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04:50 PM

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Message Subject "NO BID" threat looming. When the computers stop trading...any tradable funds may drop to zero!
Poster Handle Anonymous Coward
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..Well having no idea how financial markets actually work, I can see how a uninformed person would reach illogical conclusion based on false premises. I will help you,bonds trade at inflation + 2-3% for people/corp/govt who have excellent payment history..the less your credit history or current financial situation, you pay more than 2-3% above inflation. For example, I just bought a 2010 used car for $11k, I put down $5k and my car loan was 2.9% for 48 months. The car dealer's loan rate was 12%, now that was for the guy with a repo and bad checks and late payments, Greece if you will, BUT somebody was willing to lend him money as long as the reward was high enough. Now the problem is if the borrower can afford the payments at 12%...Greece cannot under it's current conditions...it's failure has already been calculated into all bond purchases. Don't think of a bond as any different than a car loan, mortgage...it's a loan at a interest rate and a schedule of repayment..it may or may not be secured with assets and there are legal claims in court if need be down the line but bonds are loans...no special magic, no secret cabal...you can buy them if you have the funds or join a mutual International Bond Fund...some will hold a very small portion in high interest/high risk bonds because "most" are repaid and the return is excellent..IF you can absorb the loss if they default. No one has a high percentage of their portfolio in these, rather no well run financial institution...thats why Germany/France is lending the money..banks and trading houses won't buy and can't find buyers, the rate of return they demand is higher than Greece can afford...so the Nations are buying loans that normal people want no part of. So if Greece defaults,German and French tax payers are on the losing end. A few banks will also take a hit but they have already sold off or written off Greece as a loss anyway.
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