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Man overboard!!
Follow Ups:
They can call it whatever they want, but we already have what is essentially negative rates, accruing to the benefit of the banks. As an example, I have a business account which I maintain solely for the purpose of depositing checks made out to the business name. Since the bank charges $17 per month for the account, and pays something less than 0.1 % interest, if I simply leave the account alone, it will eventually drop to zero, rather than grow.
Have a lovely day.
:)
...or mine or that of any individual. It (they?) wants to discourage the big institutions from parking money in relatively safe govt stuff and encourage investment in the risky economy. I'm no economist but I think it's going to take more than thinly veiled threats to change institutional investing strategies.
Edits: 02/02/16
:)
No surprise- the big banks get richer, while, consumers get poorer.
And it's only a test :(
Although a bit alarming as a headline, the article emphasizes at multiple points that the whole thing is a test scenario and NOT a prediction. Also, other countries/central banks have played with this already without economic disaster.
nt
Isn't the event itself a result of looming economic disaster?
...recall (from the article) that at least one notably reliable central bank has implemented a neg rate in the recent past w/o disaster...you didn't even notice it. Japan's doin it now and their system is still present. Also, as I read the article and other sources, neg rates would apply to just a very limited number of lending instruments. Glass half full.
"Japan's doin it now and their system is still present."
Japan's economy is on life support and has been for the past 25 years. The "Lost Decade" lapsed into "The Lost 20 years." Moreover, Japan nearly suffered another recession last year. And the four years prior to that were abysmal. Japan's annual GDP does well to stay above 1 percent. That's hardly a model to emulate.
https://en.wikipedia.org/wiki/Lost_Decade_(Japan)
•PLANNED MARCH SALE OF 10-YEAR JAPANESE GOVERNMENT BONDS THROUGH BANKS TO BE CANCELED AMID EXPECTED BELOW-ZERO YIELDS - NIKKEI
•JAPAN'S MINISTRY OF FINANCE IS EXPECTED TO ANNOUNCE WEDNESDAY THE FIRST-EVER DECISION TO CALL OFF SALES OF 10-YEAR JGBS- NIKKEI
Here is the full Nikkei report on this absolute stunner of a development:
The planned March sale of 10-year Japanese government bonds through banks to retail investors, municipalities and others will be canceled amid expected below-zero yields following the Bank of Japan's recent move to adopt negative interest rates.
There were other countries and central banks mentioned but you seem to want to stick with worst case example. When the outlook is half empty there isn't much to look forward to.
if you want to think any thing other that Japan where this has started, is just ok... feel free. I tend to believe that shit rolls downhill.
Edits: 02/02/16
...for proof see your cat of the day posts.
Edits: 02/02/16
I learned how from the best in the biz.
I never realized searching out, copying and reposting COTD pics was such a skill intensive activity that there would be a biz set up to teach it.
free lance, modeled after the free range bison we eat around here. Searching out is really simple...one click.. a C&P and a P and we are done. The cat needs help as she cannot use a mouse without insanity kicking in.
If cat pix bother you, I do not know what to tell ya.
I like them.
...but I'm clearly in the minority around here.
aa
"Once this was all Black Plasma and Imagination" -Michael McClure
(nt)
of codgers....geezers....whatever!
Should it make good on its slated intention of raising interest rates four times this year we will slide into recession...again.Look for Yellen to flub her statement at next month's meeting, at which point chaos will ensue. Instead of raising rates multiple time this year, a more likely scenario is that the Fed will slam on the brakes, reverse course, take back the last rate hike, and begin another round of QE. IIRC, Peter Schiff and others predicted another round of QE (for 2016) six months ago.
The markets are telling Yellen that her timing was dreadful in deciding to raise rates. That's the last thing this anemic economy needed. Inflation is nowhere in sight and the yield on the 10 year note is plummeting. Real gross domestic product rose a paltry 0.7 percent in the 4th quarter of 2015. That figure will be revised later this month and many are predicting it will be revised downward. That's not indicative of a robust economy. Two percent growth has become the new normal and our economy is struggling to deliver that.
Moreover, despite all the bluster from Republicans and Democrats, nothing has changed insofar as Wall Street is concerned. Too big to fail is still too big to fail.
Edit: http://finance.yahoo.com/echarts?s=%5ETNX+Interactive#{"range":"1mo","allowChartStacking":true}
Edits: 02/02/16
...who know oil prices would drop below $30 and China would devalue the Yuen?Do you blame the Fed for that?
Edits: 02/02/16
"Markets | Wed Dec 16, 2015 3:10pm EST, U.S. crude futures settled down nearly 5 percent, or $1.83, at $35.52 a barrel, not far from the $32.40 hit during the financial crisis in 2008."
Moreover, at that point oil had already plummeted from its January 2015 high of $53. Yeah, I blame the Fed. Who do you blame? Bush?
"who know (sic) oil prices would drop below $30 and China would devalue the Yuen?"
Pssst, China devalued four months **prior** to Yellen raising rates.
http://www.pbs.org/newshour/making-sense/whats-happening-chinas-currency/
...first time in 12 years oil drops below $30 a barrel.
...because many of the top analysts in the business had predicted it.
In September of last year Goldman Sachs warned that $20 oil was a distinct possibility.
http://www.bloomberg.com/news/articles/2015-09-11/-20-oil-possible-for-goldman-as-forecasts-cut-on-growing-glut
Citigroup warned us of $20 oil **last** February.
http://247wallst.com/energy-economy/2015/02/15/could-oil-still-drop-to-20/
Moreover, dozens of analysts were on the financial channels warning of sub $30 oil throughout 2015. (You don't stay abreast of these things, do you?)
Sub $30 was not a surprise. Yellen suspected it was coming and still raised rates. Big mistake.
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@!
The Mind has No Firewall~ U.S. Army War College.
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