{"id":7358,"date":"2015-04-17T06:02:08","date_gmt":"2015-04-17T11:02:08","guid":{"rendered":"http:\/\/olduvai.ca\/?p=7358"},"modified":"2015-04-17T06:02:08","modified_gmt":"2015-04-17T11:02:08","slug":"is-mario-draghi-stupid-crooked-or-what","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=7358","title":{"rendered":"Is Mario Draghi Stupid, Crooked Or What?"},"content":{"rendered":"<h3 class=\"entry-title\"><a href=\"http:\/\/davidstockmanscontracorner.com\/is-mario-draghi-stupid-crooked-or-what\/\" target=\"_blank\">Is Mario Draghi Stupid, Crooked Or What?<\/a><\/h3>\n<p>Europe is surely at the\u00a0top of the heap among\u00a0today\u2019s\u00a0raging\u00a0 financial market lunacy. It seems that Ireland has now broken into the negative interest rate club, investment grade multinationals are flocking to issue\u00a01% debt\u00a0on the euro-bond markets and, if yield is your thing,\u00a0you can get all of\u00a03.72% on\u00a0the Merrill Lynch euro junk bond index.<\/p>\n<p>That\u2019s right. You can stick your head in a financial meat grinder and what you get for the\u00a0hazard is essentially\u00a0pocket change\u00a0after inflation and taxes.<\/p>\n<p>Remember, the average maturity here is in the range of 7-8 years.\u00a0During the\u00a0last\u00a0ten years\u00a0europe\u2019s CPI averaged 2.0%\u00a0and even\u00a0during\u00a0the last\u00a0three deflationary\u00a0years the CPI\u00a0ex-energy averaged 1.2%. So unless you think oil prices are going down forever or that the money printers of the world have abolished inflation once and for all, the\u00a0real after-tax return on euro junk\u00a0has now been reduced\u00a0to something less than a whole number. Has the reckless stretch for \u201cyield\u201d come down to this?<\/p>\n<p>Well, no it hasn\u2019t. Yield is apparently\u00a0for suckers and retired school marms.<\/p>\n<p><em><strong>This is all about capital gains and playing momo games in the bond markets.\u00a0<\/strong><\/em>It\u2019s why euro junk debt\u2014-along with every other find of sovereign and investment grade debt\u2014-is soaring. In a word, bond prices are going up because bond prices are going up. It\u2019s an utterly irrational speculative mania that would do the Dutch tulip bulb punters proud.<\/p>\n<p>&nbsp;<\/p>\n<p>&#8230;click on the above link to read the rest of the article&#8230;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Is Mario Draghi Stupid, Crooked Or What? Europe is surely at the\u00a0top of the heap among\u00a0today\u2019s\u00a0raging\u00a0 financial market lunacy. It seems that Ireland has now broken into the negative interest rate club, investment grade multinationals are flocking to issue\u00a01% debt\u00a0on the euro-bond markets and, if yield is your thing,\u00a0you can get all of\u00a03.72% on\u00a0the Merrill [&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":[4791,172,233,279,281,282,284,426,1044],"class_list":["post-7358","post","type-post","status-publish","format-standard","hentry","category-economics","tag-bond-markets","tag-cpi","tag-ecb","tag-eu","tag-europe","tag-european-central-bank","tag-european-union","tag-inflation","tag-mario-draghi"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/7358","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=7358"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/7358\/revisions"}],"predecessor-version":[{"id":7359,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/7358\/revisions\/7359"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=7358"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=7358"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=7358"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}