The World Is Experiencing The Opposite Of A Sovereign Debt Crisis

The problems of Spain, Italy, and Greece are often pointed to as being somehow bleeding-edge, canaries in the coalmine that serve as warnings to other governments of what might happen if they don’t get their acts together.

But the real story today is just the opposite. The world is experiencing whatever the reverse of a sovereign debt crisis is, as borrowing costs for government are plummeting EVERYWHERE.

The most iconic chart is this one, which is the yield on the US 10-Year Treasury, which is once again within a few basis points of an all-time low.


Photo: FRED

You might be tempted to say, well, OK but the Fed is manipulating rates, or that the US is just the “cleanest dirty shirt” but both of these explanations fail when you look at the wide sweep of borrowing costs around the world.

Here’s a 5-year chart of the Australian 10-year, whose yield is also within a hair of its lows.


Photo: Bloomberg

France (which is thought of as a beautiful fiscal model) is seeing its 10-year borrowing costs at 2.228%.

Here are the yields on some other 10-year Treasuries around the world.

Japan: 0.778%

Germany: 1.26%

UK: 1.549%

Sweden: 1.285%

Finland: 1.501%

Canada: 1.635%

Israeli bonds are falling to multi-year lows.


Photo: TradingEconomics

Here’s the Mexican 10-year!


Photo: TradingEconomics

None of this is actually “good” news.

What this essentially means is that there’s a lot of money out there that sees no productive investments in the real world, and thus people are willing to stick it with entities that promise them a very meager return.

But it is a good reminder that the crisis is basically the exact opposite of what so many mainstream commenters say it is. It’s not about governments reaching their endgame.

It’s about a growth-deficient world, governments being the one place that can absorb all this money.

SEE ALSO: The most important charts in the world >

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