The world spins and investors get dizzy. Today the German 2-year note is yielding less than the Japanese two-year! Think about that for a moment as an indicator of the insanity that has enveloped the world. The Germans may well be the best credit in Europe but at this moment the German people are on the hook for a great deal of European DEBT so the SCHATZ is trading at a level that is devoid of reality. The reason for the SCHATZ BID may be a result of the need for high quality collateral to secure REPO borrowing or it may be a signal that citizens of the DEBT-STRESSED PERIPHERIES have grown tired of their domestic banks and are parking huge amounts of money in GERMAN SOVEREIGNS … another example of GRESHAM’s LAW.