Ten year bonds pay 17% p.a. Is this an opportunity? Or the end of the Euro? This crisis looks worse than the American one three years ago.
Greece has fallen into a vicious circle: It cannot pay its debt, so its interest rate increases, so cannot pay its debt. Greece might have to impose a haircut - or loss - of as much as 80 percent on creditors and start again. Who loses? Germany.
7 comments:
Wow, more than 30%! The world should buy again.
It's so sad that the financial crisis of 2008 ruined the good name of derivatives. Just imagine how much money one could have made, reselling these worthless Greek bonds to hochfinanz illiterates and amateur traders as AAA-rated debt obligations. Strictly speaking, you wouldn't even be lying, Nordic Europe would de facto vouch for the if the shit ever hit the fan. All is not lost, we still have the IMF. They seem to be still on board with the meme that Greece will be able to pay back their debt (or, at least, the interest on their debt.)
Ironically, the rating agencies who enabled Wall Street sociopaths to repackage debt as valuable investments up until 2008, are now the only institutions who keep warning about Greece. Just imagine what, say, AIG and Moody's would have said and recommended about Greece's worthless bonds around 2006 or so.
Argentina paid 30 cents on the dollar. Greece will pay 50 cents I think.
Argentina paid 30 cents on the dollar. Greece will pay 50 cents I think.
Yeah, anybody with half a brain can see that interest rates of >10% are already very hard to live up to. Practically impossible. Greece will thus default on its debt. There's no other choice for the rich EU countries then to take the losses.
I don't know when it will happen, but it will happen. As soon as Greece defaults, it will sends shivers down all traders' spines, because the mere fact of a country defaulting on its debt will be terrifying in itself.
I, myself, still hope for the good times to come back or, at least, the bad times not turn worse, but we all know that something's up after the summer. Just like 2008.
I suspect widespread expropiation of savings will be the solution adopted to pay public debt. Not good for people who lives from rents or pensions.
Argentina is the country of the future.
Greeks will have to work for a change. As long as there is enough to eat, the crisis is manageable. All the banks knew that this day was coming. I'm happy that the EUSSR has been given a body blow.
Ivan
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