European Central Bank

ECB Blames You For Negative Interest Rates

Revolutions, of course, can take many forms. There are social revolutions, political revolutions... and even financial revolutions. Now that interest rates are negative in many parts of the world, the financial system has become an incredibly destructive force. Negative rates adversely impact the livelihoods of just about everyone, from the average guy on the street all the way to the banks themselves... and a few key players have reached their breaking points and are starting to engage in acts of defiance.

European Stocks Tumble After EU Slashes Growth, Inflation Guesses

Despite unleashing his bazooka, Mario Draghi - like his colleagues at The BoJ - appears to have hit the limit of his impotence as the European Commission cut its outlook for growth and inflation across the Union for 2016 and 2017. Citing the economic slowdown in China and other emerging markets, geopolitical tensions and uncertainty ahead of the U.K. referendum on EU membership, WSJ reports EU’s economists also cautioned that the strength of factors that have been supporting growth in the region, such as low oil prices and a weaker euro, could start to fade. This sparked modest Euro weakness (after a non-stop surge in the last week) dragging down European stocks and darkening the outlook for the banking system further.


If the world’s economies were really out of intensive care, why would ultra-radical monetary policies like helicopter money be increasingly debated at the highest level of governments? Also, how come 70% of Americans believe the US economy is on the wrong course? And why do almost half of US citizens admit they couldn’t come up with $400 to meet an unexpected need? Yes, I know why ask why? And it is what is, and a bunch of other clichés. But this isn’t normal, it isn’t healthy, and - at least in the opinion of this author—it isn’t going to end well.

Gold And Negative Interest Rates

In Japan, the European Union and Switzerland, where negative nominal interest rates have already been adopted, it was observed that demand for safes and cash increased. At the same time, we learn that negative rates have boosted demand for gold in Japan (sales of gold to Japanese consumers rose to 32.8 metric tonnes in 2015 from 17.9 tonnes a year earlier). According to Takahiro Ito, chief manager at Tanaka Kikinzoku Kogyo K.K.’s store in Tokyo’s Ginza shopping district, “Many customers are wagering that it’s better to turn their savings to gold as a safe asset rather than deposit money at banks that offer low interest rates." 

Italy's Bank Bailout Fund Already One Third Empty After First Bank Rescue

Italy's bad bank bailouts fund, "Atlas", is about to become the proud new owner of around 90% of Italy's Popolare di Vicenza after investors only bought a fraction of the mid-tier bank's €1.5 billion cash call, Reuters reports.  Popolare di Vicenza, which was due to announce the outcome of the public share offer later on Friday, said earlier in the day that it had raised €4.25 billion, at the lower end of a 4-6 billion euro range it had initially targeted, from 67 mostly domestic financial institutions.

Key Gold Index Doubles In 2016 (But Nobody Noticed)

Coming months will give us a far better clue as to how far the trend is entrenched. All we know right now is that the general investing public, and mainstream media, remain out of the picture.

Central Bankers To The Masses: "Let Them Eat Rate"

A new generation of revolutionary central bankers must be called to arms for all of our sake. Their battle cry: We commit to never returning rates to zero or below again, to never let be money be free and forever ensure there is a true cost associated with borrowing. Release the markets to set interest rates now and forever! Will it work? Stranger things have been known to succeed in capitalistic economies with competitive and freely functioning markets.

"The Damage Could Be Massive" - How Central Banks Trapped The World In Bonds

Yields on $7.8 trillion of government bonds have been driven below zero by worries over global growth, forcing investors looking for income to flood into debt with maturities of as long as 100 years. Worse still, as Bloomberg reports, central banks’ policy is exacerbating matters, as the unprecedented debt purchases to spur their economies have soaked up supply and left would-be buyers with few options. This has driven the 'duration' - or risk sensitivity - of the bond market to a record high, meaning, as one CIO exclaimed, even with a small increase in rates "the positions are so huge that the damage can be massive... People are complacent."