Greek bond yields look funny now!!
‘We will not allow Greece to default..we are supermen of Euro Zone, saviors of financial sector’, where are you guys who were saying things like that?
What does a yield of 145% on 1year government bond imply? It means that if you invest $100 now you will get $245 in just 1year. Well, only condition is that the chances of getting that money are almost 0%. When I look at the 1yr yield curve of Greek government bonds I can only think of European policymakers, they must be thinking are they such big dumbs. If they wouldn’t have tried to save Greece and year ago and let it default then the losses would have been three times lesser than the losses if Greece defaults now.
Just an year ago I had never ever thought in my wildest dream that the government bond yield could shoot up to such levels and that too for so called developed European countries with backing of Euro. Well, we should get used to it because more such graphs are to follow in future as more European nations collapse. Welcome Drachma!