Saturday, December 1, 2018

Travails Of A Bond Blogger

What am I supposed to do, huh?

I mean, I am a blogger who specializes in writing about debt. You know, A Merchand Of Venice kind of deal... does “a pound of flesh” ring a bell? As in if you don’t repay your debts WITH INTEREST the lender will have your arm. Maybe your leg, too.

But, in the decade-long aftermath of the Big Dip the world of finance has gone topsy-turvy. You now have to PAY borrowers to lend them money. As in, here, please borrow my money and when you return it I’ll give you MY arm. Crazy stuff.

For example, Germany charges investors -0.589% annually for the (extremely dubious) privilege of holding their money for 2 years. Yup, you give the Germans 100 euro and two years later they give you 98 point something back, all is square. Sort of..

Germany 2-Year Government Bond Yield

Going on a bit longer with the Shakespearean analogy, Bassanio keeps the loot, snags Portia, buys a luxury caravel and they sail off to party in the Bahamas, while poor Shylock goes bankrupt. Moral suasion goes waaaaaay out the window.

Willy would be floundering today, probably penning something like The Playboy Of Venice.

What am I trying to say? That I am confounded, dear reader. I was raised in a world where one pays for the privilege of using something - even fiat money.

Ahhhh... but... when things don’t make any sense it is time to sense that a change is coming.  Just as a change was coming back in 2006-07.


  1. A change as in interest rate increases? What other change could be in the ether?

    1. My main point is to underscore the unnatural concept of negative interest rates. A logical, if pernicious, outcome of the financial meltdown of 2007-10 it needs to be corrected ASAP in my opinion.