Monday, May 4, 2015


In case you missed it, back in September of 2014 Germany sold about $4.33 billion (or 3.34 billion) of 2-year government bonds at negative interest rates. This means that instead of Germany paying you interest when you lend them money that you pay them for the honor of letting them use your cash to pay their bills.

Let that sink in for a moment. People are actually lending Germany money, and paying them for the privilege of doing so.

Things worked out so well with their 2-year bond sale that Germany did it again in February of this year. This time they sold 5-year bonds to investors ($3.72 billion, or 3.28 euros), who then pay Germany a small premium for holding their debt.

So, why is this important, you ask? Because according to at least one source over 25% of all bonds sold in Europe now carry negative interest rates. The fact that the European economy, let alone the U.S. economy, has yet to take off with such low interest rates means there are serious distortions throughout the European economy.

Stay tuned. It's usually "small" stuff like this that starts us off on a story-ride that doesn't end very well.

- Mark 

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