Don’t Expect Big Changes To The EU With Regard To Greece

Occam’s Razor is in effect here.  Although it would be a lot of fun to watch the fireworks if Greece were to leave the EU and default on its sovereign debt, I’m not selling tickets to that show.

It’s pretty simple:   If Greece leaves and defaults on its debt, it will trigger the financial nuclear bomb bank credit default swap OTC derivatives daisy chain that is embedded in every big western Too Big To Fail Bank.  My bet is that Deutsche Bank and Morgan Stanley would be among the first casualties.   The ECB and the Fed can not allow that fuse to be lit.

On the flip side, if Greece were to leave, revert to the drachma and print its way out of debt, it would create massive hyperinflation.  Unlike the U.S. $4 trillion QE, for which most of the money remains contained inside the banking system – for now, anyway – Greece would be dropping helicopters of cash outside its banking system.  The entities receiving that money would turn around and dump it for euros and dollars and the drachma would crash, creating massive hyperinflation and complete chaos in Greece.

Neither side of this issue wants either of those two respective outcomes.   Thus, the proverbial debt can will kicked down the road a bit further and the northern European countries will see some more of their wealth transferred to Greece via some kind of debt restructuring that does not trigger derivatives default events and does not force Greece to print zillions of drachmas…

I was opining to some colleagues yesterday that it seemed like both Greece and the ECB member countries were beginning to move off their initial negotiating stances.  This article confirms my view:   Greek Stocks Surge On ‘Creative’ Debt Plan.

5 thoughts on “Don’t Expect Big Changes To The EU With Regard To Greece

  1. It’s all about saving faces now. Greece can’t be kicked out of the EU and also can’t leave the EU. Too expensive for every side.

  2. Does anyone realize that if assets, meaning real debt-free assets such as gold and silver, were to enter circulation, existing fiat based debt can be safely purged ?

    We are on the very cusp of creating a liquidity “yin-yang” as a process to a new completion. If we add assets (L2) to existing liquidity (L1) then we can keep trade afloat while L1 (debt) is reduced.

    Just add assets and stir gently … that’s all. This is a job for the market, not the elite.

    Bullion is now a fully scalable debt-free currency that floats in real-time thanks to the age of information. Give thanks.

    You cannot pour new wine into old wineskins.

  3. Things (financial, political, social,) have been slowly coming to a head for years. There are just too many “black swans” circling overhead. Any one of, or a combination of, will cause the global system to crash. It will be sudden and violent. The time left to prepare grows ever shorter now, with each passing day. The outlook is grim, and I for one am glad to out side looking in!

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