A recent interchange with [prominent trader appearing on my podcast]:
Name: Read: “Why Greece’s Lenders Need to Suffer”
Covel: Great ending paragraph:
“There is an unsentimental logic to markets. If you make a bad investment, you are supposed to pay the full price — because if you don’t pay the full price, you will keep making bad investments. The only way to get the bond market back to its historic role is to make bondholders feel real fear that they might lose money if they make bad decisions. We need the market to reward bets that are economically wise, instead of those that are politically savvy.”
Wonder if we ever get there….
Name: We will get back there because our government will run out of money like the Greeks’ government. Ours will be painful too.