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Friday, June 12, 2015

Greek Bond Risk Laughable

As I wrote late last year, risk and reality are disconnected in so many investments today. Among the most laughable and most egregious disconnects today are bond prices/yields of Greek sovereign bonds.

A multi-year chart from Bloomberg illustrates this:

Whereas Greek yields in 2012 rose to 35%, indicating a significant risk to bondholders, today's yield is only 11.31%. Yet all we hear on a daily basis out of Europe is the danger of Greek default and possible exit from the EU, usually referred to as "Grexit".

The markets today in so many securities are totally fake, controlled directly or indirectly by Central Banks. The CB's are putting more fingers in more dykes daily. Similarly, most nations are issuing increasingly fictitious unemployment, economic and fiscal indicators. 

This means that economic observers and investors are increasingly flying blind since most of the data that they could count on in the past to give an idea of what is really going on in the world are completely unreliable/fake today.

Realize this and exercise extreme caution!