Everyone understands that the situation in Europe remains very precarious, that the economies there are threatening to tip back into recession. And the epicenter of the Euro crisis is Greece. The Greek situation has shown some signs if improvement in recent months, but here's a sign of how dire its economy remains: For a brief time on Monday, the yield on a one-year Greek government bond reached 1,000 percent.
That's right: If you had paid $1,000 for a one-year bond from the Greek central bank on Monday afternoon, you could have expected to receive a whopping $10,000 when it comes due in a year. The government there has become so untrustworthy that it was forced to promise ten times what it borrowed just to get investors to loan it money.
Part of the issue there is that Greece is expected to reach an agreement with its bondholders in a couple of weeks to give a haircut to all its bonds and reduce its indebtedness. So it's likely that no investors will ever see that tenfold return. At any rate, by Tuesday, the yield on the Greek one-year bond had settled back to 949 percent.
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