Italian bonds flashing warning signs

The story describes how the interest rates for money being lent to Italy have suddenly skyrocketed. Yes. Interest paid on Italian bonds has risen sharply. But why? Quite simply, investors are starting to doubt whether Italy can pay back its loans. OK. But why now? And what does it mean to you personally if you're not lending money to Italy? easy cards tricks

 Plenty, that's what. The aforementioned significant change that took place actually occurred over in Greece just a few weeks ago. Namely, the deal that was cut allowing Greece to default on 50% of its sovereign debt. Sovereign debt is money that Greece as a county owes to others. Greece was actually forgiven half its debt! Imagine. The country gets to default on half its debt, yet this deal is not being called a default. Believe me, it's a default. Still, meeting Greece half way on settling the huge problem of its sovereign debt repayment may at first seem a reasonable action. But allowing Greece to default on even a portion of its debt in fact represents a huge sea-change in the way things have been handled up to now. Previously, anything that was considered too big to fail, albeit a financial institution or an entire country, was, quite simply, not allowed to fail. Such entities always get bailed out. At taxpayer expense. Greece has actually been getting mini-bailouts for a while now just so it could pay interest on its loans. The country is indeed too big to fail because of how many lending institutions might in turn fail if they don't get their money back. It's also been feared a sovereign debt default by any nation may trigger a domino effect, lest other indebted nations get the same idea.

 Given that since the crisis of 2008 virtually every troubled too-big-to-fail institution has been bailed out thus far (private or public), people started to believe that the bonds from such entities were as good as gold. And since the interest rates on bonds from Greece and Italy pay a far higher interest rate than US bonds, some believed that this was the place to put ones money for both safety as well as a high rate of return. Former New Jersey Governor, former Senator, former head of Investment bank Goldman Sachs, and former bond trader Jon Corzine had such a belief. Mr. Corzine was recently head of a never-heard-of-by-most people brokerage firm called MF Global. Corzine believed so strongly that Greece would not be allowed to default that he thwarted the will of those around him and bet the whole farm on Greek bonds. cheat cards