It seems that every week that the European crisis goes on, a new record is broken. This week, government bond yields
in the United States and Germany broke through their previous historic lows to even more historic levels. In Germany, the 2-year government bond yield actually fell negative. In the U.S. the 10-year bond yield has breached the 1.5% mark, a level never seen in the 200 years that data has been recorded. Government bonds of safe-haven countries have turned into the equivalent of Brink’s trucks – investors are willing to pay a premium just to get their money back in a few years time. In Germany’s case, it’s “most,” not “all” of their money. We are truly in uncharted territory
Interesting times indeed. Everytime it seems to get better, it gets worse.
Anyways, when a bond goes negative like that, it means that investors are willing to take less than face value when the bond comes to maturity and they cash it. Germany is essentially receiving a pile of cash for the "priveledge" of holding what investors perceive as a safe harbour for their money. Safe investment countries are offering a really low ROR right now, essentially because they can (Canada is 1.5% IIRC).
Another case of "Give a man a gun and he can rob a bank. Give a man a bank and he can rob the world". Seriously the bankers and politicians responsible for ripping everyone off should just be rounded up and their assets seized to fix the problems they caused. It worked for Iceland.
I'm of the opinion that letting Greece go is the best option and focus on the bigger players. Doesn't mean they can't return later on if they meet criterias.
World economy is in good hands (article from May, I believe it wasn't posted yet):
For anyone who still hasn't grasped the magnitude of the central planning intervention over the past four years, the following two charts should explain it all rather effectively. As the bottom chart shows, currently the central banks of the top three developed world entities: the Eurozone, the US and Japan have balance sheets that amount to roughly $8 trillion. This is more than double the combined total notional in 2007. More importantly, these banks assets (and by implication liabilities, as virtually none of them have any notable capital or equity) combined represent a whopping 25% of their host GDP, which just so happen are virtually all the countries that form the Developed world (with the exception of the UK).
Greece is unlikely to be able to pay what it owes and further debt restructuring is likely to be necessary, three EU officials said on Tuesday, a cost that would have to fall on the European Central Bank and eurozone governments.
“Greece is hugely off track,” one of the officials told Reuters, speaking on condition of anonymity because of the sensitivity of the issue. “The debt-sustainability analysis will be pretty terrible.”
Cyprus’s finance minister pleaded with Russia for help on Wednesday to avert a financial meltdown after the island’s parliament rejected the terms of a European bailout, raising the spectre of a looming default and bank crash.
The country’s banks remained closed through to Thursday, and officials now say the closure could be extended until Tuesday.
Cyprus’s finance minister pleaded with Russia for help on Wednesday to avert a financial meltdown after the island’s parliament rejected the terms of a European bailout, raising the spectre of a looming default and bank crash.
The country’s banks remained closed through to Thursday, and officials now say the closure could be extended until Tuesday.
Cyprus itself is unimportant.
The fact someone thought it was a good idea to make bank depositors - versus shareholders - responsible for bank losses is what is important as it could create runs on unrelated banks. It's the principle of the thing that's important.
Cowperson
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Cyprus’s finance minister pleaded with Russia for help on Wednesday to avert a financial meltdown after the island’s parliament rejected the terms of a European bailout, raising the spectre of a looming default and bank crash.
The country’s banks remained closed through to Thursday, and officials now say the closure could be extended until Tuesday.
When this goes down the drain, I hope Greeks see the fallout clearly from their perch
The fact someone thought it was a good idea to make bank depositors - versus shareholders - responsible for bank losses is what is important as it could create runs on unrelated banks. It's the principle of the thing that's important.
Yeah, they're having a hard time making the sell to tax payer for futher bailouts. Making the "Russian mob pay" for the Cyprus crapshow appears to be a testing of the waters.
How can a country that small need so much bailout money.
I dont know enough about Cypris (I wasnt really sure where it was before all this - I thought it was closer to Greece (thanks google maps) to really make an informed comment about this.
There has to be some reason they decided this time to go after bank accounts in a special tax rather than other methods of repayment.
Does Cyprus know its ok if one of its bank goes tits-up to save the other banks? It is a free market, sure there will be some blow back but all this saving banks stuff is complete garbage.
From what I have heard, ATMs are still functional. The Finance Minister for Cyprus expects no less than a 10-15% run as soon as banks open.
