www.NegativeInterestRates.com

Central banks’ experiment with negative interest rates risks backfiring in spectacular fashion, top ratings agency Standard and Poor’s (S&P) has warned.

In a new report assessing the impact of sub-zero borrowing costs on economies and industries around the world, the ratings agency concluded: “Moving to a negative rate environment, in every circumstance that we’ve looked at, is a clear sign of desperation with the list of potential economic damage from these policies substantial.”

http://www.cityam.com/247846/standard-and-poors-attacks-negative-interest-rates

Literature on the Zero Lower Bound

The possibility of such an impediment has been mentioned over the years by McCallum (2000) and possibly others._[1] In the recent past, Paul Krugman and Michael Woodford have provided their views about the topic. Paul Krugman stated at the beginning stages of the ZLBP in the US itself that the monetary policy won’t be able to resolve this situation, and unconventional methods will be necessary to tackle it._[2] Speaking on the topic, Michael Woodford remarked that in a zero lower bound, the ideal thing to be done is for the central bank to bridge the output gap by spending liberally on stimulating effects. _[3]

http://macroeconomicanalysis.com/macroeconomics-wikipedia/zero-lower-bound-problem/

Bond king Jeff Gundlach hates just about everything these days.

The elite investor thinks the spike in oil prices is unsustainable, U.S. stocks have little room left to rise and junk bonds will get trashed by a wave of energy defaults.

But the billionaire founder and CEO of DoubleLine Capital saves his darkest warning for fans of negative interest rates.

“Negative rates are really bad,” Gundlach cautioned during a webcast on Tuesday afternoon. “It’s going to backfire like an old Model-T.”

Central bankers in Europe and Japan have embraced negative rates as a way to stimulate growth — despite the fact that little is known about the consequences because they’ve never been tried on a grand scale before. Even the U.S. Federal Reserve recently sounded open to the idea, in a crisis at least.

But Gundlach has a message for the Fed: “We don’t want negative interest rates,” he said, adding that it would send “banks crashing and stock markets tumbling.”

http://money.cnn.com/2016/03/09/investing/gundlach-bond-king-negative-rates-stocks-oil/?iid=EL

The European Central Bank has taken extraordinary steps to resuscitate the economy, but it’s gone too far, say two power players.

“People look at that and see negative interest rates as a warning signal that the future is even less safe than it is today,” said Achleitner at an American Council on Germany event in New York Wednesday evening.

Renowned American investor Jeffrey Gundlach called negative interest rates in Europe and Japan “the great plague of the 21st Century” in a webcast this week.

http://money.cnn.com/2016/06/16/news/economy/negative-interest-rates-europe/

Hoping to kick-start European economies, the European Central Banktook the extraordinary step two years ago of lowering one of its key interest rates to below zero. The idea was to discourage banks from stashing their money in the central bank by charging them a modest rate for doing so. Since the banks would lose money rather than earn interest on their deposits, it was hoped they would be prompted instead to make more loans at lower rates to businesses and consumers.

It hasn’t worked very well. As many experts predicted at the time, the policy has had only a modest impact on growth. It is also increasingly clear that pushing rates down further wouldn’t help much and could, in fact, increase risks to the global financial system.

The European Central Bank, or E.C.B., sets monetary policy for the 19 countries that use the euro. In June 2014 it became the world’s first major central bank to adopt so-called negative interest rates. Monetary officials in Denmark, Switzerland and Sweden adopted similar policies in the following months; the Bank of Japan joined them in January.

http://www.nytimes.com/2016/08/15/opinion/what-two-years-of-negative-interest-rates-in-europe-tell-us.html?_r=0

Mizuho Financial Group Inc. reported a 16% decline in profit in the April-June period from a year earlier as the Bank of Japan’s negative interest-rate policy hurt its bread-and-butter lending.

Japan’s second-largest bank by assets said group net profit for the fiscal first quarter was ¥132.6 billion ($1.30 billion), compared with ¥158 billion a year earlier.

The weak performance underscores how lenders are grappling with a tough business environment surrounded by a combination of ultrathin loan spreads, weak loan demand and lower economic growth.

http://www.wsj.com/articles/negative-rates-hit-mizuho-earnings-1469984739

from This is Money (the Mail)  Frosty warnings: HSBC has indicated it could follow RBS’ lead and charge for holding cash deposits

…A more extreme threat of negative interest rates cannot be ruled out following a warning to 1.3 million business customers from Royal Bank of Scotland, which also owns NatWest, about the possibility of having to charge for holding their cash deposits.

HSBC has indicated it could do the same, but it would only affect business customers who hold deposits in a foreign currency.

http://www.thisismoney.co.uk/money/investingguides/article-3715946/The-BIG-FREEZE-rates-savers-plunge-zero-look-best-deals.html

The vote to leave the EU has been a nasty negative shock to the UK economy that is going to lower living standards and cause much pain and suffering

Since the leave vote in the EU referendum, the bad economic news has continued to roll in. A survey by the Royal Institution of Chartered Surveyors published on 14 July, which accounts for the post-referendum period, shows a sharp fall in inquiries from homebuyers. Markit’s flash purchasing managers index (PMI) surveys taken after the vote for both manufacturing and services were especially grim. They exclude retail and construction which may well be even harder hit.

https://www.theguardian.com/commentisfree/2016/jul/27/brexit-economy-shock-uk-negative-interest-rates

Swiss cheese earnings at Swiss Banks!

UBS, Credit Suisse, expected to post downbeat quarterly earnings later this week amid turbulent markets and a new kind of squeeze

ZURICH—Switzerland’s biggest banks—UBS Group AG and Credit Suisse Group AG—are expected to post downbeat quarterly results later this week, as each struggle amid turbulent markets and increasingly strict regulation.

Among the newest challenges: a tightening squeeze due to the country’s negative interest rate policy.

http://www.wsj.com/articles/big-swiss-banks-feel-pain-of-negative-rates-1469548347