🎁 'Tis the season to support public service journalism Donate Now

The German safety deposit box

David Brancaccio Jan 9, 2012

Today’s teachable moment is about the latest tell-tale sign that Europe’s finances are a mess.

Normally, governments pay investors interest when they want to borrow money. However, things are turning topsy-turvy in Germany. In the face of the euro crisis, so many investors are desperate for a safe place to park money, they’re paying the German government to hold onto their cash. This so-called “negative yield” on some short-term debt is like getting a safe deposit box over at the bank: you pay the bank for the privilege, interest-free, no matter how many bundles of cash you stick in there.

On the topic of the European debt crisis, the leaders of France and Germany held a one-day summit in Berlin today. In their view, a new treaty to fix things by bringing European budgets in line is on track to be signed by the first of March. But not everyone sees things as so “A-OK.”

Camilla Sutton, the chief currency strategist at Scotia Capital in Toronto, is strugging to find encouraging news about Europe’s long-term future. “All in all, the market is very nervous about what’s to come in the weeks ahead,” Sutton said. The euro, gasping for air near $1.27, is an all-too-vivid sign of this uncertainty.

There’s a lot happening in the world.  Through it all, Marketplace is here for you. 

You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible. 

Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.