France sells bonds at negative interest rate. “France’s government has sold short-term bonds at negative interest rates for the first time, a sign of investor confidence despite concerns about French debts and the wider eurozone.” Confidence? Nice Try. It’s called “flight to safety” and is a sign that investors expect a collapse of the broader economy, otherwise there would be no reason to lend money to the gubbermint and get less back. Japan sold bonds at negative yields at times during their 20+ year Keynesian wreckovery.
This post was last modified on February 23, 2021
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I have a strong suspicion that the French citizens that are buying these bonds are doing so to reduce future tax liabilities.
If they can show a loss one one investment, it may put them in a lower tax bracket and save them money in the long run.
It's a tricky maneuver, and likely only certain politically well connected people will benefit from it.
Seems our French loving troll is staying far, far away from this one.
stop complaining darlin'
Yea thank your lucky starts we only have the one idiot to deal with.
No way you're talking about me. If anything, I'm the smartest one on this forum for discovering The Corporate Greed Conspiracy.
Speak of the Devil and his imps appear!
You discovered? Methinks that was a Freudian slip but hell, Columbus thought Cuba was China and he's in the history books.
No john you are equal to at least 500 idiots
No john you are equal to at least 500 idiots
Oh please, you are being too kind. Or as RAH once wrote, he is a moron with aspirations of becoming an imbecile.
So I am the left equivalent of the right-wing mass of these forums?
Well you are a mass............
A duh-mass.
We need to team up to write comedy on the progs like Johnny Twinkle.....
Sounds like a plan. I need a new career that's not so tough on the body.
Yea thank your lucky starts we only have the one idiot to deal with.
Speak of the devil!
TD,..............MO.
TD MO and Turds
Foreign investors will purchase at negative rate if their currency will be worth less than base currency of bonds. Flight to safety is occurring.
I would stick with a mattress or a can buried in the backyard. The worst I could do is keeping that amount of money, no loss. But then again I'm an engineer and deal in the real world.
This is pure bizzarro world socialist econ of 1+1=POTATO.
Not being a financial wizard, can someone please explain to me how running a negative interest rate is a good thing? Can't say I'd loan any money to these people.
It's not a good thing. Investors know there is more than one interest rate: the nominal rate is the published one. You buy a 10-yr bond at 5% interest and basically what you get back is $1.05 to the 10th power for each $1 you put in, standard compounding. But the REAL interest rate is what your nominal money is actually worth at the end of the period. Nobody publishes that, you have to guess. If inflation runs at greater than 5% per annum during those 10 years, your money is worth LESS than what you started with in terms of buying power. If inflation is lower, you come out with a positive real return in terms of buying power.
Now, analyze what it means for investors to be willing to buy bonds with a negative nominal rate of return baked in. Assuming they aren't stupid (not always a good assumption but bear with me) in the BEST case they are signifying that they are really, really afraid of not getting their money back either in bank deposits, corporate bonds, or whatever. Gubbermint bonds are basically safe as far as a nominal return because they can tax the crap out of anything that moves to pay them off (in the US, the govt can also PRINT the money to pay them off but France, currently part of the Euro, does not have that ability right now.) But in the WORST case there is the chance the investor's REAL return will be positive (in spite of nominal return being negative) - if the bottom drops out of the economy and prices collapse, the buying power of their bonds will be deteriorating LESS rapidly than other asset prices, thus their REAL return will be positive on a relative basis.
In either case, it doesn't sound like they are expecting the "growth" that Hollande has promised.
Thanks Bonfire, you clarified that quite well for me.
I'm no financial wizard either, but I think the Socialist-in-Charge is trying to tell people that he's SO good at managing an economy, if they'll just loan him some money, later on the economy will be so good that the money will actually be worth MORE than it is now. In other words, he can actually make deflation happen. Hey, nobody has ever made socialism work either. Why not try to convince people you're a magician? At least that's my take on it.
Not only does the French Army retreat. Their interest rates do too! Viva le France! (Not!)
Hmm, so you'r going to take a chance at buying something that is guaranteed to be worth less later, rather then buying a chance at buying something that
might be worth more latter? Makes sense to me---not.
One abhors, of course, falling back on any sort of ethnic stereotyping, but I suspect the Japanese economy is underpinned with a somewhat better work ethic than is the French -- in other words, for Japan, it's a strategy that may have been both rational and successful, rather than (economically) throwing down ones arms.
Buy LOTS of them. You can make up the losses in volume. Trust me.
Wasn't me.
I'm puzzled by that thumbs-down. Did that person think you were serious?
Maybe it was Her Feebleness. She's upset because she just bought a lot of them, and thinks she's going to make it up on volume.
She would down thumb anything negative about France.
"A strange game.
The only winning move is
Not to play."
Oh man, Ally Sheedy.