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Financial clusterfuck in Europe

59K views 1K replies 77 participants last post by  waistnick21 
#1 · (Edited)
okay, so according to the press the greeks are about to apply for imf/eu-money in the next few hours. i guess most of you have been following the story, for those who didn't, here's the short version:

the greek government has been spending pretty recklessly over the course of the last, say, decades. it was okay for them to do so because getting more and more credit used to be fairly cheap. the recession was hard on the people, it was harder on governments though, especially the ones with huge spending. due to the fact that the greek economy more and more relied on tourism (hit the most) and lacks any sort of major industries as of now, the credit default swaps went up since 2009. that means they will have to pay higher interest rates for the bonds they sell.

people were pretty sure greece wouldn't be able to cope with its financials unless external experts would take care of the mess. so brussels and washington came up with an umbrella if things were to get worse.

well, they did. as per usual, greek officials had been blatantly lying about the deficit(revised from 12,7% to ~14% in 09) - and the market place is having a field day. german bankers have warned merkel that greece is bound to end up like hypo real estate, a german banking conglomerate that swallowed billions and billions of cash just like a black hole due to its hidden accounts.

if the greeks were to default, it would have quite an impact on western europe as well: banks in france (~70 billion euros) or germany (~45) hold most of the greek debt - which is obviously why sarkozy was pushing a hellas-friendly agenda for some time now and keeps trying to get berlin to pay.

so here we are with greek basically bankrupt. the worst thing is that other countries are likely to follow: portugal's credit default swaps have been rising steadily, spain might be even worse, even france is getting some heat - and last but not least, the "last resort's", germany's, interest rates are higher than ever (still very low, but nonetheless).

do you believe we're gonna get out of this any time soon? will we see a major default in the euro-zone? and what about the u.s. or the uk?
 
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#7 ·
Re: Credit crisis in Greece, others to follow...?

Who cares? let Germany pay, you've gained the most from that shit euro no one else needs, and you've bought most of the cheap summer houses too, after nearly obliterating Greece during 2WW.

So now shut up and pay out.
 
#39 ·
Re: Credit crisis in Greece, others to follow...?

Who cares? let Germany pay, you've gained the most from that shit euro no one else needs, and you've bought most of the cheap summer houses too, after nearly obliterating Greece during 2WW.

So now shut up and pay out.
Pretty much in a nutshell. The facts are there need to be regulations, if not might as well be Somalia.
 
#35 ·
Re: Credit crisis in Greece, others to follow...?

It was never in doubt that someday the richer countries would have to pay for the Euro beggars... :eek:
It is of strategic importance to Europe to become strong and united.
 
#10 ·
#24 ·
Re: Credit crisis in Greece, others to follow...?

You're saying Canada wasn't affect by the GFC at all?
Yes it was affected. Canada had no bad mortgages so house prices just kept on rising, and without toxic loans the Canadian Banks are now recognised as the most solid in the world. The stock index is getting back to where it was before the crisis and the Canadian dollar has moved ahead of the US$. Unemployment is still above normal, but has been falling since mid 2009.

So all in all, the USA and European financial crisis has been a boon for Canada. There is a highrise building going up on almost every block in downtown Toronto. Penthouse condos are going for $15-20 million
 
#19 ·
Re: Credit crisis in Greece, others to follow...?

okay, so according to the press the greeks are about to apply for imf/eu-money in the next few hours. i guess most of you have been following the story, for those who didn't, here's the short version:

the greek government has been spending pretty recklessly over the course of the last, say, decades. it was okay for them to do so because getting more and more credit used to be fairly cheap. the recession was hard on the people, it was harder on governments though, especially the ones with huge spending. due to the fact that the greek economy more and more relied on tourism (hit the most) and lacks any sort of major industries as of now, the credit default swaps went up since 2009. that means they will have to pay higher interest rates for the bonds they sell.

people were pretty sure greece wouldn't be able to cope with its financials unless external experts would take care of the mess. so brussels and washington came up with an umbrella if things were to get worse.

well, they did. as per usual, greek officials had been blatantly lying about the deficit(revised from 12,7% to ~14% in 09) - and the market place is having a field day. german bankers have warned merkel that greece is bound to end up like hypo real estate, a german banking conglomerate that swallowed billions and billions of cash just like a black hole due to its hidden accounts.

if the greeks were to default, it would have quite an impact on western europe as well: banks in france (~70 billion euros) or germany (~45) hold most of the greek debt - which is obviously why sarkozy was pushing a hellas-friendly agenda for some time now and keeps trying to get berlin to pay.

so here we are with greek basically bankrupt. the worst thing is that other countries are likely to follow: portugal's credit default swaps have been rising steadily, spain might be even worse, even france is getting some heat - and last but not least, the "last resort's", germany's, interest rates are higher than ever (still very low, but nonetheless).

do you believe we're gonna get out of this any time soon? will we see a major default in the euro-zone? and what about the u.s. or the uk?
The bolded part is not true, the goverment gave up control of the economic statistics service to Eurostat at the end of the year. This is a case of revision of economic data that pretty routinely happens. Of course the timing and the direction of the change were terrible for Greece and I do not expect accurate reporting on this issue after past distorions and lies from Greek goverments.

Why lie? First to score cheap points by revealing the other party's previous lies and second to conform with the "Maastricht criteria".
 
#20 ·
Re: Credit crisis in Greece, others to follow...?

I expect a full bailout of Greece, I mean the Eurogroup and IMF guaranteeing a fixed interest rate for Greek loans for a specific window of time, say 2010-2012. Then the market interest rates for Greek bonds will converge to the bailout interest rate. There will be political posturing and such obviously, negotiating the austerity measures for Greece. Eventually everybody is scared shitless about contagion and a chain of sovereign defaults so they will somehow agree.
 
#21 · (Edited)
Re: Credit crisis in Greece, others to follow...?

When push comes to shove, Europe will not let Greece, Portugal, Ireland or others go off a cliff into default-ville - it totally destroys the credibility of the Eurozone and the Euro would be badly damaged, impacting all the Eurozone economies. It's not in France or Germany's interest to allow that to happen, however frustrating they may find the alternatives.
 
#23 ·
Re: Credit crisis in Greece, others to follow...?

When push comes to shove, Europe will not let Greece, Portugal, Ireland or others go off a cliff into default-ville - it totally destroys the credibility of the Eurozone and the Euro would be badly damaged, impacing all the Eurozone economies. It's not in France or Germany's interest to allow that to happen, however frustrating they may find the alternatives.
brussels won't have problems with portugal or greece. however, spain or italy would be almost unbearable. i really don't know what germany, france or the uk could do if both of them were in major trouble.
 
#22 ·
Re: Credit crisis in Greece, others to follow...?

you're right about the revision thing, my bad.

so do you expect greece to come to terms with the harsh methods papandreou has proposed, saving tons of money but (maybe) crippling the economy until there's hardly anything left? will people accept it without rioting like mad?

btw are you in greece?
 
#26 ·
Re: Credit crisis in Greece, others to follow...?

you're right about the revision thing, my bad.

so do you expect greece to come to terms with the harsh methods papandreou has proposed, saving tons of money but (maybe) crippling the economy until there's hardly anything left? will people accept it without rioting like mad?

btw are you in greece?
It won't cripple the economy. The exact opposite actually. The number of people living off the Greek government is incredible given the low retirement age, which if I'm not mistaken is one of the lowest in Europe. These individuals are just living off the country's producers (taxpayers). Raising the retirement age will not only save money but boost production since people that otherwise would have been living off others will actually be creating economic value (unless of course they work for the government). In turn, more producers means more tax revenue, which of course can be used to finance government spending that hasn't been cut (or pay off the debt). All in all, the Socialist party over there has actually done a decent job. Hell, you wouldn't even know they're socialists. They're more conservative than their "conservative" predecessors. Nevertheless, considering how much of an obstacle they face there's no way they'll be able to avoid a bailout. Just hope that it doesn't spread.

As for the US and the UK. Yes, we/they will face a similar crisis. Not in the next couple of years, though, at least in the US. In the US we'll be able to carry on for a while since our debt load is relatively small compared to most European economies (I believe it's about par with France and Germany). Additionally, since the dollar isn't in as imminent danger as the euro, if the Euro continues it's slide then investors will rush into the relative "safety" of US treasuries (especially if the other PIIGS get into trouble), decreasing our borrowing costs. The same holds true if the pound or yen have some issues. And in general, the US economy is a little more nimble than most places.

This, however, will only delay the inevitable. Our baby boomers are retiring soon, which will massively increase government spending. We have literally promised this generation (or more aptly, they have promised themselves on their children's behalf) more than younger Americans will even be producing, let alone what they're capable of paying in taxes without any major adverse consequences. This is the big worry, the GFC was only an appetizer. Hell, it was just afternoon tea and crumpets. I don't know much about European demographics, but I'm guessing the age makeup of the population isn't much different. Regardless of what happens, whether it's higher taxes, massive inflation, defaults, whatever, people will be forced to accept that the standard of living they have been expecting (and promised) won't be materializing. The fiscal condition of a few states (California, New York, and Illinois, are the big ones...go Texas! :woohoo:) really doesn't help.

There are a few developed countries where this isn't nearly as much of a problem. Australia's constitution requires a balanced budget (i.e. it has a national debt of 0). I don't know shit about New Zealand, but my guess is that it's similar to Australia (because their accents sound the same to me :p). Canada is in good shape too, although it'd be hard to imagine them bopping along just fine without feeling anything if the US economy takes a big hit. I don't know much about Poland, the Czech Republic, Lithuania, and Chile, but I think they're supposed to be in good shape, as well. I'm sure there are others. And no, I don't think China is going to rise up as some great economic engine anytime soon. There are a lot of skeletons in that closet that we don't know about yet.

I love discussing/reading about this stuff. Big hobby of mine, especially lately.
 
#27 ·
Re: Credit crisis in Greece, others to follow...?

so here we are with greek basically bankrupt. the worst thing is that other countries are likely to follow: portugal's credit default swaps have been rising steadily, spain might be even worse, even france is getting some heat - and last but not least, the "last resort's", germany's, interest rates are higher than ever (still very low, but nonetheless).

do you believe we're gonna get out of this any time soon? will we see a major default in the euro-zone? and what about the u.s. or the uk?
Dr Doom of MTF, do you really think the world will end?


Who cares? let Germany pay, you've gained the most from that shit euro no one else needs, and you've bought most of the cheap summer houses too, after nearly obliterating Greece during 2WW.

So now shut up and pay out.
:lol: Exactly what the Greeks are saying.

No-one forced you to dump your Drachmas and Pesetas for Deutsche Marks.


It was never in doubt that someday the richer countries would have to pay for the Euro beggars... :eek:
Indeed, socialism will always rule Europe. Wonder why Switzerland never joined this wealth-eating group.


When push comes to shove, Europe will not let Greece, Portugal, Ireland or others go off a cliff into default-ville - it totally destroys the credibility of the Eurozone and the Euro would be badly damaged, impacting all the Eurozone economies. It's not in France or Germany's interest to allow that to happen, however frustrating they may find the alternatives.
Lose-lose situation. It's very much in France and Germany's interest not to give false impressions that struggling countries can always lean on them for help. What's to stop Greeks from borrowing and spending more even after they get bailed out? They either lose directly by paying or indirectly by not paying.


brussels won't have problems with portugal or greece. however, spain or italy would be almost unbearable. i really don't know what germany, france or the uk could do if both of them were in major trouble.
There's the other problem. What happens when a larger country needs help? The only reason people expect the Greek bailout is because they know Germany can afford it. Why should small countries get preferential treatment just because they're small?
 
#32 ·
Re: Credit crisis in Greece, others to follow...?

That's what happens when you have a common currency but not a common economic policy.

Unless that changes, this stuff is bound to happen every time a contraction/recession comes along.
 
#33 ·
Re: Credit crisis in Greece, others to follow...?

That's what happens when you have a common currency but not a common economic policy.

Unless that changes, this stuff is bound to happen every time a contraction/recession comes along.
Well they tried to enforce a common fiscal policy, limiting deficits to 3% of GDP. But literally every country ended up breaking this rule.

In the end it's Greece's problem. The rest of Europe takes a hit too but that would have happened anyway, even without the single currency.
 
#38 ·
Re: Credit crisis in Greece, others to follow...?

Jimnik the deluded free-marketeer still clinging hard to his beliefs.

If governments had taken libertarian positions in this crisis there wouldn't be a functioning global banking system left. The average person would have lost their life savings. Unless they were quick enough to withdraw their savings following the inevitable panic that would've followed the initial major bank closures.

The economic meltdown proves that financial institutions need tough regulation and not the free reign they've been given in the past. Banking is too important to leave to the bankers.

And yes governments are hugely culpable as well.
 
#40 ·
Re: Credit crisis in Greece, others to follow...?

Jimnik the deluded free-marketeer still clinging hard to his beliefs.

If governments had taken libertarian positions in this crisis there wouldn't be a functioning global banking system left. The average person would have lost their life savings. Unless they were quick enough to withdraw their savings following the inevitable panic that would've followed the initial major bank closures.

The economic meltdown proves that financial institutions need tough regulation and not the free reign they've been given in the past. Banking is too important to leave to the bankers.

And yes governments are hugely culpable as well.
I say again, this Greece crisis was the government's fault, not the free market. If you think you can blame free market banking for this, you're the deluded one.
 
#41 · (Edited)
Re: Credit crisis in Greece, others to follow...?

If governments hadn't been messing with the economy in the first place then there wouldn't have even been a crisis. Don't let the negative consequences of government intervention lead you to believe that yet more intervention is needed.

It's not in the best interests of bank shareholders to let their banks get in financial trouble. It is, however, in the best interest of politicians to pass seemingly popular laws, even if those laws are terribly stupid: Freddie Mac, Fannie Mae, affirmative-action lending, setting interest rates way too low (or even being involved with setting rates at all), pressuring ratings agencies to maintain positive ratings (to make sure constituent home prices keep going up up up!...oops), a history of bailing out banks in some way or another (see: Mexican debt crisis in the nineties) thereby creating moral hazards, etc etc etc. The politicians look great when they do this stuff because it "helps the people blah blah blah". However, those very same people are really hurting now, and many of them may not ever be able to buy a house again since their credit rating will be damaged for years. At best their life savings and standard of living have been significantly reduced (as have everyone else's). If government hadn't interfered in the market/economy with all those policies/legislation in the above list none of this would have happened. Nice job pols. Enjoy the lucrative lobbying gig as a fallback should the voters ever catch on.

Government interference caused the crisis, not the banks. The banks are responsible, however, for failing to catch on, and yes, this was partly due to greed. That said, it is their job to catch on to this type of stuff so that they can serve their clients in the best manner possible. However, given the complexity of the situation and the fact that 99% of them got it wrong, this isn't something they should be terribly ashamed of (unless of course they committed fraud or ethical violations, which the court system is designed to handle...btw I'm all for revamping enforcement methods, especially since the SEC has a problem with employees surfing pornsites on the job). This isn't to say that the bankers shouldn't suffer consequences, such as going bankrupt or losing their jobs (certainly not getting fat bonuses), but I'm not about to decry them as evil, except for the few bad apples, which will appear in any group.

And the fact that they all got it wrong just proves my point. If the people who make careers working in the banking system, seeing it firsthand everyday, can't understand what's happening then why should we expect some government regulator to be able to? Ben Bernanke is often cited as one of our best economists (his predecessor Alan Greenspan was even revered as a hero), yet just a couple months before home prices began plummeting he was on record saying there was no housing bubble. Right before Bear Stearns collapsed he claimed that the housing bubble was contained and wouldn't affect the financial system. And just a couple weeks before Lehman Brothers went bust he claimed that the crisis was over. Hell, even when Lehman was collapsing the records show he believed that Merrill Lynch would be a perfect candidate to buy it. Merrill itself collapsed within a week. He just didn't understand what was happening. This isn't to say that he's not smart or even that he screwed up, it just means it's an impossible task. We're literally asking him to predict the future and to change it if it looks bad. Only a few people knew what was going on. Some of them were just lucky, and there's nothing saying that the others will predict/understand the next crisis. It can't be done.

We can play whack-a-mole with the economy every time something goes wrong. But frequently we're going to find that new regulations will just create some adverse side effect. A regulation is simply a control mechanism. When a new regulation is created it's designed to control the behavior of individuals or institutions, with the intent being that innocent bystanders (or even those being controlled) will be protected. So when we pass regulations on such a huge segment of the economy, one that is already extremely complex, we're essentially trying to control millions of people/institutions and to dictate how they interact with one another. That's obviously a monumental task. No amount of regulators/watchdogs/enforcement agencies will be able to do so. At some point, we have to just let people be responsible for protecting themselves, and I think we passed that point long ago. All we can really do is to provide an effective legal system to punish those who violate the rights of others. No amount of regulation, however, will prevent people's rights from being violated.

We can help, however, by not complicating the system. This means politicians shouldn't be throwing monkey wrenches into the economy that mislead all the parties involved, whether they're bankers, investors, borrowers, homeowners, whoever. Sometimes shit happens. People get burned and it sucks. But those individuals learn from the incident. Look at the tech bubble a decade ago. No one understood the business models of internet companies. Not investors, politicians, established businessmen, or even the management at many of these companies. They were so damn new and the experts didn't even know anything about them (sounds kind of like a mortgage-backed security...hmmm). Everyone literally thought that a successful web company was one that merely had a lot of visitors, or even just the potential to. That's important for a website, but profitability barely factored into the equation. How stupid is that in retrospect? People were investing a fortune into companies that hadn't made a dime and had little chance to do so. Sure enough, it all went bust. But we didn't address that situation by passing all sorts of regulations on internet companies, even though a lot of people were hurt when the bubble burst. The internet is arguably the least regulated area of the economy. But there's no new internet bubble popping up. The sector is doing just fine. Even if there aren't any new regulations passed on the finance industry there won't be another housing bubble anytime soon (or at least not with the same causes). People aren't that stupid. They typically learn from their mistakes.

And until Ben Bernanke can start predicting the future (and even if he could, would we listen?), there will certainly be another economic crisis, regardless of what type of regulations are passed. There's a decent chance that the regulations themselves might even cause that next crisis. With these proposed financial reform regulations we can also count on increased borrowing costs for businesses and individuals along with higher fees. It certainly won't help unemployment, especially if our banks have to compete with other banks in foreign countries with looser regulations. I just don't see the point.

What's this have to do with Greece? Are they victims of the financial crisis. Yes. But did they position themselves to weather an economic downturn? No. They spent and spent and spent and left themselves very little cushion. Their spending would have caught up with them anyway even without the crisis. My favorite line is that "speculators" are to blame for their problems. Did they really not know that speculators play a role in the sovereign debt markets when they decided to issue debt? What about the speculators that are currently buying Greek bonds (and thereby pushing the interest rates lower), taking on the risk that Greece will default but hoping it doesn't? Funny, I don't think they'd have a problem with these speculators. They have a responsibility to look after their own finances. If they default then that's their fault. They knew the risks involved with issuing debt. It sucks, but they'll survive and will be able to move on and hopefully will spend less on credit in the future. It's not like they're being treated unfairly. The same thing can easily happen to any other country if it mismanages it's finances.
 
#43 ·
Re: Credit crisis in Greece, others to follow...?

The motif of proponents of big government seems to be that government has a perpetual duty to interpose itself, whereas the motif of proponents of free enterprise is the vanquishment of any regulatory system. It doesn't take a genius to deduce that a hybrid model of the aforementioned philosophies would suffice.

What's the purpose of engaging one another when the results are predetermined ? If everyone religiously adheres to a certain ideology, is not the very point of discourse undermined ? The notion of a world in which unfettered free markets exist is, well, quixotic. Similarly, the notion of a world in which personal finances and private companies are micromanaged is, well, absurd.

Wall Street is inhabited by wildly intelligent people, yet some are naive enough to regard such individuals as magnanimous and innocuous. Main Street is inhabited by average investors, many of whom enter the market fully aware of the inherent risk involved, yet desirous of wealth. Why should the government reward the cupidity of fools ?

My diatribe has nothing to do with Greece, but I've noticed that each thread pertaining to finance succumbs to a similar fate: simplistic, ideologically based skirmishes.
 
#47 ·
Re: Credit crisis in Greece, others to follow...?

The motif of proponents of big government seems to be that government has a perpetual duty to interpose itself, whereas the motif of proponents of free enterprise is the vanquishment of any regulatory system. It doesn't take a genius to deduce that a hybrid model of the aforementioned philosophies would suffice.

What's the purpose of engaging one another when the results are predetermined ? If everyone religiously adheres to a certain ideology, is not the very point of discourse undermined ? The notion of a world in which unfettered free markets exist is, well, quixotic. Similarly, the notion of a world in which personal finances and private companies are micromanaged is, well, absurd.

Wall Street is inhabited by wildly intelligent people, yet some are naive enough to regard such individuals as magnanimous and innocuous. Main Street is inhabited by average investors, many of whom enter the market fully aware of the inherent risk involved, yet desirous of wealth. Why should the government reward the cupidity of fools ?

My diatribe has nothing to do with Greece, but I've noticed that each thread pertaining to finance succumbs to a similar fate: simplistic, ideologically based skirmishes.
Excellent post.
 
#45 ·
Re: Credit crisis in Greece, others to follow...?

i was thinking about removing this gago freak from my ignore list, but now that action jackson has quoted him and i can see what he's posting - what a wise decision i've made last year.

@ jimnik

it's a bit like the question about chicken and egg regarding the greek state and who's to blame. the main reason for government largesse over the last 5 years was the fake boom that made them think economies across the globe were actually doing well. if growth rates had stayed the same there'd be no greek problem whatsoever.

anyways, the guys who come to the rescue are governments nonetheless, not the private sector. governments create a mess, governments bail them out - unlike last time, where the private sector created the mess and governments bailed them out.
 
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#50 ·
Re: Credit crisis in Greece, others to follow...?

Main Street is inhabited by average investors, many of whom enter the market fully aware of the inherent risk involved, yet desirous of wealth.

Why should the government reward the cupidity of fools ?

average investors;
fully aware of the inherent risk involved;
yet desirous of wealth.
average investors; desirous of wealth; cupidity [eager or excessive desire]; fools [a silly or stupid person; a person who lacks judgment or sense]

Capitulation:
There is no such thing as a free lunch. Investors can't decry the alleged abuses of Wall Street, especially when it is they who decide whether or not to invest. It is foolish to expect others (i.e., government officials) to be held accountable for one's ill-advised decisions. A rational person must accept failure as well as success. The fool is he who endeavors to subsidize failure and privatize success, for such a system is unsustainable.

Regulators exist to protect investors from themselves. Foolishness breeds the illusion that ordinary investors can, under high-risk circumstances, triumph over Ivy League grads (i.e., Wall Street types) boasting IQs in the 130 - 150 range.
 
#51 ·
Re: Credit crisis in Greece, others to follow...?

Maybe we are talking at cross purposes. I was not including the government in the equation and wouldn't even think of demanding compensation for making a mistake. But taking your sentence at face value, I am fully aware of the risks involved, and desire wealth. I don't see the need for ''yet''. Who would enter the market and not desire wealth? Yet I don't consider myself a fool.

Or maybe you are just talking about main street investors who make their own investment decisions. I certainly don't. My advisor has total control of my portfolio and he has been extremely good. On a different level to anything I could do myself. Which is logical, given the hours of research he puts in. I prefer to play tennis.
 
#58 ·
Re: Credit crisis in Greece, others to follow...?

Or maybe you are just talking about main street investors who make their own investment decisions. I certainly don't. My advisor has total control of my portfolio and he has been extremely good. On a different level to anything I could do myself. Which is logical, given the hours of research he puts in. I prefer to play tennis.
As a Finance student myself, I've learnt to be sceptical towards "professional" portfolio managers.

Studies show that, while professional portfolio managers do make a better ROI than the index, the portfolio management fees push the ROI actually lower than the market. Additionally, there is no statistically significant correlation between the performance years of portfolio managers (i.e. that good years would be followed by good years, suggesting a "talented" investor) save for a few anomalies.

Most, if not all the time, people would be better of by investing to the S&P 500: with no administrative costs, it outperforms portfolio managers.
 
#52 ·
Re: Credit crisis in Greece, others to follow...?

High-yielding investments are a trade-off between an absolute profit or an absolute loss; that is, such investments are high-yielding due to the risk involved. On the other hand, pedestrian investments which yield small to moderate profits are, by definition, low-risk. The average investor is desirous of wealth, yet seemingly unwilling to bear the consequences of failure.

The Bellagio is a zero-sum game; Wall Street is a zero-sum game. Financial advisors exert great power over their clients, insofar as they can steer said clients toward bad investments (which aren't so bad from the perspective of the financial advisor who stands to profit from bets against such investments). Such is the nature of high-risk investing -- win or lose.

Thousands of ordinary investors have lost their life savings and, contrary to your claim, wish to be bailed out. And why ? Oh, that's right -- they dislike the consequences of seeking exorbitant yields, as opposed to low-risk, low-yielding investments.
 
#53 ·
Re: Credit crisis in Greece, others to follow...?

Thousands of ordinary investors have lost their life savings and, contrary to your claim, wish to be bailed out. And why ? Oh, that's right -- they dislike the consequences of seeking exorbitant yields, as opposed to low-risk, low-yielding investments.
I never claimed they didn't.

But anyway, I am a main street investor, desirous of wealth. Does that make me a fool?
 
#62 ·
Re: Credit crisis in Greece, others to follow...?

What does cd stand for?
 
#64 ·
Re: Credit crisis in Greece, others to follow...?

What does cd stand for?
Credit default swaps. They are a financial derivative that pays it's holder if a specific piece of debt is defaulted on. It's essentially insurance you can buy if you want to be protected should someone you have lent money to defaults on that loan (although you don't need to have actually lent money to purchase one). In the context of Rrainer's quote, "blowing up" means the price of these credit default swaps related to Portuguese debt is going up. This is happening because more people want to buy them because they fear that Portugal might default on that debt.
 
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