let it spread*!

* Yield spread: The difference between the quoted rates of return on two different investments, usually of different credit quality.

Greeks learned what the "yield spread" (or simply "spread") is only recently. The Portuguese, the Spaniards and many more are soon to find out themselves. In simple words it represents a rate at which a government may borrow from other financial entities. Low spreads mean a country is trustworthy and thus can sell its bonds easily. High spreads reflect a generalized doubt on the government's ability to pay back, therefore borrowing becomes more difficult. At usury rates, borrowing becomes impossible and the country goes bankrupt.

Over the last few months the yield spread of the 10-year Greek government bond rose from about 2.5% (last November) to a prohibiting 8.5%, right before Greece was forced to submit to the IMF and to a record high of 10.4% last Wednesday while the Greek MPs were discussing the ratification of the IMF memorandum and with the house of Parliament being sieged by an uncontrolled mass of demonstrators.

As the value of the yield spread is said to reflect the fiscal reliability of the state economy, I find it hard to understand the degree to which my country's credibility has improved within the last five days. The spread dropped by 50% within thirty minutes yesterday morning and it lies now only marginally (and suspiciously) below 5%, which equals the rate at which Greece is to borrow from the IMF and the EU. As from yesterday, everything seems like business as usual for the "markets". Yield spreads are dropping, the Greek Stock Market marking a rise of almost 9% on Monday and news throughout the media of mass deception talking about "a reversal of the climate", "a new hope" and "the light at the end of the tunnel".

All over Europe, people stand amazed with the clarity and consistency with which the "markets" are behaving. Two days ago, the EU announced a "rescue plan" of 750 billion Euro thus openly admitting for the first time that a number of states -and not only the lazy Greeks- are at the verge of fiscal collapse. To this grave danger, the thoughtful "markets" immediately responded by reducing interest rates and with stocks rising all over the continent. Well aren't they nice?

Well, in Greece in particular, there are a couple of things that happened in the meanwhile. These were the -unprecedented- signing of a treaty that is granting to an outside independent organization (the IMF) the right to decide on critical matters of the daily life of citizens of a member state. These were the complete abolishment of working rights, these were the reduction of the lowest salaries in the EU with a simultaneous rise in taxation. These were all "necessary", "unavoidable", "inescapable" sacrifices the people had to undergo in order to convince some German Bank to lend them money with less than 5% interest.

There are of course the skeptics. The ones who look at the salary reductions, the "reformation" of work rights, pensions being cut down even for the poorest and see "a tunnel at the end of the tunnel". Those who take to the streets because they fear they will soon be living on them, who try to sack the Parliament before it is completely run down by un-elected "loan sharks", who refuse to pay the bill for a country whose 60% rise in GDP over the last decade has gone anywhere else but in their pockets.

And this is what is happening in Greece today, in Portugal and Spain tomorrow and soon to a country near you.