I think this is a very relevant comment. It just shows that banks are getting desperate and try to borrow money cheaper wherever they can, no matter the risk. This is the same as when interest rates are low and everybody buys junk-bonds because they have a higher yield. This is the wrong move, since they are also more risky, especially in these times. Just because interest rates are lower in Europe totally overlooks the higher risk. In interest rates one has to look at their level compared to the equilibrium level. If a country keeps its level artificially lower than the market would demand, then it would be a good deal to borrow, since the rates are low AND their currency will lose somewhat due to the credit created. But Europe might not be in that situation. They might have interest rates low, because they are justified by the market, i.e. less money printing and lower trade deficits. In that case it might be better to borrow in the U.S. Does it matter for WM? Maybe. $20 billion seems like a large amount, and if they just lose 1% annually that would be $200 million. Quite significant compared to earnings of $3 billion.
Good luck with your short Poway. I haven’t gotten enough information on this, but the long-term chart sure looks like bearish flag if it cracks. Wonder what ChrisJ has to say to this.
