The Liquidity Crisis Intensifies: ‘Prepare For A Bear Market In Bonds’

Are we about to witness trillions of dollars of “paper wealth” vaporize into thin air?  During the next financial crisis, a lot of “wealthy” investors are going to be in for a very rude awakening.  The truth is that securities are only worth what someone else is willing to pay for them, and that is why liquidity is so important.  Back on April 17th, I published an article entitled “The Global Liquidity Squeeze Has Begun“, but it didn’t get nearly as much attention as many of my other articles do.  But now that the liquidity crisis is intensifying, hopefully people will start to grasp the implications of what is happening.  The 76 trillion dollar global bond bubble is threatening to implode, and if it does, the amount of “paper wealth” that could potentially be lost during the months ahead is almost unimaginable.

For those that do not consider the emerging liquidity crisis to be important, I would suggest that they check out what the financial experts are saying.  For instance, the following comes from a recent Bloomberg report…

There are three things that matter in the bond market these days: liquidity, liquidity and liquidity. 

How — or whether — investors can trade without having prices move against them has become a major worry as bonds globally tanked in the past few months. As a result, liquidity, or the lack of it, is skewing markets in new and surprising ways.

Things have already gotten so bad that Zero Hedge says that some fund managers “are starting to panic” about the lack of liquidity in the marketplace…

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