Don’t Look Now, But. . .

The Wall Street Journal has two items of special note today.  The first is a good article on the debate between Ben Bernanke and Larry Summers about how to understand our low interest rate environment:

For more than a year, Mr. Summers has advanced the theory that “secular stagnation” is to blame: a chronic shortfall in demand. Mr. Bernanke disagrees, blaming a combination of cyclical and special factors.

They both make persuasive (and entertaining) cases. My read is that Mr. Bernanke has theory on his side, while Mr. Summers has the evidence.

There’s a lot of rich material in this well-written article (if you are able to get by the Journal’s paywall; try Googling the headline if not).

But the really notable story is this one:

Spain Joins Negative Yield Club

Spain has joined the sub-zero debt club, just.

The Spanish Treasury on Tuesday issued short-term debt yielding a shade under 0%. The €725 million ($796 million) in six-month Spanish debt delivers an average yield to investors of -0.002%. Buyers were still keen, placing bids worth five times that amount, according to the Treasury.

Another slug of 12-month T-bills, also issued Tuesday, yields just 0.006%.

This is quite a turnaround for Spain. The country was at the heart of the eurozone debt crisis at its darkest hour. In June 2012, it sold similar short-term debt yielding 3.237%.

Look, I understand Germany having negative yields on its paper, but Spain?  Spain?


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