Greek 2 yr yields hit 18.71%

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Subprime JD's picture
Subprime JD
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Greek 2 yr yields hit 18.71%

The yield on the Greek benchmark two-year note rose 478 basis points to 18.71 percent as of 4:51 p.m. in London. The 4.3 percent security due March 2012 fell 6.20, or 62 euros per 1,000-euro ($1,326) face amount, to 78.67. The yield on the 10- year bond climbed 69 basis points to 10.29 percent. The yields are the most since Bloomberg began collecting the data in 1998.

http://www.businessweek.com/news/2010-04-27/greek-bond-yields-stay-near-...

WOW greece is fu**ed.

Spoke with another aunt today. She said "we were poor growing up, and will be poor in our elder years".

Germany is still holding storng saying that its banks must prepare to take a hit on gr gov paper.

Its up to the IMF to kick the can out even further. Its obvious they have been preparing for this as IMF funding has grown to 500b.

 

machinehead's picture
machinehead
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Re: Greek 2 yr yields hit 18.71%

In a Bloomberg story a couple of days ago, quoted in another thread about the Greek crisis, it was stated that spreads typically have to exceed 1,000 basis points to signal imminent default. I suggested that the spread would reach that level soon enough -- and, HERE WE ARE!

The German 2-year T-note yields 0.80 percent. So the credit spread of Greece vs. Germany has reached 1,790 basis points in the two-year notes. This is similar to the level Icelandic spreads reached, before it blew out a couple of years ago.

Coupled with this nasty bond selloff in Europe, today's huge surge in the VIX volatility index on U.S. stocks -- up 31% today -- signals that all hell may break loose tomorrow. The market is demanding an immediate bailout -- larger than 45 billion euros -- and has cut off Greece from ANY further borrowing until fresh funds are injected ... and the terms of any restructuring are announced.

As euro-skeptics said when the currency was formed, not only did it have deep-seated structural problems, but also the multinational management would be unable to respond effectively and promptly to a crisis. Berlin dithers while Athens burns. Got gold?

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Subprime JD
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Re: Greek 2 yr yields hit 18.71%

Machinehead:

Coupled with this nasty bond selloff in Europe, today's huge surge in the VIX volatility index on U.S. stocks -- up 31% today -- signals that all hell may break loose tomorrow. The market is demanding an immediate bailout -- larger than 45 billion euros -- and has cut off Greece from ANY further borrowing until fresh funds are injected ... and the terms of any restructuring are announced.

 

If the situation is that bad that "all hell may break loose" tomorrow then surely the IMF is going to pump out the money very very soon. I wish for Greece to outright default and go back to the drachma. However, with greek prime minister George Papadrenou being a bilderberg member i doubt that this will happen. The gov may be broke but the majority of citizens have very little debt (credit card, mortgage, student loans). People inherited homes from grandparents and each generation added new fixtures. The gov employees are going to take a hit but its neccesary in order for the country to ever get out of this mess. Not one of my extended family members in gr work for the government, all are private sector entreprenuers or employees, work their asses off. Now, with IMF imposed rules, the money that private sector workers earn will be subject to taxation in order to pay off the banking overlords and so that public employees can continue to loot the private sector workers.

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Re: Greek 2 yr yields hit 18.71%

As I understand it, the proposed bailout is to be a partnership of the EU with the IMF. But the EU members don't have their act together, with German parliamentary factions divided. As is typical in crises, inaction and uncertainty bring matters to a boil.

Probably EU decision makers would like to wait until this weekend to assemble a final package. But the market is rebelling NOW. Today's selloff likely was based on insider rumors -- perhaps a restructuring has been tentatively decided, with 'haircuts' for existing debt holders.

No such news has been made public yet. But that's what a yield of 18.71% tells me -- restructuring dead ahead. Stay tuned for details.

The tragedy of governments is that when cheap money is available -- they will take it. Just like some poor clueless soul, receiving credit cards in the mail, maxing them out, and then wondering what happened as the APRs zoom up and the payments balloon beyond management. Democracy (a Greek invention) coupled with paper money is like mixing teenagers, whisky and fast cars -- don't expect happy results!

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SteveW
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Re: Greek 2 yr yields hit 18.71%

This has been dragging on for weeks but the resolution has to come soon. There is a major bond rollover coming up on May 19 which creates a firm deadline.

BTW and FWIW, I was on vacation in September 2008 when TSHTF and I'm going on vacation Friday through May 15.

Subprime JD's picture
Subprime JD
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Re: Greek 2 yr yields hit 18.71%

ZH posted that IMF to provide 10billion in funding. There is no way this would go past friday of this week. The financial system is so fragile that no one can fail. If no one may fail, then all will fail.

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VeganDB12
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Re: Greek 2 yr yields hit 38%???

"9.45am: We're now getting prices from the bond markets, and it's looking like blood on the floor for Greece.

The yield on Greek two-year bonds has just blown apart to a scarcely believable 38%. It's inconcevable that a country could refinance itself at that level of interest rate, so it indicates that only the gutsiest speculators feel that medium-term Greek debt is worth holding onto."

 

http://www.guardian.co.uk/business/blog/2010/apr/28/greece-financial-crisis

machinehead's picture
machinehead
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Re: Greek 2 yr yields hit 18.71%

Greece banned short-selling today. Predictably, in mechanical fashion, the rule change created a brief bounce in Athens stocks.

But I take this as bad news -- it shows the Greek government is clueless and panicked. Banning short selling to postpone a debt crisis is like draining mercury from the thermometer to counter heat stroke -- it has no productive effect, other than shutting off useful data.

From Bloomberg: 'Credit-default swaps on Greek government bonds climbed 77 basis points to a record 901, according to CMA DataVision. The level implies the highest probability of default of any country tracked by CMA, surpassing Venezuela and Argentina for the first time.' Meanwhile, Greek 2-year debt is yielding 10 percentage points or more higher than Pakistan's.

With Portugal under attack too, this is not just a story of Greece potentially peeling away from the euro currency. Rather, if European decision-makers continue to dither, they could lose all of southern Europe to the escalating contagion.

We've got a five-alarm fire raging here. But I don't see no fire trucks careening over the ridge. Bucket brigade!

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JAG
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Re: Greek 2 yr yields hit 18.71%
machinehead wrote:

Greece banned short-selling today. Predictably, in mechanical fashion, the rule change created a brief bounce in Athens stocks.

Kiss of Death! No short selling = no bid

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Tapani
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Re: Greek 2 yr yields hit 18.71%

Swedish newspapers report that greece has told IMF to "shove it" -- refused to accept conditions like pay cuts and denied access to financial markets for three years.

However the papers might be overdramatizing the events.

 

machinehead's picture
machinehead
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Re: Greek 2 yr yields hit 18.71%

Doubtless the Greek government is concerned about its own survival. But the downgrade of Spain from AA+ to AA is hard to overdramatise. As the linked article states, Spain is probably too big to bail out. So a downgrade prompted by Spain's deep-seated structural problems -- high employment, low growth, yawning budget deficits -- makes people nervous.

http://tinyurl.com/27uxubg

As the contagion spreads, the cry goes up: WHO LOST EUROPE?

Subprime JD's picture
Subprime JD
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Re: Greek 2 yr yields hit 18.71%

Germany $3.2 trillion

France $2.6 trillion

Italy $2.0 trillion

Spain $1.4 Trillion

Netherlands $790 billion

Belgium $461 billion

Greece $343 billion

Portugal $227 billion

These 8 nations have a combined GDP of $11 trillion. With Greece, Portugal, Spain and Italy in trouble, this constitutes a huge hit to the EMU.

 

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