THE FAILED GERMAN BOND AUCTION: A CANARY IN THE COAL MINE?

Amid all the "grotesquerie" accompanying the re-arrangement of the goal posts on what the purpose (and end) of the war with Iran will be (which, you'll note, has now been expanded to include the president's intuitions and feelings as a military and operational bellweather,  a move that prompts this author to suggest that they change the name of the Joint Chiefs of Staff to the Oberkommando der Wehrmacht), the firing of people from a presidential "religious liberties panel" simply for expressing traditional Christian doctrine, the encyclicals of Senator Cruz denouncing anyone who says "Christ is King" as anti-semitic, there is a "little" story that you might not have noticed, and that concerns the recent sale of ten year bonds by the German government, and its... well...  how does one put this euphemistically?... it's less-than-optimal sales record? Here's the story (again, we are grateful to V.T. for spotting and passing this along):

Failed German 10 Year Government Bond Auction is a ‘Canary in a Coal Mine’

The article is short, and not sweet at all:

This is a short, but important article.

Short because there is not a ton of info out ‘there’ about the actual particulars of yesterday’s German Government bond auction.

Important, because when a 1st world sovereign power can’t sell enough debt to cover its stated needs, a canary just died in the coal mine-so to speak.

...

What happens when a sovereign government can’t even raise enough investor interest just to meet the total offer in the auction? Maybe they can’t retire maturing bonds. Maybe they can’t service all the interest they owe on their national debt. Maybe some government offices or programs shut down.

Maybe it signals the catastrophic nature of a worldwide system of fiat debt that has come to the end of the road and perhaps, Germany is first in a long line of dominoes to fall. Perhaps a nation like Japan, whose national debt is sky high is next.

Maybe investors (and other sovereign nations) are starting to ask the question: Why buy bonds of debt ridden countries when, at least for now-gold is available?

Or to really dig into the open wound: why buy the bonds of a government whose prize projects of the past thirty years or so - The Ukraine, open borders, unparalleled demilitarization, vast expansion of the welfare state, and an aggressive Kulturkampf against its own people - have all been abject failures?

In other words, it's not just "the war", nor just "the fiat system", nor the high debt-to-Gross Domestic Product ratio or any other standard trope in the analytical tool box. Such explanations are standard fare in financial analyses, but in my high octane speculation for today in relationship to this article, I am suggesting that what we may be seeing here is something rather new in the world of high finance, a kind of culturo-financial phenomenon: a refusal to fund the policies of a government that has turned its back on its own culture and history, and which has done so with a consistency seemingly at variance with the changes of "government" in its chancery and legislature, and to the point that what was once one of the most stable and powerful governments in Europe, is now an unstable husk wobbling from one disastrous policy to another. Only France and the United "Kingdumb" seem to be able to compete with it for the sheer lunacy of their cultural policies.

In short, what I am proposing is something radical: bond auction failure as a cultural phenomenon and commentary, in addition to the usual financial-political explanations.

The only question is, is this canary in the coal mine of German bond auctions going to spread?  Time will tell, but I suspect that with the recent announcement of the Trump administration that the US Government will step in to take up the slack in insurance underwriting for shipping through the Straits of Hormuz, that we've already heard another canary gasping for air...

See you on the flip side...

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