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FReepers, Let's GIT_R_DONE!
Posted on 02/25/2015 4:05:28 PM PST by Mariner
Germany has sold five-year debt at a negative yield for the first time, as investors paid for the privilege of lending to one of the world’s biggest economies. The sale shows how central bank policy is pushing markets ever deeper into uncharted territory, more than six years after the financial crisis.
Policy makers previously worried that negative interest rates might cause markets to malfunction —but that has not happened so far. Negative yielding bonds mean investors pay more than the face value of a bond plus interest payments, accepting a guaranteed loss if they hold it to maturity.
(Excerpt) Read more at ft.com ...
I felt pretty stupid back in the 90’s when I payroll deducted EE Savings Bonds. Not very sexy.
They’re still grinding out 4.4%.
I guess you are right
Less loss. Don't forget inflation. Then there will be the day when green paper is replaced by blue paper. But your still probably better off than those "owning" stocks in street name when a Corzine blows up the company.
here’s a link with the same story for the 99.9999999% of us who are locked out of the ft.com site:
“Linky no worky without sign up. PASS. Mods delete please.”
yeah, i’d like to see posts from sites like ft.com banned here.
I don't think so. You make some good points.
“Me no get.”
We’re getting real close to hanging thieving bankers and their Nazi central government toadies from lampposts.
Buy ammo and your favorite candy bars.
Aim small, miss small.
https://www.youtube.com/watch?v=bdXoSLb3Ztk
Thank you for the link.
I was duped by Financial Times. I was able to see their article but when I posted it the link must have contained a qualifier for redirects.
Not a decent position on the part of FT IMHO.
However, their article contained information not the the NYT article.
Particularly: Sovereign Debt at negative interest rates, in the Germanic countries, has grown from $20 billion to $2 trillion over the last year.
One year.
This due to institutions unable to acquire and keep $2 trillion in paper cash in a vault somewhere, because if they could they would.
Hell, they'd be in the mattress business.
When cash is at the negative interest rate Pinnacle then you know debt deflation comes as a monster in the night.
That's because all you see is the guy jumping out of the door of the plane.
You don't see his parachute, and you don't see what's wrong with the plane.
But if you listen carefully, you'll hear the co-pilot puking in the lavatory, and the flight attendants are getting drunk in the back...
It means the banking system has high risk and if you are a holder of cash it is cheaper and safer to give it to the government of germany than to put it in a safe deposit box at a bank, or worse deposit it with a bank.
Think of it another way if you had 500 million dollars where would you put it? A normal bank account only insures up to maybe 100 or 200k dollars. You would need like 500 bank accounts at different banks to insure all that money. Or you could drop the whole sum off with the German government and take a small loss. But you would have the full backing of a major economic power.
You can certainly drop the whole thing off at Charles Schwab. But if anything happens to Charles Schwab there goes your money. So it's all about how much risk do you want to take?
Thank you. That clarifies it.
Makes perfect sense. Thank you.
Your theory/explanation was very helpful.
Should read "A full six years into the financial crisis".
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