Posted on 07/13/2012 10:16:28 AM PDT by whitedog57
How bad is Europe’s economic climate? Switzerland, Germany and Denmark have negative 2 year sovereign yields. This means that investors are paying the governments to store their funds!
Switzerland has been in negative territory for a while. Note the red line that is off the chart!
Germany, the European “Big Dog,” has recently joined the negative yield club.
And the Netherlands, where they serve mayonnaise on their french fries (I tried it), has also recently joined the negative yield club.
And these are NOMINAL yields. Even the U.S. where the 2 year sovereign rate is 0.258% and the inflation rate is around 2.0% (implying a REAL 2 year sovereign yield of around -1.75%).
Of course, other countries are in the same boat. Investors are so desperate that they are willing to essentially pay a fee to park their funds with government.
Given the recent growth of government power in the U.S. (expansion of the welfare state, proposals to use eminent domain to seize mortgages, massive growth in personal taxes set to hit at the beginning of 2013, etc.), I would think that investors would be getting nervous about trusting government with their precious funds.
And the University of Michigan Consumer Confidence Index fell AGAIN. In fact, it hasn’t been above 100 since President Obama was sworn into office. In fact, it has never been above 80!
(Excerpt) Read more at confoundedinterest.wordpress.com ...
Moody’s downgraded Italy today:
http://www.zerohedge.com/news/moodys-downgrades-italys-baa2-a3-negative-outlook-full-text
Negative bond rates?
Hyperinflation!
Oh, wait....
Besides this, I believe the govt is lying about the inflation rate, and it’s at least 5%. That makes the negative over 4%.
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