A Financial Conundrum

The last time I checked, the highest rated sovereign debt instruments of Germany, Austria, Finland, France, Belgium and the Netherlands are selling at negative interest rates. Talk about capital risk! Buyers are assured of a loss even compared to stuffing their cash in a mattress. And these buyers include some large funds run by experienced investment managers.

So why are they doing that? Is there something going on in the EU that investors should worry about? It is true that Swiss banks also pay negative interest rates, but at least they might offer the “advantage” of being able to hide money from tax collectors.

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