Tuesday, May 24, 2011

What Happens When Greece Defaults

It is when, not if. Financial markets merely aren’t sure whether it’ll be tomorrow, a month’s time, a year’s time, or two years’ time (it won’t be longer than that). Given that the ECB has played the “final card” it employed to force a bailout upon the Irish – threatening to bankrupt the country’s banking sector – presumably we will now see either another Greek bailout or default within days.
What happens when Greece defaults. Here are a few things:
- Every bank in Greece will instantly go insolvent.
- The Greek government will nationalise every bank in Greece.
- The Greek government will forbid withdrawals from Greek banks.
- To prevent Greek depositors from rioting on the streets, Argentina-2002-style (when the Argentinian president had to flee by helicopter from the roof of the presidential palace to evade a mob of such depositors), the Greek government will declare a curfew, perhaps even general martial law.
- Greece will redenominate all its debts into “New Drachmas” or whatever it calls the new currency (this is a classic ploy of countries defaulting)
- The New Drachma will devalue by some 30-70 per cent (probably around 50 per cent, though perhaps more), effectively defaulting 0n 50 per cent or more of all Greek euro-denominated debts.
- The Irish will, within a few days, walk away from the debts of its banking system.
- The Portuguese government will wait to see whether there is chaos in Greece before deciding whether to default in turn.
- A number of French and German banks will make sufficient losses that they no longer meet regulatory capital adequacy requirements.
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  1. Bring it on....

  2. Why does everyone keep writing about Greece? USA, California, and many State have far worse debt problems than Greece.

  3. C O L L A P S E

    END of STORY

  4. 2:37 when GREECE goes, so does the rest of the world, including CALI

  5. Yeah right - Greece is a pimple on the worlds ass - california is like the worlds 12th largest friggin' economy - the world won't even flinch when greece goes under - like who real gives a shit besides the EU which is being drained ? No - the problem will be the contaigen
    that is sure to follow in time & sooner or later you'll get a big player to fail - spain,


    you've got reason to worry. greece? no - I'll sleep good tonite - thanks anyway.

  6. 4:54 brings up a rather interesting point in that we all have so much going on; so much to worry about. I think things are speeding up;
    but we must be able to "pick our spots" as too
    where we are in this coming collapse.

    You do not want to be without cash, but at what
    point to you go all in and trade your cash for goods that will have barter value?

    We must be ever vigilant to the true meaning of what is going on around us and whether or not it
    is noteworthy.

    There will come a time when you will be forced to make that decision; do I get out - out of paper, out of retirement paper, sell all bonds,
    cash out the 401k; buy whiskey, tobacco, gold, silver etc. If you time it right you'll look like a hero; if you time it wrong; you'll
    have alot of "stuff" and no cash.

    That time I feel is coming; but I agree with
    4:54; that time is not now and not Greece -
    Greece induced maybe; but not just Greece.

  7. Greece is the canary in the cold mine.

    If you live in CA. you’re fucked anyway. 40 thousand ex convicts who will not be able to find jobs. Strict gun control laws that force you to call 911 and wait for help while bleeding to death.

  8. 4:54 I forgot, the US is the only country in the world.

  9. Living in CA, I can tell you that 30 percent of the prison population is illegal immigrants who have committed crimes. The state would have the money to build prisons if they didn't have to educate the hoards of children born to illegals, pay welfare and their hospital bills for them. I might add that the states with the biggest budget problems are those that are liberal-what a surprise.

  10. 7:39 - actually, you have your facts reversed. For example, TEXAS has the same proportional budget shortfall as California. Don't believe me? Look it up. Also, the "blue" states are actually supporting the "red" states via federal spending (the blue states are net contributors to federal funds while the red states are net consumers of federal funds). Again, look it up if you don't believe me. How's that for a surprise?

  11. But again, it doesn't change the fact that Cali is just as screwed as Greece. And I do agree with you that illegal immigration is adding to the woes of California... So, I guess that I don't really disagree with your basic point, 7:39, just the last sentence of your post..

  12. Quit complaining about illegal immigration, it will never stop, no one will ever do anything about it, the rich business owners pay the politician to leave the borders open for cheap labor, always has been that way, and wont change ever!

  13. Business knows middle class pays for the illegals

  14. I can't believe I'm going to grow old one day and tell children what took place. This is going to be way more destructive than WW2, that's for sure.

    I can't imagine what will occur within a year or so as all the Islamic nations need desperate help getting food. Not that those in the west will have much, but it's important that Obama befriends the Muslim Radicals so they can eventually carve out a Caliphate.

    That's why we're buddying up with Al Qaeda in Libya, demonizing Israel in the media, denying Islamic Fundamentalism, celebrating genocide in the Ivory Coast, and have an administration filled with Communists that like cop killers.

    But focusing on those of the far left now would only show the unsophisticated idiot types, and will fail to show the dangers with the more intelligent capitalist groups. You know, the snobbish, money hungry conservatives that have an obsession with keeping the system the same wherever it may lie. Wallstreet, banks, Walmart... we can't possibly get enough of all that good stuff!

    Young people, it is your responsibility, according to Glenn Beck, that you help pay off the national debt. If you don't agree with this then you must be some lazy, impractical, day dreaming liberal.

    I can't wait to meet you all at Walmart and get those blue aprons. Our nation needs us boys and girls, it is our duty to work for rich assholes until we die. That's the ultimate law of nature to the modern Republican.


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