Countries BONDS Anyone with financial knowledge

I keep hearing about European Countries Governmetn Bonds
Now they say Italian Bonds up 12% Spanish Bonds up 7% as if that is bad

WHY? is that not good, up rather than down ?

This is all reagarding the EUROZONE

They state that surely as you can see these bonds are up the Country is in collapse

Any explanation for someone who has not a clue

Jack McH

 

Not a clue there either Jack

 

I am a bit wild...I don't know much about banks in Italy I confess...but i don't think they play with the money and they usually work on money that they have, not money that doesn't exist.

 

Thanks Shiney that makes sense
It was Nigel Farage talking about Europe and the Euro

He stated re The PIIGS that surely anyone can see that the bonds have gone up to 12% in the case of Greece 16% That these countries and the Euro are finished

I did not have a clue, but you have put me right thank you
So really if the return is too good to be true IT IS

Jack McH

 

Could you find the source where you got those info from Jack, as i believe those data are from start of September, meaning one and a half month ago.

If your bank would offer a 12% interest on a short term bond (3 months) you would jump on it right?
So this is a hopefully a well planned move on behalf of the banks to raise some money from the public quickly and as you know in the bank the money is taken from one and given to the other.

Say 11 billion bonds are sold in this month in Italy with that money you will start repaying the first bonds+their interest that come to maturity and hopefully the cycle will continue.

I had enquired back in June for some bonds in Italy just out of curiosity.
They were offering a 4.30 interest for deposits between 10.000 and 100.000 euros (in gbp it would be about 20% less of that amount) held in the bank for one and a half year.
If you were withdrawing money prior to the one and a half year the interest would be less, but still the option of the widthdrawal open, which is very good.

As you can see an extremely attractive proposal even if it was not 12%...

 

...in fact the idea is: not to withdraw the bonds early...

In case the bank goes bust it will sell the bonds to a different bank because she is merely an administrator of the bonds, which are released by the government.

I am sure the banks don't want to go bust any more than you and me.
I mean, banks are supposed to hold our money safely and it would be a big blow to the economic cycle if they don't do that.
There are guarantees in place towards the clients for those institutions who adhere to it.

 

I know all about Bonds and that it's just another form of gambling

 

I have absolute no doubt you are right, but with one small exception.

If you or I lose all our money, and also do so much damage to the company that employs us, then we are quite simply stuffed. Not only will we be completely broke, but also once word gets out as to how that came about, nobody will want to employ us.

If on the other hand you manage funds in a bank, you will have wisely invested your own earnings in property in several countries. Of course you don't want the bank to go bust, but if it does, you have the consolation that you can just walk away, sell some assets somewhere to keep you going for a few months, and then get a new job as a consultant.

 

this is an interesting point about "nobody will want to employ us".

You reckon that if I have my personal account in a bank and the bank goes bust and I loose my money and I am working for somebody they would sack me? (possibly i didnt understand your point) but why?
Unless of course my money is in any form relevant to the smooth running of the company. Is it an image thing?

 

No, sorry, what I meant was if you worked for a company that collapsed at least in part as a result of your activities (or inactivity), then you'd be unemployable once word got out.

Whereas if you were in a position of of authority in a bank, earning huge amounts, and you had already accumulated millions of pounds worth of assets in various countries. so that not all your eggs are in one basket, then you'd have less reason to care what happened to the company (in this case the bank) long term because worst case scenario, it collapses, you get to sneak away for a few months and live off assets you'd already accumulated.

 

The figures were early September and were for GOVERNMENT BONDS
ie THE GREEK GOVERNMENT were prepared to issue Government Bonds with 16%
return
Now when Greece goes bust in November and reverts from Euro to Drachma your bonds will go too so you are left with zilch nil nothing

That is why I asked for advice on here and got it from Shiney
16% would be nice instead of the 2.1% offered by the UK banks on savings pre tax :-)

Now I wonder WHY I can not lend money out at 4000 % as Pay Day Loans do
apparently it would be illegal ?

Jack McH