In an interview with Chrystia Freeland of Reuters, George Soros explains why he’s long Italian bonds (which his fund bought from MF Global), and why he wishes he had more: Yield.
Yep, it’s simple. 6% yield on a 10-year bond is juicy in a period of such low inflation, and that yields is likely to come down even more.
Implicit in this bet, obviously, is the idea that Italy won’t default. On that question he simply responds that it won’t happen, because a default by Italy would be the “End of Europe.”
And he notes, therefore, that for Italian banks, buying Italian bonds is “riskless” since if Italy goes, they’d go kaboom — which happens to be the exact same point that Jamie Dimon also made in an interview just now. Great sutff packed into a 2:30 minute video.