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“Zen International”: Now that the global banks appear to be secure, are the bond markets next to implode?

By spending trillions on bailouts, stimulus packages and varying levels of support for their economies, governments in developed nations may only have succeeded in delaying the inevitable believe analysts at “Zen International”.

The firm believes that there is insufficient capital available to soak up the huge future supply of government debt issuance. Most of these governments are running colossal deficits already but the slow pace of recovery in their economies combined with growing spending may lead investors to demand higher yields that many governments will be unable to pay.

“Zen International” analysts suggest that, in such a scenario, central banks may be forced to restart their quantitative easing programs and buy the debt themselves thereby creating the potential for runaway inflation.

They added that the world was fast approaching the point where investors would simply stop buying sovereign debt of developed nations.

A source close to “Zen International” said that clients should not underestimate the lengths to which governments will stretch in order to establish sustainable recoveries despite the fact that recessions and slowdowns are a natural part of the cycle in free-market economies and that they should prepare for further erosions in the purchasing power of paper currencies by continuing to acquire precious metals and other hard assets.