In Denmark You Are Now Paid To Take Out A Mortgage
bonds trading with negative yields, many were wondering when any of this perverted bond generosity will spill over to other debtors, not just Europe’s insolvent governments (who can only print negative interest debt because of the ECB’s backstop that it will buy any piece of garbage for sale in the doomed monetary union). In fact just earlier today we, rhetorically, asked a logical – in as much as nothing is logical in the new normal – question:
Who will offer the first negative rate mortgage
Little did we know that just minutes after our tweet, we would learn that at least one place is already paying homeowners to take out a mortgage. That’s right – the negative rate mortgage is now a reality.Thanks of Mario Draghi’s generosity with “other generations’ slavery”, and following 3 consecutive rate cuts by the Danish Central Bank
, a local bank – Nordea Credit – is now offering a mortgage with a negative interest rate! This means, according to DR.dk, that Nordea have had to pay instead of charging interest to to a handful of customers, says housing economist at Nordea Kredit, Lise Nytoft Bergmann for Finance.
And just like that, first in Denmark, and soon everywhere else in Europe, a situation has now emerged where savers who pay the bank to hold their cash courtesy of negative deposit rates, are directly funding the negative interest rate paid to those who wish to take out debt. In fact, the more debt
That all this will end in blood and a lot of tears is clear to anyone but the most tenured economists, however in the meantime, we can’t wait to take advantage of the humorous opportunities that Europe (and soon Japan and the US) will provide in the coming months, as spending profligacy will be directly subsidized and funded by the insolvent monetary system, while responsible behavior and well-paid labor will be punished, first with negative rates and soon thereafter: with threats, both theoretical and practical, of bodily harm.
As Switzerland Moves to Negative Rates, Finance Enters Uncharted Territory
Having abandoned its policy of capping the Swiss franc’s value versus the euros, the Swiss National Bank needs a Plan B for blocking the destructive, deflationary forces emanating from Switzerland’s struggling neighbors in the eurozone.
Most likely, it will consist of allowing Swiss banks to charge negative interest rates
to foreign depositors in a bid to deter unwanted “hot money” inflows into the franc. It’s an extreme measure that opens up uncharted territory and provides a test case for the limits of all central banks’ ability to spur economic growth in a post-financial crisis era of stagnating economies and currency imbalances.
The SNB has not satisfactorily explained why it abruptly stopped intervening to keep the euro at a floor of 1.20 Swiss francs. But whether it was a response to political concerns over a ballooning portfolio of ever-depreciating euros or because of distortions in the domestic economy, it’s hard not to imagine that some SNB policy committee members
are having pangs of regret. The Swiss franc’s dramatic 20% surge after the announcement has immediately created the very problem that the euro floor was supposed to avoid, driving down the price of imported goods and making exporters’ products more expensive overseas.
5 June 2014 – ECB introduces a negative deposit facility interest rate
- Deposit facility interest rate cut effective as of 11 June 2014
- Negative rate to apply also to average reserve holdings in excess of the minimum reserve requirements and other deposits held with the Eurosystem
When deciding to lower the key ECB interest rates at its meeting today, the Governing Council of the ECB took the decision to cut the interest rate
on the deposit facility to -0.10%.http://www.ecb.europa.eu/press/pr/date/2014/html/pr140605_3.en.html
Why quantitative easing and negative interest rates will fail
This is going to be a short thought piece. But the takeaway should be that the convergence to zero will continue unabated as the threat of inflation is muted given the combination of excess capacity, high private debt and unfavourable demographics. The subject is monetary policy.
Last week, when Mario Draghi spoke to the press after the ECB’s decision to conduct large scale asset purchases
of euro area government bonds, his language was clear and telling. He indicated at that time that he believed ECB policy, while not wholly effective in lieu of fiscal policy, had two ways in which to work.
Read more at http://investmentwatchblog.com/how-screwed-up-is-the-world-when-savers-have-to-pay-banks-to-keep-their-deposits-and-those-same-banks-turn-around-and-pay-debtors-on-their-mortgages-this-will-end-badly/#MhhR4wVOpqOXmdZ5.99