Can you explain this in lehmans?
The interest paid on bonds is directly related to the risk of holding the bond (or, the perceived risk). A high interest rate (which the government pays) is the only way the government can get people to buy its bonds, because it's considered a high risk.
It pretty much means that, people aren't expecting Greece to be able to pay back its debt in 2 years. Which is really bad, normally, short term bonds have lower rates (because the risk is lower)...but now, even at 2-years, people see huge risk.
People want 75% interest on, what is essentially, a 2 year loan. Compare that to other parts of the world where you're taking 3% on 20 years....20 years is a long time, anything can happen, but even over such a huge difference in time scale, greece is a much, much, higher risk.
The yield is determined by the free market, it's the amount that Greece has to (promise to) pay for anyone to take them. It's not determined by a formula afaik, just based on current events and the state of the country's finances.
I don't think you can invest (or rather, speculate, this is too crazy to call investing) in these as normal retail investor though.
Of course if the government defaults on your bond you get maybe on $1 coupon and end with a net loss of $49.
The simplest translation, though: The market believes that if you were to loan money to Greece for two years, there's only about a 33% chance that you'll get your money back.
(That's 1.74^(-2) assuming risk-neutrality and a risk-free rate of 0%, which is depressing but sure makes calculations easier. In reality, the math is much more complicated, as nobody is actually neutral to asset risk, and you have to consider pseudo-defaulting via inflation, and the fact that bonds aren't entirely worthless after a default, etc.)
Maybe a Lehman has become a measure of the scale of financial failure.
"Greek defaulting would be 12.72 Lehmans."
Greek debt is around $240 billion and Lehman assets were around $613 billion.
Of course, that number does not even consider that countries only partially and temporarily default, instead of fully and permanently like limited corporations, and that everyone who owns Greek debt has had a generous advance warning. This is really a comparatively minor crisis.
So, a correct use would be like "Don't worry, our national debt is only 25 Lehmans."