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Fixed income 101 or why the EU sovereign debt crisis is still very real (chart progression)

• The Political Commentator
The European sovereign debt crisis still exists determined by the only arbiter that matters, the marketplace Bonds 101 says that there is a concept known as risk and reward. That is the greater the risk, real or perceived (because as we know perception very often becomes reality), the more of a return the buyer will demand. If an adequate return is not available, the knowledgeable investor will not invest. There are a variety of risks, but for the purposes of the discussion of European sovereign debt we will be looking at default risk and the risk that the outstanding debt may need to be restructured. Any restructuring would of course be to the detriment of the bondholder. The EU has already experienced the need to bailout some of its members. The first was Greece, then Ireland with Portugal looming next on the horizon (3 of the 4 EU PIGS, the other being Spain).

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