11–20 of 48 posts
Or do I have this wrong? I've been trying to follow this a bit..
As someone not wholly familiar with government bonds, let me ask- does this mean that private creditors, aka individuals like you or I, are taking a 50% loss on investments? Or is this at a corporate or governmental level?
Great, so German's pay for the fiscal and political indiscretion of the Greeks. I guess they had little alternative as Greece was too big to fail -or, had they been allowed to default, The German people, via German bank investments in Greece,would have lost even more --seems they didn't learn much from our Wall Street banks and saddling die Volkes with the bag. Or do I have this wrong? I've been trying to follow this…
Earlier quoted context omitted.
'Bond' is another word for 'promise' so you should be able to rely on it... they're supposed to be risk-free Agreed. I'd be livid right about now if I held Greek bonds. Although I suppose anyone looking for shelter in the form of government bonds could have taken the next step and diversified across nations, further reducing their exposure.
A large number of the holders (especially the foreign holders) bought the Greek bonds precisely because of the higher risk, which resulted in them having higher interest rates than, say, American or German bonds. They made a bet and lost.
This restriction makes this deal a nothingburger.
Great, so German's pay for the fiscal and political indiscretion of the Greeks. I guess they had little alternative as Greece was too big to fail -or, had they been allowed to default, The German people, via German bank investments in Greece,would have lost even more --seems they didn't learn much from our Wall Street banks and saddling die Volkes with the bag. Or do I have this wrong? I've been trying to follow this…
I'd consider this a bit of political and fiscal indiscretion of both Greeks and Germans, both relying on a similar moral hazard. German banks made stupid, risky loans, expecting that the EU wouldn't let anything go wrong, and would bail them out if it did go wrong; and Greek governments accepted the money, with the same expectations that the EU wouldn't let anything go wrong.
Greece made quite the mess on its own, of course, but the number of ways in which the EU has further screwed the pooch are mind-blowing.
Earlier quoted context omitted.
Both. Pension funds and the like often invest in government bonds; traditionally they're a safe investment used to hedge against riskier ones like stocks. With the latter you know there's no guarantee of performance, but you expect a risk premium in the firm of a dividend or accelerated growth. 'Bond' is another word for 'promise' so you should be able to rely on it. Saying that 'people knew the risks' of investing i…
> Saying that 'people knew the risks' of investing in bonds misses the point: they're supposed to be risk-free Given the fact that bonds regularly default, I'm not sure how any sane investor could consider them risk-free. If they were, every bond would trade at identical yields, equal to the risk-free rate of return.
It'd be interesting to see what happens next: will investors flee from Europe? Will the banks have enough to resist the loss? Must the ECB and the stability fund support banks holding greek debt? Will fear about default spread to Italy or Spain?
Basically everyone is waiting for Spain, Italy, Greece, Portugal, Ireland and Iceland to crash. None of them have, despite all the screaming and all of them will have to implode in their own sad ways, eventually. Thus, despite all the media talk about fear, drama and emotion people in the investment community are actually very unemotional and pragmatic and unfearful (I can not say they are courageuous now can I?) The…
Incorrect title. This deal only cut down the debt hold by nongovernmental entities. The debt will be cut from 180% to 120%, roughly speaking. This restriction makes this deal a nothingburger.
Earlier quoted context omitted.
'Bond' is another word for 'promise' so you should be able to rely on it... they're supposed to be risk-free Agreed. I'd be livid right about now if I held Greek bonds. Although I suppose anyone looking for shelter in the form of government bonds could have taken the next step and diversified across nations, further reducing their exposure.
A large number of the holders (especially the foreign holders) bought the Greek bonds precisely because of the higher risk, which resulted in them having higher interest rates than, say, American or German bonds. They made a bet and lost.
Greek bond chart: http://www.bloomberg.com/quote/GGGB1YR:IND/chart German bond chart: http://www.bloomberg.com/quote/GDBR1:IND/chart
Go back out 3 years, and you'll see that as late as December 2009, the yield spread was minor, and that it didn't start to really diverge until July of this year.