
2/14 9:15 ET Cap Ute & Ind Prod
2/14 10:00 ET Business Inventories

Key Economic Events Week of 2/3

2/4 10:00 ET Factory Orders
2/5 8:15 ET ADP Employment
2/5 9:45 ET Markit Service PMI
2/5 10:00 ET ISM Service PMI
2/6 8:30 ET Productivity & Unit Labor Costs
2/7 8:30 ET BLSBS
2/7 10:00 ET Wholesale Inventories

Key Economic Events Week of 1/27

1/28 8:30 ET Durable Goods
1/28 10:00 ET Consumer Confidence
1/29 10:00 ET Pending Home Sales
1/29 2:00 pm ET FOMC Fedlines
1/29 2:30 pm ET Powell presser
1/30 8:30 ET Q4 GDP first guess
1/31 8:30 ET Pers Inc and Spending
1/31 9:45 ET Chicago PMI
2/2 10:00 pm ET Chiefs win SB LIV

Key Economic Events Week of 1/13

1/14 8:30 ET CPI
1/14 9:00 ET Goon Williams
1/15 8:30 ET PPI and Empire Fed
1/16 8:30 ET Retail Sales and Philly Fed
1/17 8:30 ET Housing Starts
1/17 9:15 Et Cap Ute and Ind Prod

Key Economic Events Week of 1/6

1/7 8:30 ET US trade deficit
1/7 10:00 ET ISM Services PMI
1/7 10:00 ET Factory Orders
1/8 8:15 ET ADP employment
1/9 8:00 ET Goon Chlamydia speech
1/9 1:20 ET Goon Evans 2:00 ET Goon Bullard
1/10 8:30 ET BLSBS
1/10 10:00 ET Wholesale Inventories

Key Economic Events Week of 12/16

12/16 8:30 ET Empire State Manu Idx
12/16 9:45 ET Markit flash PMIs Dec
12/17 8:30 ET Housing Starts and Bldg Perms
12/17 9:15 ET Cap Ute and Ind Prod
12/19 8:30 ET Philly Fed
12/20 8:30 ET Final guess Q3 GDP
12/20 10:00 ET Pers Inc and Spending
12/20 10:00 ET Core Inflation

Key Economic Events Week of 12/9

12/10 8:30 ET Productivity and Unit Labor Costs
12/11 8:30 ET CPI
12/11 2:00 pm ET FOMC fedlines
12/11 2:30 pm ET CGP presser
12/12 8:30 ET PPI
12/13 8:30 ET Retail Sales
12/13 10:00 ET Business Inventories
12/13 11:00 ET Goon Williams speech

Key Economic Events Week of 12/2

12/2 9:45 ET Markit Manu PMI
12/2 10:00 ET ISM Manu PMI
12/2 10:00 ET Construction Spending
12/4 9:45 ET Markit Services PMI
12/4 10:00 ET ISM Services PMI
12/5 8:30 ET Trade Deficit
12/5 10:00 ET Factory Orders
12/6 8:30 ET BLSBS
12/6 10:00 ET Wholesale Inventories

Key Economic Events Week of 11/25

11/25 8:30 ET Chicago Fed Nat'l Idx
11/25 7:00 pm ET CGP speech
11/26 8:30 ET Advance Trade
11/26 9:00 ET Case-Shiller home prices
11/26 10:00 ET New home sales
11/26 10:00 ET Consumer Confidence
11/27 8:30 ET Q3 GDP 2nd guess
11/27 8:30 ET Durable Goods
11/27 9:45 ET Chicago PMI
11/27 10:00 ET Pers Inc & Cons Spndg
11/27 10:00 ET Core inflation
11/27 2:00 pm ET Beige Book

Forum Discussion

by Alex777, 5 hours 43 min ago
by Green Lantern, Feb 21, 2020 - 11:13pm
by argentus maximus, Feb 21, 2020 - 5:14pm
by Battantan, Feb 21, 2020 - 4:42pm
by Blackwatersailor, Feb 21, 2020 - 4:17pm