Greek Fire, Part 25

We're now back to interest rates on the Greek 10-year bond above where they were when Greece needed a bailout.

Greek 10-year bonds on Thursday rose to a record high of 12.553 percent, breaking the previous record set earlier this year during its bailout by the European Union and International Monetary Fund.

In thin trading the yield, or return to investors, on Greek 10-year bonds rose from Wednesday's close of 12.489 percent to hit an intra-session high of 12.553 percent. It later dropped to 12.504 percent.

The records of 12.465 percent intra-session and 12.449 percent close were set in May, when the country secured a 110-billion-euro (150-billion-dollar) EU-IMF bailout.

Investors have been spooked by Greece's high deficit and debt levels, and been demanding higher returns.

You think?   The Greek bailout has failed.  The Irish bailout is looking pretty failtastic too.

From the report: "Deposits from the Irish resident private sector were 6.7 per cent lower on a year-to-year basis in November 2010. The annual rate of change in deposits from Irish households was minus 4.5 per cent, whereas deposits from Irish NFCs fell by 14.9 per cent on an annual basis in November." What this means simply said, is that as more deposit capital is withdrawn from Irish banks, the more they will need to rely on ECB and ICB funding, the more distressed they will be perceived as, the more capital will be withdrawn and so on... But that is a 2011 story.

Boy, is it.  Greece is crashing, Ireland is next, and the rest of the PIIGS are about to be barbecued.  I've been warning about Greece and Ireland for months now, and it's looking more and more like worst case scenario time.  The Eurozone is destabilizing across the board.  Italy's latest bond auction failed today.  Portugal is planning to sell all kinds of bonds in 2011 in a buyer's market.  There's no appetite for Spain's bonds at all.

The Greek Fire is raging across Europe, folks.  And it's looking like there's no way to put it out until everything is reduced to ashes.  As Digby reminds us, that's what's in store for us if we let it happen.