For the first time ever the Bank of England have sold £3.8 billion of gilts , a three year bond which indicates a yield of minus (-) 0.03% per annum. When the bonds mature in three years you are certain to get back less money back than you invested. The trade is made as it is seen by the Investor as a safe haven. In short the Investor market doesn’t believe in returns and is willing to come back later a collect less. It’s free money for the Government.
This is happening at a time of so called economic crisis when the Government are funding the majority and as their income levels via taxation etc fall. Surely that scenario leads to bust where even Dickens‘ Mr Micawber saw where outgoings exceed income the result is misery. Normally that misery is bust, bankrupt, worthless but I must be stupid, I must be missing something.
I was raised in the era of Mr Lamont who raised interest borrowing rates to 15% in 1992 when the economy was in crisis. So why lower rates now and higher rates then ? . Perhaps I am missing something , perhaps it was the threat on inflation in 1992 but if we keep printing money like we do the currency sterling will deflate even more than its post Brexit level.
At this point we must look a little closer. The Banks continue to lend money to those that don’t need it whilst those relying on credit cards or overdrafts are either having their cards cancelled or paying 3% per month for their overdraft. Mortgages for house buys are still available at low rates but satisfying all the conditions is often for many a bridge too far.
It is Dickens again with the Tale of Two Cities, the best of times and the worst of times. In a nation where 1% of the people have 17% of the income something is awry, then again it has always been. The real point is that none of this adds up and good Mathematics requires the figures to add up, when they don’t then look for the unexpected and that could be worse than any virus or indeed anything we have seen.
Credit is often there for those who are not in need, rarely for those in need. There’s a penny for your thoughts today.
Meantime Invest for less if it’s safety you are looking for. How much less remains the unknown.
qbitblogger 