#occupy It seems bankers are giving us money(?)

Another interesting snippet from Fullermoney.

Although its full implications aren’t obvious to me yet, it looks, on the face of it, as if the bankers have either developed a case of altruism (possibly with other people’s money/pension funds), or they are worried about the mess they’ve created.

A third possibility is that they are the headless chickens that we believe them to be, totally undeserving of their obscene bonuses.

A fourth possibility that having bought up everything that can be privatised, they’ve nowhere to put their profits, as their mattresses are already stuffed full to bursting and this is the safest option. If it’s the latter then Gov’t should charge them more for buying Gov’t debt.

Still! The Effective outcome is good news for us.

In the eurozone, there are growing signs that governments in places such as Spain and Ireland are “encouraging” – if not forcing – banks and state pension funds to buy public sector bonds, at potentially unfavourable prices.   Meanwhile, in America something just as remarkable is under way: investors are gobbling up government debt at unfavourable rates without needing to be “repressed” at all. This week, demand for 10-year Treasuries was so high – as fears exploded about the eurozone – that the US government sold debt with a record low coupon of 1.75 per cent. And while the nominal yields on 10-year Treasuries, of about 1.91 per cent, are above last year’s lows, in real terms they are in negative territory, given inflation over 2.5 per cent.   Anybody buying Treasuries, in other words, is essentially agreeing to subsidise the US government in coming years – unless you believe that deep deflation looms. Call it, if you like, a form of “voluntary” repression; either way, it will almost certainly end up helping the US state, to the detriment of investors


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