Courtesy of Mish.
Spain Joins the Negative Interest Rate Club
Reader Bran emailed a link this morning to an El Pais Article that showed interest on a 6-month treasury auction in Spain went negative.
Rather than translate, please consider the Wall Street Journal report Spain Joins Negative Yield Club.
Spain has joined the sub-zero debt club, just.
The Spanish Treasury on Tuesday issued short-term debt yielding a shade under 0%. The €725 million ($796 million) in six-month Spanish debt delivers an average yield to investors of -0.002%. Buyers were still keen, placing bids worth five times that amount, according to the Treasury.
Another slug of 12-month T-bills, also issued Tuesday, yields just 0.006%.
This is quite a turnaround for Spain. The country was at the heart of the eurozone debt crisis at its darkest hour. In June 2012, it sold similar short-term debt yielding 3.237%.
Negative Interest Rate Thesis
Ben Bernanke made the claim “In the weak (but recovering) economy of the past few years, all indications are that the equilibrium real interest rate has been exceptionally low, probably negative.”
Quite frankly, that’s idiotic.
In the absence of central bank monetary foolishness, negative interest rates cannot happen. I discussed that briefly in Thrown Under the Bus: Another Look at the Self-Serving Launch of Ben Bernanke’s Blog and the Brookings Institute’s Pandering Role.
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