Debt Serf Ireland Gets Paid To Borrow Even More

By David Stockman, Budget Director under President Reagan and author of the bestseller, The Great Deformation: The Corruption of Capitalism in America. This article originally appeared on David Stockman’s Contra Corner.
About 36 months ago Ireland’s two-year notes were yielding 14% and its government and the Brussels apparatchiks were scrambling with tin cup in hand to stave off disaster. Now their yield is negative 0.01%.
Mirabile dictu!
Yes, a wonder to behold—but not one I can explain. Better its left to the experts in today’s bizzzaro world of maniacal central banking. That is, with the reminder that the ECB has now set its deposit rate at negative 0.2%, here’s how Goldman explained the Irish note miracle to the WSJ:

Quote :: If “you buy short-dated Irish or French paper and pay less [than depositing at the ECB], you’re improving your net income, even if the yields are still negative,” said Jonathan Bayliss, a managing director for global government bonds at Goldman Sachs Asset Management in London.

That’s right, down is the new up. The price and yield of government bonds no longer have anything to do with risk or economics; it’s all about central bank machinations. Actually, it’s all about the speculator driven momentum surges that are triggered by central bank maneuvers.
As is well-known, Draghi’s “whatever it takes” pronouncement triggered the most blistering bond rally in recorded history. Leveraged speculators have literally made triple digit returns since July 2012 in the notes of still debt-besotted basket cases like Spain, Italy and Ireland.

Debt Serf Ireland Gets Paid To Borrow Even More Italy-government-bond-yield

Debt Serf Ireland Gets Paid To Borrow Even More Italy-government-bond-yield

Debt Serf Ireland Gets Paid To Borrow Even More Spain-government-bond-yield

Debt Serf Ireland Gets Paid To Borrow Even More Ireland-government-bond-yield

More: http://wolfstreet.com/2014/10/01/bailed-out-irish-government-gets-paid-to-borrow/

Debt Serf Ireland Gets Paid To Borrow Even More

Debt Serf Ireland Gets Paid To Borrow Even More

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