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Posted: 8/20/2016 10:30:19 PM EDT
[#1]
Why would anyone buy a german bond when you can buy other countries' bonds that are still positive?
As for the deposits... 
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Posted: 8/23/2016 2:22:45 AM EDT
[#2]
Why you ask would anyone buy these?
1. because you are betting rates will go lower and you'll see a capital gain on your negative interest rate bond. 2. Because financial institutions are required to invest a certain percentage of their deposits in sovereign debt. My prediction..... This will all end badly once rates begin to rise and the magnitude of the loses hit the balance sheets. 
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Posted: 8/24/2016 11:48:42 AM EDT
[#3]
Quote HistoryQuoted:
Why you ask would anyone buy these? 1. because you are betting rates will go lower and you'll see a capital gain on your negative interest rate bond. 2. Because financial institutions are required to invest a certain percentage of their deposits in sovereign debt. My prediction..... This will all end badly once rates begin to rise and the magnitude of the loses hit the balance sheets. They are people who get paid big dollars to manage duration of the bond/asset portfolio. The whole having to mark to market is the problem. |
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Posted: 8/25/2016 4:50:02 PM EDT
[#4]
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Posted: 8/26/2016 9:29:27 AM EDT
[#5]
If they have deflation in Germany, then the real rate of return is positive. Probably depends on which metric you use to measure it whether or not you think they are experiencing deflation.
I think the rate of return in the US is under the rate of inflation. The real return might be lower in the US than it is in Germany. If it is stupid to hold German bonds, it is even dumber to hold US bonds or have any money in savings by that logic. |
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Posted: 8/26/2016 1:07:56 PM EDT
[#6]
Quote HistoryQuoted:
Why would anyone buy a german bond when you can buy other countries' bonds that are still positive? As for the deposits... Because of the risk, and the ability to price the loss. |
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