And people are brazen and arrogant enough to believe that we (humankind) can do anything to our own benefit. Haha! It’ll be interesting to see this massive imaginary stack of debt come tumbling down in the years to come.
This seems to be the definitive paper, but it’s paywalled. Googling for “Greece Benford’s law” nets a few other articles.
Yes, it’s a bit like saying “who was dumb enough to bet on that horse that lost?” Greece was more risky, but the possible return was higher. On this occasion, it proved a bad bet, but what can you do?
I think what complicates it is that people bought bonds from Greece, the Euro member. That membership of the surely unbreakable currency union made Greece seem like a better bet than it actually turned out to be.
I don’t think it was particularly “dumb” to buy that idea, a few years ago. Many decidedly not-dumb people accepted it.
That’s a very nice infographic. Seeing as it’s your site, a nitpick on one of the quotes - Josiah Stamp was a director of the Bank of England, not its President, a position that doesn’t exist. The head of the BofE is Governor.
Hindsight is 20/20 vision. Sure it was risky, but all investments carry some risk. If things had turned out the opposite way, we’d be saying, “Man…why didn’t I have the sense to invest in Greece? I could be rich by now.”
I think the problem is that no one actually thought it would turn out the opposite way.
In other words “Governor of the Bank of England” is the full title.
Another nitpick: you have the ‘Greece’ caption at the top of the US page.
I am indirectly an investor in Greek bonds, via an ETF that invests in all sorts of high-risk (read: junk) bonds. (Of course, my total exposure to Greece specifically is minimal; that’s why I picked an ETF. Investing across many bad bets seems safer than doubling down on particular one.)
I invest in this fund as part of my diversification strategy - it is more risky than the safe part of my bond portfolio, but still safer than some of my stocks. In my mind, it fills a necessary gap.
This ETF pays approximately 7.5% interest. I understand that I’m getting that higher payout at the risk of losing some or all of my principal, but that’s investing. (For what it’s worth, the principal value of the ETF has gone down 1%. Over 18 months, I’m still about 10% up on this ETF between reinvested dividends and principal appreciation).
With the S&P doing essentially 0% through all of 2011, I’m feeling pretty smug about my choices right now. In fact, my total portfolio gained 6.25% in 2011.
I made a similar risky gamble when I put $1,800 into AIG’s bonds in December 2008. Those bonds paid me $180/year in interest and cashed out at their $3,000 face value in 2011. So that’s a gain ($1,740) of almost 100% over three years on a bond. With AIG, I was gambling that the US government would just keep pouring money into them until I could cash out. I was right. Now that I’m out, I couldn’t care less where AIG winds up eventually.
You can see how the same thinking might be applied to Greece.