I like "the glass is half-FULL" -news as much as the next guy, but I do wonder a bit at the cheerfulness of the AP writer who penned the lead in the story about France today, noting that the French government just had a successful bond issue "paying" its "investors" negative interest... in effect, charging folks for buying French national debt. To wit:
PARIS (AP) -- France enjoyed a boost in investor confidence with a successful bond auction Monday - but also got a warning from the president that growth so far this year is "nil" and that the country needs to rethink its social model.
France's government sold (EURO)6 billlion 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..."
Huh. Well, investors invest for two basic reasons:
1) To make a profit from "renting" their money to a second party; in bond purchases, that's called being paid interest on the investment.
2) To put their money in a safer place than other market alternatives, even if it means lower returns (or in this case, a loss).
The eagerness with which the new French-bond purchasers jumped aboard should, IMHO, be considered terrifying. It means that they see NO safe investments in the marketplace, believe that banks aren't a safe place to park their cash, and figure that a French government bond at least has a chance of being redeemable when the manure hits the fan.
That they are doing this as the new French president warns that the economy there is stalled --and that the nation may need a fundamental social transformation, a term that usually strikes horror in investment circles-- only highlights the teetering-on-the-edge nature of the situation. France, which faces a looming debt crisis of its own, is still considered a safer bet than any alternative the investors can see.
A "boost in investor confidence"? Even with the legendary "ca va bien" attitude of the French, I somehow doubt this, Associated Press.
It's more, IMHO, like folks bribing the purser of the Titanic to get first dibs at even a moth-eaten life jacket.
"Enjoy zee swim," is anything but confidence-inspiring, I fear.