Financial Markets: "Wall Street And Too Big To Fail Banks Pushing Another Sand Castle - Junk Bonds"

Too big to fail Morgan Stanley, JPMorgan Chase & Co., and Bank of America Corp. are recommending junk bonds as a hedge "while sovereign-debt crisis flares in Europe and concern mounts over the strength of the U.S. recovery".

This despite the fact that extra yield investors demand to hold U.S. junk bonds rather than government debt has declined 103 basis points this year to 620 basis points even though spreads are up from last year’s low of 452 on Feb. 21, 2011.

Said one European investor: "you must either be out of your mind or totally stupid to believe these financial institutions, this looks like another big sand castle". 

EU-Digest