First time ever German interest rates are negative

nemo183

Is it just me or should we not all be more than a tad concerned that German 5yr Bonds are paying a negative interest rate, as are deposits at a major commercial bank? (Deutsche Skatbank)

"Those with deposits of more than €500,000 (£393,000), will, rather than receiving interest on their deposits, have an interest rate of -0.25pc per annum. However, the bank said it would only actually apply this if balances went above €3m."

There are also negative rates on offer in both Sweden and Finland.

Frankly it scares the **** out of me that we seem to have adopted this a the new norm when it has never happened before.

JohnRo

Don't worry, central bankers know what they're doing...

Ballard

nemo183 wrote: »

Is it just me or should we not all be more than a tad concerned that German 5yr Bonds are paying a negative interest rate, as are deposits at a major commercial bank? (Deutsche Skatbank)

"Those with deposits of more than €500,000 (£393,000), will, rather than receiving interest on their deposits, have an interest rate of -0.25pc per annum. However, the bank said it would only actually apply this if balances went above €3m."

There are also negative rates on offer in both Sweden and Finland.

Frankly it scares the **** out of me that we seem to have adopted this a the new norm when it has never happened before.

It may be new to Germany but it's not unprecedented. The Swiss & Japanese have been through this before.


Interbank LIBOR rates for the Euro have been negative (up to two months) for some time so this bank can't afford to take deposits without charging because they are incurring a fee themselves.

nemo183

Ballard wrote: »

It may be new to Germany but it's not unprecedented. The Swiss & Japanese have been through this before.


Interbank LIBOR rates for the Euro have been negative (up to two months) for some time so this bank can't afford to take deposits without charging becau bonds will almost certainly yield a se they are incurring a fee themselves.

I take your point, and in reality the bonds will almost certainly yield a profit eventually, but it's the situation with deposits that I think is potentially more troublesome. You guys have probably seen this site http://www.tradingeconomics.com/ - it's a fantastic source of reliable data (inc historic) on just about any country and any indicator, and lets you do comparables.

I fully realise that Mr Osborne has everything under control (terribly nice man) but whilst we think we're having hard with austerity we have no idea how much worse it is round the Med - Greece, Spain, Portugal etc. Literally no idea whatsoever.

And it's fascinating when you start trying to find an indicator that is even vaguely positive. One that's interesting is wages growth. Or should that be wages decline?

Never was the concept of "Getting to Norway" more pertinent. (Did it not used to be "Getting to Sweden"? Anyone know what went wrong for them?).

nemo183

JohnRo wrote: »

Don't worry, central bankers know what they're doing...

My mind is at rest then....... I knew someone had a handle on it.

I'd love to know if George truly believes he has even a tiny bit of control over the economy - it would make him almost delusional if he did. At least if you're Foreign Secretary you can go and biff other nations with your toys......