Not surprising considering that the yields on their latest 2-year bond spiked to 11.61%, so they have asked for the activation of the financial rescue package:
Describing his country’s economy as “a sinking ship,” the Greek prime minister formally requested on Friday an international bailout, testing the solidarity of the European Union as never before.
“We drew up a plan, we took difficult and painful measures,” Prime Minister George A. Papandreou said in a nationally televised address. “But the markets did not respond.”
Concerns about the Greek budget deficit — an estimated 13.6 percent of gross domestic product last year — have pushed interest rates on Greek bonds above those of emerging countries like India and the Philippines, leading to talk of a potential default and years of stagnant growth.
(emphasis mine)
Note that as screwed up as Greece is, and it is arguably the closest to 3rd world nation status among the Euro zone members, it ain’t the Philippines.
Part of the reason for the spike is clearly heard panic mentality, but my guess is also that some of the wonderful new instruments that have come into existence over the past 20 years, credit default swaps (CDS) and the like, which make it profitable to bet on a neighbor’s house burning down, and then torching it.
These instruments magnify both risk and volatility, and this is why they need to be severely restricted or banned.