The Swiss Franc Will Collapse When the interest interest rate on the long bond goes to zero. A falling rate destroys capital, and that lower rates mean a higher burden of debt. If the long bond rate is zero then the net present value of all debt (which is effectively perpetual) is infinite. Debtors cannot…
Day: January 28, 2015
Why European Euphoria Isn’t Likely to Last
Why European Euphoria Isn’t Likely to Last A prolonged period of heightened tension and difficult debt negotiations is a possibility, though the ECB QE is serving as a sort of backstop holding down contagion risks for now. It is also important to note: The majority of Greeks have expressed a desire to remain in the…