Why dont they dig a hole instead?

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15/08/19

04:31

Post #: 39997022
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Originally posted by Crom Valen: ↑

https://www.washingtonpost.com/busi...b7b9ca-bada-11e9-a091-6a96e67d9cce_story.html

Banks are paying people to borrow money. That’s alarming news for the global economy.

By David J. Lynch
August 14 at 9:00 AM

For Americans accustomed to paying 4 or 5 percent mortgage rates, let alone the double-digit figures consumers endured in the early 1980s, the new loan from Denmark’s Jyske Bank might seem inconceivable.

The Danish lender last week started offering home buyers 10-year mortgages at an interest rate of -0.5 percent. That means borrowers over a decade will pay back a little less than the amount borrowed, not including one-time fees.

This highly unusual condition may be good for Danish home buyers, but economists say it’s an alarming sign for the global economy. Several major governments and more than 1,000 big companies in Europe are now able to effectively borrow from global financial markets at a negative interest rate. For Jyske Bank, that means it can then turn around and lend money at a subzero interest rate, too.

The amount of this type of debt, issued as government or corporate bonds, has doubled since December and now totals $15 trillion.

The sudden increase suggests that a fast-rising share of investors are so nervous about the future they’re willing to actually lose a little money by lending it to a borrower that is almost certain to pay it back, rather than risk betting on something that could go bust. In a healthy economy, investors would put their money to work in profit-making ventures such as factories or office buildings.

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Why dont they dig a hole instead?
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0 Great analysis

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