Market Turmoil Twaddle

ruggedtoast

I wish I had £500 a month to lend to the Germans.

Generali

chewmylegoff wrote: »

but what would you do with it? after you've filled your ISA and paid £500 a month into regular savers, you're still going to have quite a lot left over.

in order to invest in something which will pay the returns which match the interest payments due on your debt, you will need buy bonds. suggest you go for euro denominated ones to avoid taking on foreign exchange risk. may be some nice greek bonds. what can possibly go wrong.

I'd buy a small utilities company or perhaps a couple of million acres of farmland.

michaels

two points
firstly this shows serrious misjudgement by the German DMO to allow an auction to be seen to fail during a time of market stress purely for presentation reasons

more substantially, the reasons Germany has been able to borrow so cheaply as it has been seen as the safest option for those with money looking for a home for it. If people are slightly more comfortable with holding other assets then they will be less willing to bid german yields down to silly levels thus increasing german yields may be more an indication of renewed confidence in other assets than any reduction in confidence in germany.

1984ReturnsForReal_2

michaels wrote: »

two points
firstly this shows serrious misjudgement by the German DMO to allow an auction to be seen to fail during a time of market stress purely for presentation reasons

As does a public EuroBond split in conference yesterday.

As far as I see it the only (remote) possible way to save the Euro is to consolidate & refinance under one bond method & it looks like that isn't going to happen so I expect the end of the Euro is a definite.

michaels

Not sure about a utility company - if the brown stuff really hits and international trade grinds to a halt then energy supplies may become very scarce and are likely to be 'nationalised' with utility company shareholders unliekly to be compensated.

Generali wrote: »

I'd buy a small utilities company or perhaps a couple of million acres of farmland.

purch

I think another factor in this is the worry that if the ECB do use the "nuclear" option of QE, then the result is likely to be highly Inflationary and will make 2% Bunds look incredibly expensive.

If the ECB does resort to creating EUR to write off the debts of member nations, then the EUR created would be considered a permanent addition, and therefore it would obviously lead to a dilution of value.

What has (so far) kept the QE undertaken by the U.S. and U.K. from being considered as likely Inflationary is the expectation/hope (maybe a vain hope :eek:) that the measures will only be temporary, and will be reversed at some stage in the future, and therefore not leading to a dilution of value.

System

When all this is over and the Eurozone and capitalism have collapsed, let's start again with the following rule:

No-one, individual, company, local authority, country, is allowed to borrow ANYTHING unless they have submitted proposals to their bank, shareholders, electorate, setting out precisely what they want to spend it on. This must contain a reasoned estimate of the projected rate of return on the investment, and must be backed up by collateral, such as a house, premises, land, mineral rights, territory, etc.

Borrowing in order to finance current expenditure or service previous debt will be forbidden.

tomterm8

chewmylegoff wrote: »

but what would you do with it? after you've filled your ISA and paid £500 a month into regular savers, you're still going to have quite a lot left over.

in order to invest in something which will pay the returns which match the interest payments due on your debt, you will need buy bonds. suggest you go for euro denominated ones to avoid taking on foreign exchange risk. may be some nice greek bonds. what can possibly go wrong.

I'd buy publishing companies. Lots and lots of publishing companies.

Because, for years they have been making billions on 4% margins.

With ebooks, they will be on 20% to 30% margins.

If you bought publishing company stocks today, the odds are they will be worth in real terms between ten and twenty times what you pay for them in ten years.

chewmylegoff

tomterm8 wrote: »

I'd buy publishing companies. Lots and lots of publishing companies.

Because, for years they have been making billions on 4% margins.

With ebooks, they will be on 20% to 30% margins.

If you bought publishing company stocks today, the odds are they will be worth in real terms between ten and twenty times what you pay for them in ten years.

i would buy a load of silver and then spend my days ramping it on here. pretty sure i'm more likely to make money than you.

shame about the VAT though...

drc

Generali wrote: »

That means that the German Government is effectively expecting people to pay them money for the privilege of lending to them! The amazing bit for me is that they found so many takers, not that they failed to sell everything..

This is the bit that interests me. Why are there so many takers if it is effectively a bad deal? What does this imply that those buying the bonds are anticipating?