IN SOVIET GERMANY, BONDS CHARGE YOU FOR LENDING! “On Wednesday, for the first time ever, the German government sold 30-year bonds at a negative interest rate. The bonds pay no coupon interest at all. Yet bidders at the auction were willing to pay more than the face value they would receive back when the bonds mature.”

Despite its strong credit rating and demand for its bonds, Germany is a big part of the growth problem for the eurozone. The German economy shrank 0.1 percent in the second quarter and could tip into recession with another quarter of falling output.

Negative rates aren’t just an indicator of economic distress. They can cause problems in the financial system, too. They make it harder for banks to turn a profit or for insurance companies to fund their future payouts.

“Why would you want to lend money when you can’t make money?” Sohn said.

Indeed, bank stocks have tumbled — 24% in Europe and 23% in Japan — over the past year.

Most of the negative-yielding debt is in government bonds, in part because they are seen as ultra-safe. But there are also about $60 billion U.S. corporate bonds that are in negative territory.

Something similar is going on with U.S. government debt: The yield on the 10-year Treasury note has sagged to 1.57% — a rate that would amount to a negative one after accounting for inflation. Japan has been stuck in years of low inflation and sluggish growth. And growth rates in Europe have slowed in recent quarters. 

This news seems like good leverage for Boris Johnson and Brexit, and in related news, “Sterling soars as Brexit deal hopes rise,” the London Telegraph reports today.