The Greater Fool Theory is Back with a Vengeance

Last week Standard & Poor’s declared “Selective default” on $101 Billion of Argentina’s government bonds.

Before we get into any details, let’s take a look at an email we wrote back in July 2017…

Last month, Argentina (with a history of defaulting roughly every 20 years) issued 100-year bonds.

No, that’s not a misprint.

And what’s crazier is the issue was oversubscribed by 3.5X with a net yield of 7.9%.

The hilarious part was the finance ministry hailed the success as evidence that Argentina had regained “credibility and confidence.”

ARE YOU FREEKIN’ KIDDING ME?

Who in the world buys 100-year bonds from a country with a history of defaulting? 

And why should you care?

As the saying goes: “Desperate times call for desperate measures.”  And the most desperate buyers out there are the heavily underfunded pension plans in America.

They’re still trying to recover from the 2008 crash and are starving for higher yields.

You’d better hope your pension plan doesn’t own any of these bonds or you’ll feel the pain when they eventually default.

Maybe I’m exaggerating here because the market depends on the GREATER FOOL THEORY. 

So here we are, only two years later and all those pensions are floating down the creek without a paddle.

We’re not saying “I told you so.”

(Well…maybe we are…kinda…sorta)

But it’s important to note that the bond market is in serious trouble.

And when you consider it’s more than double the size of the stock market, you can expect the ripple effect to run across the globe.

This is all part of the loss of confidence in governments that’ll accelerate into 2020, The Year of Chaos.

Fortunes are lost AND made in chaos.

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