Greece took a further battering from financial markets Wednesday as government officials began talks in Athens with the International Monetary Fund and the European Union over conditions for a package to help rescue the country from its debt crisis. Interest rates on Greek 10-year bonds rose above 8%, the highest since Greece joined the euro in 2000, and the euro itself weakened.
Meanwhile, other bond markets around Europe displayed nervousness following a warning from the IMF that Greece's government-debt troubles could spread to other nations. Big budget deficits that have followed the economic slowdown and financial crisis promise a glut of government bonds in all major Western economies.
Meanwhile, other bond markets around Europe displayed nervousness following a warning from the IMF that Greece's government-debt troubles could spread to other nations. Big budget deficits that have followed the economic slowdown and financial crisis promise a glut of government bonds in all major Western economies.
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The IMF said Greece's troubles could represent a new phase of the global financial crisis. "In the near term, the main risk is that, if unchecked, market concerns about sovereign liquidity and solvency in Greece could turn into a full-blown sovereign-debt crisis, leading to some contagion," the IMF said in its World Economic Outlook published Wednesday.
In a separate report Tuesday, the IMF said that Portugal, and to a lesser extent Spain and Italy, were likely to suffer most from Greece's debt problems. European banks are big holders of Greek debt and would also suffer knock-on effects if Greece couldn't pay its way.
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