{"id":18724,"date":"2016-03-10T20:32:09","date_gmt":"2016-03-11T01:32:09","guid":{"rendered":"http:\/\/olduvai.ca\/?p=18724"},"modified":"2016-03-10T20:35:02","modified_gmt":"2016-03-11T01:35:02","slug":"german-bank-that-almost-failed-now-being-paid-to-borrow-money","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=18724","title":{"rendered":"German bank that almost failed now being paid to borrow money"},"content":{"rendered":"
\"berlinhyp-negative-interest-rates\"<\/div>\n

German bank that almost failed now being paid to borrow money<\/a><\/h3>\n
The 12.5 hours spent crossing the Pacific on Qantas flight 27 feels like going through a wormhole.<\/div>\n
\n

The flight departs Sydney, Australia at 12:50pm and arrives to Santiago, Chile the same day at 11:20am. In other words, the plane lands 90 minutes before it departs.<\/p>\n

When I landed yesterday, the captain came on the P.A. and said, \u201cLadies and Gentlemen, I have good news; if you enjoyed Wednesday March 9th, it\u2019s still Wednesday March 9th!\u201d<\/p>\n

It really does feel like going back in time.<\/p>\n

This feeling was only reinforced when I whipped out my phone and saw that German bank Berlin Hyp had just issued 500 million euros worth of debt\u2026 at negative interest.<\/p>\n

I wondered if I really did go through a time warp, because this is exactly the same madness we saw ten years ago during the housing bubble and the subsequent financial crisis.<\/p>\n

To explain the deal, Berlin Hyp issued bonds that yield negative 0.162% and pay no coupon.<\/p>\n

This means that if you buy \u20ac1,000 worth of bonds, you will receive \u20ac998.38 when they mature in three years.<\/p>\n

Granted this is a fairly small loss, but it is still a loss. And a guaranteed one.<\/p>\n

This is supposed to be an investment\u2026 an investment, by-the-way, with a bank that almost went under in the last financial crisis.<\/p>\n

It took a \u20ac500 billion bail-out by the German government to save its banking system.<\/p>\n

Eight years later, people are buying this \u201cinvestment\u201d that guarantees that they will lose money.<\/p>\n

The bank is now effectively being paid to borrow money.<\/p>\n

We saw the consequences of this back in 2008.<\/p>\n

During the housing bubble, banking lending standards got completely out of control to the point that they were paying people to borrow money.<\/p>\n

At the height of the housing bubble, you could not only get a no-money down loan, but many banks would actually finance 105% of the home\u2019s purchase price.<\/p>\n

…click on the above link to read the rest of the article…<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

German bank that almost failed now being paid to borrow money The 12.5 hours spent crossing the Pacific on Qantas flight 27 feels like going through a wormhole. The flight departs Sydney, Australia at 12:50pm and arrives to Santiago, Chile the same day at 11:20am. In other words, the plane lands 90 minutes before it […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[1622,12870,88,4365,195,359,536,558,7312],"class_list":["post-18724","post","type-post","status-publish","format-standard","hentry","category-economics","tag-bail-out","tag-berlin-hyp","tag-bonds","tag-borrowing","tag-debt","tag-germany","tag-money","tag-negative-interest-rates","tag-simon-black"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/18724","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=18724"}],"version-history":[{"count":2,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/18724\/revisions"}],"predecessor-version":[{"id":18726,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/18724\/revisions\/18726"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=18724"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=18724"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=18724"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}