10-Year US Bond Yields at All-Time Low

[The Rabbi]

Why did Greece tank if it wasn't for debt and social programs they couldn't pay for?
This is all about debt, deficits and programs that cost far more than revenue can pay for. The govt. borrows about 50% of every dollar spent.

Greece was fiscally irresponsible, it's true. However, other countries in this crunch, like Spain and Ireland, had lower debt burdens than non-suffering countries like Germany on the eve on the crisis. The debts and social programs are not the only causations.

Exactly. If the real story were a morality play about debts, Germany would be must worse off than Spain and Ireland.

Nope, factually wrong. As per usual.
European public debt at a glance - CNN.com

 

[editec]

Yields are low because big capital is seeking a safe haven to warehouse its money.


When big capital believes that the economy is improving, then the market for government bonds will stagnate and the interest rate on bonds will have to rise to attract buyers.

 

[Polk]

Greece was fiscally irresponsible, it's true. However, other countries in this crunch, like Spain and Ireland, had lower debt burdens than non-suffering countries like Germany on the eve on the crisis. The debts and social programs are not the only causations.

Exactly. If the real story were a morality play about debts, Germany would be must worse off than Spain and Ireland.

Nope, factually wrong. As per usual.
European public debt at a glance - CNN.com

How is what I said wrong? Your own link says the same thing.

 

[The Rabbi]

Exactly. If the real story were a morality play about debts, Germany would be must worse off than Spain and Ireland.

Nope, factually wrong. As per usual.
European public debt at a glance - CNN.com

How is what I said wrong? Your own link says the same thing.

No, actually it says the opposite. Germany has much lower debt per gdp than Spain and Italy.

 

[Polk]

Nope, factually wrong. As per usual.
European public debt at a glance - CNN.com

How is what I said wrong? Your own link says the same thing.

No, actually it says the opposite. Germany has much lower debt per gdp than Spain and Italy.

The chart at the top of the article lists Spain in 41-60% group, while Germany is in 60-80% group. Last time I checked, 41-60% is lower. Furthermore, those figures are in the end of 2010. We were talking about debt/GDP before the recession hit.

 

[starcraftzzz]

Nope, factually wrong. As per usual.
European public debt at a glance - CNN.com

How is what I said wrong? Your own link says the same thing.

No, actually it says the opposite. Germany has much lower debt per gdp than Spain and Italy.

Can you not do math 60% is not higher then 80%

 

[The Rabbi]

How is what I said wrong? Your own link says the same thing.

No, actually it says the opposite. Germany has much lower debt per gdp than Spain and Italy.

The chart at the top of the article lists Spain in 41-60% group, while Germany is in 60-80% group. Last time I checked, 41-60% is lower. Furthermore, those figures are in the end of 2010. We were talking about debt/GDP before the recession hit.

Aha. Should have known you can't read text and like to look at the pretty pictures.
Here's the text:
Topping the European debt league is Greece with 142.8% government debt to GDP ratio, followed by Italy (119.0%), Belgium (96.8%) Ireland (96.2%), Portugal (93.0%), Germany (83.2%), France (81.7%) Hungary (80.2%) and the United Kingdom (80.0%).
Note that Germany is well below Greece, Italy, Ireland and Portugal.

 

[Polk]

Your article never mentions what Ireland's debt load was at that time, and you're the only person talking about Greece, Italy, and Portugal. Spain's is clearly lower than Germany's, even at that time (which is later than the period being discussed in the first place).

 

[starcraftzzz]

No, actually it says the opposite. Germany has much lower debt per gdp than Spain and Italy.

The chart at the top of the article lists Spain in 41-60% group, while Germany is in 60-80% group. Last time I checked, 41-60% is lower. Furthermore, those figures are in the end of 2010. We were talking about debt/GDP before the recession hit.

Aha. Should have known you can't read text and like to look at the pretty pictures.
Here's the text:
Topping the European debt league is Greece with 142.8% government debt to GDP ratio, followed by Italy (119.0%), Belgium (96.8%) Ireland (96.2%), Portugal (93.0%), Germany (83.2%), France (81.7%) Hungary (80.2%) and the United Kingdom (80.0%).
Note that Germany is well below Greece, Italy, Ireland and Portugal.

Facts on European Debt Crisis | Economics Blog
Ireland and Portugal the UK had the same or less debt then Germany in 2007
futhermore italy had lower deficits then germany
Economic survey of Italy 2007: Achieving fiscal sustainability

 

[Polk]

The chart at the top of the article lists Spain in 41-60% group, while Germany is in 60-80% group. Last time I checked, 41-60% is lower. Furthermore, those figures are in the end of 2010. We were talking about debt/GDP before the recession hit.

Aha. Should have known you can't read text and like to look at the pretty pictures.
Here's the text:
Topping the European debt league is Greece with 142.8% government debt to GDP ratio, followed by Italy (119.0%), Belgium (96.8%) Ireland (96.2%), Portugal (93.0%), Germany (83.2%), France (81.7%) Hungary (80.2%) and the United Kingdom (80.0%).
Note that Germany is well below Greece, Italy, Ireland and Portugal.

Facts on European Debt Crisis | Economics Blog
Ireland and Portugal the UK had the same or less debt then Germany in 2007
futhermore italy had lower deficits then germany
Economic survey of Italy 2007: Achieving fiscal sustainability

To push back a little bit on those Italian numbers, they had a better "primary balance" situation, but Italy had (and still has) a lot of legacy debt that results in high interest payments that make the overall budget picture worse.

 

[Staidhup]

Why did Greece tank if it wasn't for debt and social programs they couldn't pay for?
This is all about debt, deficits and programs that cost far more than revenue can pay for. The govt. borrows about 50% of every dollar spent.

Greece was fiscally irresponsible, it's true. However, other countries in this crunch, like Spain and Ireland, had lower debt burdens than non-suffering countries like Germany on the eve on the crisis. The debts and social programs are not the only causations.

Ah...but one of the reasons Germany is stronger is that it went through austerity in the 2000's.

Yes Germany experienced the austerity move in the early 2000's, however, the ECB, courtesy of Europe's tax payers and the IMF stepped in the loan euros to Italy, Spain, Portugal,Greece, Ireland, as a temporary bailout, in exchange for loads of sovereign debt, who then paid a large portion of these funds back to Germany for sovereign debt retirement. Germany was able to retire large portions of sovereign debt exposure as a result and place them back in the drivers seat, courtesy of the ECB. So is Germany immune from the pending implosion of sovereign debt? no, can they survive the the failure of the Euro? not looking too good when one considers they need to maintain exports.

 

[Toro]

I would expect it to be more of an Europe effect than China effect.

However, I do say US bonds are way overvalued (as safe heaven). So the long term effects of this can be quite negative. Especially as the politicians will justify burrowing loads of short term debt with these wields.

I think FED and other organizations are heavily involved as well. Negative interest rates mean no safe heaven at all. Doesn't make much sense to make such trade.

It's not the Fed. It's investors dumping risk assets and euros and buying Treasury bonds.

 

[Toro]

the federal reserve purchased 61% of all treasury issuance in 2011. The yields are low to keep the shell game shuffling.

True, but even when the Quantitative Easing program ended, 10-year bond rates were still extremely low. The yields are reaching rock bottom, and there's no serious talk from the Federal Reserve for a fourth round of Quantitative Easing. That must count for something.

QE hasn't ended. The latest iteration, Operation Twist, ends in June I believe.

 

[Toro]

Why did Greece tank if it wasn't for debt and social programs they couldn't pay for?
This is all about debt, deficits and programs that cost far more than revenue can pay for. The govt. borrows about 50% of every dollar spent.

Greece was fiscally irresponsible, it's true. However, other countries in this crunch, like Spain and Ireland, had lower debt burdens than non-suffering countries like Germany on the eve on the crisis. The debts and social programs are not the only causations.

Spain is being hammered because the market believes it will nationalize bad bank debt, which has started with Bankia. Ireland was hammered because it did nationalize bad bank debt.

 

[Polk]

Why did Greece tank if it wasn't for debt and social programs they couldn't pay for?
This is all about debt, deficits and programs that cost far more than revenue can pay for. The govt. borrows about 50% of every dollar spent.

Greece was fiscally irresponsible, it's true. However, other countries in this crunch, like Spain and Ireland, had lower debt burdens than non-suffering countries like Germany on the eve on the crisis. The debts and social programs are not the only causations.

Spain is being hammered because the market believes it will nationalize bad bank debt, which has started with Bankia. Ireland was hammered because it did nationalize bad bank debt.

Yes and no. If Spain doesn't nationalize the bad bank debt, the banks will collapse, so people are going to pull all their money and send it to German banks, which means the banks will fall even faster.

 

[Toro]

Your article never mentions what Ireland's debt load was at that time, and you're the only person talking about Greece, Italy, and Portugal. Spain's is clearly lower than Germany's, even at that time (which is later than the period being discussed in the first place).

Spain's current debt is lower than Germany but the market thinks it will be significantly higher in the future.

 

[Toro]

Greece was fiscally irresponsible, it's true. However, other countries in this crunch, like Spain and Ireland, had lower debt burdens than non-suffering countries like Germany on the eve on the crisis. The debts and social programs are not the only causations.

Spain is being hammered because the market believes it will nationalize bad bank debt, which has started with Bankia. Ireland was hammered because it did nationalize bad bank debt.

Yes and no. If Spain doesn't nationalize the bad bank debt, the banks will collapse, so people are going to pull all their money and send it to German banks, which means the banks will fall even faster.

Which is why Spain is nationalizing their bad banks.

 

[Polk]

Your article never mentions what Ireland's debt load was at that time, and you're the only person talking about Greece, Italy, and Portugal. Spain's is clearly lower than Germany's, even at that time (which is later than the period being discussed in the first place).

Spain's current debt is lower than Germany but the market thinks it will be significantly higher in the future.

Agreed, but that just goes to show that responsible budgeting isn't the only factor to care about.

 

[Polk]

Spain is being hammered because the market believes it will nationalize bad bank debt, which has started with Bankia. Ireland was hammered because it did nationalize bad bank debt.

Yes and no. If Spain doesn't nationalize the bad bank debt, the banks will collapse, so people are going to pull all their money and send it to German banks, which means the banks will fall even faster.

Which is why Spain is nationalizing their bad banks.

Big picture here: Spain is screwed either way. Either Germany has to commit to eurobonds, or the Spain needs to dump the euro.