Hope y'all are watching this
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Japan Sells 10Y Bond At Negative Yield For First Time Ever
Submitted by Tyler Durden on 02/29/2016 23:02 -0500
As we detailed earlier, for the first time in the history of crazy, Japan 'sold' 10-year government bonds today at a negative yield. Translated into English, this means"investors" agreed to pay the Japanese government 2.4bps per year for the privilege of lending it money for 10 years...
Down from a 7.8bps positive yield at the last auction, the 10Y auction's average yield was -2.4bps...
Peter Pan(ic) continues as the rest of the JGB curve collapses to fresh record low yields and await the reaction in Japanese bank stocks...
Charts: Bloomberg
Submitted by Tyler Durden on 02/29/2016 23:02 -0500
As we detailed earlier, for the first time in the history of crazy, Japan 'sold' 10-year government bonds today at a negative yield. Translated into English, this means"investors" agreed to pay the Japanese government 2.4bps per year for the privilege of lending it money for 10 years...
Down from a 7.8bps positive yield at the last auction, the 10Y auction's average yield was -2.4bps...
Peter Pan(ic) continues as the rest of the JGB curve collapses to fresh record low yields and await the reaction in Japanese bank stocks...
Charts: Bloomberg
That's part of it. If you look at the consumer fatigue that has set in around the world you realize that inflation goals are not going to be met. I remember seeing a chart of imports/exports by country a year or so ago. Funny thing was, they didn't balance. Exports were higher than imports. Impossible, unless some of the countries are exporting stuff to Martians. There is no recovery from 2008. The problems were papered over.
Risk avoidance is also one major reason. If you can't trust your money with the gubmint, who can you trust it with? I'd rather lose a little bit of my principal than a whole lot of it, is how their thinking goes. It's supposed to balance out with investors taking some risk in high yield bonds, but lately many are starting to see that the debt of those companies/sovereign countries will never be repaid. So that means vicious haircuts which investors hate.
For now, Japan is stable, so investors jump in. US Treasuries are selling well lately, too. Not much longer though.
Truly Grits
Active Member
IMHO, anyone needing more than the most basic EMT skills, during a SHTF scenario, must be left behind. That may sound callous, but it is a reality. Welcome to command school.
ROGER4314
Been Called "Flash" Since I Was A Kid!
Been following this control of cash transactions on the Right Wing shortwave broadcasts. The most disturbing facets about cash control are two:
Cashless transactions make it super easy for our rulers to track what we do, when we do it and how much we spend on our activities. They know when and where we travel and how much ammo or other commodities we have.
The worst of this ability to track us, is that the Rulers can shut off our ability to buy ANYTHING! They can punish, harass, disrupt and isolate anyone who speaks against the Rulers or for any other reason................ or on a whim. They can shut off our ability to buy food for our families or food for my dog, Jake with the snap of their fingers! There is no way to appeal. They just shut your life off!
How's that grab ya?
There are some other interesting changes in the banking industry. Ever heard of a "BAIL IN?"
The banks continue to muck up their accounts until they once again go bust. Bail Outs are not going to happen again, so they bail IN. The banks seize your accounts and use those funds to keep the bank afloat. You line up to retrieve your funds just like any other bank creditor. Don't laugh.....it happened in Europe and with Global government and economics forming on the horizon, it stands to reason that it will show up here.
How's THAT grab ya?
Flash
Cashless transactions make it super easy for our rulers to track what we do, when we do it and how much we spend on our activities. They know when and where we travel and how much ammo or other commodities we have.
The worst of this ability to track us, is that the Rulers can shut off our ability to buy ANYTHING! They can punish, harass, disrupt and isolate anyone who speaks against the Rulers or for any other reason................ or on a whim. They can shut off our ability to buy food for our families or food for my dog, Jake with the snap of their fingers! There is no way to appeal. They just shut your life off!
How's that grab ya?
There are some other interesting changes in the banking industry. Ever heard of a "BAIL IN?"
The banks continue to muck up their accounts until they once again go bust. Bail Outs are not going to happen again, so they bail IN. The banks seize your accounts and use those funds to keep the bank afloat. You line up to retrieve your funds just like any other bank creditor. Don't laugh.....it happened in Europe and with Global government and economics forming on the horizon, it stands to reason that it will show up here.
How's THAT grab ya?
Flash
Last edited:
Thanks for this contribution to the thread. I hope and pray everybody really takes the time to consider the implications of what you've written. The FDIC and the Bank of England have already set up plans for a bail-in. One of the leaders of the European Union slipped when he announced that the bail-in Cyprus was the template to keep banks alive in the future. (Cyprus was where two banks that had invested heavily in Greece failed and were "saved" by robbing from the accounts of the depositors. Imagine if you were a small business which had to make payroll on Monday. Too bad. The banks were closed on Friday night and a hefty percent of your cash was taken.)
When this happens in the US, you can be sure that the president will come on TEEVEE to explain, sympathetically, that it's being done for the children.
The way to prepare for the loss of freedom by the destruction of the dollar and for the elimination of cash is to transfer your wealth into physical items, well in advance. (Like now.)
Yep, two government programs where the rules can be changed at any time.
[h=2]http://www.voxeu.org/article/negative-rates-negative-reactions
2) Response to a possible move to negative savings rates[/h]The survey then asked how they might react if rates went negative. Although there is room to doubt if all respondents might actually react as they say if this became a reality, the strength of feeling revealed by the survey is striking. Only 23% of the total sample said that they would do nothing in response (see Figure 3). This compares with 69% of the sample who said that they have not changed the way that they save in response to low interest rates so far. The survey suggests that crossing the zero bound is a major psychological shock to consumers.
The negative reaction to the possibility of negative interest rates is an interesting application of the behavioural economics concept of ‘loss regret’. Feelings evoked by seeing interest rates cut from, say, zero to -0.5% are stronger than those from 1% to 0.5%. The difference is that the former is perceived as an outright loss, while the latter merely as a smaller gain.
There are also political and cultural dimension. Many will see negative rates as an unfair ‘tax’ on small savers, particularly in cultures that celebrate saving as a virtue. In this respect, a significant minority of 11% would save more (Figure 3)
Figure 3. Nearly 80% of savers would respond to negative interest rates
Notes: Weighted by country, age, gender and region, significance tested on 95% level. As respondents were allowed to choose more than one answer, the country total may exceed 100%.
Source: ING International Survey
Figure 4 shows only those who plan to move at least some of their money out of savings accounts (some 78% of the respondents). Some 10% would spend more, almost exactly matching the proportion of those who intend to save more. The remainder are almost evenly split between those who would switch into alternative assets or simply put their savings ‘in a safe place’.
In other words, around 40% who would respond to negative rates (or 33% of the total sample) said that they would hoard cash. In the Netherlands, France and Belgium, this proportion rises to more than 50%.
Figure 4. Switching into investments and hoarding cash are the most popular options
Note: As respondents were allowed to choose more than one answer, the country total may exceed 100%
Source: ING International Survey
2) Response to a possible move to negative savings rates[/h]The survey then asked how they might react if rates went negative. Although there is room to doubt if all respondents might actually react as they say if this became a reality, the strength of feeling revealed by the survey is striking. Only 23% of the total sample said that they would do nothing in response (see Figure 3). This compares with 69% of the sample who said that they have not changed the way that they save in response to low interest rates so far. The survey suggests that crossing the zero bound is a major psychological shock to consumers.
The negative reaction to the possibility of negative interest rates is an interesting application of the behavioural economics concept of ‘loss regret’. Feelings evoked by seeing interest rates cut from, say, zero to -0.5% are stronger than those from 1% to 0.5%. The difference is that the former is perceived as an outright loss, while the latter merely as a smaller gain.
There are also political and cultural dimension. Many will see negative rates as an unfair ‘tax’ on small savers, particularly in cultures that celebrate saving as a virtue. In this respect, a significant minority of 11% would save more (Figure 3)
Figure 3. Nearly 80% of savers would respond to negative interest rates
Notes: Weighted by country, age, gender and region, significance tested on 95% level. As respondents were allowed to choose more than one answer, the country total may exceed 100%.
Source: ING International Survey
Figure 4 shows only those who plan to move at least some of their money out of savings accounts (some 78% of the respondents). Some 10% would spend more, almost exactly matching the proportion of those who intend to save more. The remainder are almost evenly split between those who would switch into alternative assets or simply put their savings ‘in a safe place’.
In other words, around 40% who would respond to negative rates (or 33% of the total sample) said that they would hoard cash. In the Netherlands, France and Belgium, this proportion rises to more than 50%.
Figure 4. Switching into investments and hoarding cash are the most popular options
Note: As respondents were allowed to choose more than one answer, the country total may exceed 100%
Source: ING International Survey
Interesting story: Someone asked Einstein to explain something wonderfully mathematical that a layman could understand. He replied with a short explanation of "compound interest".
How does that work in a NIRP world ? Not very well I think.
How does that work in a NIRP world ? Not very well I think.
That's a great point.
Compound interest...
Those who understand it, earn it. Those who don't, pay it. In a normal world anyway.
It’s a revolution: German banks told to start hoarding cash Simon Black
March 4, 2016
Just stunning.
German newspaper Der Spiegel reported yesterday that the Bavarian Banking Association has recommended that its member banks start stockpiling PHYSICAL CASH.
Europe, of course, has been battling with negative interest rates for quite some time.
What this means is that commercial banks are being charged interest for holding wholesale deposits at the European Central Bank. In order to generate artificial economic growth, the ECB wants banks to make as many loans as possible, no matter how stupid or idiotic. They believe that economic growth is simply a function of loans. The more money that’s loaned out, the more the economy will grow.
This is the sort of theory that works really well in an economic textbook. But it doesn’t work so well in a history textbook.
Cheap money encourages risky behavior. It gives banks an incentive to give ‘no money down’ loans to homeless people with no employment history. It creates bubbles (like the housing bubble from 10 years ago), and ultimately, financial panics (like the banking crisis from 8 years ago).
Banks are supposed to be conservative, responsible managers of other people’s money. When central bank policies penalize that practice, bad things tend to happen. Traditionally when a commercial bank in Europe wants to play it safe with its customers’ funds, they would hold excess reserves on deposit with the European Central Bank.
In the past, they might even have been paid interest on those excess reserves as an extra incentive to be conservative. Now it’s the exact opposite. If a bank holds excess reserves on deposit at the ECB to ensure that they have a greater margin of safety, they must now pay 0.3% to the ECB. That’s what it means to have negative interest rates. And for the bank, this eats into their profits, especially when they have tens of billions in excess reserves.
Talk about being between a rock and a hard place. On one hand, banks stand to lose a ton of money in negative interest. On the other hand, they put their customers’ deposits at risk if they don’t hold extra reserves.
Well, the Bavarian Banking Association has had enough of this financial dictatorship. Their new recommendation is for all member banks to ditch the ECB and instead start keeping their excess reserves in physical cash, stored in their own bank vaults.
This is officially an all-out revolution of the financial system where banks are now actively rebelling against the central bank. (What’s even more amazing is that this concept of traditional banking– holding physical cash in a bank vault– is now considered revolutionary and radical.)
There’s just one teensy tiny problem: there simply is not enough physical cash in the entire financial system to support even a tiny fraction of the demand. Total bank deposits exceed trillions of euros. Physical cash constitutes just a small percentage of that sum.
So if German banks do start hoarding physical currency, there won’t be any left in the financial system.
This will force the ECB to choose between two options:
1) Support this rebellion and authorize the issuance of more physical cash; or
2) Impose capital controls.
Given that just two weeks ago the President of the ECB spoke about the possibility of banning some higher denomination cash notes, it’s not hard to figure out what’s going to happen next.
March 4, 2016
Just stunning.
German newspaper Der Spiegel reported yesterday that the Bavarian Banking Association has recommended that its member banks start stockpiling PHYSICAL CASH.
Europe, of course, has been battling with negative interest rates for quite some time.
What this means is that commercial banks are being charged interest for holding wholesale deposits at the European Central Bank. In order to generate artificial economic growth, the ECB wants banks to make as many loans as possible, no matter how stupid or idiotic. They believe that economic growth is simply a function of loans. The more money that’s loaned out, the more the economy will grow.
This is the sort of theory that works really well in an economic textbook. But it doesn’t work so well in a history textbook.
Cheap money encourages risky behavior. It gives banks an incentive to give ‘no money down’ loans to homeless people with no employment history. It creates bubbles (like the housing bubble from 10 years ago), and ultimately, financial panics (like the banking crisis from 8 years ago).
Banks are supposed to be conservative, responsible managers of other people’s money. When central bank policies penalize that practice, bad things tend to happen. Traditionally when a commercial bank in Europe wants to play it safe with its customers’ funds, they would hold excess reserves on deposit with the European Central Bank.
In the past, they might even have been paid interest on those excess reserves as an extra incentive to be conservative. Now it’s the exact opposite. If a bank holds excess reserves on deposit at the ECB to ensure that they have a greater margin of safety, they must now pay 0.3% to the ECB. That’s what it means to have negative interest rates. And for the bank, this eats into their profits, especially when they have tens of billions in excess reserves.
Talk about being between a rock and a hard place. On one hand, banks stand to lose a ton of money in negative interest. On the other hand, they put their customers’ deposits at risk if they don’t hold extra reserves.
Well, the Bavarian Banking Association has had enough of this financial dictatorship. Their new recommendation is for all member banks to ditch the ECB and instead start keeping their excess reserves in physical cash, stored in their own bank vaults.
This is officially an all-out revolution of the financial system where banks are now actively rebelling against the central bank. (What’s even more amazing is that this concept of traditional banking– holding physical cash in a bank vault– is now considered revolutionary and radical.)
There’s just one teensy tiny problem: there simply is not enough physical cash in the entire financial system to support even a tiny fraction of the demand. Total bank deposits exceed trillions of euros. Physical cash constitutes just a small percentage of that sum.
So if German banks do start hoarding physical currency, there won’t be any left in the financial system.
This will force the ECB to choose between two options:
1) Support this rebellion and authorize the issuance of more physical cash; or
2) Impose capital controls.
Given that just two weeks ago the President of the ECB spoke about the possibility of banning some higher denomination cash notes, it’s not hard to figure out what’s going to happen next.
http://www.zerohedge.com/news/2016-03-05/sweden-begins-5-year-countdown-until-it-eliminates-all-cash
Sweden Begins 5 Year Countdown Until It Eliminates All Cash
Do you think it will really take that long?
Sweden Begins 5 Year Countdown Until It Eliminates All Cash
Do you think it will really take that long?
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