Negative Rates in Europe

Today’s political discord is less durable and dangerous than an obvious consensus, one that unites the political class more than ideology divides it. The consensus is that, year in and year out, in good times and bad, Americans should be given substantially more government goods and services than they should be asked to pay for.--Will


It feel cool. Like Fall.
Chris went to the Pirate game, then played baseball; mom went to a movie; Liz went to a musical.

Amanda Knox is getting married. Her wedding will be "very nontraditional."
That includes the couple "writing a fun script," Knox said, and asking guests to come in costume. Probably not scary ones.

Frequent Uber customers in San Francisco and Chicago can get Uber’s new subscription pass that combines all of the company’s offerings into a single deal: Discounted Uber rides, access to Jump electric scooters and bikes, as well as free Uber Eats deliveries, all in a single package. $24.99.

The Justice Department has received 270 bias-crime cases since 2009, and obtained convictions in only 29 of them. 

The political theorist Isaiah Berlin warned in 1967 that "a single formula to cover all populisms everywhere will not be very helpful. The more embracing the formula, the less descriptive. The more richly descriptive the formula, the more it will exclude." Nonetheless, Berlin identified a core populist idea: the notion that an authentic "true people" have been "damaged by an elite, whether economic, political, or racial, some kind of secret or open enemy." 
What fuels populist politics is that concept of the people battling the elite. This is often presented as anger towards subsets who are more successful but often looks more like anger toward subsets that have more access to perceived common assets. I'm not so sure about the "true people" requirement.

By 2017, a Pew poll showed that just 15 percent of Republicans supported paring back the escalating costs of Medicare or Social Security to bring down the deficit.

In every year from 1977 until about 2003, North Dakota ranked in the bottom 15 US states for GDP per capita. Thanks to the fracking revolution and the prolific Bakken Formation, North Dakota’s energy-related economy was booming by 2009 when it rose into the top 15 states for the first time, before quickly rising to the No. 1 state for per capita GDP in 2015. By 2018, North Dakota fell back to the No. 6 ranking.

On this day in 1945, in the 11th hour of World War II, Winston Churchill was forced to resign as British prime minister following his party’s electoral defeat by the Labour Party. It was the first general election held in Britain in more than a decade. The same day, Clement Attlee, the Labour leader, was sworn in as the new British leader. 
Apparently Churchill had not done enough for the British people.


               Negative Rates in Europe

There has been plenty of discussion in the financial media about the Fed needing to “compete” with other central banks, whose policies have led to $13 trillion in bonds with negative yields. As absurd as that might seem, especially when developed economies aren’t in recession, this type of  monetary policy has gone mainstream.

But how will that work when rates in so much of the developed world are already negative?

In his Out of the Box commentary, Mark Grant, B. Riley’s chief global strategist for fixed income, wrote on July 22 that the negative yields exist “for one reason only, and it is because the nations of the European Union, Switzerland and Japan have mandated that their central banks take rates to these levels so that their countries can survive.” Grant elaborated in a later commentary: “Most nations in Europe cannot afford their budgets, or their social programs, and have lost their ability to raise taxes without having their politicians thrown into the streets, and so they manufactured money in their computer rooms and lowered the yield on their bonds, to less than zero, in many cases.”
So the creation of that money needed to run their programs will be cheap.

All this, with low inflation. Someone planning to retire 10 years from now and fund a significant portion of his expenses with interest or dividend income from savings or investments may have to change his plans. Unless inflation quickens and forces a complete change in central banks’ policies, interest rates and dividend yields may be too low for a simple change “from growth to income” to fund his golden years. On the other hand, what will happen if the interest rates on that created money rises?