According to last night’s headline, Negative interest rates put world on course for biggest mass default in history. Its sub-line continues:
More than two trillion-worth of eurozone government bonds trade on a negative interest rate. It’s a bubble that’s bound to end badly.
Jeremy Warner’s article opens as follows,
‘Here’s an astonishing statistic; more than 30% of all government debt in the eurozone – around €2 trillion of securities in total – is trading on a negative interest rate.
‘With the advent of European Central Bank quantitative easing, what began four months ago when 10-year Swiss yields turned negative for the first time has snowballed into a veritable avalanche of negative rates across European government bond markets. In the hunt for apparently “safe assets”, investors have thrown caution to the wind, and collectively determined to pay governments for the privilege of lending to them…’ (continue reading)
His closing remark is most noteworthy, with emphasis added:
‘Both Keynsian and monetary economics seem to be in some kind of end game. What comes next is anyone’s guess.’
[Image by courtesy of Koinonia House.]