Depfa lent the money to the districts on a "nonrecourse" basis, meaning that the districts would not have to repay the loan if the securities bought with the borrowed funds defaulted.
New rescue money will also be needed: to fund defaulting countries' budget deficits; to help recapitalise these countries' local banks (which will suffer losses on their holdings of government bonds); and, if necessary, to recapitalise any hard-hit banks in Europe's core economies.
The high yield reflects growing concern that Portugal, another recipient of bailout funds, might default as well.
These days, however, that seems a fantasy compared to more prosaic demands such as, don't shut down the government, starve critical government agencies of funds or default on the national debt.
That means if workers don't actively decide where to put their 401(k) contributions, the money could end up in target-date funds by default.
While many more companies are making life-cycle funds their default, managed accounts are also a fast-growing and intriguing–option.
The spectre of bank runs, high funding costs, default and social unrest might not seem so scary in today's conditions: some countries are already vulnerable to these.
Indeed, what we have seen lately — through hedge funds, credit-default swaps and the like — is a system that champions debt over capital and hides that debt in ever-less-regulated nooks and crannies of the financial system.
Yet added collection of data on money market funds, credit-default swaps, financial leverage and counterparty risk exposure, he said, could make it possible for financial institutions themselves, as well as regulators, to have early-warning signals of trouble.
It includes a reserve fund, borrower default insurance and fraud and cyber crime insurance.
