Market Turmoil Twaddle

chewmylegoff

drc wrote: »

What does this imply that those buying the bonds are anticipating?

being able to sell the bonds to the european central bank for a profit?

dtsazza

Clifford_Pope wrote: »

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.

The thing is, you don't need to have such a rule if businesses are allowed to operate properly, without government interference. Banks that make bad decisions about creditworthiness are going to make less money than those than make good decisions. Banks that make very bad decisions are going to go bust.

If this was allowed to happen, rather than private companies being enshrined as part of the national fabric and bailed out, then all would function as you desire.

Assessing and managing risk is a bank's business, it's fundamentally the product/service/wealth that they create. If they're allowed to succeed when they get it wrong, then something is rotten in the state of Denmark.

tomterm8

chewmylegoff wrote: »

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...

Good luck, mate.

You'll need it:D Silver is a really crap investment right now:D

Kennyboy66

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.

or you could buy music publishing companies, who will be making brewster's when they sell everything in digital format.

Oh hang on..............

tomterm8

Kennyboy66 wrote: »

or you could buy music publishing companies, who will be making brewster's when they sell everything in digital format.

Oh hang on..............

The music industry is very different to the publishing industry. For a start, they had ten years longer to scheme and plan:D

And for that ten years, they've been buying up ebook rights for a complete song:D

I would not say it is a long term investment. But I think there is a very high probability of a bubble in the sector, starting in one or two years, and no doubt ending abruptly.

Of course, YMMV.

drc

dtsazza wrote: »

Assessing and managing risk is a bank's business, it's fundamentally the product/service/wealth that they create. If they're allowed to succeed when they get it wrong, then something is rotten in the state of Denmark.

Too right. Max Keiser described it recently - "Capitalism without bankruptcy is like Christianity without hell". I thought it was an apt analogy .

Road_Hog

drc wrote: »

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?

Depends on what the options are. Maybe comparatively it is a good deal risk/reward? Maybe the Germans are quite patriotic when in comes to investing.

Generali

drc wrote: »

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?

IMO one of three things:

- buyers are banks that need AAA rated bonds to include in their reserves as a part of Basle III
- a belief that deflation is in the future
- they really can't find anything more profitable to do with their money

tomterm8

Generali wrote: »

IMO one of three things:

- buyers are banks that need AAA rated bonds to include in their reserves as a part of Basle III
- a belief that deflation is in the future
- they really can't find anything more profitable to do with their money

I don't know whether this is the case in Germany, but there was a quantitative easing phase in the UK where it worked like this:

a. Bank of england made money out of thin air.
b. Leant money to banks at negative real interest rate in return for dodgy collateral
c. Banks took the money and used them to buy Gilts
d. Banks got a interest rate on gilts lower than inflation, but they were borrowing from the govt at even lower than the Gilt rate, and so made money.
e, government could fund its ridiculously high deficit.

Sort of... monetizing your debt without it being obvious you were monetizing your debt.