There has been much interest in the European Central Bank making a new call on Greek government bonds, saying that ‘it is currently not possible to assume’ the bonds to be safe assets once the bailout programme expires. This is as you might expect: after all Yanis Varoufakis, the new Greek Finance Minister, has been touring European capitals this week to remind creditors that Greece is bankrupt. Yet markets and Twitter – our two modern messengers of truth – ‘spooked’, along, of course, with the poor souls who thought Greece’s Attica or Piraeus banks to be worthy an embrace by their savings. Loans to the Greek government fetch a 9.7 per cent rate of interest – in comparison to German, British, and even French levels of less than 2 per cent.
Ever since the creation of the first bailout to Greece, it has been an insult to junk bonds to put them in the company of Greek government bonds.
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