Danish banks will pay you to borrow money from them

Originally published at: https://boingboing.net/2019/08/08/danish-modernism.html

5 Likes

Can I borrow from a danish bank from the US? :stuck_out_tongue_winking_eye:

19 Likes

“We expect this to contribute to driving home prices higher.”

Maybe it’s just that the banks own the real estate too, and need to get rid of it before that bubble bursts.

4 Likes

Seriously what sort of interest are they offering on pay day loans? Really short terms with extreme interest rates right? So if 10 year mortgages are at -.05% a pay day loan should be at like -400%

We’ll be rich!

5 Likes

Sure sounds like they’re expected an overall market crash.

I may have to adjust my IRA to invest in commodities - these may make sense.

image

Actually kinda scary if real.

19 Likes

what happens when the 0.1% sequester away all the cash.

4 Likes

Translation: some people with a LOT of money think that we’re heading for a depression so ferocious that they’ll loan you money for 30 years at only 0.5%, just to lock in some kind of return during the decades-long bloodbath they foretell.

Just because one central bank is doing this is not a sign that others will. Even in this connected world, there are still individual money policy issues unique to each currency.

For this case, the real takeaway should be that Denmark’s central bank is concerned about deflation. That Denmark has reason to worry about deflation does not necessarily mean other currencies are in the same boat. In particular, as I type this, the US Treasury ten year notes are going for about 1.699%.

Investopedia has a good summary of negative interest rates here: https://www.investopedia.com/articles/investing/070915/how-negative-interest-rates-work.asp

Note too that the flip side of negative interest rates is bank accounts also have negative interest rates, and they’re going to be lower than what you can borrow at. Therefore, borrowing a large quantity of krone and parking it in a savings account won’t work.

8 Likes

Coming soon to the U.S.

https://www.bloomberg.com/amp/opinion/articles/2019-08-07/is-pimco-right-that-negative-yields-make-sense

My sense is that this “this time it’s different” argument is whistling through the graveyard to explain away the inverted yield curve that’s presaging the next correction or recession. Keeping the music playing for as long as possible so the right people can position themselves to have chairs when it stops.

15 Likes

I was literally just looking at all-time SP500 and DJIA charts moments before visiting bb and seeing this story, and had the thought that when this comes, it’s going to nail at least a third of market value. Ha!

My retirement account is medium-term US Securities, which have been going WAY up recently – another sign of doom, heheh. Frankly I’m OK with it – I kind of don’t want to have a job any more.

2 Likes

Perhaps. But I do want to have a roof and a stable diet.

20 Likes

Oh I dunno, I’d live out under the stars, scavenging and hunting for squirrels. #madmaxlife

(Of course honestly, I’d probably end up as some warlord’s gimp at best in a Mad Max scenario…)

8 Likes

Flush toilets and TP are luxuries I would rather not do without.

9 Likes

They’re already effectively doing it, mainly in the form of piling money into real estate.

10 Likes

As it so happens, I am stocked up on oats and carrots.

10 Likes

Seriously, my household could probably keep that cookie company afloat during Christmas… there is no way that companies stock can ever tank.

8 Likes

and clean, hygienic, potable water

5 Likes

The time bank movement has you covered, sorta. Ithica hours was the first one, plenty more have cropped up sice then. At the scales we are talking about, its just a question of how far your hot shower, food, clothes, bedding,etc had to travel before they get to you. If you live someplace near where food is grown, your biggest worry may well be the new immigrants that come in from elsewhete. But if you live in Las Vegas or Honolulu, where most of the life support is shipped in, then it may not matter what kind of investments you have, if your bank or stockbroker decide they dont want to take your calls anymore.

4 Likes

Just remember that exchange rates change too, and when taking loans in a foreign currency this is often more important than the interest rate.

6 Likes

One reason that interest rates in Denmark might be behaving oddly is because Denmark is a member of ERM2, which means that the Krone has to be kept pegged to a value of 7.46kr to the Euro.

This means that if the Krone is rising in value, the Danish central bank has to cut interest rates to keep it within the band. These ultra-low interest rates could be a side effect of this policy.

This caught out a load of people in central Europe back in the 2008 mortgage crisis. There, banks offered lower interest rates by lending in Swiss Francs. When the crash came, the CHF soared against the local currency, and people found their mortgage payments got bigger every month even as interest rates fell.

11 Likes

Danish banks will pay you to borrow money from them

oh well:

Yield on 30-year Bunds falls to the minus

If you lend money to the state for 30 years, you have to put something on it. For the first time, the yield on long-term government bonds has slipped into the red

It is a turning point in the financial market and a problem for investors. For the first time in the history of the Federal Republic, the yield on German government bonds with a maturity of 30 years has fallen below zero percent. At times it was on Friday at minus 0.002 percent. The state can be as cheap as never. If investors lend money to them for 30 years, they have to go a long way - instead of collecting interest as they normally would.

All German government securities are now a loss. For bonds with an even longer term does not offer the federal government.

4 Likes