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I see the German 10-year bond looking for lower yields. Are we going to see new lows for German and other European yields?
As Carl Weinberg the economist, I look at all the influences that ought to be supportive of lower yields. Inflation in Europe is more controlled. We are looking at a safe-haven flow into Bunds. But then Carl Weinberg the market watcher looks at those yields and says, “Gee, they really are near a record low—and how much lower can they go before people get scared about them reaching new lows? And are these things really safe?” That is key.
Japan’s economy is where it was in 1993. The British economy is where it was five years ago. Do you sense an urgency among policymakers to take more aggressive action?
We look at euroland, and the focus is still on austerity. They are not going to stimulate their economies until their budgets and their debt are under control. There is a long way to go. And the Bank of Japan is tapped out on both fiscal and monetary policy. There’s not much they can do even if they want to. I mean, Japan is the next big problem to come down the road.
This all comes down to the sogginess of a 2 percent U.S. economy, doesn’t it?
You can’t blame the U.S. for everything. The Japanese problem goes back more than 20 years to when they never recapitalized their banks properly.