專欄普倫德

Foolery at work in investors’ search for safe assets

Awelcome benefit of the collapse in oil prices and of falling inflation more generally is that the return on cash in much of the world is now positive in real terms.

All the more paradoxical, then, that investors are cheerfully accepting negative yields on increasing amounts of sovereign debt. Well over $3tn of government bonds is reckoned to have negative nominal interest rates. There was no heist of this kind, with investors paying for the privilege of lending to governments, even in the Great Depression of the 1930s.

The nub of the story is that a global savings glut is confronting a shortage of safe assets. Credit quality diminished after the financial crisis, not least because so many triple A rated structured products turned out to be dross.

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