Bomb Shelters in Singapore – New York Times

Here is a city that has mandated bomb shelters in all Singaporean homes built since 1998. I’m really impressed.

”We don’t call it a bomb shelter,” says Cindy Lim, whose Singapore city apartment has one of the ”housing shelters” that have been mandated by law in all Singaporean homes built since 1998. ”We call it the storeroom. But mostly we don’t talk about it. It’s just something that comes with the flat.”

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It’s the Bomb (Shelter) – New York Times

Financial Ebola Sweeps Through Global Bond Markets

What does the end of the bond market world look like? Something like this …

Bond Market Armagenddon Strikes Greece

The chart above shows the yield on the benchmark 2-year note in Greece. Just a few short months ago, Greek sovereign yields were hovering around 2.1 percent. On Wednesday, they shot up as high as 18.9 percent!

Translation? The cost of borrowing for the Greek government — not some subprime mortgage customer or deadbeat credit card holder — shot up almost NINE-FOLD in the span of six months.

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During this same time, the price of Greece’s 6 percent 10-year notes due July 19, 2019 plunged from 112.4 to 68.1. That’s a loss of more than 39 percent. Not on some dot-bomb stock … not even on a high-yield, or “junk” piece of paper …

… but on a sovereign government bond!

Folks, THAT is bond market Armageddon. And it’s playing out now. Right on the trading screen of every investor around the world.

Think Greece Is Alone?
Think Again!

Worse, the pain isn’t confined to Greece …

Portugal’s benchmark 2-year note yield just blew out to 4.82 percent from 1.58 percent. That’s a tripling in interest rates in less than a month.

Ireland? Its 2-year yield rocketed to 3.83 percent from 1.62 percent in 23 days.

Even bigger European economies, like Spain, are getting whacked. Yields there recently shot up to 2.08 percent from 1.36 percent.

S&P has cut the debt ratings of several EU members.
S&P has cut the debt ratings of several EU members.

Standard & Poor’s has taken the hatchet to its sovereign debt ratings in response. The agency cut its Spanish debt rating to AA just a day after slashing its Portuguese debt rating by two notches to A-. It also cut its Greek debt rating by three notches to BB+, “junk” territory.

Bottom line: A virulent sovereign debt contagion is spreading like wildfire throughout the euro zone. In the short run, that will likely get the Germans to back down on their bailout opposition.

They’ve been holding up a package that would give Greece up to $60 billion in aid from richer European Union nations and the International Monetary Fund. The crisis may temporarily take a breather if the package gets approved.

But here’s the thing: If the Greeks get bailed out, who’s next? And where the heck is all the bailout money going to come from? Policymakers may need to cough up almost $800 billion to “save” everyone, according to economists at firms such as Goldman Sachs and JPMorgan Chase.

The problem is that nobody has that kind of money laying around! So it’ll have to be borrowed. And if it has to be borrowed … from a European bond market that’s already falling apart at the seams … what’s likely to happen? Even more selling, which would drive bond prices down and interest rates up!

Coming Soon to a Bond Market
Near You: Financial “Ebola!”

So far, this is predominately a problem for continental Europe. Our Treasury prices actually rose a bit during the worst of the European debt selling.

But I believe it is woefully ignorant, provincial, and arrogant for us to assume something similar can’t or won’t happen here.

The way politicians are burning through our money, interest rates are sure to skyrocket.
The way politicians are burning through our money, interest rates are sure to skyrocket.

Even the Secretary General of the Organization for Economic Cooperation and Development likened the crisis to the “Ebola” virus, saying “it’s threatening the stability of the financial system.”

When you think it through logically, you can’t help but ask: Why wouldn’t the Grim Reaper eventually come knocking at OUR door?

After all, OUR deficits are out of control! OUR debt level is through the roof! OUR politicians are burying their heads in the sand, just assuming they’ll be able to keep funding their profligacy at rock-bottom rates forever. Those are precisely the same problems that built up in Greece for months on end.

Then one day, the lid blew!

Think about it:

  • Our total debt load is set to double to $18.6 trillion over the next decade,
  • Weekly benchmark Treasury auctions have surged from $20 billion to $30 billion to more than $120 billion,
  • And we’re dumping more than $375,000 in debt onto the market every second in some weeks, all in an effort to fund a budget deficit that’s closing in on $1.6 trillion!

Do I expect a nine-fold rise in U.S. 2-year note yields? A 40 percent plunge in bond prices in just a couple of months? Not really.

But I do believe the bond market will force us to take our fiscal medicine. I do believe a sovereign debt crisis is brewing here. And I do believe it will be just one reason our interest rates will head significantly higher.

So please, invest and prepare accordingly. By the time the bond market bleeding starts, it’ll be too late.

Until next time,

Mike Larson

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Afghanistan Troops Go Viral with Lady Gaga Video Remake

A couple guys located in Afghanistan produce a remake of the music video by Lady Gaga….Telephone. Prepare yourself for a fantastical journey.
Right now this is the temporary version, we have more scenes to cut, and edit, however with guys always on mission it is harder to film than you think.

This video has gone viral with over 700,000 views.

YouTube Link

Tehran warns Israel against attack on Syria as arms tension mounts | World news | The Guardian

“We will stand alongside Syria against any [Israeli] threat,” Rahimi said at a news conference with the Syrian prime minister, Mohammad Naji Otri. “If those who have violated Palestinian land try anything, we will cut off their feet,” he promised.

Tehran warns Israel against attack on Syria as arms tension mounts | World news | The Guardian

The North Korea Endgame –

I have to disagree with the author on this issue. The U.S. should get off the Korean peninsula and cancel the alliance with South Korea. If North Korea attacks South Korea then we should do nothing.

It’s time for the South Korean people to go their own way.

For this reason, Korean unification—under a democratic, market-oriented Republic of Korea that remains allied with the U.S.—must be the ultimate objective. Today that looks like a daunting and risky prospect. But to paraphrase Churchill: Unification would be the worst possible outcome for Korea—except for all the other alternatives.

Nicholas Eberstadt: The North Korea Endgame –

Chinese Focus On Building Submarines Cause Of Concern Says Expert | AHN

China is putting a major focus on submarines which have no peacetime purposes said a defense expert on Friday, noting, on the other hand, aircraft carriers are perfect tools for peaceful purposes but submarines are for military purposes.

Chinese Focus On Building Submarines Cause Of Concern Says Expert | AHN

The Party’s Over: China’s Endgame

Government-mandated lending pushed unneeded funds into the Chinese stock markets, which caused an abnormal jump in prices; similar funds also flooded into the coffers of casinos in Macau, which had been languishing before the stimulus program. Predictions that Beijing’s plan might trigger the biggest wave of corruption in Chinese history now seem correct. And forced lending will undoubtedly create a mountain of bad loans because banks are shoveling funds to “beauty-show projects” that have little economic viability.

World Affairs Journal – The Party’s Over: China’s Endgame

Iran and Allies Plan a Middle East War The Summer of 2010 | DebkaFiles Article

Tehran has opted for this course for five reasons:

To pre-empt a US/Israel strike

1. To preempt a possible US or Israeli military strike on its nuclear facilities, by throwing their military preparations awry.

2. To pre-stage its first military clash with the US and/or Israel in an arena far from home – preferably in Syria or Lebanon, if possible.

 3. To distract Iranian and world public attention from the threat of sanctions.

Iran and Allies Plan a Middle East War This Summer «

BREAKING: Second Oil Rig Overturns In Lousiana, Threatening Inland Waters

This second oil rig accident seems like a true accident, but it certainly makes one wonder if terrorism is somehow involved.

Even as the oil slick from the ruined Deepwater Horizon creeps onto the Lousiana shoreline, Reuters is reporting that another offshore drilling rig has overturned- this time among the inland waters near Morgan City, LA.

BREAKING: Second Oil Rig Overturns In Lousiana, Threatening Inland Waters

Laid Off in Singapore: Ex-Pats Have to Downsize – TIME

Today, as beleaguered investment banks shutter offices and commodity prices and trade flows plunge, Credit Suisse estimates that hundreds of thousands of expat jobs are disappearing from Singapore. Property prices, particularly of high-end homes, are expected to fall some 50% as the recession gathers force.

But in a departure from previous downturns, some expats are electing not to return to banking centers such as New York City and London. This recession is global, and the implosion of the financial-services industry means job prospects back home are even bleaker. American Marc Rudajev, a 37-year-old ex–hedge fund manager whose $350 million fund dissolved in the middle of 2008 as global stock markets swooned, is one of the Singapore expats not hurrying home.

Laid Off in Singapore: Ex-Pats Have to Downsize – TIME