Angela Merkel's RecentComments & Irish Bond Prices

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The result of the german chancellor's recent comments which she has since re-iterated, that bond holders should share some of the costs in the event of defaults, had the effect of increasing the Irish sovereign bond yields even further. However on the other hand, it would appear that one of the main reasons we are "voluntarily" bailing out our domestic banks is so that the vast sums of money owed to german bondholders (banks) is repaid in full. Surely what she is suggesting would entail a default mainly at the expense of her own banks, or is this some future proposal she intends to take effect only after they've got all their money back? .. can anyone shed some light on this?
 
She is talking about any future crisis. They want default resolution mechanisms in place for banks and sovereigns that get into difficulty that make it easier for bondholders to share some of the cost.

There was nothing new in it but she shouted her mouth off and it was picked up to mean that Ireland and other Countries would restructure their debts. Hence the spike in yields.
 
Thanks for that. However I do wonder as to why she "shouted her mouth off" in such a manner esp at this crazy time for us, and it wasn't a slip cause she re-iterated it even after the negative effects on our bond prices were made known. Her comments have helped us inexorably further on our way into the Eu Bailout Fund, which is perhaps what was intended, ie it's inevitable anyway and perhaps the sooner the better to have the uncertainty over with and finally have EU clutches on our Corp tax rates etc? Am I cynical or what? :)
 
It's all political. She has voters to impress and the German taxpayer is understandably getting a bit peeved off. The French did it as well. They rowed back a bit today at the G20 (apparently were told by the UK and middle tier European Countries to clarify the position as the risks were spreading to countries like Italy).

I think you will see her backtrack more over the next few days.
 
You're right of course, it's always political..the same with wanting to change the Lisbon Treaty cause of her problem with the Karlsruhe constitutional court, however, damage already done regarding Piigs bond prices I'd say, and a nice little warning spanking for them all from Dr Domimatrix!
 
There are elections due to take place in Germany in the spring.

When you think about it if I was a German citizen I would want my political leader to make sure that German money was not going to be wasted supporting living standards,employment conditions and pension benefits in other European states that did not exist in Germany
 
I totally agree, what a pity we don't have such a like minded government here, that would put the lives of our own citizens before foreign bondholders and speculators.
 
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