Is a sovereign's word his bond?

Many investment advisers tell their clients lending to governments is one of the safest things you can do.

You buy a sovereign bond, safe, they say, in the knowledge the country concerned will pay you regular interest on time and repay the loan in the full at the end of the contract. In recent years, owners of US, UK, German and Japanese bonds have, on the whole, made good money. The markets have become ever more appreciative of the sterling virtues of these bonds. Interest rates on them have gone to low levels, driving the prices of existing bonds higher. In recent days owners of Irish bonds have not fared so well. Nor in recent months have owners of Greek government bonds been too happy....