Coming Soon to a Country Near You: Greek Interst Rates Hit 60 Percent

Mike Shedlock

Once again the bond markets have spoken, and once again the message is the same: default. Greek two-year bonds are near 44%, having touched as high as 46%. The interest rate on 1-year Greek government debt is a stunning 59.8%.

Greece Not Saved

Supposedly "Greece was Saved" on that blue circle when yet another bailout (throwing more good money after bad) was approved.

The deal unraveled for numerous reasons but demands by Finland for collateral are at or near the top of the list. Austria, Slovakia, and the Netherlands now want collateral as well.

Under great pressure from Germany, the EU, and IMF, Finland allegedly dropped those demands. It was a lie. Finland did not drop demands for collateral, and that shows you the effect of multiple veto points where such decisions must be unanimous or they fall apart.

Greek 1-Year Government Bonds



Greek 2-Year Government Bonds



44% a year, for two years or whopping 60% for one year, unless of course there is a default.

Not only does the bond market say Greece will default, but the implied haircuts are huge given those interest rates.

17 Veto Points

Please consider A Small Country — Finland — Casts Doubt on Aid for Greece http://www.nytimes.com/2011/08/29/busin ... l?ref=mish

Finland is just one of 17 euro zone countries whose parliamentary approval is needed for the expanded bailout fund and whose domestic politics could upset the process. The case of Finland points to a bigger governance problem in Europe, said James Savage, a professor at the University of Virginia who has published a book on European monetary union.

“You have all these multiple veto points, so they can’t come to a reasonable conclusion, at least not easily,â€