Anti-Value: Europe’s Rape of Savers
This is an excerpt, the full article can be accessed via the link.
According to Bloomberg, $1.9 trillion worth of Euro-area bonds are trading at negative yields (“Euro-Area Negative-Yield Bond Universe Expands to $1.9 Trillion,” http://bloomberg.com). Purchasers of negative-yield bonds receive less money that what they put up; they are paying the issuer for the privilege of lending to it. Like some of the more bizarre aspects of quantum physics, negative interest rates will probably lead to not intuitively obvious, perhaps mind-bending, economic effects. On an easier to grasp level, they also represent yet another monstrous undermining of the ethical foundation of capitalism, and may come to symbolize the inflection point of Europe’s descent into an unrecognizable, dystopian hell of its own making.
According to Bloomberg, $1.9 trillion worth of Euro-area bonds are trading at negative yields (“Euro-Area Negative-Yield Bond Universe Expands to $1.9 Trillion,” http://bloomberg.com). Purchasers of negative-yield bonds receive less money that what they put up; they are paying the issuer for the privilege of lending to it. Like some of the more bizarre aspects of quantum physics, negative interest rates will probably lead to not intuitively obvious, perhaps mind-bending, economic effects. On an easier to grasp level, they also represent yet another monstrous undermining of the ethical foundation of capitalism, and may come to symbolize the inflection point of Europe’s descent into an unrecognizable, dystopian hell of its own making.
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- 4Posted by richrobinson 9 years, 10 months agoLooks like the Euro Zone in following our lead. I would add that those who save in the US are getting crushed just as bad.| Mark as read | Best of... | Permalink
- 2Posted by $ jbrenner 9 years, 10 months agoI thought about this when I didn't receive a 1099 statement from Bank of America this year.| Mark as read | Best of... | Permalink
- 2Posted by CircuitGuy 9 years, 10 months agoWhy doesn't the market, despite central bank manipulation, value these bonds lower such that they have a positive interest rate that prices in expected inflation, rate risk, and credit risk? It is simply that the market has confidence the central bank will buy back the bond at the high price (negative yield), and market participants are just using the bonds has a highly liquid place to store value with the negative rate being the fee for the "security guard" and liquidity?| Mark as read | Best of... | Permalink
- 2Posted by straightlinelogic 9 years, 10 months agoI think the you hit the nail on the head.| Mark as read | Parent | Best of... | Permalink
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