By John Galt
August 18, 2011 – 21:45 ET
And with this posting, I shall go to bed early as I fear things are going to spiral a tad tomorrow. In the mean time, I took the sub-headline from the UK Telegraph’s Ambrose Evans-Pritchard column tonight as it signals the ultimate demise of the “West” as a force in the world economy through the end of this decade if he is correct.
Read the full story below by clicking on the title:
The global credit markets are braced for deflation and perhaps depression.
Panic flight to safety has pushed the yield on 10-year US Treasuries below 2pc for the first time in American history, exceeding the extremes of the Lehman crisis and the banking crash of the 1930s.
Investors scrambled to buy the bonds of strongest industrial states on Thursday on fears of a double-dip recession on both sides of the Atlantic and a European banking crash, driving down their returns to investors. German yields fell to 2.08pc and Switzerland’s 3-month rates have turned deeply negative.
Markets were stunned by a plunge in the manufacturing index of the Philadelphia Federal Reserve to minus 30.7 in August from plus 3.2 in July, one of the most violent falls ever recorded.
“It is a catastrophic collapse,” said Rob Carnell from ING. “Markets are in a fearful state right now, and data like this gives them plenty of excuses to panic.”