My favorite pinata (http://www.youtube.com/watch?v=wi3semJPQzk), Greece, has received some help from China. On a visit to Greece (first by a Chinese Prime Minister in 24 years), Wen said China had bought some Greek government bonds and would do so again in the future. This has helped bring down 10-year Greek government bond yields below 10% for the first time since June:

Greek 10yr government bond yield. Source: Bloomberg.com

Furthermore, a $5bn shipping fund will be set up to “facilitate the sale of Chinese vessels to Greece” (also known as vendor financing – the vendor has to bring the goods AND the financing). Coincidently, Cosco (Asia’s #3 operator of container terminals) has a 35-year concession at Port of Piraeus. This will teach Europeans a lesson (who still haven’t learned to buy “Made in China” with the reckless abandon seen in the US).

Buying Greek government bonds (if done in serious amounts – which we don’t know) brings up another issue down the road: what if Greece finally throws out it’s worthless economic advisors and wants to default on its debt? Mr. Wen surely wouldn’t be amused. He might hint that Chinese ships will avoid Piraeus in that case – and, by the way, since the Greek haven’t paid for their ships yet the Chinese take them back right away.

Greek PM Papandreou to Chinese PM Wen at the Acropolis: “Some day, lad, all this will be yours!” Source: zerohedge

But this is for some day in the distant future. For now, Wen enjoys 290 tonnes of Greek olive oil: “A few months ago, [we] signed an agreement to purchase 290 tonnes of Greek olive oil,” Wen said. “Last night, for the first time in my life, I dipped a bite of bread in olive oil. It tasted very good.” (Financial Times, October 3, 2010)

Oh, and, by the way, Fitch downgraded Ireland from AA- to A+ with negative outlook (Moody’s & S&P still rate it AA-).