UK Jeremy Warner: <img src= ></img>

Here’s an astonishing statistic; more than 30pc of all government debt in the eurozone – around €2 trillion of securities in total – is trading on a negative interest rate.

With the advent of European Central Bank quantitative easing, what began four months ago when 10-year Swiss yields turned negative for the first time has snowballed into a veritable avalanche of negative rates across European government bond markets. In the hunt for apparently “safe assets”, investors have thrown caution to the wind, and collectively determined to pay governments for the privilege of lending to them.

On a country by country basis, the statistics are even more startling. According to investment bank Jefferies, some 70pc of all German bunds now trade on a negative yield. In France, it's 50pc, and even in Spain, which was widely thought insolvent only a few years ago, it's 17pc.

Not only has this never happened before on such a scale, but it marks a scarcely believable turnaround on the situation at the height of the eurozone crisis just a little while back, when some European bond markets traded on yields that reflected the very real possibility of default. Yet far from being a welcome sign of returning economic confidence, this almost surreal state of affairs actually signals the very reverse. How did we get here, and what does it mean for the future? Whichever way you come at it, the answer to this second question is not good, not good at all.

John Maynard Keynes greets Franz Kafka as Keynesian economics go Kafkaesque.

"The Bundesbank president, Jens Weidmann, has been known privately to complain that the ECB’s bond-buying orders are, for Germany, a kind of Kafkaesque experience; it’s as if he’s awoken to discover he’s metamorphosed into a giant insect."

"We live in an 'extend and pretend' world in which economies pathetically fight between themselves for any scraps of demand ... in an ultimately futile, zero-sum game of competitive currency devaluation."

"The flip side of the cheap money story is soaring asset prices (e.g. stock market, real estate). The bond market bubble is just the half of it; since most other assets are priced relative to bonds, just about everything else has been going up as well. Eventually, there will be a massive correction, in which creditors will suffer sickening losses."

"Call it 'secular stagnation" ... advanced economies, and perhaps emerging ones too, seem to have run out of productivity-enhancing growth and therefore need constant infusions of financially destabilising debt to keep them going."

Today the US DOC reports near zero growth (0.2% annualized) of US economy in prior quarter (Jan - March) and former OMB chief David Stockman commented: “There are no markets left in any meaningful sense of the word, just a raging casino infected with the madness of the crowds and the central bank pied pipers who mesmerize them.” Jeremy Warner’s piece seems all the more salient.

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