Greek bond yields surge yet again

I pity the money managers who bought Greek bonds yesterday believing they were getting a good deal at 6%. Today Greek 10 year bonds are yielding 6.45% as the spread between German bonds jumps to 335bps. No doubt the talking heads will be debating the causes but this should not be a surprise to anyone paying attention to the situation. Nothing has been solved in Greece!! The "Greek bailout" by the IMF/EU solves nothing accept promising to loan Greece more money. The Greek problem is that they have too much debt and need to take drastic steps to reduce its indebtedness. I have absolutely no faith in Greece when it comes to implementing and sticking to its austerity measures. The easiest and therefore the most probable solution to Greece's woes is to inflate and devalue its currency. But until they officially withdraw from the EU that solution is not possible. I don't support the devaluation method but it is very popular politically because people do not understand inflation well.

Black Swan Insights


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