Zero Hedge: 12 Reasons Why Negative Rates Will Devastate The World
It has been a thesis over 20 years in the making, but with every passing day, SocGen's Albert Edwards - who first coined the term "Ice Age" to describe the state of the world in which every debt issue ends up with a negative yield as capital markets and economies collapse into a deflationary singularity - is that much closer to having the victory lap of a lifetime. Although, we doubt he is happy about it.
Commenting on the interest rate collapse he has been (correctly) predicting ever since he first observed Japan's great bubble bust of the 1980s and which resulted in both NIRP and QE, and which he (correctly) expected would spread across the rest of the world, leading to a "Japanification" of every major bond market.
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WNU Editor: In Denmark you can now have a negative mortgage rate .... A Danish bank is offering mortgages with negative interest rates — why you shouldn’t wish for that to happen in the U.S. (Market Watch). I do not know how long such a rate is sustainable, but that has become a trend line that most countries around the world are pursuing.
4 comments:
In Sunmary:
Indeed, as Panigirtzoglou adds, "the fact that the 3m10y or 2y10y UST spreads have inverted is less of a reflection of US recession risks and more of a reflection of the desperation for yield by foreign investors flocking into USD denominated bonds as bond yields turned more negative in Europe and Japan."
Makes me wonder if the US is purposely running up a debt to drive foreign rates down! Interesting idea.
"Summary"
First European (Pan-European) negative interest rate was June 2014. This is during Obama's admin. It is not his fault although you could reasonably argue that it is.
The Swiss were the 1st to have a negative interest rate from 1972 to 1978. I understand somewhat why they did it. They were surrounded by idiots and the USSR & CCP were not holding up their end of the bargain.
https://www.bloomberg.com/quicktake/negative-interest-rates
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