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* as had happened many times before when investors made the imprudent choice bought government bonds that were never going to be paid back* I would just argue
by mathattack 12y ago
* as had happened many times before when investors made the imprudent choice bought government bonds that were never going to be paid back*
I would just argue that it's not imprudent. They get higher than "risk free" yields, and many times get bailed out. On average they still outperform the risk-free rates.
- meric 12y agoI mentioned specifically those government bonds that were never going to be paid back, not all government bonds. Here is a list of historical government bond defaults: http://en.wikipedia.org/wiki/Sovereign_default#List_of_sovereign_debt_defaults_or_debt_restructuring http://en.wikipedia.org/wiki/Sovereign_default#List_of_sover...
- mathattack 12y agoRight. But if people diversify across all risky government bonds, even after defaults, they'll outperform people who only invest in the ultra-safe governments. The yields are higher to entice people to take the risk, and live with the volatility.