The ultra-low interest rates might not reflect real market rates but only mumbo jumbo rates.

Sir, we are giving banks permission to load up their balance sheets with a lot of sovereign and highly rated corporate debt against much less capital than what they need to have for holding “riskier” assets, and we think this has nothing to do with current low and even negative rates for the “safe” assets.

We have our central banks buying up, at no personal cost for central bankers such amazing quantities of sovereign debt the markets run out of it... and we still think we can talk about market rates? And, of course the rates we see are the marginal rates and not the average rates. It would be interesting to know at what rate sovereigns could refinance all of their debt in truly genuine markets.

Sir, when I saw the title of Gillian Tett’s “An ultra-low interest rate show that could run and run” March 13, I got enthusiastic, as I thought she would approach the issue as an anthropologists. That she would try to explain how come people could accept lending their in many cases hard earned savings, for instance to Germany at .25 percent for ten years… even when their central banks announce their determination of achieving the target of 2 percent inflation. As a minimum it sounds like freely giving away 17.5 percent of their money to the government. Or perhaps real people do not do such things others do it for them.

But unfortunately, at least for now, Ms. Tett took refuge in the discussion of swaps, basis points and other technicalities. We eagerly wait for the anthropologist to get working at it.

PS. For all of you financial experts using US Treasury as the “risk-free rate” remember that is now a subsidized risk-free rate. 

@PerKurowski