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Italy Bond Yields Rise at Auction, 10-Year Bond Auction Yield at New Euro Era High

Posted by WARREN MOSLER on October 28th, 2011

Nice, they announce proposal to confiscate 50% of Greek bonds from investors right in front of an Italian auction. And we thought we had sorry politicians…

9 Responses to “Italy Bond Yields Rise at Auction, 10-Year Bond Auction Yield at New Euro Era High”

  1. Geoff Says:

    The 50% haircut is completely unfair to Greek bondholders, IMO. It is not like Greek bondholders were trying to get rich quick speculating on some kind of subprime ponzi scheme, or on the bonds of a banana republic. It also highlights a major drawback of bonds, which is that the upside is normally very limited (especially in today’s low yield environment), whereas the downside can be huge.

    Reply

    WARREN MOSLER Reply:

    Agreed

    Reply

  2. Ryan Says:

    Why would the bond holders agree to a 50% cut on the face value of their bonds and not force a default so they could collect their default swap insurance? Shareholders should sue the banks and their directors that agreed to this nonsense. They threw their shareholders under the bus and now the government is going to ‘recapitalize’ the banks and steal the equity on the cheap from the shareholders.

    Reply

    Unforgiven Reply:

    @Ryan,

    Now, that’s a REALLY negative interest rate!

    Reply

  3. Leverage Says:

    I don’t support the status quo government bond market. I don’t support risk-free income because you bought some paper from the government, it’s a scam against people who have to ‘borrow credit’ to raise money and pay back interests to the banking cartel.

    Either lending money is ‘really lending money and assuming risk’ or it isn’t and is ‘printing money’. Kill the government bond market if is just free printing of money (as per MMT) and call it as it is, but people would be shocked if they knew the truth off course.

    If things where logical then naturally rates of italian bonds should raise because they are financing their-shelves with increasing risk of failing on obligations. If not they let just print money and call it day (raising inflation as that money is being wasted on non-productive things).

    But calling the ECB to defend a rate and just buy bonds because they can while people is being crushed is a corrupted support of plutocracy in place and bondholders and failed governments.

    Reply

    Mario Reply:

    @Leverage,

    I think we just need to get rid of the ECB altogether. It just really needs to go. The EU and the sharing of citizenship and work and continental mobility can stay that is good, but NOT the monetary union.

    I think the ECB/EU formation is some weird & demented cousin (once or twice removed) of the soviet union.

    Each country should take back their currency.

    Reply

  4. GLH Says:

    Do you think that this deal may cause liquidity in Europe to dry up even quicker that it otherwise might have?

    Reply

    WARREN MOSLER Reply:

    Sure isn’t slowing down the process!

    Reply

  5. Adam (ak) Says:

    Actually… Warren is right. This may not end up nicely.

    http://www.bloomberg.com/apps/quote?ticker=GBTPGR10:IND

    These politicians are as clueless as their former friend from bunga bunga parties Muammar when he choose to hide in the gutter instead of living in luxury exile overseas

    Reply

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