From Bill Bonner’s Diary (USA) –
Yesterday, stocks took a little rest. The Dow went approximately nowhere.
At first glance, things don’t look bad. U.S. crude oil is back over $40 a barrel. And U.S. stocks are back in the black for the year.
But China is on a debt binge that is bound to end in a blowup. And U.S. corporate earnings are falling, leaving only borrowing and share buybacks to hold up prices.
Frackers are still operating at a loss. Auto and student debt are going into default. Global trade – as measured by freight indexes – is still sinking.
And Japan – the pacesetter in the race to the bottom – is proving that negative interest rates have an effect exactly opposite to what the meddlers intended.
NIRP (negative-interest-rate policy) is supposed to spur lending and spending.
In Japan, it has done neither – the yen is strengthening as the economy weakens.
NIRP was always an “experimental” policy.
Central banks in Sweden, Denmark, Switzerland, the euro zone, and Japan have all pushed their target lending rates into negative territory. All that has been learned so far (apart from that this doesn’t work) is that sales of home safes go up… as people take out cash and keep it at home.