Moves towards World War 3 - Warning of bond markets creating the 'biggest financial crisis of our lifetime'

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BIGGEST CRISIS OF A LIFETIME COMING...WW3

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Wealth manager warns of bond markets creating the 'biggest financial crisis of our lifetime'

• Brian Raven, group chief executive at Tavistock Investments, believes that bond markets will be the source of the problem and are primed for a sharp reversal
• With central banks preparing to put an end to ultra-loose monetary stimulus, and with inflation recently seeing a pickup, there are concerns that bonds could lose value quickly in a market that is not very liquid

CNBC,

11 October, 2017

The CEO of a U.K.-based wealth management firm has warned that an unruly end to monetary stimulus from global central banks could lead to pensioners and retail customers suffering the biggest financial crisis of their lifetimes.

Brian Raven, group chief executive at Tavistock Investments, believes that bond markets will be the source of the problem and are primed for a sharp reversal.

"This is the biggest financial crisis of our lifetime, because it affects the average person," Raven told CNBC over the phone. Tavistock is focused on the U.K. but Raven said the problem could be felt more broadly around the world. He argued that bond markets are in a state "never seen before" which could soon trigger a financial shock bigger than in 2008.

Bonds — pieces of paper that companies, governments and banks sell to raise money — have seen three decades of price gains and are perceived to be a safe haven in times of economic stress. They also traditionally perform poorly in times of rising inflation. In the last 10 years, central banks have been busy buying up bonds in an effort to boost the global economy and increase lending. This has further accentuated the move higher for bond prices and many economists now believe the market has become distorted.

"The more conservative central banks that have been skeptical of quantitative easing have long warned that long periods of low interest rates can sow the seeds of the next crisis."-Jan Randolph, Director of sovereign risk at IHS Markit

With central banks preparing to put an end to ultra-loose monetary stimulus, and with inflation recently seeing a pickup, there are concerns that bonds could lose value quickly in a market that is not very liquid. There are also concerns that bondholders aren't fully aware of the risks.

"The more conservative central banks ( e.g. Bundesbank ) that have been skeptical of quantitative easing have long warned that long periods of low interest rates can sow the seeds of the next crisis by smothering relative prices in the financial markets — but it is difficult to tell where ahead of time because of the 'fog' created," Jan Randolph, director of sovereign risk at IHS Markit, told CNBC via email.

"There is a risk of a sharp rebound in prices as monetary policies tighten and liquidity problems if investors stampede out these more risky markets when risks start to crystallize," he added.

While there's been many gloomy forecasts for the bond market, not everyone agrees that they'll definitely see significant losses as central banks reduce their bond-buying programs. Mike Bell, a global market strategist at JPMorgan Asset Management, told CNBC Monday that this monetary tightening creates a risk but believes that the recent economic recovery should be enough to offset the impacts of lower bond prices.

"Eventually tighter monetary policy could tip the U.S. economy into recession, but we believe that the economy and equity markets can withstand at least the next year's worth of monetary policy tightening," he said.

"We certainly don't expect the next bear (negative) market to be as bad as the financial crisis in 2008 as banks are much better capitalized than they were in 2008. We therefore expect the next bear market to be a more classic recession rather than a full-blown financial crisis," he added.

Central banks are unlikely to change their strategy and so investors will be likely face higher interest rates and higher inflation. Therefore, Tavistock's Raven told CNBC that investors should adapt and diversify their investments. Bonds with short durations, high-yielding bonds and emerging market bonds are all potential options for investors, according to Raven.

Congress Warns N.KOREA EMP to Wipe Out 90% of Population

Congress warned North Korean EMP attack would kill '90% of all Americans'

WashingtonExaminer,

12 October, 2017

Congress was warned Thursday that North Korea is capable of attacking the U.S. today with a nuclear EMP bomb that could indefinitely shut down the electric power grid and kill 90 percent of "all Americans" within a year.

At a House hearing, experts said that North Korea could easily employ the "doomsday scenario" to turn parts of the U.S. to ashes.

In calling on the Pentagon and President Trump to move quickly to protect the grid, the experts testified that an explosion of a high-altitude nuclear bomb delivered by a missile or satellite "could be to shut down the U.S. electric power grid for an indefinite period, leading to the death within a year of up to 90 percent of all Americans."

Related: Secret South Korean war plans are safe after reported North Korea hack, Pentagon says

Two members of the former congressional EMP commission said the threat to the U.S. has never been higher, in part because of the current high level of saber rattling by both sides and North Korea's surprising display over the past six months of its ability to deliver on its threats.

"With the development of small nuclear arsenals and long-range missiles by new, radical U.S. adversaries, beginning with North Korea, the threat of a nuclear EMP attack against the U.S. becomes one of the few ways that such a country could inflict devastating damage to the United States. It is critical, therefore, that the U.S. national leadership address the EMP threat as a critical and existential issue, and give a high priority to assuring the leadership is engaged and the necessary steps are taken to protect the country from EMP," the experts told a House Homeland Security subcommittee.

William R. Graham, chairman of the former EMP commission and its former chief of staff, Peter Vincent Pry, said that the U.S. has ignored the warning signs for years and that North Korea's military moves this year must be seen as a wake-up call.

They said:

• Just six months ago, most experts thought North Korea's nuclear arsenal was primitive, some academics claiming it had as few as 6 A-Bombs. Now the intelligence community reportedly estimates North Korea has 60 nuclear weapons.
• Just six months ago, most experts thought North Korea's ICBMs were fake, or if real could not strike the U.S. mainland. Now the intelligence community reportedly estimates North Korea's ICBMs can strike Denver and Chicago, and perhaps the entire United States.
• Just six months ago, most experts thought North Korea was many years away from an H-Bomb. Now it appears North Korea has H-Bombs comparable to sophisticated U.S. two-stage thermonuclear weapons.
• Just six months ago, most experts claimed North Korean ICBMs could not miniaturize an A-Bomb or design a reentry vehicle for missile delivery. Now the intelligence community reportedly assesses North Korea has miniaturized nuclear weapons, and has developed reentry vehicles for missile delivery, including by ICBMs that can strike the U.S.
• After massive intelligence failures grossly underestimating North Korea's long-range missile capabilities, number of nuclear weapons, warhead miniaturization, and proximity to an H-Bomb, the biggest North Korean threat to the U.S. remains unacknowledged—nuclear EMP attack.

Their testimony also highlighted the failure of the Pentagon or Congress to extend the life of the EMP Commission and they recommended deeper study into the threat, include from a simple solar flare.

"Our current vulnerability invites attack," they said.