The late great Louis Rukeyser used to call bond traders, bond ghouls. The reason is that bond traders always see things from the worst point of view, assuming that the economy is going to hell in a hand basket. Thus the only way to keep your money safe is in bonds, not stocks or any other asset. A more pessimistic bunch you can not find.
Bond Ghouls are currently assessing bonds in country after country in Europe as unable to make debt payments and default as being the obvious next step. The last one was Italy and if you have been following our postings you know Italy can not pay interest rates above 7% and survive long. They currently are nearing 8%. The only country left in Europe currently considered stable financially is Germany and the bond ghouls have taken a different approach there today.
We have talked about EFFECTIVE negative interest rates on US Treasury bonds when you take the impact of inflation and the low low interest rates paid. But for the first time in my life government bonds actually traded at NEGATIVE interest rates. The rate was .01% negative and it was even oversubscribed by almost four to one. This traders and investors is what is called real fear that Europe is going to collapse. You give Germany $10000 and in six months they give you back $9995. Go figure.
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