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In "Paranormal" Europe, Banks Will Pay You To Borrow, And Charge You To Save
A month ago, we wrote about a bizarre situation involving Denmark's now totally broken monetary system, where as a result of an unprecedented scramble to weaken the currency in order to preserve the peg to the Euro the central bank unleashed a historic rate-cutting scramble, where in 4 consecutive rate cuts its pushed the interest rate to an unheard of -0.75% (while at the same time being the first modern central bank to unveil what we dubbed "Bizarro Backdoor QE"). The culmination of this series of events was the surreal realization by some debtors that the bank would now pay them the interest on their new or existing mortgage.
The insanity was only compounded when one considers that in the vast majority of European countries, depositors are already (or will soon) pay for the "privilege" of providing banks with unsecured funds (in the US, JPM recently also started charging some customers - mostly corporate and hedge funds- for holding their deposits).
In short, this is what Europe has become: savers - those who diligently put away the fruits of their labor - are now forced to pay, using banks as an intermediary, and subsidize the the debtor: spenders, who live beyond their means, and who in increasingly more frequent situations are now paid to take out even more debt! Call it monetary socialism.
Which is probably why with a one month delay, none other than the NYT decided to cover precisely this topic with "In Europe, Bond Yields and Interest Rates Go Through the Looking Glass"
Here is the story in a nutshell, shown with pictures so even central bank idiots and other economist PhDs will get it:
A Denmark bank will pay Eva Christiansen, left, $1 a month for taking out a loan. Ida Mottelson's bank will charge her to hold her money:
The key highlights from the NYT story:
At first, Eva Christiansen barely noticed the number. Her bank called to say that Ms. Christiansen, a 36-year-old entrepreneur here, had been approved for a small business loan. She whooped. She danced. A friend took pictures.
“I think I was so happy I got the loan, I didn’t hear everything he said,” she recalled.
And then she was told again about her interest rate. It was -0.0172 percent — less than zero. While there would be fees to pay, the bank would also pay interest to her.
* * *
... some corporate bonds, which are generally deemed less creditworthy than government bonds, are falling into the negative territory, including some issued by Nestlé and Novartis, a Swiss pharmaceutical company. While they did not initially have negative yields, investors bid up their prices after they were issued. “This is obviously a once-in-a-lifetime and once-in-history phenomenon,” said Heather L. Loomis, a managing director at JPMorgan Private Bank, who specializes in bonds, “and it is hard to make sense of it.”
Ms. Christiansen, a sex therapist, took out a loan to finance a website called LoveShack that is part matchmaking site, part social network. For her, the full novelty of her loan didn’t sink in until a spokeswoman for the bank called her back.
“She said, ‘Hi, Eva, they have contacted us from TV 2’ — it’s a big station in Denmark, one of the biggest — ‘and they would like to talk to you because of this loan,’” Ms. Christiansen said. “Then I was really like, ‘O.K., this is big.’”
She said she was generally aware of what the Danish central bank was doing, but fuzzy on the specifics and had not paid close attention to the issue until she realized she might be asked about it in front of a camera.
“When I was contacted by the television, I was like, ‘O.K., I need to know something,’” she said, laughing, during an interview at her office, where two distant windmills were visible outside the windows. “So I actually called my bank adviser and said, ‘Can we please have a meeting?’ Because all these financial terms, I’m not used to them,” she said. “If I talk about something, I’d like to know something about it.”
* * *
Some other Danes are facing a related, if somewhat opposite, issue.
Last month, Ida Mottelson, a 27-year-old student, received an email from her bank telling her that it would start charging her one-half of 1 percent to hold her money. “At first I thought I had misunderstood this, but I hadn’t,” she said.
Ms. Mottelson is studying for a master’s degree in health sciences, and lives in Odense, a city about 100 miles west of Copenhagen. She said she had been following the news about the central bank, but called her own bank just to make sure she was reading the email correctly.
“I asked him supernaïvely, ‘Can you explain this to me?’ And he tried, but I got the feeling he was like, come on, just move the money and you’ll be fine.”
She does plan to move her money to another bank. “I’m not an expert,” Ms. Mottelson said, “but to me it sounds so weird that you have to pay to have your account at a bank.”
You are right, Ms. Mottelson: it is. And it will only get much weirder from here. Because we have now gotten so far past the looking glass into a world in which the central banks have broken every correlation and logical relationship so profoundly, that nothing makes sense any more; whoever, before the now inevitable grand reset when everything finally collapses under the unsustainable weight of the global house of cards, things will only going get even stranger.
And while we have been lamenting all of this years in advance, all of which we predicted would happen back in June 2012, we are delighted that even the mainstream media has once again, with the usual two to three year delay, caught up with what Zero Hedge readers knew long, long ago.
These are strange times for European borrowers, as if a wormhole has opened up to a parallel universe where the usual rules of financial gravity are suspended. Investors lent Germany nearly $4 billion this week, knowing they would not be fully repaid. Bonds issued by the Swiss candy maker Nestlé recently traded in the market for more than they will ever be worth.
Consumers loans and mortgages with interest rates that are outright negative remain rare, and Ms. Christiansen appears to be one of the few who actually received one while banks mull how to proceed. Some other Danes are getting charged to park their money in their bank accounts.
* * *
Such paranormal financial episodes are taking place all across Europe.
Indeed, call it the new "paranormal", and thank the central-planners for bringing the world to the edge, and beyond, of reason, where nothing makes sense any more. But don't worry, because this time it's different, and there will be a happy ending for everyone involved...
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I'd like to take a loan out to purchase the LBMA and COMEX, on second thought, scratch that
In America, banks still charge hefty rates for loans and offer essentially zero for savings even as the Fed gives free money to the banks. We're still number one.
This really is a bizzaro world. The banks paying people to borrow money because if they depoit the excess cash they will be paying more to the central bank.
So whats the optimal thing to do here? I guess borrow the money and keep it under your mattress! Then return it a year later and keep the change. Mattresses must be the only thing inflating in the deflationary world of Europe.
All of this is the inevitable outcome of unbridled jewish usury upon a completely subserviant world. Payback will be of an unprecedented sweetness. Be patient.
Save gold .... borrow to buy gold .... was that so hard .... not smart enough to be a Joo ?
In 2008 demand dried up due to too much debt and rather than letting a recession occur, the central banks stepped in and started money printing. This was equivalent to watching the economy fall off a cliff and trying to fix it by quickly digging a debt hole and turning the drop from one that was likely to injure to one that is likely to kill. It was an utterly stupid approach that had no chance of succeeding. All it achieved was to delay the point where the economy hit rocks but at the cost of the downward speed increasing. This has ineviatably led to the point where interest rates turned negative....impact is close.
Grievance is your middle name, Lola. There's no point in ever trying to make you happy.
Have we reached the apex of social engineering?
Apparently we are devolving. Must be something in the water.
Watch Idiocracy. Explains everything...
It's what plants crave.
water? like in the toilet?
Brawndo, it's got Electrolytes.
Sorry, do not have time to watch.......batin'.
https://www.youtube.com/watch?v=hetaBX00wtI
"Have we reached the apex of social engineering?"
NO. What's the last phrase of every Liberal politician, Ignatius,
-there's still much to be done.
"Loveshack"....you cant make this shit up...or could you?
Cash and gold has a better deal. Keep the Spider-Man towel
I feel like I'm taking crazy pills.
If you ask Krugman he'll say it totally makes sense.
It does make sense from the bankerster's viewpoint. Extract rent from those with assets and induce those without assets to take loans and extract rent via usurious interest rates.
LOL that they're charging the health worker to save and paying the sex therapist to borrow and start a social media dating site. Charging the person who will work curing the STDs to give it to the person spreading more liberal sexual degeneracy. It sure beats just breaking windows.
LOL,
Borrow hundreds of thousands, buy physical PMs and then default.
Fuck the banksters. Let them eat the loses.
Good idea but it would have to be a cash advance.
Not in the least. I have personally purchased PMs with funds from credit cards that are charging me 0% interest for anywhere from a year to 18 months.
Many credit cards are offering 0% interest on balance transfers as well. I've used a few of them, since it simply doesn't make sense not to, unless you are imprudent and do not intend to repay. I have no problem using the bank's money as a short term hedge against the current madness and/or for speculation in PMs. With a little creativity (not much, really - the CC companies are issuing blank checks that you can use for any purpose), I could use the money to buy stocks, but that's not my gig.
I'll pay them back, establishing myself as a good credit risk, in hopes that they'll extend more of the same or better terms.
Hell, if they keep it going long enough, eventually, I'll die, with loads of (unsecured) debt, a horde of PMs and a clear conscience, since you can't take it with you, of course..
And this is why we see debt remain unpaid while not be declared in default. Its simply a haircut...or negative interest. in a world nearly destroyed by debt, the only solution left is more debt, even to the point of paying you to borrow.
When it comes to finance, the West is like a man holding a gun to his own head and managing to remain standing while he keeps pulling the trigger.
Pfft, if this won't break the world financial system, nothing will. Time to back the truck up on spoos and leverage grandma's house and buy QQQ 5000 calls
They must know it can't be sustained long term. But then, they only care about the short term.
OT: I've been watching a lot of David Icke videos. While I don't buy the reptilian alien theory, the rest of what he says seems to be spot on. Question: is this guy legit, or is he a plant to distract us away from the truth?
I see a lot of lonely financially illiterate morons in my mirror.
If it looks too good to be true, it probably is.
The culmination of this series of events was the surreal realization by some debtors that the bank would now pay them the interest on their new or existing mortgage. lmfao
I just realized I need a refi.
If I finance $100,000 for 15 years, I only pay $99,925.00.
Are they making it up on fees? They're trying to get people to borrow new money and spend their existing savings. Crazy.
You bet your but they are.
They're making it up on volume, like Amazon.
As I'm reading this....
I'm flipping a Gold Krug.....
then I reached for the Valium and wine......
and it is not even 1pm in the afternoon.....
Charles Eisenstein knows his shit.
Being educated by some indoctrinated buffoon is moot. Use your heads peeps.
I want a 1,000,000,000,000 loan with a negative interest rate of 5% - with a 100 year term.
Mojito time!https://www.youtube.com/watch?v=amtG0RsGnag&index=15&list=UUF_xfFVc5F33q...
Okay. I'm 1/3 cocked. If you're paying 9.99% best balance on you're credit card balance, being negative 50 basis points is MOOT!
If you have massive wealth being held at minus -50 basis points, you're GOLDEN! Any questions?
This should mean treasuries are going to go negative as well in the US. That would be the way to unwind the debt. But if people are paying to lose the stock market is going to crater.
Unless you buy treasuries now and lock in the 2% rate in which case it's hard to lose. I'm guessing this is what the smarts are doing.
Bottom line this is extremely deflationary.
The Zio fiat zone
http://youtu.be/WJOsz9sPd4s?list=UU08eZUU6XiqthPMmtHkydTw
Ok. I will put this out there as going to happen.
SSPL
Self Securitizing Personal Loan.
No credit check. Loan deposited into a special account. The money itself is the guarantee, there is NO risk of default.
Borrow 1B personally @ -0.25%, the proceeds of the loan CANNOT be withdrawn.
At maturity, 1B paid back from the account, balance to owner.
THIS is exactly how the banks are currently making money. Borrow @ 0% from Fed, redeposit with Fed @ 0.25%. Why not extend it to everyone?
Why limit it to 1B, why not 100B, 1T etc? Just think of the possibilities.
WTF, I think you're on to something here. All I need is a $10 million loan just like you described. 30-year term, at -0.25%. Nets me $25,000 a year, which I can easily live on (been living on less for years). Giddy-up!
This whacked out financial world came to me at the right time, I guess. Been living in my parents' home which had a mortgage and I inherited, but haven't paid in nearly six years. Verbally agreed to a "cash for keys" kind of deal with the bank, but they've yet to sign the papers. Guess they're still trying to figure out a way to not show a loss, so no more negotiations. Fling court motions abut is fun, good for a couple more years, probably.
Eventually, I suppose somebody has to win or lose, but hey, I turn 62 in 10 months. I see a reverse mortgage in my (and the bank's) future.
Fun with numbers!
Never trust a fat sex therapist's opinion
@"In "Paranormal" Europe, Banks Will Pay You To Borrow, And Charge You To Save".
.
maybe so,, but factor in the waiting on line.
.
So, if Denmark breaks the peg will the currency become more expensive relative to other currencies?
There's gotta be some sort of play on here. Borrow DKK capture -% interest and hope they break the peg?
It's the Nirvana of consumerism
Denmark has gone full retard
So now the bank pays you to spend money you don't have on things you don't need to impress people you don't like.
all part of the plan folks. When the crash occurs, only one solution will be found - a global gubmit and a single global legal tender currency. Boom, total control realised.
So basically I should put all of my time, talent, efforts, and energy into this system in exchange for fiat paper or fiat electrons, and then, if I actually manage to accumulate some of them after the government and exploitative upper echelon of capitalists do their best to prevent that, the system will periodically seize some of the electrons that I've saved back from me? Sign me the fuck up already! I love this arrangement! It sounds even better than Bitcoin!
LOL!
I love Zero Hedge for describing these facts in such an amusing way!
(But then I have such a well-developed macabre sense of humour that it is worn out from overuse.)
love the new avatar ;-)
“If I talk about something, I’d like to know something about it.”
An actual person versus every single psycopath idiot we have in the House, Senate, Supremes or White House.
Don't do business with banks. It's that simple.
The only option for being charged to save your money in a bank is under the mattress and only accept payments in cash. The MSM is being verq quiet on this but it would be like standing on a slope covered in snow and shouting "AVALANCHE".
The being paid to borrow, the banking system is struggling to keep up with the flow of newly created currency that OURIGHT QE TOPPED UP. The fools should never have started the Keynesian / Fiat style economy because every increased effciency (means primarily removing labor costs) might seem like a good idea but you just cant generate the level of inflation through ever increasing borrowing that way to make it work.
Clearly THE cause for monetary strife in the Eurozone is govts fighting frantically to prevent any competition to their unbacked fiats from alternative competing currencies. Competitors must be squashed to ensure the wealth looting continues for the few.
I went to an ISIS public execution .... and some naked pyramids broke out !
Seems like western c/b's are getting ready to default on mass in current fiat and move to another system. Store of value ceases to exist with negative rates.
I can't get over the feeling that this is a trap. They get you to buy with neg rate then make money scarce so you can't afford even your tiny payments. Then, foreclosure time and, withthe stroke of a pen the banks own everything.
Or, too much fiat swimming around that noone needs right now. Anyway, buying a bond with neg interest makes zero sense to my dumb ass. Cash, gold, tools, land. Cash can get taken right out too. Neg rates push us into cash and real things, probably most people go with cash. Maybe SDRs are close than we think?
"Then, foreclosure time and, withthe stroke of a pen the banks own everything."
Only if it's a 'secured' loan.
Unsecured tell them to whistle.
http://supremelaw.org/cc/barber/2-A-MEMORANDUM%20OF%20LAW.htm
This is the new CB 'tool' to fight deflation and spur CPI. This worked for the banks and the stock market so now TPTB know that trickle down economics is just that 'a trickle' and failing the broader economy, negative interest rates on loans and savings will encourage fiat money generation and consumption. This is all about fight deflation and if your country has declining M2 velocity expect paranormalcy in your bank soon after.
Kill me now.
Only gold is money.
So where can I get one of these never pay it back loans?
Fiat money is just an instrument of exchange and accounting.
If the instrument of exchange goes on LSD as a result of government thumbprint, then it follows that 1) exchanges that are made will no longer bear a correlation with the cost in labor and capital, and 2) accounting values will no longer bear a correlation between the cost in labor and cost in capital.
The hissing sound you hear in the background is the sound of wealth leaving society. If it is smart, wealth goes and hides until the storm passes. If not, it is frittered away.
dup
Negative interest rates on loans will blow the biggest bubbles of the known history. It already shows in real estate prices in Kopenhagen - a small apartment now gets prices of 800.000 euros and more. The culprit : one has to accept VARIABLE interest rates. The suckers who subscribe this shit will be cooked before 2020.