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Truer words have never been spoken...

There's a big causality issue with all these analyses, which makes them all largely worthless.

I think we've run out of hands here, sire :)... I don't know, tbh. But one thing for sure... They'd better make a decision and quick.

Agree, unfort... Which tells me that maybe they shouldn't be in the Euro in the first place.

I dunno what to say... I am all choked up.

Sure, I know about CDP as well... Point I am trying to make is that all govts are guilty of some "financial shenanigans" and all media reports the wrong figures. The mkts are generally well-aware of who has what where, including the assets. As to the UK, RBS and Lloyds are actually included...

The ratings agencies do know. The mkt also knows. Moreover, KfW isn't an issue, as it has assets. Which means that it's sensible to classify KfW differently. Just like it's sensible to classify Reggione Campania (for example) debt different to that of the central govt of Italy. Again...

Well, I don't see a strategy of Fed dollar debasement. What I do see is the mkt pricing the likely loss of the reserve ccy status by the USD, as the world starts refusing to fund the US current account deficit. Moreover, your very own Congress has given the Fed a particular mandate. If the...

Indeed, that's what I am talking about... I am not suggesting a sharp one-off devaluation is always and everywhere the right answer, but, I am pretty sure, the weight of precedent is sufficient to not dismiss it out of hand. Moreover, it all depends on your starting point, which is different...

Well, firstly, a devaluation and a default are, in many ways, similar (certainly to a local ccy bond investor). Secondly, again, you *think* it's not the ccy devaluation that saved Iceland. The fact of the matter is that trade-weighted ISK is now almost 50% less than it used to be before 2008...

Well, for the US, for one, a long time back... For Iceland, which appears to be everyone's favorite recent example of how to deal with a crisis. Worked exceedingly well for the Scandis during their crisis in the early 90s. There's a whole slew of other examples.

You can build a risk-neutral probability distribution from option prices/vols. There's an older thread that discusses the various issues involved.

Well, I'd argue that Japan is fighting something a bit bigger and more fundamental than a recession. Maybe the same in Europe. Nobody knows what the right answer is, but, arguably, we have all sorts of precedents that taking on debt at the right moment and/or ccy devaluations kinda work.

The Japanese are printing money hand over fist, faster than pretty much anyone else. So how is it in their case, "not that bad" or "evil"?

Absolutely... The union (currency and otherwise) of formerly independent states that's currently known as the US of A is pretty much universally perceived to be a good thing, as far as I am aware. I am sure there were lots of objections when it was formed, but it didn't work out too badly, did...

Well, why is it so wrong again?

I dunno, mate, tbh...

It's traded in the secondary mkt like all the other EUR sov debt...

Well, you just wrote it, but, with all due respect, I know nothing about you and whether you know what you're talking about (to be sure, you can definitely say the same about me). My point is that, as a mkt participant, I am an investor in Germany, both govt bonds, as well as KfW, Pfandbriefe...

Huh? Are you referring to me as "someone starting to think"? You sure you wanna go there, amico?