This yield and price crap? Look, I've got a piece of paper. It's a pretty piece of paper. It has an embossed stamp and a water-mark, and, if I'm lucky, a wax seal from the Fuggers.
But I don't really understand bonds.
Here's a simple question. What on earth does one Greek government bond (bought in the last offering) have to do with another (bought in some putative Greek nonexistent future)?
To me, these are two entirely separate pieces of paper, even with gilt edges and yea a broken promise.
Or, to put it another way: why are there not two markets: one in (diseased) pre-owned Greek government bonds, guv, good runner, got a bit of work to be done, change the spark-plugs and a few bits of suspension here and there and you're good to go ... and one in (insane, only the ECB would possibly contemplate this, and even then under the rack) proposed Greek bonds.
I mean, I just don't get this.
I don't understand the market, basically. No sane human being would want to own a Greek bond at 100% of the issue price. No sane human being would want to own a Greek bond at 93.5% of the price (I forget the ECB rescue rate, but it was something like 6.5%).
In fact, as far as I can see, and you will be glad to hear that I am taking a short-cut (if not a haircut, ho ho): no sane human being would want to own a Greek bond at even 40% of the issue price.
Plus which, the wonders of compound interest are going to make that 40% less and less appealing every single goddamn day.
Apologies if you've already pointed this out.
Liked the three alternatives, btw.
... although I don't expect the Twin Towers of Benelux to like them very much.
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My Name Is Bond, Greek Bond
Date: 2011-05-14 01:31 am (UTC)But I don't really understand bonds.
Here's a simple question. What on earth does one Greek government bond (bought in the last offering) have to do with another (bought in some putative Greek nonexistent future)?
To me, these are two entirely separate pieces of paper, even with gilt edges and yea a broken promise.
Or, to put it another way: why are there not two markets: one in (diseased) pre-owned Greek government bonds, guv, good runner, got a bit of work to be done, change the spark-plugs and a few bits of suspension here and there and you're good to go ... and one in (insane, only the ECB would possibly contemplate this, and even then under the rack) proposed Greek bonds.
I mean, I just don't get this.
I don't understand the market, basically. No sane human being would want to own a Greek bond at 100% of the issue price. No sane human being would want to own a Greek bond at 93.5% of the price (I forget the ECB rescue rate, but it was something like 6.5%).
In fact, as far as I can see, and you will be glad to hear that I am taking a short-cut (if not a haircut, ho ho): no sane human being would want to own a Greek bond at even 40% of the issue price.
Plus which, the wonders of compound interest are going to make that 40% less and less appealing every single goddamn day.
Apologies if you've already pointed this out.
Liked the three alternatives, btw.
... although I don't expect the Twin Towers of Benelux to like them very much.
We need a Hobbit.