John Abernethy: The situation in Europe, where the ECB are forcibly holding down yields on government bonds is no different to the sub-prime crisis of '07

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John Abernethy: The situation in Europe, where the ECB are forcibly holding down yields on government bonds is no different to the sub-prime crisis of '07. It's encouraging people to trade with the absolute belief that the ECB will not let the bond market fail. These same institutions bought sub-prime debt off the American Investment Banks (pre GFC) in the belief that they wouldn't fail, based on a AAA guarantee. They are willing to completely disregard risk, disregard pricing and just buy this stuff. That's scary. It's a completely contrived market. It's a joke. Now that's as bad, if not worse than '07 in terms of a financial calamity possibility. On the likely outcome, Abernethy says I think markets invariably have an adjustment where all of a sudden the lights come on and people say, what are we doing buying this stuff? The Ponzi scheme of all time.

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