Last week we wrote that in the latest bout of European NIRP panic, "Over Half Of European 2-Year Bonds Trade At Record Negative Yields" with Italy now paid to issue debt, with a follow-up in which even very serious banks are now looking at the Eurozone's record €2.6 trillion in negative-yielding debt, and finding that the lower yields drop, the greater the savings rates across the continent...
... suggesting a "policy failure" as even more cash ends up inert on bank balance sheets instead of being spent on either the economy or asset price inflation.
And while the €2.6 trillion number noted above is massive, and as we showed last week is a record for the amount of debt trading under negative rates in Europe...
... here are some shocking statistics on how we got there, and which we all take for granted, courtesy of BofA:
- There have been 606 global rate cuts since LEH
- $12.4 trillion of central bank asset purchases (QE) since Bear Stearns
- The Fed is operating a zero rate policy for the longest period ever (even exceeding the WW2 Aug’37-Sep’42 zero rate period)
- European central banks operating negative rate policies (Swiss policy rate currently -0.75%; Sweden’s policy rate currently -0.35
- Just this month, the PBoC cut rates, the ECB confirmed QE2, Sweden announced additional QE, and the BoJ promised additional easing if necessary "without hesitation"
- $6.3 trillion global government bonds currently yielding <0%
- $20.0 trillion global government bonds currently yielding <1%
But wait, there's more in describing what BofA says is the most immense and long-lasting monetary stimulus, i.e., bubble, in history:
- For every 1 job created in the US this decade, US corporations have spent $296,000 on stock buybacks
- An investment of $100 in a portfolio of global stocks & bonds (60:40) since the onset of QE1 would now be worth $205; in contrast, a wage of $100 has risen to just $114 over the same period
- US prime (“CBD”) office real estate has appreciated 168% this decade; in contrast, the value of US residential property across America has risen just 16% (see Chart 5)
- For every $100 US venture capital & private equity funds raised Jan 1st 2010 they are now raising $275; in contrast, for every $100 of US mortgage credit extended and accepted at the beginning of this decade, just $61 was extended and accepted in June 2015 (see Chart 6 - a big reason the US consumer remains so moribund)
- In 2014 London accounted for 26% of the value of all housing sales in England, despite accounting for just 1% of the land area
And so on.
What can end this wholesale lunacy which only economists fail to grasp for what it is: the biggest global asset bubble in the history of humanity, leading to a monetary ice age across the world's economies (as the velocity of money drops to zero or goes negative) which as Albert Edwards so aptly predicted years ago, is the natural counter to asset price hyperinflation? Alas, with all central banks now clearly all-in on the last and final attempt to reflate the world's $200+ trillion in debt (a default is not an option as it would wipe out tens of trillions in "legacy" equity wealth) expect many more exponential charts in the coming months before the inevitable admission of "policy failure" by central planners which, if past is prologue, will come during the sound of guns.