OMG: INTEREST RATES — WE ARE LOOKING MORE LIKE FRANCE …

Stephen Levine by Stephen Levine on July 10th, 2012

This is article 29 of 61 in the topic Finance

Headlined on the Drudge Report …

FRANCE SELLS BONDS AT NEGATIVE INTEREST RATE

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Reported by the Associated Press …

France’s government sold (EURO)6 billion in short-term bonds at negative interest rates Monday, as investors flock to the perceived safety of Europe’s larger economies. It was the first time rates entered negative territory, according to the French Treasury.

In Monday’s bond sale, 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 <Source>

This is the first time for negative interest rates in France and they are comparitively mild.

But has anyone noticed what is on the Federal Reserve’s H.15 Report …

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Here is the July 6th report on TIPS (Treasury Inflation Protected Securities) showing that the 5-year bond sells for a premium (not yield) of 1.12% per annum, the 7-Year bond commands a premium of 0.86% per annum, and the 10-year bond demands a premium of 0.51% per annum. All while the prime rate is held artificially high at $3.25% and the Federal Funds Rate (which banks pay to borrow from the Fed) average only 0.17%. <Source> Remember premiums are what you pay the government to keep your money safe! Yields are what the government pays you to borrow money.

And this has been the situation for a much longer time.

With rates like these, financial firms are coining money hand-over-first with zero risk. They can get money at approximately one-quarter of one-percent and then charge you 17.9% for a credit card loan.

Bottom line …

Under Obama and the present Federal Reserve leadership, we are rapidly approaching the fiscal, union and immigration situation found in France.

Thank heavens, we are the United States of America and can change our leadership in 2012 and will never be cheese-eating surrender monkeys.

— steve

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