How “NIRP Refugees” Try to Escape Financial Repression But End up in Riskiest Assets with Greatest Potential for Loss

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NIRP refugees are conservative investors such as pension funds and insurance companies that manage everyone’s money. They need predictable returns from high-quality bonds for future payouts. But now their business model has collapsed under central banks’ negative-interest-rate policies.

Here I am on Double Down, with hosts Max Keiser and Stacy Herbert to discuss what these refugees from financial repression are getting into (warning: this radio show, especially in the beginning, may be unseasonably funny):



There’s something hidden behind the Fed’s flip-flop theatrics about raising rates. Read…  Goldman Sachs, Morgan Stanley, JPMorgan, “Other Banks” Ask Fed to Let them Dodge the Volcker Rule till 2022

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  21 comments for “How “NIRP Refugees” Try to Escape Financial Repression But End up in Riskiest Assets with Greatest Potential for Loss

  1. wholy1
    August 14, 2016 at 1:21 pm

    All the unproductive, parasitic financial “investors/traders” wondering what to do with all the ill-gotten-[digital]gain/illusory paper birds in the bush and how they are going to just “maintain” not only current “value” but also future ACCESS to cover the current “life”style. And the CB fraudsters laughing their asses off.

    • nhz
      August 15, 2016 at 1:01 am

      I don’t think it is the “unproductive, parasitic” types that are wondering, probably more so those who were productive in the past, saved some money and now see all their financial buffers transferred by central banksters and politicians to the unproductive (the parasites who never worked and the speculators in stocks, RE etc.). And it’s not about covering the current life style because that went out of the window years ago already. It’s about maintaining a little bit of independence from the idiotic government which is impossible if all your savings are erased.

      In Netherlands we have a fixed 1.2% yearly tax on savings accounts, whatever the gains (tax office assumes a minimum 4% rate on savings accounts, and taxes that at 30%; at the moment you are lucky to get 0.4% rate and for small business rates are already going negative). This in addition to plunging value of the euro, rampant inflation in almost everything that you can’t avoid paying for etc. It all adds up especially as this policy has been in place basically from the start of the euro in 2001 and gets worse every year.

      This situation is really bad for those who have been productive and saved. For the speculators and parasites it seems that there is always new opportunities thanks to the Wall Street casino and the government; they are still laughing all the way to the bank.

      Kreditanstalt mentions below that the idea of “investing” will have to be scrapped; IMHO the whole idea of “saving” was erased years ago already, it’s just that much of the general public hasn’t noticed yet.

      • Ray
        August 15, 2016 at 1:25 am

        Just out of curiosity is that 1.2% tax an additional tax, or are your gains also included in your income taxes as well.

        • nhz
          August 15, 2016 at 4:49 pm

          It’s separate from and additional to income tax. So first of all your income is taxed heavily, and from what remains after taxes and other expenses the government steals 1.2% every year. It is impossible to deduct anything against this tax like e.g. deducting the mortgage cost for income taxes.

          If you make consistently more than 4% ROI per year the system seems more fair (if you don’t take inflation into account …), but who can do that nowadays? Certainly not if you have to convert your savings account to stocks are bonds in the current market …

          On the other side, if the tax office thinks that investing is your primary income source, all investment income will be taxed as regular income which would certainly mean higher taxes (around 50% of income), but in that case you could also deduct losses.

          Of course for politically privileged investments like homes there are far lower tax rates (0.4% with a very high floor below which one pays nothing, instead of 1.2% for anything over 20K euro).

      • Paulo
        August 15, 2016 at 9:01 am

        I’m a saver with a question. Are people putting in home and office safes and security systems? Do they use safety deposit boxes for cash and valuables?

        Unbelieveable, they penalize thrift and responsibility outright, in Holland. It’s bad enough people make zip on the rates, but then to steal extra?

        • nhz
          August 15, 2016 at 4:52 pm

          this tax system was designed by socialists (the Labour party), I think that explains it all. Of course most other politicians liked it very much because it helps to drive up home prices.

          It’s only fair that if people are stupid enough to save money that the government steals it from them and hands it out to the parasites and speculators who know how to put money to good use ;-(

  2. nhz
    August 14, 2016 at 3:12 pm

    Something tells me NIRP refugees are the only type of ‘refugees’ that won’t get a warm welcome and free-everything-for-life from EU politicians. And as a NIRP refugee I haven’t yet received an interesting migration proposal from Soros either ;-(

    BTW, Dutch pension funds demanded last week that the government will make up for the pension cuts that they are forced to apply from 2017 (because – shockingly – they think pension funds might be under pressure for many more years due to ECB policy and have to cut further for many years). And why not, “the government can lend money for free from the ECB so it doesn’t cost them anything to compensate the pensioners”. These pension fund managers are quick learners ;-(

    Great plan, the pensioners won’t lose a dime (most of them have pensions that are many times higher than their contributions over the years allowed, even with many years of pension cuts they would still make out like bandits) and the people who don’t have a pension from one of the bigger government/union funds at all (the self-employed and future taxpayers) will get the bill for all this fun.

  3. Nicko
    August 14, 2016 at 6:50 pm

    Many emerging markets have surged 20% this year, it’s all good.

    • ERG
      August 15, 2016 at 11:54 am

      I have a bridge in Brooklyn I’d like to sell to you!

      • Chicken
        August 15, 2016 at 12:09 pm

        Once Hillary is elected, she’ll explain all this and reset expectations lower. Meet the new boss…. Meanwhile, hang in there.

    • wholy1
      August 15, 2016 at 12:08 pm

      Until it isn’t.

    • Chip Javert
      August 15, 2016 at 2:39 pm


      Surged in what currency?

      ….and I can’t find a reference to …Many emerging markets have surged 20% this year…’ – got a link or was this apocryphal?

      • Nicko
        August 16, 2016 at 6:32 am

        Obviously in local currencies, that’s where the risk comes in.

  4. Kreditanstalt
    August 14, 2016 at 7:25 pm

    NIRP refugees are stuck between the rock of “permitted investment types” and the hard place of a business model which MUST produce “income”.

    As massive monetary inflation progressively cheapens “money” and destroys yield, returns will trend towards zero (or less) EVERYWHERE. If one obstinately refuses to recognize this fact one will be eventually proven a dinosaur.

    The entire idea of “investing” will have to be scrapped: in future preservation of purchasing power will be paramount, but just how insurers, pension funds, hedge funds and banks will survive in such a world is uncertain at best. Indeed, “The Gonny Gonny Bnaks”, goes the song.

    Thus we see this rampant speculation – nothing more than BETTING – as yield-desperate seekers of “ROI” plumb new depths…

    • Chicken
      August 15, 2016 at 11:55 am

      Don’t forget to mention, shorts are losing their wardrobes and sporting major haircuts.

      Pretty convenient narrative.

  5. rich
    August 14, 2016 at 10:18 pm

    In 2005, as I started dumping large chunks of my real estate, I decided to put the proceeds into a MONY annuity that was paying about 4.5%. After 8 days, I started fearing an economic collapse and fought to get my money back (which I did). However, to the best of my knowledge, that annuity is still paying out. Consequently, I missed out on about 45 grand a year in interest payments.

    I was afraid that there wouldn’t be enough new recruits to pay into what I felt was a ponzi, and that I would ultimately start losing some, if not all, of my principal. To this day, as the US gets closer and closer to NIRP, I can’t understand how these annuities garner enough yield to continue to pay out on the older, higher yielding policies. These investment/insurance vehicles appear to me to be like one-winged bumblebees, and I can’t figure out how they stay aloft? So would anyone out there care to postulate as to how these annuities will continue to pay out for a generation of upper middle class cohorts, a group that seems to be living longer all the time?

    • Chicken
      August 15, 2016 at 11:52 am

      My thoughts exactly. For instance, the San Jose, Ca. real estate I was scared out of is now worth 4x what I sold it for.

      • nhz
        August 15, 2016 at 5:01 pm

        same story everywhere.

        I had to sell my home in 2001 because of a stupid tax change rule that threatened to cost me over 100K in taxes. The home had appreciated by 450% within 8 years without any changes, just like many other homes in the area and I thought this was ridiculous given that incomes had hardly increased. Many people thought the Dutch housing market was ripe for a crash, as price-to-income ratio was the highest in 400 years.

        But after 2001 – thanks to euro introduction and every more crazy central bank policies – home prices doubled or even tripled again, while rents have shot up through the roof. No way to hide. Although I’m spending a fortune on rent, I refuse to spend my hard earned cash on buying a home at these extreme valuations. But I do understand why the housing market is surging ahead again, there never was a better time for subprime buyers to buy a home ;-(

  6. Mike C
    August 15, 2016 at 10:04 am

    Shares of Inc. CRM, -3.47% were down 3.7% seemingly after the company announced that its quarterly results will be released on Aug 31, 2016 after the close of market, instead of Aug 29, 2016, “to accommodate a scheduling conflict.” Great website WR……. enjoy housing news from SF

  7. Chicken
    August 15, 2016 at 1:14 pm

    Why does Harry Dent insist on filling up my inbox with spam, does anyone know if this guy will go away if I send him a few bucks?

    Long TWLO from last week, not an Harry Dent tip.

    • Chip Javert
      August 15, 2016 at 6:12 pm

      I’ve always wondered why guys who are convinced they can see the future (Harry Dent) even bother writing & selling newsletters for the rest of us.

      Makes you wonder why they need the second job of a newsletter.

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