SLL WILL BE ON A BUSINESS TRIP FROM 3/2 TO 3/6 AND WILL BE UNABLE TO POST. POSTING WILL RESUME 3/7.
From Wolf Richter at wolfstreet.com:
“Derail an expansion and deepen a subsequent recession.”
When the yield of 10-year Japanese government bonds fell below zero, it marked a new milestone in the negative yield absurdity: it pushed the amount of global government debt sporting a negative return for investors to over $7 trillion.
Which means investors buying this government debt are willing to pay the government for the privilege even if that government is fiscally in worse shape than Greece! But “investors” is a funny word these days of central-bank craziness: the entity that buys every Japanese government bond that isn’t nailed down is the Bank of Japan.
The ECB too is still gobbling up government debt, as Bank of England Governor Mark Carney noted dryly in his speech on Friday at the G20 conference in Shanghai:
The largest four central banks bought assets worth $1.2 trillion in 2015, similar to the amounts purchased post-Lehman and during the 2013 euro-area crisis. Adjusting for lower government debt issuance, that leaves an unprecedented flow of net QE, with only $400 billion of additional government debt sold to the private sector, compared to $3 trillion in 2010.
And these QE-crazed central banks buy most of it negative yields.
Carney – who has never been shy about inflicting “unconventional monetary policies” on the economy and its denizens – went on to slam negative interest rates just when the chief negative-interest-rate perpetrators, let’s call them NIRPs, were hoping for a little love and solidarity.
He warned that the global economy, despite or because of years of QE, ZIRP, and NIRP, is dogged by a “weak global outlook” and “sluggishness of global demand”:
The global economy risks becoming trapped in a low growth, low inflation, low interest rate equilibrium. For the past seven years, growth has serially disappointed – sometimes spectacularly, as in the depths of the global financial and euro crises; more often than not grindingly as past debts weigh on activity
It is a reminder that demand stimulus on its own can do little to counteract longer-term forces of demographic change and productivity growth.
Then he defended “monetary stimulus” and the great things it has accomplished since the Financial Crisis. So the economic results are crummy. But hey, it’s the governments’ fault, he said: “Global growth has disappointed because the innovation and ambition of global monetary policy has not been matched by structural measures.”
To continue reading: “Valuations Will Fall Back”: Bank of England Gov. Carney Pooh-Poohs NIRP Miracle
