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The defense of the euro gave us negative interest rates

Fed chairman Alan Greenspan stood at the top of his reputation in the early 2000s. Legendary journalist Bob Woodward - who, along with Carl Bernstein, unveiled Watergate and forced President Nixon to resign - published his book Maestro: Greenspan's Fed And The American Boom.

In 2002, he was awarded the honorary Knight of the British Empire by Queen Elizabeth II for his "contribution to global economic stability".

Then came the financial crisis and the Lehman Brothers went bankrupt in 2008. The disaster was imminent and there is now as much consensus as it can among economists, that Greenspan was one of the culprits by holding interest rates too low for too long.

Then came the euro crisis.

Greece was the most urgent problen, but it was resolved for the time being by the EU lending money to Greece so that Greece could pay its loans to the banks.

- The big risk was that Greece would trigger a crisis in Italian, French and German banks. In practice, there is now an EU guarantee for the outstanding Greek government bonds, then Swedish Finance minister Anders Borg said on February 22, 2012.

But the euro crisis persisted. A turning point came when ECB chief Draghi in 2014 held a famous press conference proclaiming that he would save the euro, "whatever it takes", lowered the interest rate to zero and then below zero.

In March 2015, the ECB initiated Quantitative easing (QE) and in October 2018 ECB had bought € 2.5tn (1tn = 1000bn) of euro area securities.

In addition, complex things, like Targeted long-term refinancing operation - TLTRO, Outright Monetary Transactions ("OMT") and Target2 European interbank payment system, were introduced.

Draghi saved the euro, at least for the time being, and now before his departure has the same star gloss as once Allan Greenspan.

But the ECB's minus interest rates spread around the world, firing on real estate, bond and stock prices to an alarmingly high level.

Unfortunately, nobody seems to know how to get out of this.

If Draghi had not saved the euro by "whatever it takes" measures, we would not have had today's situation.

It would have been better if the euro had not existed today. It was not a good idea to introduce it before all the pieces were in place, whenever that will be it, if ever.

Rolf Englund


Investment bubbles are rooted in human psychology, so it is inevitable that they should occur from time to time.

As economists put it, in both investing and lending, the “principals” have been split from the “agents”. When people make decisions about someone else’s money, they lose their fear and tend to take riskier decisions than they would with their own money.

John Authers FT MAY 22, 2010


Germany to auction a zero-percent 30-year bond

Enligt Keen var orsaken till finanskrisen 2008 för mycket krediter skapade av privata banker

Som han ser det är den privata skuldsättningen den gemensamma nämnare bakom såväl finanskrisen som Den stora depressionen 1929 och den, tycker han, bortglömda Paniken 1837.

– Sverige har en mycket högre skuldnivå bland hushåll än USA

SvD 20 augusti 2019


Spanish, Portuguese benchmark bond yields hover just above 0%

 It highlights a stunning turnaround from the euro-area crisis

Less than a decade ago, investors could barely be compensated enough to hold the bonds of Spain and Portugal for fear the nations could be severed from the European Union. 

Now, they are a hair’s breadth away from having to pay for the privilege.

Before the global financial crisis, Spain was growing healthily and might have benefited from higher interest rates; Germany was growing more weakly. 

As one monetary policy had to fit all, Spain benefited from low rates aimed at Germany, and enjoyed an epic construction boom that would inflict a severe and enduring recession once the bubble burst.

John Authers Bloomberg 19 augusti 2019

A picnic in a meadow on the Hungarian-Austrian border enabled the first exodus from behind the Iron Curtain. Unintentionally — or not?

Even 30 years on, the question of who orchestrated the events of August 19, 1989, remains unanswered. Was it the newly formed Hungarian opposition? Or the Kaiser's son, in absentia? 

Otto von Habsburg was represented at the picnic by his daughter, Walburga. Or the secret service? Or perhaps some combination of all three?

The undercover role of West Germany's intelligence service and other security services is now regarded as an open secret.

Walburga Habsburg Douglas: 'We knew the Iron Curtain could fall'

From 1916 to 1918, my father was crown prince of Austria-Hungary, so he was an important man. But since he didn't want to be the center of attention and the event was aimed at discussing what role Hungary should play in Europe in the future, he sent me to the border as a representative of the Pan-European Union. 

I had already asked the Hungarian government for permission. 
Together, Minister of State Imre Pozsgay and my father sponsored the project.


12 Reasons Why Negative Rates Will Devastate The World - Albert Edwards

It has been a thesis over 20 years in the making, but with every passing day, SocGen's Albert Edwards - who first coined the term "Ice Age" to describe the state of the world in which every debt issue ends up with a negative yield as capital markets and economies collapse into a deflationary singularity - is that much closer to having the victory lap of a lifetime. Although, we doubt he is happy about it.

Commenting on the interest rate collapse he has been (correctly) predicting ever since he first observed Japan's great bubble bust of the 1980s and which resulted in both NIRP and QE, and which he (correctly) expected would spread across the rest of the world, leading to a "Japanification" of every major bond market...

Zerohedge 18 August 2019

Albert Edwards

In 2013, the International Monetary Fund produced a report acknowledging that it had “underestimated” the effects that austerity would have on Greece’s economy.

Yet the Fund has made the same mistakes in its subsequent deals with Argentina and Ecuador.

The IMF’s bizarre belief in “expansionary austerity” would be laughable if it were not so damaging. 

How can the IMF justify an approach with such a poor track record? 

Jayati Ghosh Project Syndicate 14 August 2019

Was the 1960s the last pre-global decade?

An era long synonymous with progress is now idealised for the opposite reason.

The 1960s must seem like the last stand of a more familiar world.

FT August 16 2019

Då var jag i Lund.

it was on this spot 30 years ago that 600 East Germans walked into Austria — a watershed moment.

In the weeks after the picnic, thousands of East Germans abandoned their DDR-produced Trabants in the nearby fields and crossed into Austria. In less than a month 60,000 East Germans were en route to West Germany via Vienna.

Contrasts sharply with the fence it built on its southern border with Serbia in 2015, after 1m asylum seekers passed through on their way to Germany. 

FT 18 August 2019

Cracking the Iron Curtain: Remembering Hungary’s ‘Pan-European Picnic’

“Hungary was where the first stone was removed from the Berlin Wall” ~ former German Chancellor Helmut Kohl, speaking to mark the reunification of Germany on October 4th 1990.


Habsburgs picknick och slutet på järnridån och kommunismen


There is no logical reason for the bond market to be drastically bidding down yields in anticipation of an impending recession

 The bond traders and speculators are not front-running recession: 

They are front-running the Fed and the rest of the central banks based on their now three times repeated experience since the arrival of Greenspanian monetary central planning that central banks will flood the markets with liquidity and bond-buying in the event of a recession, thereby driving bond prices skyward and yields to rock bottom.

That is, the central banks drive bond prices sky high and speculators, who purchased these bonds on repo and other short-term practically zero-cost credits, laugh all the way to the bank.

Never before has the stupidity of a tiny group of PhDs and political apparatchiks domiciled in the central banks generated such unspeakable windfalls for so many speculators and gamblers.