France sells bonds at negative interest rate

I don't understand. Negative? Does that mean those buying the bonds have to pay interest instead of earning interest?

It means means the buyers are paying to receive less money back.

Who in their right mind would do that? No one. So what this tells me is that managed funds, Mutual Funds, IRAs, Government managed accounts, yadda yadda funds along these lines managed by a third party are being used to buy these bonds. It's ugly.

The French Government must be willing to take the negative press because they desperately need funding.

This needs a pin as this is significant as "breaking the buck"

Wow!
So they are basically "paying" to buy the bonds if they're getting less back. Wtf? Who would do that? Here, you can borrow $100,000 but only have to pay back $90,000? Kind of like that?

No, it's more like by these 98K bonds for 100K

We promise to pay you 98K on this date if you pay us 100K now.

It's like giving the French Government an excellent loan.

It's a guarantee they'll only loose 2k type deal, which looks good if you think anywhere else you could put that money would loose even more.

And so it begins...

Thats what you call one of those "Progressive" "Socialist" states that we are striving to emulate.

You are totally clueless, right?

What Idiot Will buy thoose !


OPPS ! American investors ! DAM !@

When investors are desperate for safety, and they know that huge losses are imminent, they flock into this kind of deal.

That title would fall to you and your tiny, tiny, tiny little mind.

What does it say about the state of the world economy when people are happy to lose in investments just to feel secure from greater loss?

Good one spic! Now get back out on the corner and pimp your sister so your family can eat beans tonight.

It may happen in ANY country of the world, moron.

The only necessary thing is a huge number of investors desperate for "safety" against huge losses.

You are not very bright and lose IQ points interacting with you.

*and I

Its the equivalent of "Stuffing Money In a Mattress" for banks



What this means is that financial firms are positive that there's going to be another HUGE recession.




Lets say you have 50 billion (Euros ) in the EU and you believe that European stocks are about to drop through the floor and lose 50% of their value

So people in Europe with lots of assets are in a bind

Gold is already overpriced , so if you buy it now and try to sell it later you're guaranteed to lose at least 25%

Stocks are about to collapse ( again ) and lose at least 50% of their value.

The banks are going to collapse , so you're an idiot if you trust them with large deposits

You CANT store billions of Euro's worth of CASH in a safe deposit box, only "small" investors have this option , there simply isn't enough currency in circulation for the "Big Boys" to do this.


So whats going on right now is

Large investors are getting their wealth OUT OF THE BANKS and OUT OF THE STOCK MARKET and they need somewhere to store it

The "safest" place they can put it is in government bonds.




Imagine you have five cruise ships , with no life boats ,sinking in the Arctic Ocean and one of the boats is sinking a little slower than the rest ....that's the boat everyone wants to be on, you could actually sell tickets at outrageous prices even though the boat is sinking too.


Financial institutions are so desperate to get off the "other boats" ( Stocks, banks, gold ) that they are willing to take a loss at this point to buy bonds they normally wouldn't touch with a ten foot pole.

under the mattress might be better

Thanks for explaining it like that. Now it makes sense.

Very nice and easy to understand explanation...really puts it in perspective

^this^

It has gotten so bad that people are willing to "shelter" their money in a guarranteed loss because they believe not doing so will result in much greater loss. France is just treading water while it is watching Greece, Protugal, Spain, and now Italy drowned. It knows it is the next domino and so do investors. They might as well be flat out asking for donations like a street corner bum at this point.

Agreed, fantastic explanation. Very Schiff-like, too. Peter? ;)

Suggested this thread be pinned.

It still doesn't make any sense as if you just held on to your 100,000 you would have more money. I don't see this as a safety investment. I would say that if they are doing this, they are even less likely to pay you back your 98,000.

but yet so many people are consuming and living fine. explain this someone seriously. govt employees some but many others. why aren't they affected. will they ever. this is all sounds like a soap opera another story for us to follow and be scared with.

Ordinarily you would be right, but my guess is if... when the Euro dies that 100k in the bank will be about as good as 100k peices of blank paper. By "investing" in French government bonds now, even for negative interest, the money will have to be re-paid in the new/old-world currency of the state instead of the Euro if they get the timing right. It looks like a desparate gamble to me.

you are assuming that it is liquid assets

its actually all fake (fiat) digital money

most of which can not be turned back into liquid dollars (cash on hand) without significant penalties (taxes and fees)

There isn't enough currency for "Big Institutions" to convert their wealth into cash.


The "Small" investors can do this ( and it's what individuals in Europe SHOULD be doing) but when you need to store hundreds of billions of Euros OUTSIDE the banks and stock market the only option you have is bonds.



To stick with my original metaphor about the "sinking ships"

Lets say there are life boats ( currency = lifeboat ) but some of the passengers are too big to fit into them...those are the passengers desperate to get onto the "slow sinking ship"

Passengers who can fit into the lifeboats are better off to get into them.

There isn't enough currency for "Big Institutions" to convert their wealth into cash.


The "Small" investors can do this ( and it's what individuals in Europe SHOULD be doing) but when you need to store hundreds of billions of Euros OUTSIDE the banks and stock market the only option you have is bonds.



To stick with my original metaphor about the "sinking ships"

Lets say there are life boats ( currency = lifeboat ) but some of the passengers are too big to fit into them...those are the passengers desperate to get onto the "slow sinking ship"

Passengers who can fit into the lifeboats are better off to get into them.

finally -- yes, it is a fake bullshit scam. punching numbers in computer like a kid with a calculator. everyone lives around this scam.

money is their control mechanism. so this is all a diversion from something out of their control. buying zombies attention and time while the paper printers prepare for something else they don't want people to know about due to panic.