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Semantics in markets


Bond market vigilantes – recent events in Europe centred around sovereign debt concerns has forced  investors to seek additional protection and security by demanding higher levels of interest in the face of worldwide money printing.  Higher inflation is also compounding the issue as real rates of return are being diminished. This is quite distinct from the behaviour of a vigilante.   Investing in sovereign debt is dicey and speculative, these nations are essentially bankrupt; their borrowing capacity should be set by the market.

Debt ceiling –  this is supposed to be fixed indicating a state of permanence. Caps should be enforced and followed; the debt ceiling is not an open top roof or a temporary ceiling.