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Please explain.


swords driver

Active member
Joined
Jan 2, 2009
Messages
113
Firstly, please forgive my ignorance if thats what it is.

What are bondholders ?. Are they not gamblers of millions rather than tens and twenties and if so why must we pay out on lost bets ?

Is there not a military and economic principle of "Never reinforce failure. Failure reinforces itself." and if this principle has been proven correct in the past, what the hell are the politicians playing at ?. Is the current policy of bailing all these unknown "bondholders" perpetuating, rather than truncating, the slump as happened in the 1930's.

Who are these bondholders and if their bets/investments are lost how would it effect the citizens of countries seemingly being held to ransom by these individuals ?.
 


G

Gimpanzee

What are bondholders ?. Are they not gamblers of millions rather than tens and twenties and if so why must we pay out on lost bets ?
Unlike a share price or the price of gold, there is essentially a promise with bonds to pay the bearer their full investment and the agreed return, so it isn't like a bet.

Bonds are usually bought to put money some place with a low return and a guaranteed return of your investment. Unless you count putting money anywhere except under the mattress as a form of gambling then putting it in bonds isn't usually gambling. They are generally the polar opposite to putting it in the likes of equities (high risk for higher returns) - which could be described as gambling.

Not all bonds are equal. There are different levels of risk.

Who are these bondholders and if their bets/investments are lost how would it effect the citizens of countries seemingly being held to ransom by these individuals ?.
Bonds can be bought and sold so the list of people who originally bought them probably differs greatly from the people who hold them years later. That breeds suspicion, but no one knows who really stands to lose.
 

tomcat

Member
Joined
Jul 30, 2010
Messages
40
Apparently, Roman Abramovich is one of the bondholders (senior/subordinated or whatever) in Irish Nationwide.

So Ireland will be financing Chelsea's transfer/John Terry's alimony fund for God knows how long.

And before any the Man Utd/Liverpool fans start slagging, who is to know whether Magnier, McManus, Glazer, Gillette, Hicks et al are not fellow bondholders also ?
 

Odyessus

Well-known member
Joined
May 16, 2007
Messages
12,987
Firstly, please forgive my ignorance if thats what it is.

What are bondholders ?. Are they not gamblers of millions rather than tens and twenties and if so why must we pay out on lost bets ?

Is there not a military and economic principle of "Never reinforce failure. Failure reinforces itself." and if this principle has been proven correct in the past, what the hell are the politicians playing at ?. Is the current policy of bailing all these unknown "bondholders" perpetuating, rather than truncating, the slump as happened in the 1930's.

Who are these bondholders and if their bets/investments are lost how would it effect the citizens of countries seemingly being held to ransom by these individuals ?.
Basically, bond holders are like depositors who agree to leave their money on deposit with the bank for a fixed amount of time (say ten years) in return for a higher interest rate than they would get if they opened a demand account i.e. one where the depositor can withdraw his money at any time.

In return the depositor receives a bond (basically an I.O.U.) on which the bank pays, say 5% interest per annum, and repays the principal at the end of the ten years.

In the meantime the bond holder can sell the bond to someone else if he needs his money in a hurry, or if someone offers him more than he paid for it in the first place. In any event, the bank pays the bearer or owner of the bond, regardless of the original purchaser.

Subordinated bonds, or "junior bonds" are much the same, except they pay a higher rate of interest. In the event of the bank becoming insolvent, the shareholders, that is the owners of the bank, must take the hit.

If the share capital is exhausted, subordinated bondholders are next in the firing line, (the extra interest is in return for the extra risk). If there is still a shortfall, the senior bondholders are next, along with other depositors.

The article below gives a fuller explanation.

Bond (finance) - Wikipedia, the free encyclopedia


P.S. The idea of a western European bank becoming insolvent was up to very recently considered an extremely remote possibility.

Therefore, rather than gamblers, senior bond purchasers in Irish banks were considered to be very conservative investors.
 
Last edited:

Mushroom

Well-known member
Joined
Nov 27, 2009
Messages
15,761
What are bondholders?

Are they not gamblers of millions rather than tens and twenties and if so why must we pay out on lost bets ?

Who are these bondholders and if their bets/investments are lost how would it effect the citizens of countries seemingly being held to ransom by these individuals?
I am a bondholder - at least I think I am!

By which I mean that some of my small pension is invested in an Irish Life Fund that invests in Bonds.

So if the bond 'bet' is lost, then, presumably, my pension will suffer. :cry:
 

Asparagus

Well-known member
Joined
Apr 7, 2010
Messages
4,882
I am a bondholder - at least I think I am!

By which I mean that some of my small pension is invested in an Irish Life Fund that invests in Bonds.

So if the bond 'bet' is lost, then, presumably, my pension will suffer. :cry:
So you are one of the bondholders eh - well give it up ya bum - we can't afford it.
 

Asparagus

Well-known member
Joined
Apr 7, 2010
Messages
4,882
P.S. The idea of a western European bank becoming insolvent was up to very recently considered an extremely remote possibility.

Therefore, rather than gamblers, senior bond purchasers in Irish banks were considered to be very conservative investors.
Well up to recently tax payers contributed tax on their incomes and expenditures to pay for hospitals, roads, eductaion and social welfare.
Now most of it ifor the next 20 years s required to pay these conservative investors - whose investments tanked.

Give up yer ould bonds - here take 10c on the euro and p1ss off
 

swords driver

Active member
Joined
Jan 2, 2009
Messages
113
So, let me sumerise.
A bondholder is someone who took a bet at 7-2 on and should not loose, but would accept a small return.
A Subordinated bondholder is someone who took a bet at 7-1 and expects a level of risk, but would expect a sizable return.
A depositor is an ordinary Joe who expects that the state would protect his deposit for minimal or no return.

So in effect we ARE paying for someone else's gambling and our politicians ARE guilty of reinforcing failure and doomed to perpetuating the crisis rather then dealing with it effectively.
 

Odyessus

Well-known member
Joined
May 16, 2007
Messages
12,987
So, let me sumerise.
A bondholder is someone who took a bet at 7-2 on and should not loose, but would accept a small return.
A Subordinated bondholder is someone who took a bet at 7-1 and expects a level of risk, but would expect a sizable return.
A depositor is an ordinary Joe who expects that the state would protect his deposit for minimal or no return.

So in effect we ARE paying for someone else's gambling and our politicians ARE guilty of reinforcing failure and doomed to perpetuating the crisis rather then dealing with it effectively.

If you want to call senior bond-holders gamblers, you also have to call depositors who agreed to leave their money in the bank for a fixed term, in return for a slightly higher interest rate than a demand account, gamblers.
 

Odyessus

Well-known member
Joined
May 16, 2007
Messages
12,987
Well up to recently tax payers contributed tax on their incomes and expenditures to pay for hospitals, roads, eductaion and social welfare.
Now most of it ifor the next 20 years s required to pay these conservative investors - whose investments tanked.

Give up yer ould bonds - here take 10c on the euro and p1ss off

This is factually incorrect, but I expect you know that already.
 

firefly123

Well-known member
Joined
Dec 8, 2009
Messages
28,163
Has anyone any idea how much is on deposit with Anglo? I mean if I had some deposits in there I would have withdrawn them by now. Also could ordinary depositors stick moneyin Anglo or was it all developers etc.
 

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