Greek Bond Yields Surge After Debt Relief Talks Collapse

Greek bond yields are surging in the latest twist of the nearly seven year old Greek crisis, when on Wednesday Eurozone fin mins and the ESM, suspended their promise to grant short-term debt relief measures to the Greek government, as a result of pledges made by the Greek PM Tsipras to ease austerity on the country’s pensioners earlier in the week.

In a statement released by Eurogroup head Jeroen Dijsselbloem, the finance ministers chided Greece, saying that "the institutions have concluded that the actions of the Greek government appear to not be in line with our agreements", jeopardizing the recently adopted measures to alleviate the Greek debt burden. As reported previously, last week creditors granted a series of short-term debt concession which would help reduce the country’s debt servicing burden by 20% points by 2060.

"Some member states see it this way also and thus no unanimity now for implementing short-term debt measures” the statement added and noted that as a result of the Greek non-compliance with the agreement, the finmins will "await a full report of the institutions in January."

Today's latest breakdown in negotiations comes after the Syriza government announced it would spend €600 million to the nation's 1 million low-income pensioners, to replace a Christmas bonus scrapped by the Greek bailout supervisors.

Following the news, Greek bond yields surged back over 7% amid fresh concerns that the Greek crisis may be coming back.

Today's fiasco follows a snafu overnight, when Euro zone officials hit back at the IMF on Tuesday for publishing an article on the way forward for Greece's fiscal and economic policy that thrust into the open a row between the lenders over Athens' bailout.

"The European institutions were surprised that the IMF staff published a blog post on the ongoing negotiations with the Greek government as new talks in Athens are starting with the aim of concluding the second review," said a spokesman for the euro zone bailout fund, the European Stability Mechanism.

"We hope that we can return to the practice of conducting program negotiations with the Greek government in private."

The IMF article appeared as the Fund and the euro zone struggle to find common ground on Greek policies that would allow the IMF to take part in the latest bailout, the third one since 2010 and now fully financed by the euro zone.

And so, more than a year after the third Greek bailout, one which was predicted upon further debt reductions and even more austerity, nothing has been resolved, and the tensions between the Greek government (and its people), the IMF, and the rest of the Eurozone finmins, are nowhere close to a resolution,