A Greek default will cause big problems for Europe, America, and the rest of the world.
Greece has been on the verge of default for a couple years now. But each time Greece has been just about ready to go under, the Eurozone leaders and central banks cobble together some last minute scam, I mean, plan to keep Greece afloat and kick the can a little farther down the road. Then about a month later the whole thing unravels and the big wigs come up with another con, er, conjure up another plan to save Greece.
Detect any sarcasm there?
(And to clarify... the "Eurozone" is not the same as the continent of Europe. The Eurzone refers to the countries in Europe that use the Eruo as their currency. Not all of the countries in Europe use the Euro so those countries are not part of the Eurozone.)
If Greece is in such dire straights, then why is it that most the talking and deal making is done by the leaders of France (Nicolas Sarkozy) and Germany (Angela Merkel) and not so much from the leader of Greece?
It's because the French and German banks hold most of Greece's debt.
If Greece goes down, the large French and German banks will go down soon after. Those banks will drag down many other banks in Europe and the US.
Yup. The big banks in the US have got their hands caught in this cookie jar too.
The big American banks insured the big French and German banks with credit default swaps (CDSs).
Remember the big stink about AIG?
Back in 2008/2009 when all the big American banks were in trouble, AIG was the patsy stuck holding the bag and went down in flames because of CDSs. Now the shoe is on the other foot and the big American banks are stuck holding the CDS bag when the European banks get pulled under by Greece defaulting on its debts.
There are many theories as to what will happen when that time comes... and it will come.
One school of thought is that the Eurozone leaders won't allow Greece to officially default, thus triggering the credit default swaps that would most likely destroy what's left of the European and American economies.
(Turd Furguson Metals Report - Why Greece Matters and What It Means To You
http://www.tfmetalsreport.com/blog/3415/why-greece-matters-and-what-it-means-you)
Technically, mathematically, by all rights and definition, Greece will default but the Eurozone leaders and central bankers will demand, command, and strong-arm if they have to, every party involved not to declare Greece's default a default.
It's banana pudding.
It's flying pigs and polka-dotted elephants.
Call it whatever you want, but it is not, under any circumstances, a default.
(In the best Marlon Brando, Godfather impression you can muster.) - Capiche?
Another school of thought is that there are too many players and too many variables involved in this Greek tragedy to control so the whole thing is going to get real messy no matter what anybody does.
(The Economic Collapse Blog - 8 Reasons Why The Greek Debt Deal May Not Stop A Chaotic Greek Debt Default
http://theeconomiccollapseblog.com/archives/8-reasons-why-the-greek-debt-deal-may-not-stop-a-chaotic-greek-debt-default)
The banks, on either side of the pond, aren't coming clean as to how much they are truly exposed to Greek debt.
There are speculators betting big on Greece defaulting. We've seen what speculators can do to the price of oil, now similar sharks are sensing Greek blood in the Mediterranean waters.
Greece is going to have elections in April and the next batch of Greek politicians may give the Eurozone leaders and central bankers the finger.
And wouldn't it be convenient if there were some big global event to take people's attention away from the economic messes in Europe and the US?
Something, like... oh, maybe another world war kicked off by Israel and Iran?
Greece isn't the only headache for world leaders that could be conveniently snuffed-out by global war.
Then there is always the chance, however slim, that somehow this whole thing sorts itself out and there will be no big calamity.
Yeah, I'm not buying that one either.
The longer those involved keep denying and lying about the eventual default of Greece the worse it will be for the rest of us.
Comments
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Related Links:
Turd Furguson Metals Report - Why Greece Matters and What It Means To You
http://www.tfmetalsreport.com/blog/3415/why-greece-matters-and-what-it-means-you
The Economic Collapse Blog - 8 Reasons Why The Greek Debt Deal May Not Stop A Chaotic Greek Debt Default
http://theeconomiccollapseblog.com/archives/8-reasons-why-the-greek-debt-deal-may-not-stop-a-chaotic-greek-debt-default
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