Following a two-day marathon in which "Spitzenkandidat" Failed and Merkel's Plan A and Plan B Dumped Lagarde will now head the ECB and give up her job at the IMF.

Nearly Perfect

It's rare to find someone who is consistently wrong on everything. Christine Lagarde, whom the EU just anointed as the president of the ECB, comes close.

To emphasize the point, Negative Interest Rates Benefit the Global Economy, Says IMF Chief Christine Lagarde.

Subzero interest rates in Europe and Japan are “net positives” for the global economy, International Monetary Fund chief Christine Lagarde said Tuesday, though she warned that the side effects of unorthodox central-bank policies should be closely monitored.

“We see the recent introduction of negative interest rates by the ECB and Bank of Japan —though not without side effects that warrant vigilance—as net positives in current circumstances,” Ms. Lagarde said.

Compromise Candidate

French President Emanual Macron proposed Lagarde as the "compromise candidate".

Even Lower

Yield on the German 3-month bond is -0.556%. Yield on the German 10-year bond is -0.373%.

"Net Positive" Nonsense by the Numbers

Negative interest rates

  1. Keep zombie corporations alive
  2. Punish savers
  3. Foster economic bubbles
  4. Foster income and wealth inequality
  5. Encourage leverage
  6. Punish banks by charging them interest on excess reserves

Diminishing Returns

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If negative interest rates did any good, why are Europe and Japan in such miserable shape?

Yesterday, I noted the BIS Warns of Diminishing Returns of Monetary Policy, Zombies, Junk, Complacency.

BIS Comments

  • "Fundamentally, monetary policy cannot be the engine of growth."
  • "As mutual funds and other institutional investors have increased their holdings of lower-rated debt, mark-to-market losses could result in fire sales and reduce credit availability."
  • Low interest rates "crowd out resources available to more productive firms."

Globally

Globally, central bankers are hell bent on pursuing the same bubble-blowing policies that led two huge economic busts.

This third bubble is the biggest of all but they do not see it.

Meanwhile, there is no impetus for change anywhere, except in the wrong direction!

Wrong Cake

The appointment of Lagarde is icing on the "If it doesn't work, we will keep doing it, until it does" cake.

Rules, Rules

The ECB is running out of sovereign bonds to buy, by current rules.

Lagarde will also face a test regarding budget deficits and debt in Italy and the deficit in her own country, France.

How many rules will Lagarde break?

Mike "Mish" Shedlock

Lagarde Praises Negative Rates, Study Shows They Reduce Lending

Incoming IMF chief Christine Lagarde says negative rates have helped Europe more than they’ve hurt. I disagree.

ECB's New Interest Rate Policy "As Long As It Takes" Huge Failure Already

Last week, the ECB tried to make loans more tempting to banks, but the banks wanted no part of it.

Negative Interest Rates Are Social Political Poison

The interest rate business model is dead. Negative interest rates killed it, with no replacement in sight.

ECB to Keep Negative Rates for "At Least" Another Year: Treasuries Rally

The ECB will end its asset purchase program in Dec. but will keep negative rates "at least through the summer of 2019".

Questioning Lagarde as Gross Interest Income in Germany Heads Towards Zero

Thanks to negative interest rates, Germans interest income has plunged towards zero.

Negative Interest Rates: Have They Backfired Already?

Anyone with an ounce of common sense knows that negative interest rates cannot occur naturally, can only occur with government or central bank intervention, have nothing to do with free markets, and must fail eventually.

Negative Interest Rate Mutiny in Germany, Japan

Banks in Japan and Europe are fed up with central bank negative interest rate policies that cost the banks money.

Negative Interest Rates: Can They Ever Occur Naturally? What is the “Natural Rate”?

A question on negative interest rates has arisen in response to Negative Interest Rates: Have They Backfired Already?

Like Lemmings Over a Cliff: Fed to Test Negative Interest Rates

Low and negative rates have not done a damn thing for the Eurozone, Switzerland, Japan, or any other country that’s implemented them. Nonetheless, Fed lemmings want to Test How Banks Would Handle Negative Rates.