Happy Halloween. Whether you’ll get a trick or a treat is hard to know in this zombified economy.
Take negative interest rates. When Europe’s central banks pushed rates below zero, large depositors found themselves paying interest instead of receiving it.
But at the same time, some lucky homeowners found their mortgage payments turn into credits.
The weirdness continues. Last week, Bloomberg reported that German power producers would likely be paying customers to use electricity this weekend.
How does this possibly make sense?
The answer is in the wind.
Normally, utility companies calculate how much a kilowatt-hour of electricity will cost to produce and therefore, how much to charge the customers. That’s pretty easy to do with fossil fuels, but wind production – which Germany depends on heavily – can be volatile due to weather conditions. That means utilities must install extra renewable power capacity to meet demand in suboptimal conditions.
This post was published at Mauldin Economics on OCTOBER 31, 2017.