Friday, March 4, 2016

NIRPalypse

It's coming, according to Bill Gross:
Capitalistic initiative married to an ever expanding supply of available credit has facilitated economic prosperity much like the Sun has been the supply center for energy/ food and life’s sustenance. But now with quantitative easing and negative interest rates, the concept of nurturing credit seems to have morphed into something destructive as opposed to growth enhancing. Our global, credit based economic system appears to be in the process of devolving from a production oriented model to one which recycles finance for the benefit of financiers. Making money on money seems to be the system’s flickering objective. Our global financed-based economy is becoming increasingly dormant, not because people don’t want to work or technology isn’t producing better things, but because finance itself is burning out like our future Sun.
Here in Ireland, both AIB and Bank of Ireland have managed to defy gravity by increasing their Net Interest Margin (more so in the case of Bank of Ireland) - the main driver of their recent profitability.

But with a Negative Interest Rate Policy coming down the track from the ECB it's doubtful that our pillar banks - or any bank for that matter - will avoid the gravitational pull of the NIRP black hole.

Enjoy the sunshine, while it lasts.

No comments:

Post a Comment

Related Posts Plugin for WordPress, Blogger...