Exaggeration to prove a point:
Who would you lend to?
Donald Trump (bankrupt several times) or someone living on the breadline but never missed a payment.
East Germany essentially defaulted when it ceased to exist in 1989.
So, how does a country with a perfect payment record and a past history of doing whatever it can, even to the detriment of its citizens, to pay the debts be regarded as a bigger risk that a regular defaulter?
The UK's budget deficit is bigger than ours. Why do we get such a kicking by bondholders and the UK doesn't?
The UK's budget deficit is bigger than ours. Why do we get such a kicking by bondholders and the UK doesn't?
I dont have facts & figures to back this up but I think, the reason why Germany gets more levy
Levy? What levy? This thread is about bond yields and spreads.
is because of its size in terms of number of tax payers which is also one of the reason for its status in the EU. Based on the high(er) number of people living in Germany and paying tax, ultimately more money flows into the EU/ system in general from Germany than it is the case with Ireland. Hence the bigger loan allowances.
What is a loan allowance?
Let's not forget the fact that Germany basically signs the majority of the cheques for the EU.
Maybe Germany, apart from being in the Euro, makes things people buy, ie exports, and is therefore more likely to repay its loans if it had to.
But lower rate is simple, those lending the money have more faith in Germany's ability to pay it back. It really is that simple.
Because our government in the UK can magically print money that immediately creates wealth and can then divert it into the world's largest ponzi scheme by buying back their bonds themselves.
This is a very relevant discussion at present. Markets have nose dived in the past few days due to the fact that countries may not be able to repay debts. It is a self fulfilling prophecy... people worry about a country not paying their debt, so the interest rates charged to that country go up...when the rates go up it becomes less affordable to repay the debt so .....people worry about a country not paying their debt etc etc. That is how the banks started collapsing so I wouldn't be surprised to see countries start to fall next.
(snip)
The future is already heading to Asia. Can we do anything to stem the flow of wealth Eastwards? I doubt it with the current muppets in charge of the West.
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