Unknown let now a rumor that Deutsche Bank allegedly requested the ECB’s emergency loan. Twitter responded immediately, the account of the jokers already banned. However, the situation with the “Deutsche Bank remains extremely anxious — and if this rumor is confirmed tomorrow, analysts, perhaps only shrug. Say, this all was going.
And here is the real news. “Bank of America” warned of a coming collapse in the bond market. Bond prices climbed incredibly high, and the yield on bonds has never (over the last 500 years of documented history) were not as low as it is now:
I remind you now of the Western economy and together plunge into the abyss of POP music, a policy of negative interest rates. In these circumstances, the purchase of bonds becomes unprofitable business — you lend, say, a hundred francs, and a year later you return… only 99.
You ask why someone is buying bonds, even at such a disadvantage?
There are several reasons. First, in many places the authorities forced the court banks to buy bonds, no matter at what price. You know, like in Soviet times, polupronicaema were distributed raffle tickets and such nonsense.
Secondly, other options (except bonds) are not very good. To save money in paper bills uncomfortable — need to be transported, counted, protected. To quickly scroll somewhere paper money is also tough, these kinds of activities on a regular basis engaged unless the drug lords.
Keep the money in Bank accounts is dangerous. If, say, U.S. Treasury bonds are liquid as long as the whole US financial system will not collapse, the money in the accounts of the Bank of any American is vulnerable — if the Bank will burst, your money will be gone.
It turns out that sometimes it’s better to pay a little over keeping the money in safe bonds than to mess with the uncomfortable and dangerous “in cash”. (Just in case I will remind that in articles on financial topic under the term “cash” or “cash” refers to usually not banknotes, but money in Bank accounts).
So, bond prices hit records, the yield falls below any reasonable limits. However, what is happening at this time with credits for real business?
And loans for real business, as well as loans for individuals, on the contrary, expensive. Credit LIBOR rate has updated a maximum since 2009 — this means that to take new loans to service old on average, is getting more and more expensive:
Bankers, of course, also can understand. In conditions of instability they are trying to insure and lay their risks in the rate on their loans. So will give a businessman the loan, and he will take and destroy… better to charge him a higher rate.
Again, the situation is not just alarming, the situation is critical. Authoritative rating Agency Standard & Poor’s, for example, recently stated that US corporations are drowning in debt. According to the Agency, the situation is worse now than before 2008. Moreover, S&P analysts believe that serious problems (such as massive bankruptcies in some sectors of the US economy is only oprocurement:
Against this background it is not surprising that billionaires continue to transfer their wealth in cash:
When everything will collapse, that cash will serve them in good stead. At the peak of the crisis for cash billionaires will be able to buy a large number of depreciating assets.
To summarize
Now, some rejoice in the fact that the indices are at record high levels. However, to rejoice there is nothing. If your unemployed neighbor brags to you new cell phone, that doesn’t mean he’s good with money. This means that he took the micro-credit and already spent it — with all the ensuing unpleasant consequences.
Fritz Moiseevich Morgen
