{"id":19883,"date":"2016-04-13T11:49:50","date_gmt":"2016-04-13T16:49:50","guid":{"rendered":"http:\/\/olduvai.ca\/?p=19883"},"modified":"2016-04-13T11:49:50","modified_gmt":"2016-04-13T16:49:50","slug":"peak-negative-interest-rate-absurdity-hilarity-ensues","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=19883","title":{"rendered":"Peak Negative-Interest-Rate Absurdity? Hilarity Ensues"},"content":{"rendered":"<header>\n<h3 class=\"entry-title\"><a href=\"http:\/\/wolfstreet.com\/2016\/04\/13\/negative-interest-rate-absurdity-nirp-reverse-yankees\/\">Peak Negative-Interest-Rate Absurdity? Hilarity Ensues<\/a><\/h3>\n<\/header>\n<div class=\"entry-content\">\n<p><strong>Among the goodies: \u201creverse Yankee\u201d landmines.<\/strong><\/p>\n<p>When a central bank like the ECB imposes negative interest rates along with QE on its bailiwick, funny things start to happen.<\/p>\n<p>Investors become so eager to get any kind of visible yield that they will do the craziest things. They\u2019re now chasing \u20ac3 billion of 50-year bonds that the French government\u00a0<a href=\"http:\/\/www.bloomberg.com\/news\/articles\/2016-04-12\/france-borrowing-for-50-years-to-tap-investors-tired-of-no-yield\" target=\"_blank\">placed today<\/a>. The yield? 1.916%.<\/p>\n<p>These 50-year bonds are\u00a0bought by institutional investors who, in normal times, would have been institutionalized.<\/p>\n<p>The impact of negative interest rates isn\u2019t limited to the bailiwick where they\u2019re imposed. These yield-desperate investors will go\u00a0<em>anywhere<\/em>\u00a0to get some yield. They\u2019re now scrambling to get their hands on Argentina\u2019s new dollar-denominated bonds: $15 billion spread over maturities of five, 10, and 30 years, expected to come to market next week.<\/p>\n<p>This is a country that has spent 75 of the last 190 years in default, including 2013-15, 2000-04, and 1980-92. The next default might be ten years down the road. Since Argentina cannot default on those bonds via devaluation of the peso, it will have to default on them in the classic Argentine way.<\/p>\n<p>But investors need the yield\u00a0<em>now<\/em>, and to heck with the risk of default. They\u2019re hoping they can dump these things \u2013 or at least move on to the next job \u2013 before the government pulls the plug.<\/p>\n<p>Yet\u00a0there are a few things that the noble combination of negative interest rates and QE has not been able to accomplish.<\/p>\n<p>Consumers, whether in the Eurozone, Japan, or other NIRP countries, are inexplicably leery of becoming even bigger debt slaves by borrowing to consume. And those who try it by running up their credit cards find that negative interest rates, or even low rates, haven\u2019t made it that far.<\/p>\n<p>&#8230;click on the above link to read the rest of the article&#8230;<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>Peak Negative-Interest-Rate Absurdity? Hilarity Ensues Among the goodies: \u201creverse Yankee\u201d landmines. When a central bank like the ECB imposes negative interest rates along with QE on its bailiwick, funny things start to happen. Investors become so eager to get any kind of visible yield that they will do the craziest things. They\u2019re now chasing \u20ac3 [&hellip;]<\/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":[195,200,233,282,534,558,661,662,4254,4255],"class_list":["post-19883","post","type-post","status-publish","format-standard","hentry","category-economics","tag-debt","tag-default","tag-ecb","tag-european-central-bank","tag-monetary-policy","tag-negative-interest-rates","tag-qe","tag-quantitative-easing","tag-wolf-richter","tag-wolfstreet"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/19883","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=19883"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/19883\/revisions"}],"predecessor-version":[{"id":19884,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/19883\/revisions\/19884"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=19883"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=19883"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=19883"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}