Despite Heavy Debt & ‘Nil’ Growth, Investors Pay France to Stash Cash
- Posted on July 9, 2012 at 3:50pm by
Becket Adams
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PARIS (The Blaze/AP) –France’s government sold €6 billlion in short-term bonds at negative interest rates Monday, as investors flock to the perceived safety of Europe’s larger economies.
In a sale Monday, the treasury sold three-month bonds at -0.005 percent, and six-month bonds at -0.006 percent. The treasury agency says it’s the first time they have registered negative yields.
So what does this mean?
It means that investors “effectively paid France on Monday to park their money in the relative safety of the government’s short-term debt,” Reuters reports, which means that this is the first time France has been able to raise cash for less than it’ll have to repay.
Considering France’s massive debt burden, this development is somewhat surprising. In fact, France’s economic outlook is stagnant, according to French President Francois Hollande.
“Everybody knows that in the first half of the year, growth will be nil,” French President Francois Hollande said Monday at a jobs conference.
Still, despite its debt and economic projections, “France has been borrowing recently at historically low cost,” Reuters reports. Yields, or borrowing rates, have been falling on French medium and long-term bonds in auctions over the past couple of months.
“Investors are rating it as a relatively safe option compared with euro alternatives such as Italy, one of the world’s biggest sovereign debtors, or Spain, which has had to seek a bailout for banks left crippled by a property crash four years ago,” the report adds.
German Chancellor Angela Merkel and French President
Francois Hollande Sunday July 8, 2012. (AP)
Speaking to union and employer groups on Monday, Hollande outlined what he thinks are the three biggest problems facing France: public finances, lack of competitiveness, and dealing with rising unemployment.
“[W]e need to mobilize all our forces, all our imagination, all our capacities to achieve lasting growth for the years ahead,” he said. “My goal is to make our social model evolve to better guarantee. The time has come to put France on the move, and there is no time to lose.”
“This is not a choice for an assault of austerity but the choice for the future sovereignty of our country,” he added, referring to his administration‘s efforts to tackle France’s growing debt.
The Associated Press contributed to this report.
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RayOne
Posted on July 15, 2012 at 10:53amAnd, now for something completely different.
Report Post »The US Presidential results reporting has been farmed to a Spanish company. It is just coincidental that the Spanish economic bailout is timed for US election 2012.
overthecliff
Posted on July 10, 2012 at 10:49amNot Good
Report Post »lineinthesand
Posted on July 9, 2012 at 10:27pmThe only way any of this madness makes sense is if you believe that this is a currency race to the bottom. Sort of like dragging someone under water believing that they cannot hold their breath as long as you can so only one survives. Developed economies seem to be playing this game. Who survives?
Report Post »lukerw
Posted on July 10, 2012 at 1:51amThis does not make sense… unless France is the only Nation that Survives. So, maybe it is French NATIONALISM? But, either way… it is Irrational & Crazy!
Report Post »tommyg524
Posted on July 9, 2012 at 8:01pmhow you lost your home equity if not your home itself:
Report Post »http://www.pbs.org/wgbh/pages/frontline/money-power-wall-street/#a
..someone needs to snuff dimond
lukerw
Posted on July 9, 2012 at 6:58pmThis is about POSITIONING… for whom will become a DICTATOR… when the CRISIS comes!
Report Post »snapperman
Posted on July 9, 2012 at 5:25pmAre investors rating the bonds as a relatively safe place to put money or are they expecting a market crash in the near future with dramatic deflation (what $100 buys today will be purchased for $90 tomorrow) and figure that a government obligation is better than that of a private company?
Report Post »lukerw
Posted on July 9, 2012 at 7:01pmIt is a… DOOMSDAY… bet!!!
Report Post »Kevin M
Posted on July 9, 2012 at 4:54pmJust so you guys know, I am also willing to borrow money if I don’t have to pay it all back.
Report Post »kaydeebeau
Posted on July 9, 2012 at 4:32pmSo, I am loaning $100 (purchasing a bond) and I can expect to only get back $90 – $95?
How does this make finacial sense, unless you need to record losses for tax purposes somewhere (like the punitive US) ? No wonder we are in such dire financial straits, who loans money with no return or who purchases a bond knowing you are going to get back less than you spent?
Unless the loss is a guaranteed loss as opposed to fluctuating, inflationary losses due to falling currency values – I haven’t thought that through real hard yet?
Report Post »historyguy48
Posted on July 9, 2012 at 4:14pmComrades, talk about letting the fox guard the henhouse! How stupid can you get? Perhaps these people will be interested in purchasing the bridge in Brooklyn I’ve been trying to sell! What do you think?
Report Post »KickinBack
Posted on July 9, 2012 at 4:14pmThat is one awkward pic of Merkel and commie…Note that Obama is out of frame…he‘s kissing Merkel’s shoes…
Report Post »hatchetjob
Posted on July 9, 2012 at 6:18pmI hope Merkel stepped in some doggie stuff first.
Report Post »Cavallo
Posted on July 9, 2012 at 4:14pmNot one drop of red, not one drop of green for France.
Report Post »Gonzo
Posted on July 9, 2012 at 3:59pmWhen the Germans take over France, let’s let them keep it this time.
Report Post »Sam Owens
Posted on July 9, 2012 at 4:11pmThey won’t have to take it over. They’ll just buy it along with Spain, Italy and Greece.
Report Post »KickinBack
Posted on July 9, 2012 at 4:11pmI doubt the Germans would want France. Heck, seeing how they’re going politically, I don’t think the French want France…
Report Post »