{"id":20550,"date":"2016-05-14T08:01:30","date_gmt":"2016-05-14T13:01:30","guid":{"rendered":"http:\/\/olduvai.ca\/?p=20550"},"modified":"2016-05-14T08:01:30","modified_gmt":"2016-05-14T13:01:30","slug":"negative-interest-rate-absurdity-is-another-rabbit-out-of-the-hat","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=20550","title":{"rendered":"Negative-Interest-Rate absurdity is another \u201crabbit out of the hat.\u201d"},"content":{"rendered":"<h3><a href=\"http:\/\/wolfstreet.com\/2016\/05\/14\/ecb-admits-were-the-magic-people-in-a-clown-show\/\"><strong>Negative-Interest-Rate absurdity is another \u201crabbit out of the hat.\u201d<\/strong><\/a><\/h3>\n<p>For the second time this year, Spain\u2019s caretaker government just managed to sell 50-year bonds in a \u20ac3 billion ($3.4 billion) deal. Despite maturing in the year 2066, when many of us won\u2019t even be alive and the duty to pay back the debt (assuming it still exists) will have been handed down to our children\u2019s children, the bonds will pay an annual interest rate of just 3.45%. Not only that, but the issuance was over-subscribed by \u20ac7 billion.<\/p>\n<p>This is a mind-blowing turn-up for a country that just four years ago needed an unprecedented bailout from the Troika to save its saving banks and avert total financial collapse. It is also a resounding testament to the power of central bank policy to turn economic reality on its head.<\/p>\n<p>Less than three years ago, when Draghi had only just begun doing \u201cwhatever it takes\u201d to save the single currency, the Spanish government had to pay a 5% yield to get investors to buy their one-year bonds. Now investors are willing to take 50-year bonds off the government\u2019s hands in exchange for an annual interest rate of 3.45%, despite all the attendant risks involved.<\/p>\n<p>While the Spanish economy has\u00a0improved somewhat since then, that is largely due to the fact that the government has sacrificed long-term stability for short-term growth, going so far as to\u00a0<a href=\"http:\/\/www.elmundo.es\/economia\/2016\/01\/30\/56abc01922601d48618b464a.html\">plunder half of the nation\u2019s social security reserve fund<\/a>\u00a0in order to keep spending at its current levels. The remaining half is\u00a0<a href=\"http:\/\/economia.elpais.com\/economia\/2015\/03\/23\/actualidad\/1427126450_809003.html\">exclusively invested<\/a>\u00a0in Spanish bonds. Even Brussels now admits that Spain\u2019s public debt is out of control.<\/p>\n<p>To make matters worse, Spain doesn\u2019t have an elected government to speak of and could struggle to form one even after the next round of elections, on June 26.<\/p>\n<p>&#8230;click on the above link to read the rest of the article&#8230;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Negative-Interest-Rate absurdity is another \u201crabbit out of the hat.\u201d For the second time this year, Spain\u2019s caretaker government just managed to sell 50-year bonds in a \u20ac3 billion ($3.4 billion) deal. Despite maturing in the year 2066, when many of us won\u2019t even be alive and the duty to pay back the debt (assuming it [&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":[88,195,5660,233,282,418,434,1044,558,1389,743,2868,4255],"class_list":["post-20550","post","type-post","status-publish","format-standard","hentry","category-economics","tag-bonds","tag-debt","tag-don-quijones","tag-ecb","tag-european-central-bank","tag-imf","tag-international-monetary-fund","tag-mario-draghi","tag-negative-interest-rates","tag-nirp","tag-spain","tag-troika","tag-wolfstreet"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/20550","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=20550"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/20550\/revisions"}],"predecessor-version":[{"id":20551,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/20550\/revisions\/20551"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=20550"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=20550"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=20550"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}