Comments on: Subordination in Spain causes very little pain http://blogs.reuters.com/felix-salmon/2012/06/25/subordination-in-spain-causes-very-little-pain/ A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: Temizlik http://blogs.reuters.com/felix-salmon/2012/06/25/subordination-in-spain-causes-very-little-pain/comment-page-1/#comment-43362 Fri, 21 Sep 2012 19:27:16 +0000 http://blogs.reuters.com/felix-salmon/?p=15429#comment-43362 Great post…

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By: jusha http://blogs.reuters.com/felix-salmon/2012/06/25/subordination-in-spain-causes-very-little-pain/comment-page-1/#comment-40666 Mon, 25 Jun 2012 20:25:39 +0000 http://blogs.reuters.com/felix-salmon/?p=15429#comment-40666 Felix – I don’t think Kapoor’s deals very much with seniority. If x = 0.8y, a bailout never makes sense (it only makes sense if x > y, but for maturity or currency mismatches cannot be fulfilled in every period; x 0, 0.8(y-z) < 0.8y. So if there is any doubt about the fundamental solvency of a country, a senior bailout clearly lowers the expected repayment in case of default…

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By: trevorh http://blogs.reuters.com/felix-salmon/2012/06/25/subordination-in-spain-causes-very-little-pain/comment-page-1/#comment-40664 Mon, 25 Jun 2012 20:10:44 +0000 http://blogs.reuters.com/felix-salmon/?p=15429#comment-40664 Sony Kapoor’s post is horrible.

It resembles another attempt from the financial industry (drug dealers) to sell more drug (debt) to the victims (the public). A pathetic attempt to convince the victims to stop quitting drug (commit to austerity).

The victim is a serious drug addict and for political reason cannot be restrained (ie by military dictator government), yet the victim is surrounded by very fragile pottery (social order). If the drug is taken off right away, serious withdrawal symptoms will appear. The victim goes crazy. There will be a lot of broken pottery (social chaos).

The solution from Germany is the smartest way. Cutting down on drug. The bail out is meant only to smooth out the craziness of the victim when the drug is taken away. Hopefully less pottery is broken (less chaos on the street).

The yield goes up for several reasons mostly speculative.

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By: PR1 http://blogs.reuters.com/felix-salmon/2012/06/25/subordination-in-spain-causes-very-little-pain/comment-page-1/#comment-40662 Mon, 25 Jun 2012 18:43:19 +0000 http://blogs.reuters.com/felix-salmon/?p=15429#comment-40662 Doesn’t that assume the z-euro bailout is put to efficient use? If it’s burned in the public square (or the functional equivalent, loaned to insolvent-before and still-insolvent-after banks to help out their bondholders), then how has the country’s ability to produce anything of value been enhanced?

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By: Woj http://blogs.reuters.com/felix-salmon/2012/06/25/subordination-in-spain-causes-very-little-pain/comment-page-1/#comment-40657 Mon, 25 Jun 2012 17:10:19 +0000 http://blogs.reuters.com/felix-salmon/?p=15429#comment-40657 Interesting calculations. I don’t disagree that the added austerity measures may be a greater influence on credit spreads but I’m not convinced subordination can be written off so easily.

As Sony notes “The only circumstances under which a public bailout will make private investors worse off is if the public bailout money is ‘wasted’ or spent on items that are NPV negative.”

I don’t think we can write off the possibility that many Spanish banks currently have a negative NPV (due to severely overvalued home loans). In that case, bailouts may very well hurt private and public investors.

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By: MrRFox http://blogs.reuters.com/felix-salmon/2012/06/25/subordination-in-spain-causes-very-little-pain/comment-page-1/#comment-40656 Mon, 25 Jun 2012 17:06:56 +0000 http://blogs.reuters.com/felix-salmon/?p=15429#comment-40656 If my fellow commenters are on their games today, FS – this is going to be a rout.

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