Tags: Economist Hennecke Bond Disaster Brewing in U.S. and Europe

Economist Hennecke: Bond Disasters Brewing in U.S. and Europe

Thursday, 04 Mar 2010 09:55 AM

Investors should take a closer look at how much recovery has occurred in the United States and other Western countries, said Martin Hennecke, associate director at investment and financial advice firm Tyche.

The economies in those countries are not generating a real recovery, he said.

“We are not seeing any growth in the United States, let alone any sustainable growth,” he told CNBC. "The U.S. economy has never really recovered. They have just been throwing money at the problems, been bailing out the banks,” Hennecke said.

The bond market could be hit with the next crisis, especially long-term U.S. Treasuries and even European sovereign bonds and currencies, Hennecke said. "They are very much at risk now with this huge budget deficit," he said.

The U.S., United Kingdom and other countries will encounter high rates of inflation, said Hennecke. “With the start of (the) sovereign bond crisis across the Western countries that we have seen in Greece and are starting to see in Spain … across the euro zone there's absolute disasters there,” he says.

“We are going to see a sovereign bond crisis probably leading to very high or even hyper inflation in most Western countries and that could actually — ironically, theoretically — even drive up the markets because if you have high inflation, anything with any tangible assets behind it via commodities, companies … could even rise," Hennecke said.

The U.S. central bank is holding back on issuing business and consumer loans, Bloomberg reported.

“The Fed remains more concerned about the sustainability of the recovery and disinflation than accelerating inflation in the near-term. They are in no hurry to raise rates, nothing before the fourth quarter or later," said Diane Swonk, chief economist at Mesirow Financial. "And their position is justified.”

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Investors should take a closer look at how much recovery has occurred in the United States and other Western countries, said Martin Hennecke, associate director at investment and financial advice firm Tyche. The economies in those countries are not generating a real...
Economist Hennecke Bond Disaster Brewing in U.S. and Europe
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2010-55-04
Thursday, 04 Mar 2010 09:55 AM
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