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In response to
"Ah. I see. We need you to buy our bonds so we can build roads. Don't want to buy them? What if we promised 10% return? 15%? 20%?"
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Mop on Macbook Air
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Sort of. This is really sales of the already outstanding bonds among traders I believe. So people are selling them at growing discounts that
Posted by
pmb (aka pmb)
Nov 7 '11, 14:45
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increases the effective yield. So people are selling $100 bonds for $80 which increases the effective yield should the bonds in fact be repaid. Now, if Italy wants to issue new debt (which they will need to do to fund their deficits), they would have to sell them at comparable rates of interest to attract buyers, which will cost them a fortune (that's why they cancelled their auction for new bonds).
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