Former ECB Governing Council member Lorenzo Bini-Smaghi makes the case for Greek debt in the FT.
“Looking at the dynamics, Greece’s debt appears to be more sustainable than that of several other countries,” he writes. “It might be argued that the price for sustaining the debt is too high, for an economy which has gone through a major contraction since the start of the crisis.”
Greek 10-year bonds are yielding 9.43% today.
“Many discussions about Greece’s debt, which currently stands at about 175 per cent of gross domestic product, start from the presumption that it is unsustainable and cannot be repaid. The argument is highly questionable,” Bini-Smaghi writes.
I think you’d have to be crazy to buy Greek bonds but it was the same story with Portugal and buying those above 10% turned out to be a magnificent move.
