It has since added formidably to its debt liabilities.

Borrowing countries such as Argentina or the Ottoman Empire regularly defaulted. They were then punished for a few years by not having access to international capital markets.

Will it be possible for them to rollover their market funding in these circumstances?

But even large and stable countries such as Britain and the US are finding auctions of government paper increasingly problematic.

Borrowing countries such as Argentina or the Ottoman Empire regularly defaulted.

Some crisis prone countries such as Latvia are already unable to sell any more debt.

Nothing less will persuade investors to go near debt issues from the eurozone s fiscally challenged members.

Lenders to defaulting countries were also punished, as their instruments (mostly bonds) became worthless.

Indeed, Russia is running fiscal and current account surpluses of 2 and 17 of GDP respectively. Despite being up to its neck in debt its obligations equal 75 of GDP Russia appears able to pay its creditors.

Shorting bonds by purchasing a CDS contract carries limited risk but almost unlimited profit potential, whereas selling a CDS contract offers limited profits but practically unlimited risks. This encourages short side speculation, which places downward pressure on the underlying bonds.

Despite being up to its neck in debt its obligations equal 75 of GDP Russia appears able to pay its creditors.

This encourages short side speculation, which places downward pressure on the underlying bonds.

As a consequence, they are crowding into bonds and debt instruments that they view, rightly or wrongly, as safe vehicles.

The prices of structured securities such as collateralized debt obligations have come down, because the institutional fraud of a multi fold chain of securitizations has been detected. Cash back loans to NINJA (No Income, No Job, and No Assets) customers that included voluminous fees to brokers and were securitized and structured up to 60 times do not represent any value.

The prices of structured securities such as collateralized debt obligations have come down, because the institutional fraud of a multi fold chain of securitizations has been detected.

The big American investment banks received excellent ratings up to the last moment, and so did the CDOs with which they betrayed the world.

Debtor countries pay substantial risk premiums to finance their debt, which is reflected in their high economy wide borrowing costs.

Are bank managers ignorant?

Some have had their financial assets frozen.

Exporters of any particular commodity should issue debt that is denominated in terms of the price of that commodity, rather than in dollars or any other currency.

Exporters of any particular commodity should issue debt that is denominated in terms of the price of that commodity, rather than in dollars or any other currency. Jamaica, for example, would issue aluminum bonds

Everyone has known the truth that Greece can never service its current debt obligations in full but nobody involved in the negotiations would say it.

But the debate about austerity and the cost of high public debt levels misses a key point Public debt owed to foreigners is different from debt owed to residents. Foreigners cannot vote for the higher taxes or lower expenditure needed to service the debt.

Lower demand for Greek debt caused its price to fall, meaning that its yield in terms of market interest rates rose.

But the debate about austerity and the cost of high public debt levels misses a key point Public debt owed to foreigners is different from debt owed to residents.

The market thus punished bad risks.

The principal risk I see today is that being borne by investors in dollar denominated debt and I don t believe they are charging a fair price for what they are doing.

To believe that any country issuing debt in its own currency is risk free as long as the exchange rate is flexible is astonishingly naive.

Because runs on banks can trigger widespread distress, governments explicitly guarantee insured deposits and implicitly guarantee all the other debts of mega banks. Governments that guarantee bank liabilities, however, must then also demand that bankers exercise more prudence than they might on their own.

Governments that guarantee bank liabilities, however, must then also demand that bankers exercise more prudence than they might on their own.

Europe s debt problems should, in fact, still be quite manageable provided the requisite write downs and debt restructurings are implemented.

Since NAMA swaps IOUs for bank debt at only about half its face value, the three way transaction can result in a 1 capital loss for every 1 the banks get from the ECB.

The Fed has printed new bank reserves with reckless abandon.

Bank services are getting more and more expensive.

Tom cleaned out his bank accounts and disappeared.

Europe s debt problems should, in fact, still be quite manageable provided the requisite write downs and debt restructurings are implemented.

When the US Treasury announced a bailout of mortgage giants Fannie Mae and Freddie Mac in July, the rally lasted just four weeks. When the 200 billion rescue of these firms was undertaken and their 6 trillion in liabilities taken over by the US government, the rally lasted one day.

I (among others) have been arguing for years that countries should cover their risks by issuing a different kind of national debt, tied to their own GDP or a similar measure of economic success.

Chinese demand for Treasuries has enabled the US to increase its government debt almost threefold over the last decade, from roughly 6 trillion to 16.7 trillion.

When the 200 billion rescue of these firms was undertaken and their 6 trillion in liabilities taken over by the US government, the rally lasted one day.

Will bank stocks once again outperform the market?

National banking systems need a lender of last resort.

Austria Values and Responsibilities

Rights, obligations and defences

Obligations not affected by countermeasures