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The Bond Market Is Revolting - Will There Be A Debt Crisis?

The Bond Market Is Revolting - Will There Be A Debt Crisis?

Forbes23-05-2025
TOPSHOT - Students clash with riot police in front of the Greek Parliament during a demonstration ... More against the government's plans for private universities, in Athens, on February 1, 2024. (Photo by Angelos TZORTZINIS / AFP) (Photo by ANGELOS TZORTZINIS/AFP via Getty Images)
In 2013 President George W. Bush referred to the Greeks as 'Grecians'. At the time the 'mis-speaks' of the second Bush president provoked much amusement and some concern, though by comparison to the current occupant of the White House, the author of the disastrous invasion of Iraq is a strategic genius. The 'Grecians' came to mind this week when tuning into commentary by the Japanese prime minister Shigeru Ishiba who compared his country's fiscal situation to Greece in the early 2010's as he rejected calls for tax cuts. By the staid standard of Japanese political pronouncements this is controversial and will help draw attention to the rise in Japanese interest rates in the past two weeks.
Ishiba's comments are a harbinger of what is to come as we head into the 'Age of Debt', an era where indebtedness will dominate politics, economics and geopolitics. I have spent enough time in Greece over the years to know how brutally painful the consequences of austerity were, and how reckless economic policy had become in the late 1990's and early 2000's.
Indeed, I recall the late years of the (Andreas) Papandreou period, when the social debate in Athens revolved around his younger, second wife 'Mimi'. Papandreou was a very interesting character, and an example I often deploy to show that an education in economics is no guarantee of good policy – before he entered politics Papandreou was the Dean of the economics faculty at Stanford.
Often a finance minister will need political as well as policy skills. In his book, Stress Test, Tim Geithner, who was appointed Treasury Secretary by President Obama and who as head of the New York Fed had very good technical skills, worried aloud that he did not have the political skills for the role (arguably Robert Rubin was the master here) and the Obama team spent some time coaching him in this field.
There is a small but interesting literature on the backgrounds of finance ministers, which hypothesises that more left leaning governments (like Obama?) will choose economics experts to bolster their economic credibility, while right leaning governments often choose a finance minister with a financial services background – Donald Trump's two Treasury Secretaries, Steven Mnuchin (ex Goldman Sachs banker) and Scott Bessent (hedge fund manager who worked with George Soros for some time) fit this profile.
The point of my dragging up the cv's of finance ministers is to state that difficult times are ahead, and will require political courage and policy acumen, most of all in the US as President Trump takes aim at the budget deficit. Unfortunately, his lead policy manoeuvre on tariffs have shown that he has neither of these attributes.
In the US, President Trump has driven hard to have his budget (Big, Beautiful Bill) passed by Congress. It contains some elements that are quite sinister such as the ending of an excise tax on gun silencers, and one particular policy I agree strongly with – the introduction of MAGA (Money Account for Growth and Advancement), whereby the Treasury would create tax preferred savings accounts for children and give each one an initial deposit of USD 1,000. Europe should do the same!
However, the broad strokes of the budget look like they could rob many Americans of what they need most, notably MEDICAID. Worryingly from an economic point of view the budget is expected to add nearly USD 3.5 trillion to the budget deficit over the next ten years, according to a range of bodies from the Penn Wharton Budget Model to the Joint Committee on Taxation, and the implication is that the indebtedness of the US will rise further (estimates point to a historic debt to GDP ratio of 125% in ten years' time). The Congressional Budget Office publishes an intimidating chart that puts this in perspective and shows that the debt to GDP ratio in the US has only been higher (going all the way back to 1790) in the post-World War II period.
This is the daunting backdrop to two poor bond auctions last week (demand for US and Japanese bonds was well below the norm). In this respect, the case of Greece is instructive – notably the devastating effect of forced austerity, the difficulty in trying to make policy when a government has lost the confidence of markets and the reality that once this confidence is lost, it can take time to regain it.
Ultimately, Greece was a small economy in the scheme of things, though its membership of the euro made it systematically important. The US and Japan are on a different scale altogether.
We are all Grecians now.
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The US sources most of its coffee from Brazil, which is set to face 50% tariffs on its products on Aug. 1, and Colombia, which faces a tariff rate of 10%. In Keurig's coffee business, appliance volume decreased 22.6% during the quarter, reflecting impacts of retailer inventory management, and K-Cup pod volume decreased 3.7%, reflecting category elasticity in response to price increases, the company reported. "Our retail partners will likely continue to manage their inventory levels tightly, in particular on brewers," Cofer commented. "And then finally, you know we did a round of pricing at the beginning of the year. We've announced another round of pricing that will take effect next month, and we'll need to closely monitor how that elasticity evolves." Read more about Keurig earnings here. The EU's Trump insurance As my colleague detailed below, EU member states voted to impose tariffs on over $100 billion of US goods from Aug. 7. The Financial Times reported that this move that allows the bloc to impose the levies quickly at any point in the future should its trade relationship with the US take a turn for the worse. From the report: Read more here (subscription required). Europe approves $100B-plus tariff backup plan A report in the Wall Street Journal on Thursday said that the European Union has now approved its retaliatory tariff package on US goods that could start in August if no trade agreement is reached. The EU announced on Wednesday that it will hit the US with 30% tariffs on over $100 billion worth of goods in the event that no deal is made and if President Trump decides to follow through with his threat to impose that rate on most of the bloc's exports after Aug. 1. The US exports, which would include goods such as Boeing (BA) aircraft, US-made cars and bourbon whiskey would all face heavy tariffs that match Trump's 30% threat. 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EU, US reportedly close in on trade deal The Financial Times reports: And more from Bloomberg: Read more here. Trump says he will trade 'Tariff points' for open markets to the US President Trump pushed one of his priorities in negotiating trade deals on Wednesday, and it wasn't exactly trade deficits. He suggested the US would reduce tariffs in exchange for countries opening their markets, i.e., putting zero tariffs on American-made products. "I will always give up Tariff points if I can get major countries to OPEN THEIR MARKETS TO THE USA," Trump posted on Truth Social. "Another great power of Tariffs. Without them, it would be impossible to get countries to OPEN UP!!! ALWAYS, ZERO TARIFFS TO AMERICA!!!" Trump's social media post came after the European Union announced it was preparing countermeasures against US tariffs, including a 30% tariff on over $100 billion worth of goods. Meanwhile, Indonesia agreed to drop its tariffs on US goods to 0% for 99% of trade. 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Its major customers Tesla (TSLA) and General Motors (GM) warned of fallout from U.S. tariffs and legislation that will end federal subsidies for EV purchases on September 30. "US tariffs and an early end to EV subsidies will put a burden on automakers, potentially leading to vehicle price increases and a slowdown in EV growth in North America," CFO Lee Chang-sil said during a conference call. Read more here. Reuters reports: South Korean battery firm LG Energy ( Solution warned on Friday of a further slowdown in demand by early next year due to U.S. tariffs and policy uncertainties after it posted a quarterly profit jump. Its major customers Tesla (TSLA) and General Motors (GM) warned of fallout from U.S. tariffs and legislation that will end federal subsidies for EV purchases on September 30. 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This would mean that returns would be split 10% for Japan and 90% for the US, according to the White House official, and that it would be "based on the respective levels of contribution and risk borne by each side." Bloomberg News reports: Read more here. Japan said Friday that profits from the $550 billion investment deal with the US will be shared based on how much each side contributes. A government official suggested the US will also put in significant funds, but details of the scheme remain unclear. The White House had announced earlier in the week that the US would retain 90% of the profits from the $550 billion US-bound investment and loans that Japan would exchange in return for reduced tariffs on auto and other exports to the US. This would mean that returns would be split 10% for Japan and 90% for the US, according to the White House official, and that it would be "based on the respective levels of contribution and risk borne by each side." Bloomberg News reports: Read more here. US business activity rises; tariffs fuel inflation concerns US business activity rose in July, but companies increased the prices for goods and services, supporting the view from economists that inflation will accelerate in the second half of 2025 and it will mainly be due to tariffs on imports. Reuters reports: Read more here. US business activity rose in July, but companies increased the prices for goods and services, supporting the view from economists that inflation will accelerate in the second half of 2025 and it will mainly be due to tariffs on imports. Reuters reports: Read more here. It sounds like Trump now has a new minimum tariff rate: 15% President Trump set a new rhetorical floor for tariffs on Wednesday night in comments in a shift that raises the president's baseline rate from 10%. Yahoo Finance's Ben Werschkul writes: Read more here. President Trump set a new rhetorical floor for tariffs on Wednesday night in comments in a shift that raises the president's baseline rate from 10%. Yahoo Finance's Ben Werschkul writes: Read more here. Keurig Dr. Pepper brewer sales volume drops 22%, CEO says tariff impacts 'will become prominent' Keurig Dr. Pepper CEO Tim Cofer said that tariffs are putting additional pressure on the company in an earnings call Thursday, especially when it comes to its coffee business, which KDP expects to be "subdued" for the remainder of the year. "Commodity inflation will build as we roll into the back half and we roll into our higher cost hedges on green coffee," Cofer said. "The tariff impacts will become prominent. And we all know that tariff situation is a bit fluid." Keurig is one of the biggest coffee importers in the US, along with Starbucks (SBUX) and Nestle (NSRGY). The US sources most of its coffee from Brazil, which is set to face 50% tariffs on its products on Aug. 1, and Colombia, which faces a tariff rate of 10%. In Keurig's coffee business, appliance volume decreased 22.6% during the quarter, reflecting impacts of retailer inventory management, and K-Cup pod volume decreased 3.7%, reflecting category elasticity in response to price increases, the company reported. "Our retail partners will likely continue to manage their inventory levels tightly, in particular on brewers," Cofer commented. "And then finally, you know we did a round of pricing at the beginning of the year. We've announced another round of pricing that will take effect next month, and we'll need to closely monitor how that elasticity evolves." Read more about Keurig earnings here. Keurig Dr. Pepper CEO Tim Cofer said that tariffs are putting additional pressure on the company in an earnings call Thursday, especially when it comes to its coffee business, which KDP expects to be "subdued" for the remainder of the year. "Commodity inflation will build as we roll into the back half and we roll into our higher cost hedges on green coffee," Cofer said. "The tariff impacts will become prominent. And we all know that tariff situation is a bit fluid." Keurig is one of the biggest coffee importers in the US, along with Starbucks (SBUX) and Nestle (NSRGY). The US sources most of its coffee from Brazil, which is set to face 50% tariffs on its products on Aug. 1, and Colombia, which faces a tariff rate of 10%. In Keurig's coffee business, appliance volume decreased 22.6% during the quarter, reflecting impacts of retailer inventory management, and K-Cup pod volume decreased 3.7%, reflecting category elasticity in response to price increases, the company reported. "Our retail partners will likely continue to manage their inventory levels tightly, in particular on brewers," Cofer commented. "And then finally, you know we did a round of pricing at the beginning of the year. We've announced another round of pricing that will take effect next month, and we'll need to closely monitor how that elasticity evolves." Read more about Keurig earnings here. The EU's Trump insurance As my colleague detailed below, EU member states voted to impose tariffs on over $100 billion of US goods from Aug. 7. The Financial Times reported that this move that allows the bloc to impose the levies quickly at any point in the future should its trade relationship with the US take a turn for the worse. From the report: Read more here (subscription required). As my colleague detailed below, EU member states voted to impose tariffs on over $100 billion of US goods from Aug. 7. The Financial Times reported that this move that allows the bloc to impose the levies quickly at any point in the future should its trade relationship with the US take a turn for the worse. From the report: Read more here (subscription required). Europe approves $100B-plus tariff backup plan A report in the Wall Street Journal on Thursday said that the European Union has now approved its retaliatory tariff package on US goods that could start in August if no trade agreement is reached. The EU announced on Wednesday that it will hit the US with 30% tariffs on over $100 billion worth of goods in the event that no deal is made and if President Trump decides to follow through with his threat to impose that rate on most of the bloc's exports after Aug. 1. The US exports, which would include goods such as Boeing (BA) aircraft, US-made cars and bourbon whiskey would all face heavy tariffs that match Trump's 30% threat. The approval of the package comes despite the growing optimism that the US and EU will reach a deal that would put baseline tariffs on the bloc at 15%, matching the level the US applied to Japan. The EU is keen to reach a deal with the US but as a cautionary measure has approved 30% tariffs if a deal is not made. A report in the Wall Street Journal on Thursday said that the European Union has now approved its retaliatory tariff package on US goods that could start in August if no trade agreement is reached. The EU announced on Wednesday that it will hit the US with 30% tariffs on over $100 billion worth of goods in the event that no deal is made and if President Trump decides to follow through with his threat to impose that rate on most of the bloc's exports after Aug. 1. The US exports, which would include goods such as Boeing (BA) aircraft, US-made cars and bourbon whiskey would all face heavy tariffs that match Trump's 30% threat. The approval of the package comes despite the growing optimism that the US and EU will reach a deal that would put baseline tariffs on the bloc at 15%, matching the level the US applied to Japan. The EU is keen to reach a deal with the US but as a cautionary measure has approved 30% tariffs if a deal is not made. Trump tariffs wreaking havoc in Brazil's citrus belt Reuters reports: Read more here. Reuters reports: Read more here. South Korea weighs US investment pledge to trim auto tariff Trade discussions between the US and South Korea have led both sides to investigate the idea of creating a fund to invest in American projects. A report said this possible deal would be similar to the agreement Japan struck Tuesday with President Trump. The details of the plan are still not clear, but the US has been seeking pledges totaling hundreds of billions of dollars. However, further talks on a deal between the two sides may have to wait as a trade meeting between the US and South Korea has been postponed after Treasury Secretary Scott Bessent became unavailable due to a scheduling conflict, South Korea's Finance Ministry said Thursday. Bloomberg reports: Read more here. Trade discussions between the US and South Korea have led both sides to investigate the idea of creating a fund to invest in American projects. A report said this possible deal would be similar to the agreement Japan struck Tuesday with President Trump. The details of the plan are still not clear, but the US has been seeking pledges totaling hundreds of billions of dollars. However, further talks on a deal between the two sides may have to wait as a trade meeting between the US and South Korea has been postponed after Treasury Secretary Scott Bessent became unavailable due to a scheduling conflict, South Korea's Finance Ministry said Thursday. Bloomberg reports: Read more here. Hyundai Motor warns of bigger hit from US tariffs after Q2 profit fall Hyundai Motor ( HYMTF) reported a drop in second-quarter operating profit on Thursday. The company cited US tariffs on vehicles and parts as the reason for the decline and that President Trump's trade war had weighed on its bottom line, the automaker also warned of a bigger impact in the current quarter. The group's South Korean shares fell 2% Thursday. Reuters reports: Read more here. Hyundai Motor ( HYMTF) reported a drop in second-quarter operating profit on Thursday. The company cited US tariffs on vehicles and parts as the reason for the decline and that President Trump's trade war had weighed on its bottom line, the automaker also warned of a bigger impact in the current quarter. The group's South Korean shares fell 2% Thursday. Reuters reports: Read more here. Trump lifts tariff baseline rate, warns countries face 15-50% range President Trump appears to have raised the minimum US tariff rate to 15%, up from 10%, as he prepares to set new reciprocal tariffs before his Aug. 1 deadline. 'We'll have a straight, simple tariff of anywhere between 15% and 50%,' Trump said Wednesday at an AI summit in Washington. 'A couple of — we have 50 because we haven't been getting along with those countries too well.' Trump's latest statement that tariffs would begin at 15% is a new twist in his efforts to impose duties on almost every US trading partner. The US and Japan reached a trade agreement this week of 15%, which could be one reason why the US president has decided to increase the baseline tariff rate. The European Union said on Wednesday that it is getting ready to impose 30% tariffs on over $100 billion worth of US goods if no deal is made and if Trump decides to follow through with his threat to impose that rate on most of the bloc's exports after the Aug. 1 deadline. Reports from The Financial Times on Wednesday have said that the EU and the US are now closing in on a 15% trade deal on European imports. Bloomberg News reports: Read more here. President Trump appears to have raised the minimum US tariff rate to 15%, up from 10%, as he prepares to set new reciprocal tariffs before his Aug. 1 deadline. 'We'll have a straight, simple tariff of anywhere between 15% and 50%,' Trump said Wednesday at an AI summit in Washington. 'A couple of — we have 50 because we haven't been getting along with those countries too well.' Trump's latest statement that tariffs would begin at 15% is a new twist in his efforts to impose duties on almost every US trading partner. The US and Japan reached a trade agreement this week of 15%, which could be one reason why the US president has decided to increase the baseline tariff rate. The European Union said on Wednesday that it is getting ready to impose 30% tariffs on over $100 billion worth of US goods if no deal is made and if Trump decides to follow through with his threat to impose that rate on most of the bloc's exports after the Aug. 1 deadline. Reports from The Financial Times on Wednesday have said that the EU and the US are now closing in on a 15% trade deal on European imports. Bloomberg News reports: Read more here. EU, US reportedly close in on trade deal The Financial Times reports: And more from Bloomberg: Read more here. The Financial Times reports: And more from Bloomberg: Read more here. Trump says he will trade 'Tariff points' for open markets to the US President Trump pushed one of his priorities in negotiating trade deals on Wednesday, and it wasn't exactly trade deficits. He suggested the US would reduce tariffs in exchange for countries opening their markets, i.e., putting zero tariffs on American-made products. "I will always give up Tariff points if I can get major countries to OPEN THEIR MARKETS TO THE USA," Trump posted on Truth Social. "Another great power of Tariffs. Without them, it would be impossible to get countries to OPEN UP!!! ALWAYS, ZERO TARIFFS TO AMERICA!!!" Trump's social media post came after the European Union announced it was preparing countermeasures against US tariffs, including a 30% tariff on over $100 billion worth of goods. Meanwhile, Indonesia agreed to drop its tariffs on US goods to 0% for 99% of trade. President Trump pushed one of his priorities in negotiating trade deals on Wednesday, and it wasn't exactly trade deficits. He suggested the US would reduce tariffs in exchange for countries opening their markets, i.e., putting zero tariffs on American-made products. "I will always give up Tariff points if I can get major countries to OPEN THEIR MARKETS TO THE USA," Trump posted on Truth Social. "Another great power of Tariffs. Without them, it would be impossible to get countries to OPEN UP!!! ALWAYS, ZERO TARIFFS TO AMERICA!!!" Trump's social media post came after the European Union announced it was preparing countermeasures against US tariffs, including a 30% tariff on over $100 billion worth of goods. Meanwhile, Indonesia agreed to drop its tariffs on US goods to 0% for 99% of trade. Detroit Three automakers raise concerns about Japan trade deal A group representing General Motors (GM) Ford (F) and Chrysler-parent Stellantis (STLA) raised concerns on Tuesday about the US-Japan trade deal, which could cut tariffs on auto imports from Japan to 15% while leaving tariffs on imports from Canada and Mexico at 25%. Reuters reports: Read more here. A group representing General Motors (GM) Ford (F) and Chrysler-parent Stellantis (STLA) raised concerns on Tuesday about the US-Japan trade deal, which could cut tariffs on auto imports from Japan to 15% while leaving tariffs on imports from Canada and Mexico at 25%. Reuters reports: Read more here. SAP falls as trade war concerns temper strong cloud growth Bloomberg News: Read more here. Bloomberg News: Read more here. EU readies over $100B no-deal plan to match US 30% tariff The European Union announced on Wednesday it plans to hit the US with 30% tariffs on over $100 billion worth of goods in the event that no deal is made and if President Trump decides to follow through with his threat to impose that rate on most of the bloc's exports after Aug. 1. A European Commission spokesman said that the first part of countermeasures would combine an already approved list of tariffs on $24 billion of US goods and a previously proposed list on an additional on $83 billion of American products into one package. The US exports, which would include goods such as Boeing (BA) aircraft, US-made cars and bourbon whiskey would all face heavy tariffs that match Trump's 30% threat. Bloomberg News reports: Read more here. The European Union announced on Wednesday it plans to hit the US with 30% tariffs on over $100 billion worth of goods in the event that no deal is made and if President Trump decides to follow through with his threat to impose that rate on most of the bloc's exports after Aug. 1. A European Commission spokesman said that the first part of countermeasures would combine an already approved list of tariffs on $24 billion of US goods and a previously proposed list on an additional on $83 billion of American products into one package. The US exports, which would include goods such as Boeing (BA) aircraft, US-made cars and bourbon whiskey would all face heavy tariffs that match Trump's 30% threat. Bloomberg News reports: Read more here. Error in retrieving data Sign in to access your portfolio Error in retrieving data

'You Can't Even Afford Rent': Ramsey Hosts Clash With Woman Trying To Buy An RV While $40K In Debt
'You Can't Even Afford Rent': Ramsey Hosts Clash With Woman Trying To Buy An RV While $40K In Debt

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'You Can't Even Afford Rent': Ramsey Hosts Clash With Woman Trying To Buy An RV While $40K In Debt

"You can't even afford rent," career expert and "The Ramsey Show" co‑host Ken Coleman said in a recent episode. He addressed Rachel, a Dallas caller whose 2023 flood pushed her family into her parents' RV. Finance coach and fellow co‑host Jade Warshaw echoed the warning. The hosts insisted that wiping out $40,000 in debt must outrank buying another camper, no matter how daunting Texas rents appear for families today. Rough Math Meets Tough Love Rachel told the hosts that her household lives rent‑free on her parents' land, that she has pared her unsecured balances to $40,000 and that she has banked just $2,500. She brings home $70,000 and her husband earns $11 an hour while pursuing marine‑biology studies. Coleman said monthly rent should stay at $1,250 to preserve cash for repayments. Don't Miss: 7,000+ investors have joined Timeplast's mission to eliminate microplastics—now it's your turn to $100k+ in investable assets? – no cost, no obligation. "You should not stop paying down your debt to buy an RV," Coleman said. "You have no idea what it will cost," Warshaw said. Coleman urged moving closer to Rachel's workplace and pausing coursework so her husband can seek higher wages — steps the show's hosts often prescribe for callers in similar binds. Debt Data Mirrors Caller's Strain The couple's predicament mirrors broader figures. The Federal Reserve Bank of New York in May pegged household balances at $18.2 trillion in Q1 and reported that mortgage balances climbed $199 billion. Freddie Mac said the 30‑year fixed rate averaged 6.72% for the week of July 10. Higher rates feed steeper obligations. Typical monthly debt payments reached $1,237, up 5% year over year, Experian found. The Bureau of Labor Statistics showed shelter costs rising 3.8% in June from a year earlier, pressuring renters already juggling larger credit card balances and pricier auto loans. Trending: This AI-Powered Trading Platform Has 5,000+ Users, 27 Pending Patents, and a $43.97M Valuation — With budgets squeezed, 64% of workers plan a second job or side gig this year, according to the American Staffing Association. Coleman's rent ceiling reflects those realities, emphasizing liquidity for repairs and emergencies instead of new liabilities. Map To Move Forward Coleman told the caller to "get your income up and change your lifestyle." He recommended relocating nearer to work, trimming transportation costs and delaying further study. Warshaw, who once eliminated $460,000 herself, said every extra dollar must attack principal until balances vanish. Ramsey Solutions' Baby Step 2 guide endorses the avalanche method, which targets the highest‑interest debts first and the snowball, which clears the smallest balances for quick wins. Read Next: Warren Buffett once said, "If you don't find a way to make money while you sleep, you will work until you die." Many are using retirement income calculators to check if they're on pace — Image: Shutterstock UNLOCKED: 5 NEW TRADES EVERY WEEK. Click now to get top trade ideas daily, plus unlimited access to cutting-edge tools and strategies to gain an edge in the markets. Get the latest stock analysis from Benzinga? APPLE (AAPL): Free Stock Analysis Report TESLA (TSLA): Free Stock Analysis Report This article 'You Can't Even Afford Rent': Ramsey Hosts Clash With Woman Trying To Buy An RV While $40K In Debt originally appeared on © 2025 Benzinga does not provide investment advice. All rights reserved. Sign in to access your portfolio

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