German Bond Rates Go Negative

Today, Bloomberg reports that for the first time German bonds will pay a negative yield! That means you get back less at maturity than you paid for it. This tells us that the rest of Europe must be such a mess that you will forgo any interest to safeguard your money.  This sort of follows the Will Rogers quote "I am not interested in a return on my money, just a return of my money."

Combine this news with the report today that the US now has as much debt as GDP. Are we the next Greece? Should we be moving our money to German bonds?

Things are NOT getting better and anyone who tells you that is trying to sell you something.   Maybe, a re-election! If you watch the news, you will see an on going drum beat of "things are getting better."  The decrease in unemployment will be followed by other "economic good news."  It is all made up!

Germany Sells Bills With Negative Yield for First Time Amid Crisis Concern

By Brian Parkin | Bloomberg – 4 hours ago

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Germany sold bills with a negative yield for the first time as investors sought the perceived safety of the region's benchmark securities amid concern leaders are struggling to contain the debt crisis.

The government sold six-month bills today with a yield of minus 0.01 percent, the Federal Finance Agency said today in an e-mailed statement. The auction drew bids that were about double the 3.9 billion euros ($4.98 billion) sold.

Some 25 of the Federal Finance Agency's 39-member auction group participated in the bidding, the debt agency said. Investors bid for 1.8 times the securities offered, it said.

The yield on the German two-year note was little changed at 0.16 percent as of 11:40 a.m. London time, while the 10-year yield rose three basis points to 1.88 percent.

German Chancellor Angela Merkel and French President Nicolas Sarkozy plan to drive forward their agenda for stricter budget rules as they seek to craft a master plan for rescuing the euro over the next three months. The two leaders have sponsored a plan to draw up new fiscal guidelines by March to resolve a crisis that began in Greece more than two years ago.

To contact the reporter on this story: Brian Parkin in Berlin at bparkin@bloomberg.net