Here is some context to our last post on Greece nominal bond yields.  What really matters is real bond yields – nominal rate less inflation.   This chart illustrates that though Greek nominal yields were over 20 percent in 1993 when Maastricht was ratified, inflation was running at 12-15 percent, the current account was close to balance, and the country had an autonomous central bank and a national currency.

After the round-tripping, 10-year Greek yields are back to over 20 percent, the country’s inflation is close to zero and will have to move negative for Greece to become competitive — if it stays in the Euro — , the current account has a structural deficit, and Greece effectively has no central bank and has given up its national currency.

Furthermore,  Greece 10-years are a reflection of the recovery value of the bond rather than the rate at what the country can borrow long-term euros    Always in context, folks.

(click here if chart is not observable)