What Happens If Greece Defaults?

Great link to how a Greece default would likely play out and the domino effect it will cause.

Seems that with every passing day a default is likely... Looks like phase two of the collapse has arrived. Hope you are all prepared!

www.cnbc.com...

reply to post by Nomad451


As much as I hate CNBC I have to applaud them ... they actually mentioned CDS's in their little slide show!

the default of Greece it's self wouldn't be bad, it would hardly shake the market because, quite frankly (sorry Greeks) Greece ain't a big deal.

But the "exposure" of Greece is .. astronomical. People are betting that Greece will eventually default, there's no other explanation as to why derivatives of Greek debt have exploded. There are multiple CDS contracts out on single issues of debt.. meaning that when Greece croaks some banks will loose everything, some banks will win everything, and some nations will be forced to pay the balance through a new shell corporation (think AIG)

How small is Greece? The total debt exposure to banks in Europe is 1/4th the size of the bailout we gave just to Citibank. We could fund Greece's over expenditures for 20 years just on the money we sunk into AIG and Freddie Mac/Mae ..

But it's that black hole of crazy insane derivatives.. when THOSE dominoes fall that will shake the World's economy to it's foundation. And yet, we have to wonder.. since 2008 WHY has no government in the World tried to stop this insanity?

That is a very ominous and disturbing outcome if there is any truth to the assessment of the damage in that article. The question is 'if' Greece defaults, and the next question is how much damage it will cause and how pervasive.

1. Greek banks get nationalized

This is underway in the USA already. One small law after another has been passed, to the point where non-Freddie and non-Fanny banks can't even issue loans in many cases. In rural areas loaning is going grey-market, made between individuals, because the locals don't want to go to non-local banks, and the small local banks can't make the loans anymore.

7. Ireland & Portugal walk away

Ireland can't afford to walk away. EU money is the only reason Ireland hasn't gone belly-up.

8. ECB Crisis

I'm sure they'll use inflation & manipulate the markets just like the US fed does. They won't go down without a big fight.

9. Political crisis in Germany

This would affect one politician. I don't see anything major coming of this beyond German elections.

10. US consumers hit the mattresses

It would be about danged time. Overspending at EVERY level of personal & public policy is the crux of the whole problem. We don't hold ourselves accountable, so we have no idea what it means to hold our governments accountable.

11. Politicians say "don't panic"

So?

12. Protectionism arises

This could be a good thing. I see lots of pluses here. Sucks if you're China, but...

13. Hard landing for China

"Years of over-investment in housing & infrastructure... are revealed to be costly mistakes." Oh, noes! China will have to learn the lessons we're learning, too!

14. US will keep raising the debt ceiling

I have no doubt this will keep happening. But hey - if the government brings itself down, it will save a lot of patriots a lot of hard work... What an Orwellian ending!

15. Someone will get rich off the whole thing

Of course they will!

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Sorry, I think this is all a little - silly, really. It's vague and obvious and just regurgitating other scary news stories.

Originally posted by Schkeptick
13. Hard landing for China

"Years of over-investment in housing & infrastructure... are revealed to be costly mistakes." Oh, noes! China will have to learn the lessons we're learning, too!

That's when war comes in. And they don't even have to pull the trigger. Let North Korea get the blame.

One thing puzzles me, where have all the billions of Euro's gone? (or Dollars for that matter) Oh rights, billions of dollars were 'lost' on their way to Ashcanistan, that still leave's all the Euro's un-accounted for.
Perhaps its just electronic money in the Euro case, Actual dollar bundles were sent to ashcanistan by the plain load.

reply to post by pikestaff


I believe your correct most money is electronic, theres actually very few printed bills in curculation when compared to how much is in existence.