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January 7, 2008
Interest Rates: U.S. Remains Among Lowest in World
Nice chart from Tom Sowanick at Clearbrook Financial showing how U.S. rates currently compare worldwide. In a nutshell, out of 35 economies cited -- including most of the majors -- there are only five countries that offer lower rates than the U.S.: Switzerland, Taiwan, Hong Kong, Singapore, and Japan.
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Is Pakistan really, actually a "major economy?" That seems to be a stretch of the definition, eh? Why not throw Zimbabwe into the mix? What's that old saying? "There are lies..."
ECON 101: Anyone else find it interesting that countries with the lowest interest rates also tend to be rank highly on the Index of Economic Freedom (http://www.heritage.org/Index/topten.cfm)? Could it be that deep and liquid financial markets do better at stabilizing economies and spreading risk, thus reducing interest rates? Seems to me that there is a pretty strong relationship here, one which conflicts with a paper linked here a few weeks ago arguing that spreading of risk magnifies systemic risk. I dont buy it.
Ireland might be an error. There are different rates in the Eurozone, but the differences are very small. The reason of course is the rating. So German bonds (AAA) always yield a little bit less than Italian bonds (AA). But Ireland can't be that much better than Germany.
Perhaps Ireland didn't issue a suitable 2 year bond for the comparison and Bloomberg took one with 1,5 years maturity. Just a wild guess.
How can Ireland have different interest rates to France when they are both in the euro zone?