How do you define a bad investment? Perhaps the best definition has to do with the relationship between risk and reward. We are seeing -- in a very dynamic way -- this tug of war being carried out in Greece. Government bonds are by definition guaranteed by a sovereign entity, so should be risk free. At least that is the basic idea as far as US Treasuries are concerned. Of course no sovereign entity can go bankrupt and court orders are generally ineffective methods of enforcement, so the use of law to limit risk does not generally apply to these types of investments.
One of the reasons why investors lost money on the Greek bonds has to do with the promoter of the issue. Greek bonds were obviously sold by the Greek government whose incentives are not just those of profit and loss. The Greek government does not have to worry about balancing its books, because in theory it has the power to tax people in sufficient amounts to pay off debtors. But that is exactly the problem. The Greek government is loath to enforce taxes against its tax dodging citizens to benefit creditors, for the very solid reason that if it does so, soon there will be a different Greek government. Since Greece is a sovereign state, unlike a normal debtor it cannot go out of business nor can it restructure in bankruptcy. Worse-- as a member of the European Union and the eurozone, there is the moral hazard that its financial profligacy will not fall on its own taxpayers, but the taxpayers of other countries.
The Agricultural Bank of China [ABC] is one of China’s big four banks. Along with the Industrial & Commercial Bank of China [ICBC], China Construction Bank [CCB] and the Bank of China [BoC], these four banks control over 70% of China’s banking activity. Like almost every
