We’re Watching the Silent Collapse of Europe in Real Time

This episode explores the ongoing decline in European interest rates and the implications for the broader economy. Against the backdrop of recent ECB rate cuts, the speaker analyzes market predictions and official statements, highlighting a high probability of rates reaching ultra-low or even zero levels. More significantly, the analysis delves into the behavior of German bond yields, demonstrating a bull steepening pattern consistent with past recessionary periods. For instance, the speaker compares the current situation to the 2008 financial crisis, noting similar trends in short-term and long-term rates. The speaker argues that the current downward pressure on rates is not solely due to tariffs, but reflects underlying economic fundamentals, such as low growth and disinflationary pressures. Ultimately, the episode concludes that the global economy is experiencing a race to the bottom in interest rates, with the ECB seemingly accepting this trajectory, while other central banks like the Federal Reserve remain hesitant. This suggests a potential prolonged period of low growth and low inflation, echoing the economic conditions of the 2010s.