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comment by Rye631
Rye631  ·  3299 days ago  ·  link  ·    ·  parent  ·  post: Tumbling Interest Rates in Europe Leaves Some Banks Owing Money on Loans to Borrowers

At what point will banks accept deflation. negative interest rates are shocking and I don't understand how they even make sense.





mk  ·  3299 days ago  ·  link  ·  

The point might be near where they will have little choice. It seems like they are pushing on string.

kleinbl00  ·  3298 days ago  ·  link  ·  

It's a hedge against Euro collapse. Negative interest rates are an economic tool to maintain a political alliance.

mk  ·  3298 days ago  ·  link  ·  

If, years ago, economists were asked to list precursors of a Euro collapse, the sale of negative interest bonds would likely be on the list.

kleinbl00  ·  3298 days ago  ·  link  ·  

I wonder if they'd have even thought of it. I've yet to see a single pundit go "yeah, we expected that."

Granted, I follow the rationalist macroeconomists and they would argue that "the existence of the Euro" is a precursor to a Euro collapse.