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.
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 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?