On Monday, France borrowed at a negative rate, which means investors are losing money… they’re paying to deposit their money! Even though this is for short-term loans (3, 6 and 12 months, for a total of 8.2 billion euros) at rates slightly below zero (-0.002% to -0.004%), this hadn’t occurred since May of 2013.
At the same time, Germany also borrowed at negative rates, while its economic situation is quite different than France’s: Germany experienced a budget surplus in the last quarter, whereas France couldn’t even manage to keep its deficit at 3% of GDP; unemployment in France is double that of Germany; Germany’s commercial balance had a 200-billion euro surplus, whereas France’s had a 60-billion euro deficit. And this list could go on and on (businesses profitability, percentage of exporting small companies, level of investment, quality of professional formation, etc.). How can two countries with so little in common borrow with the same ease on the international markets?
Well, actually, they do have one thing in common: the euro…
This post was published at Gold Broker on Sept 5, 2014.
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