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Friday, October 28, 2011

Mr. Sensitive Wins The Pool

Italy sold bonds:

The Rome-based Treasury sold 3.08 billion euros ($4.36 billion) of 2014 bonds to yield 4.93 percent, the highest since November 2000, and up from 4.68 percent on Sept. 29.
Italy sold a total of 7.93 billion euros of bonds, less than the maximum 8.5 billion-euro target, after
Prime Minister Silvio Berlusconi vowed in a letter to the European Commission this week to boost growth and cut debt to fight the sovereign crisis. Also auctioned were 2.98 billion euros of 2022 bonds to yield 6.06 percent, 871 million euros of 2019 bonds to yield 5.81 percent and 1 billion euros of floating-rate bonds due 2017 to yield 5.59 percent.
But it makes sense if you think about what just happened - pushing all the losses on private holders has to nullify the effect on private investors of ECB bond purchases. Also see this article on Eurobank finances.

The financial media takes on a dooms day mentality reminiscent of certain end of days religious groups. Day after day of what could or might happen, today its run away inflation yesterday was run away deflation, the Euro, the dollar,the FED,Congress its an endless story line that the public gets fed, sorta like a run up to war getting the public ready for action.
Hobson's choice. If they made the bond investors whole, interest rates would rise because they'd be broke. If they don't make the bond investors whole, then the interest rates rise enough further to make them go broke anyway.
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