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You know that your country is in trouble when investors want 15% to buy your bonds.

If you still needed confirmation of the depth of the Greek debt crisis, today Standard & Poor’s lowered its long- and short-term rating on Greek government debt to BB+ and B, respectively. BBB- is Standard & Poor’s lowest investment grade rating. BB+ is its top “speculative” rating.

In other words Greek government bonds are now junk bonds.

Before this downgrade Standard and Poor’s had rated the country’s bonds BBB+ and A-2 for the long-term and in the short-term.

 “Medium-term financing risks related to the government’s high debt burden are growing, despite the government’s already sizable fiscal consolidation plans,” S&P said today. “Our updated assumptions about Greece’s economic and fiscal prospects lead us to conclude that the sovereign’s creditworthiness is no longer compatible with an investment-grade rating.”

And worse is yet to come, according to S&P, which said that the outlook for Greek debt is negative.

S&P gave the debt a recovery rating of “4.” That means, in S&P’s system, that investors who own Greek debt can expect only a 30% to 50% recovery of their investment in the event of a debt restructuring or a default in interest payments.

The downgrade is actually a huge deal since many banks and central banks won’t or can’t accept bonds rated below investment grade as collateral for loans. Since Greek banks hold a huge amount of Greek government bonds in their portfolios, the S&P downgrade could trigger a liquidity crisis in the Greek banking system if Greek banks can’t borrow against their government bonds as the European Central Bank. That bank has recently loosened its collateral standards to let Greek banks keep borrowing but the bank is clearly not happy at the prospect of letting that situation run on for very long.

Stock markets around the world are, not surprisingly, down today.