Q1 Bailing banks has been forced on people because everyones respective central bank has been against any form of restrucure or default from the start. This policy was based on much of the thinking you yourself profess about market sentiment turning bad due to investor losses blah balh and frankly it's a lod of cobblesrs and neither is it working and in fact is getting worse. We have seen where this policy has led us and to continue it now for Spain and Italy will be suicide both for the Euro the EU and the world economy.
Q2 So what your saying is that you prefer to reward bad investment strategies by private corporations and individuals by taking money from taxpayers etc etc. Therefore you want to increase the debt burden on the sovereign by making it liable for bank losses which increases the amount need to be borrowed for bailouts and as a result deflates said economy which increase the debt burden. This cycle needs to be broken or it will break us all.
Q3 Because there is less burden on the sovereign to borrow to refinance existing loans and because much of the reticence in the bondmarket is due to the need to refinance and the fear of restructuring. The markets have no memory they only care about returns and they will lend if they feel there is one available.
I'm confident if Ireland gets to cancel much of it's bank debt then it's bond rates will actually go down and facilitate a return to market funding in 2013 as envisaged all along by the Troika. Every paper released by every investment bank/hedge fund/financial blah blah says the same thing Ireland must restructure it's bank debt ie to effectively not pay it back. The continual burden on taxpayers of Ireland to pay back the bailout money merely increase the cost of the debt making it harder to exit the programme.
I believe Portugal could get a simmilar bounce depending on the situation in Spain but unfortunately it appears Spain is as we speak paying more for it bonds. If Spain is paying more it probably means that the proposed spanish bank deal is nothing of the sort and is actually a bailout of the sovereign.
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