Submitted by Chris Hamilton,

What do Sovereign bond interest rates represent???

If I knew nothing about the growth, the debt, the inflation, the exporters vs. importers, the serial defaulters, currency manipulators, hot-money or conversely deflation fighters, etc. etc. and simply grouped the nations of the world by interest rates paid on 1yr and 10yr sovereign debt…well I’d get a funny feeling the rates paid have a stronger correlation to the relationship of the nations to the US than any other variable.  I’d wonder if your status with the central bank cabal was more important than your ability to repay the loaned money?  Luckily I know better!

Some very notable rates…

  • PIIGS are amazing and now thanks to the EU’s LTRO are dirt cheap…(PIIGS 1yr / 10yr yields)= Portugal 0.05% / 3.75% , Ireland 0.12% / 2.18%, Italy 0.27% / 2.74%, Greece 2% / 6.3%, Spain 0.13% / 2.50%…Serial defaulters need not pay more for lending ever again!?!
  • Italy with the world’s 3rd largest aggregate debt, no growth, and no enforceable tax laws have blended rates that are ludicrous and indicative of institutional fraud…in fact, that can be said of nearly all these rates.
  • Australia and New Zealand are the only “outliers” paying up on yields and generally sitting in the wrong classifications.

1 yr interest rates

US Pals and/or “deflation-istas”:

Belgium 0.02%, France 0.024%, Netherlands 0.03%, Germany 0.036%, Switzerland 0.05%, Japan 0.055%, Czech Rep 0.09%, US 0.09%, Ireland 0.12%, Spain 0.13%, Hong Kong 0.14%, Sweden 0.25% Denmark 0.25%, Italy 0.27%, Latvia/Lithuania 0.3%, Singapore .0.35%, UK 0.41%, Portugal 0.5%, Israel 0.53%, Taiwan 0.6%, Austria 0.7%, Qatar 0.7%, Canada 1%, Saudi Arabia 1%, Bulgaria 1.26%, Norway 1.33%,

US “fence sitters”:

Hungary 1.98%, Greece 2%, Philippines 2.07%, Thailand 2.14%, Poland 2.31%, S. Korea 2.37%, Australia 2.5%

US naughty list and/or importers of US inflation:

Mexico 3%, Chile 3.1%, Malaysia 3.3%, China 3.74%, New Zealand 3.9%, Vietnam 4.6%, Colombia 5%, Iceland 5%, S. Africa 6%, Sri Lanka 6.4%, Indonesia 7.25%, Russia 8.6%, India 8.7%, Venezuela 9.7%, Turkey 9.75%, Pakistan 10.1%, Kenya 10.27%, Brazil 11.2%, Egypt 12.2%, Argentina ???, Ukraine 20%

10 yr interest rate

US Buds and/or “deflation-istas”:

Switzerland 0.44%, Japan 0.51%, Germany 1.06%, Finland 1.23%, Netherlands 1.26%, Austria 1.34%, Denmark 1.42%, Czech Rep 1.45%, France 1.46%, Belgium 1.47%, Taiwan 1.59%, Sweden 1.62%, Hong Kong 2.02%, Canada 2.09%, Ireland 2.18%, Norway 2.35%, Singapore 2.38%, US 2.43%, UK 2.49%, Spain 2.50%, Latvia/Lithuania 2.6%, Israel 2.72%, Italy 2.74%, Qatar 3.04%,  S. Korea 3.06%, Poland 3.37%, Australia 3.40%, Portugal 3.75%

US “fence sitters”:

Thailand 3.4%, Bulgaria 3.5%, Malaysia 3.89%, New Zealand 4.2%, Philippines 4.33%

US “haters” and/or importers of US inflation:

Chile 4.24%, China 4.3%, Hungary 5.07%, Peru 5.2%, Mexico 5.71%, Greece 6.3%, Colombia 6.66%, Iceland 7.28%, Sri Lanka 7.5%, S. Africa 8.14%, Vietnam 8.21%, Indonesia 8.25%, India 8.85%, Argentina 9%?, Turkey 9.32%, Russia 9.38%, Venezuela 11.7%, Brazil 11.97%, Kenya 12.1%, Pakistan 13.2%, Egypt 15.9%

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Extra credit:

1 mo interest rates

Germany  <-0.025%>, Switzerland <-0.015%>, France 0.008%, US 0.03% (US was 5.22% in Feb ’07), UK 0.031%, Russia 9.55% – but these rates are only for central banker pals worldwide…

Consumer Rates

While consumer rates in America for non-bankers are a little higher…

  • Credit card rates are a minimum of 10.5% easily up to 30%
  • Auto loan (60mo, new car) @ 3.2%
  • Mortgage (30yr fix) @ 4.3%
  • Stafford student loan @ 4.66%

And poor, poor savers…not quite keeping up with inflation (somewhere between 2% and 10%…like the Fed you can pick the rate that suits you best)…

  • 1yr CD @ 0.6%
  • Savings accounts @ 0.1% – 0.3%

So does that mean that US savers and credit card spenders are 'friend' or 'foe'?

 

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Original source at: zero hedge - on a long enough timeline, the survival rate for everyone drops to zero | http://www.zerohedge.com/news/2014-08-12/how-value-sovereign-bonds-2-words-us-friend-or-foe

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Inflation is hot property today, hyperinflation is even hotter! We think we are modern, contemporary, smart and ready to deal with anything. We’ve got that seen-it-all-before, been-there-done-it attitude. But, we are not a patch on what some countries have been through in the worst cases of hyperinflation in history. Here’s the top 10 list of worst cases in history. We’ll start with the worst first…let’s think positive!

Hungary 1946

Inflation at its peak reached a staggering figure of 13.6 quadrillion % per month! That’s 13, 600, 000, 000, 000, 000%. The largest denomination bill was a 100 Quintillion note. Prices ended up doubling every 15 hours at the time.

Zimbabwe 2008

Prices doubled here every 24.7 hours in November 2008 and inflation reached levels of 79 billion-odd %. They eventually stopped using the official currency and switched to the South African Rand or the $US. A loaf of bread ended up costing $35 million. This is the most recent case. It was Mugabe’s land-redistribution program that caused this.

Yugoslavia 1994

In just the one month of January 1994 inflation rose by 313 million %. Prices doubled every 34 hours (which is nothing compared to Hungary). The currency ended up getting revalued 5 times in all between 1993 and 1995, all to no avail. The cause? A recession triggered by overseas borrowing and an on-going political struggle in the 1980s and the following decade.

Germany 1923

Adolf Hitler rose to power as a consequence of hyperinflationary pressure (at least one of the reasons). Prices doubled every 3.7 days and inflation stood at 29, 500%. Germany was crippled with the reparation payments after the Treaty of Versailles and the end of World War I.

Greece 1944

Prices started rising by 13, 800% in October 1944 and they doubled every 4.3 days. The trouble was the debt incurred by World War II.

Poland 1921

Prices rose in 1921 by 251 times in comparison with those of 1914. They doubled every 19.5 days. The Zloty was introduced as the new currency in 1924 in an attempt to start afresh. Inflation stood at 988, 233% in 1924.

Mexico 1982

Mexico had a rate of inflation of 10, 000% in 1982 (due mainly to too much social expenditure).

Brazil 1994

Inflation was 2, 075.8% at its worst in 1994. The Real was adopted in 1994 and it managed to calm inflation down.

Argentina 1981

The highest denomination bill was the one million pesos note. The Peso was revalued three times.

Taiwan 1949

This was a knock-on effect from China and the Chinese Civil War. The New Taiwan Dollar was issued in June 1949. The monthly rate of inflation stood at 399%

Inflation can be creeping (mild or moderate inflation) or galloping. We can talk of Hyperinflation and stagflation (inflation and recession). Deflation is not better. We have so many names for it.

Hyperinflation means prices doubling in such a short space of time that we can’t keep up with it all. Hyperinflation comes about at times of trouble, war, conflict, upheaval, change on unprecedented levels. It comes about because we still haven’t learnt how to control it. History repeats itself, we hear people say. Thankfully, it doesn’t repeat itself too often. Fingers crossed.

Originally posted: Hyperinflation – 10 Worst Cases

You might also enjoy: Death of the Dollar | You’re Miserable USA! | Emerging Markets: Lock, Stock and Barrel | End of the Financial World 2014 |  Kristallnacht on Wall Street? Bull! | China’s Credit Crunch | Working for the Few | USA:The Land of the Not-So-Free  

 

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Original source at: zero hedge - on a long enough timeline, the survival rate for everyone drops to zero | http://www.zerohedge.com/contributed/2014-02-06/hyperinflation-%E2%80%93-10-worst-cases

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