11 responses to “Chart of the Day: Greek Crisis”

1. 

   Fausta

   February 12, 2012 at 6:37 pm

   Whoa!
2. 

   Steven L. Taylor

   February 12, 2012 at 6:43 pm

   @Fausta: Indeed.
3. 

   Gold Star for Robot Boy

   February 12, 2012 at 6:50 pm

   For comparison’s sake, where does the U.S. stand?
4. 

   Steven L. Taylor

   February 12, 2012 at 7:01 pm

   @Gold Star for Robot Boy: Around 1.99% (http://www.bloomberg.com/quote/USGG10YR:IND)
5. 

   Gold Star for Robot Boy

   February 12, 2012 at 7:31 pm

   @Steven L. Taylor: 1.99&, which means we’re in better shape than the best-off European country. And I should be listening to GOP doomsayers why?
6. 

   Stormy Dragon

   February 12, 2012 at 7:32 pm

   What this chart really says is that no one lending money to Greece for 10 years actually expects the principle to be repayed. The interest rate is being set to recover most of the principle long before then, because they’re going to default in a few years.
7. 

   John Burgess

   February 12, 2012 at 7:58 pm

   @Gold Star for Robot Boy: Possibly because too low a rate means that would-be investors don’t invest. Instead, they go where their investment will give them a better return, which in this case isn’t the US and therefore will not create US jobs.
8. 

   Gold Star for Robot Boy

   February 12, 2012 at 8:01 pm

   @John Burgess: Then a little inflation would be a good thing, no?
9. 

   Steven L. Taylor

   February 12, 2012 at 8:06 pm

   @John Burgess: Well actually, this is not the case as I understand it. Instead, US treasuries are considered a very save place to park money. In this case the higher rates are indicative of huge risk–i.e., the only way for Greece to attract lenders is to promise huge returns.

   In the current climate the lower rates are positive indicators of the way the market views long-term stability: low risk means low rewards (but guarantee ones).

   Again, this is as understand it.

   I know for a fact that the Greek number is a serious problem. It certainly isn’t indicative that the market foresees massive growth in the Greek economy!
10. 

    Ben Wolf

    February 12, 2012 at 9:48 pm

    The bond markets know U.S. bonds are risk-free because the government is sovereign in its currency and cannot involuntarily default, but ultimately the Fed determines yields. There is no possibility of interest rates spiking as they have in some eurozone countries.
11. 

    James Joyner

    February 14, 2012 at 10:22 am

    @John Burgess: @Steven L. Taylor: Indeed, my understanding is that the Treasury is currently selling long-term bonds at slightly negative interest rates–that it, they’ll actually return a bit less than principal!–and investors are lining up to buy them.