8 comments on “Timmy elsewhere

  1. JamesV – when they had the drachma, markets were better able to factor in the consequences of the Greeks behaving like Greeks and price accordingly. The Euro has been a disaster for them.

  2. Right, because it says in the whole euro thing that you must lend to everyone on the same terms. There was no reason for the market to not factor in Greeks being Greeks, via charging higher interest rates. As they had done for decades beforehand.

    All the Euro did was change the nature of counterparty risk – from money-printing devaluation to default. And as I’ve asked millions of times, why do investors care to be repaid 1:1 in freshly-printed drachmas worth half of what they should be over 0.5:1 in euros? And indeed, those investors have had both – Greek money printing under the Drachma, and the biggest sovereign default in history in the Euro. And they will presumably never learn.

  3. JamesV – I’m not a financial bod but lenders evidently assumed that, under the single currency, Greek debt was now as good as German debt. What with there being the one central bank and all that.

    Well, they ken noo.

  4. @Steve – “lenders evidently assumed that, under the single currency, Greek debt was now as good as German debt” …

    how very well put, perhaps the most succinct explanation I’ve found.

    Perhaps you are more of a financial bod than you realise, and they do indeed ken now.

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