Who wanted us to protect senior bondholders?

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Dreaded_Estate

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The constant line from the government is that Europe pretty much "forced" us to protect all senior bondholders from any losses.

But this just doesn't seem to make sense given the recent statements from both Germany and France.

France Joins Germany Ganging Up on Bondholders to Share Pain

French Finance Minister Christine Lagarde said investors must share the cost of sovereign debt restructurings, backing a German call that helped send yields on Irish and Portuguese bonds to record highs.
The IMF has always said that insolvent banks

“All stakeholders must participate in the gains and losses of any particular situation,” Lagarde said during an interview yesterday in Paris for Bloomberg Television’s “On the Move” with Francine Lacqua. “There are many, many ways to address this point of principle.”

So either Europe has changed its mind on bondholders, sovereign and bank, and they should face losses as well as the taxpayers. Or they never thought we should save all bondholders at any cost.

If it looks like the Europeans have changed their mind on the issue should Ireland do the same?
 


cyberianpan

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It is a prospective issue, and clearly flagged as such

Also I still don't agree that in FRB, that senior bondholders should have any "moral hazard" ... that should belong to the subbies ... and tis the Regulator's job to ensure there's sufficient bulwark of subbies

cYp
 

Dreaded_Estate

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It is a prospective issue, and clearly flagged as such

Also I still don't agree that in FRB, that senior bondholders should have any "moral hazard" ... that should belong to the subbies ... and tis the Regulator's job to ensure there's sufficient bulwark of subbies

cYp
Not sure what you mean by a prospective issue.

But I disagree with your main point, it is not the responsibility of the FR to remove all investment risk from senior bondholders nor subbies.

They is no such thing as risk free funding, and it is up to every investor to examine those risks on behalf of the company they invest for.
 
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