What is it about EU countries that makes their bonds worthless?
Worthless is a bit too strong (but the same is true of US mortgage backed securities). What makes European sovereign debt worth-less is the combination of very slow growth and fairly high interest rates, and the justifiable belief that the people don't want to pay a large fraction of their GDP just to cover the interest on their debt. Their governments don't want to be punished by the voters, so they have a strong incentive to default.
This is especially true of Italy, which runs a primary surplus, but has to borrow more money to cover the interest payments on their debt. If Italy defaulted, they wouldn't have to worry about their credit rating tanking, because they can cover their expenses just on their tax revenue, without implementing tough (unpopular) austerity measures.
Going through expiring predictions reminded me. Just as we did for 2010 and 2011, it's time for LessWrong to make its beliefs pay rent and give hostages to fortune in making predictions for events in 2012 and beyond.
Suggested topics include: Methods of Rationality updates (eg. "will there be any?"), economic benchmarks (price of gold has been an educational one for me this past year), medical advances (but be careful not to be too optimistic!), personal precommitments (signing up for cryonics?), being curmudgeonly about self-improvement, making daring predictions about the future of AGI, and so on.
As before, please be fairly specific. I intend to put most predictions on PredictionBook.com and it'd be nice if they weren't too hard to judge in the future.
(If you want advice on making good predictions, I've tried to write up a few useful heuristics I've learned. So far in the judging process, I've done pretty well this year, although I'm a little annoyed I got a Yemen prediction right but for the wrong reasons.)