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Greece sells at remarkable demand today 6-month bills worth 1.95 billion euros at the interest rate of 4.9%. Thus, the minimal interest rate goal of the Financial Ministry is completed as the interest rate is below 5%. However, interest rates on Greek securities of short-term maturity are growing up dangerously. The 6-month bills were traded at 4.82% interest in November. The money earned will be used for repayment of old bills, maturing soon.

The trade should really be considered successful for it is held under extremely unfavourable international conditions as all South European countries enter the markets to borrow money. The yield spread of the eurozone’s “troubled” countries, including Greece, increased seriously and yesterday crossed the psychological barrier of 1000 points to calm down later at 972 basis points.  

And the background of all this is the worsening local economy. According to the Greek National Statistical Service, inflation rate in the country has risen to 5,2% in December 2010. For comparison, it was 4.7% in November 2010 and its average value for 2009 was 1.2%. The cost of house keeping has increased the most as it jumped by 1.3% mainly because of the heating fuel price growth. Transport has become 0.8% more expensive due to gasoline price increase. Prices of hotels, restaurants and bars have increased by 0.7 %, while food essentials prices have increased by 0.1%.

The Institute for Industrial Research reported in its monthly analysis of the Greek economy that the business environment has deteriorated in December 2010 as its index fell by nearly two percentage points. The crisis affects the construction industry the worst. There is a sharp decline there due to the sharp drop in the number of employees in the industry. Forecasts for the industry of the country are negative too as there is steady decline in production. However, the Institute recorded recovery in areas such as services and retailing.

The Athens Stock Exchange responded nervously to the trade held today by the Greek Public Debt Management Agency. The stock index is going upward today and its value increased by 0.61%. But this is nothing compared to yesterday's collapse when it lost 2,6% of its value in a day and reached its lowest level since early 1997. Bank shares have suffered the most. EFG Eurobank’s shares sank the deepest as their value fell by 9.72%. The shares of Alpha Bank fell by 8.08% and the National Bank of Greece shares dropped by 6.62%. Analysts explained the Athens Stock Exchange developments are due to markets and investors firm belief that the country would restructure its debt and to the expected lowering of its credit rating.

Analyst at the Japanese bank Nomura told Financial Times, that Greece is insolvent and should restructure its debt. He stated that the sooner the country does this the sooner the crisis will be resolved. “Greece triggered the eurozone crisis. Some form of government debt restructuring there now seems almost inevitable to prevent the single currency project from running aground,”said another analyst Don Smith for the same newspaper. The newspaper cites a debt restructuring specialist, who explains the psychology of the markets and investors as:  “It’s like telling a fellow that you won’t shoot him until after lunch. He was never going to enjoy the shooting, but now you have also spoiled his lunch.”