Greek interest rates of 106% provoke bankruptcy speculation

The interest rate on one-year Greek government bonds rose to 106%, Monday morning, fuelling investors’ fears that the debt-ridden country could be heading for bankruptcy. Senior economist Jacob Graven of Sydbank said: “Greece hasn’t been able to live up to demands to reduce its national debt, a pre-condition of the country being given the next part of its agreed loan from the rest of the eurozone and the IMF. Many analysts now expect governments to say stop and refuse to lend Athens more money when they can’t even live up to the original demands, and that can only lead to one thing – bankruptcy”. The fear that Greece may default has forced the exchange rate of the euro and share prices down, as investors look for a save haven in ‘secure’ government bonds, such as Germany, USA, and Denmark, where interest rates are at record-low levels. According to Jacob Gravesen, there’s no ‘quick fix’ that can halt the eurozone’s debt crisis, but in the short term the panic mood will slow down if eurozone governments decide to help Greece yet again. However, at the same time he warned that the debt crisis will continue to hang like a millstone around the EU’s neck for years to come and a new finance crisis could explode within ‘weeks, or even days’ if Greece is pushed over the edge into bankruptcy. http://epn.dk/tema/gaeldskrise/article2543046.ece