Guest Post: The Only Way Forward Is To Accept Reality: Default Is Not The End Of The World

Tyler Durden's picture

Your rating: None

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Sun, 06/19/2011 - 22:39 | 1383642 phungus_mungus
phungus_mungus's picture

If Greece defaults?!??!


These fools still think its avoidable....  we are so screwed. 

Sun, 06/19/2011 - 23:20 | 1383748 ISEEIT
ISEEIT's picture

Happy Fathers day. I just returned from a very nice meal with 'my' clan. I adore them! The deal was: If my short EUR/USD dipped to the right place, I would pay for a  meal out together.

The meal was great. We loved it.

Thank you TYLERS.

If you people didn't do what you do, I would still think that the 'drudge' was cutting edge 'news'.

I really do love you guys and I appreciate what you do.

Yes, I am drunk. I'm only drunk though because I'm hurt. Blah on forever, you people are good:)

Yes, I am also serious. I love you people. You are good.

Sun, 06/19/2011 - 23:20 | 1383749 ISEEIT
ISEEIT's picture

Happy Fathers day. I just returned from a very nice meal with 'my' clan. I adore them! The deal was: If my short EUR/USD dipped to the right place, I would pay for a  meal out together.

The meal was great. We loved it.

Thank you TYLERS.

If you people didn't do what you do, I would still think that the 'drudge' was cutting edge 'news'.

I really do love you guys and I appreciate what you do.

Yes, I am drunk. I'm only drunk though because I'm hurt. Blah on forever, you people are good:)

Yes, I am also serious. I love you people. You are good.

Mon, 06/20/2011 - 02:59 | 1384205 Michael
Michael's picture

Ok, we got it the first time. Have another drink. You'll need it for the information that's coming down the pike from ZH.

Sun, 06/19/2011 - 22:42 | 1383644 surfersd
surfersd's picture

Tyler, do you have the statistics that show how much greek ( and for that matter spanish-portugal-ireland ) debt is held by the Euro banks? I can't find the great chart in the NYT which shows the cross holdings, this article   talks about the smaller German banks and the Corporate risk from default. 

How much capital do these banks need to cover a default? Is the ECB going to step in like the FED and rescue them by printing Euros? How much greek debt does the FED have vis-a-vie the IMF? Have to wait to find out what is in the other Asset category I guess.

 It does seem impossible for these governments to cut and and or grow their way back to a a balanced budget so that they can start to actually restructure their debt.

I guess my question is do these banks have enough Tier 1 capital to absorb loses on their sovereign debt portfolios? I believe the answer is no, just trying to get some more definitive answers. 0 hedge for 1yr and 43 weeks. Thxs

Sun, 06/19/2011 - 23:17 | 1383705 Zero Govt
Zero Govt's picture

these figures were 'easily' available from Euro Banks: Stress Test 1 ...the thorough research that passed all the Irish, Greek, Portugese and Spanish banks (who all subsequently went/are about to go, bankrupt) please refer to the new one, Stress Test 2: Cooked Books - The Sequil... inside this obsiqious, opaque, fraudulent document you should find precisely nothing about the numbers you seek

...please note it also doesn't have the ECB in it, who are bankrupt/insolvent at this point in time

Chin up everyone, it's looking fucking good

Sun, 06/19/2011 - 23:47 | 1383792 Quixotic_Not
Quixotic_Not's picture

It is natural to indulge in the illusions of hope. We are apt to shut our eyes to that siren until she allures us to our death...

Mon, 06/20/2011 - 02:34 | 1384183 molecool
molecool's picture

Saw this chart the other day - don't remember the numbers but France was on top, followe dby Germany about 25% lower.

Sun, 06/19/2011 - 22:43 | 1383645 cranky-old-geezer
cranky-old-geezer's picture

Read my lips: There will be no default. 

Bankers aren't going to take haircuts. Simple as that.

They'll print money and loan it to Greece (and Spain, etc) till the Euro is worthless.


Sun, 06/19/2011 - 22:41 | 1383649 kito
kito's picture

how anticlimatic for this greek comic tragedy.

Sun, 06/19/2011 - 22:45 | 1383652 Charley
Charley's picture

Yes. Default is not the end of the world ... neither is another $10T in dancing electrons on a computer terminal.

Sun, 06/19/2011 - 23:50 | 1383811 Quixotic_Not
Quixotic_Not's picture

Everything is so dangerous that nothing is really very frightening...

Sun, 06/19/2011 - 22:45 | 1383653 Ropingdown
Ropingdown's picture

The "extend and pretend" isn't a reflection of our unwillingness to accept reality.  It is a practical reflection of these, that kicking the can successfully for six months more may be the difference between a big final bonus before retiring... or not.  It may be the difference between another four year term in office or not.  Our executives, portfolios, and elections are built around winning in the short term.  Why?  Because our laws (in the US and EU) don't allow the polity to take back the winnings of the can-kickers.  Simple.  The guys at the top aren't stupid.  They are selfish.  And we say "that's fine" by our actions.  I was adamantly for a Balanced Budget Amendment, but the whole thing got brushed aside in favor of abortion rights or not, new war or not, BS... and the pork vote-buying machine. We don't need lectures about denial.  We need people to f'g think.

Sun, 06/19/2011 - 22:46 | 1383654 traderjoe
traderjoe's picture

Sovereign countries do not need to
borrow money from private banks.

Repudiate the odious debt.

Sun, 06/19/2011 - 22:42 | 1383655 CrashisOptimistic
CrashisOptimistic's picture

The problem with advising calm and insistence that "it's not the end of the world" is simply this:

If Greece takes some action of that sort, and does not appear to suffer 10's of thousands, or hundreds of thousands of OUTRIGHT DEATHS, then Ireland and Portugal will do the same the week after.

Sun, 06/19/2011 - 22:54 | 1383687 Stuck on Zero
Stuck on Zero's picture

Icelanders already did it.

Sun, 06/19/2011 - 23:09 | 1383717 Baptiste Say
Baptiste Say's picture

Iceland defaulted on what? $20 billion?


That's no small amount but realistically it is still small enough that a bank the size of BAC, HSBC etc could hold it all and face default and yet still not face a liquidity crisis. On the otherhand a default of $15 trillion which is mostly held by the Federal Reserve, China and Japan in that order will:


-Send the USD to zero when people realise the notes backing it is worthless and remove your ability to maintain $1 trillion trade deficit that probably accounts for $3-4 trillion in domestic activity.

-Remove the ability for government to spend $4 trillion annually thus further reducing GDP to probably half of current amounts or worse.

-Cause a massive crisis in China and Japan which will send them back a decade, however ultimately once things stabilise both China and Japan will have massive manufacturing capacity equal to 20% or more of GDP ready to be utilised whilst USA has much less capacity.


To be honest I'd love to see USA default, at least there might be a degree of peace in the world after 235 years of constant warfare.


Mon, 06/20/2011 - 00:37 | 1383955 HungrySeagull
HungrySeagull's picture





Mon, 06/20/2011 - 05:24 | 1384301 Coke and Hookers
Coke and Hookers's picture

Iceland didn't really default. They just didn't bail out the banks. That's not defaulting.

Sun, 06/19/2011 - 22:46 | 1383656 Reese Bobby
Reese Bobby's picture

The Global Bank Cartel is not happy with you C.H.S.  Not happy at all...

Mon, 06/20/2011 - 09:40 | 1384562 i-dog
i-dog's picture

I doubt they'll be too upset with him.

Firstly, a default -- and subsequent recovery from it -- does absolutely nothing to address the underlying systemic issues. They'll even lend Greece more fiats (after a brief period of mourning) for a second/third/.....nth time around.

Secondly, Rothschild (or Rockefeller) could fully bail out Greece from the petty cash tin that his steward uses to pay the stable boys, if he were so inclined. He wouldn't even notice it missing!

Sun, 06/19/2011 - 22:42 | 1383657 gwar5
gwar5's picture

I'm a proud doomer and gloomer.

Sure it will suck, and then you die, but then it won't suck anymore.

Sun, 06/19/2011 - 22:42 | 1383658 SilverFocker
SilverFocker's picture

Enough already......Greece, Greece, Greece. there are 3 choices, Sink, Swim or tell the rest of the world to fuck-off and start all over again, out of the Eruro.

Its not that complicated that it needs to be brought forth in every other ZH news event.

Sun, 06/19/2011 - 22:58 | 1383685 gwar5
gwar5's picture

No way, I gotta see the live shots when whatever happens is announced on said square in Greece.

It might be a good indication how it's going to play out in Ireland and the rest of the PIIGS. This could well be the inglorious end of the EU, Eurosocialism, and NWO dreams ---- and has implications for the Obamao experiment as well.

Mon, 06/20/2011 - 09:16 | 1384569 i-dog
i-dog's picture

Junked you. Stop your whinging. Start your own blog and cover what you want.

Pass the popcorn, bitchez!

Sun, 06/19/2011 - 22:48 | 1383660 expectplannedevents
expectplannedevents's picture

The rich have nothing to lose..except "losing" a few investors..and some future profits.

Things will be back eventually..Weimar Republic, Japan, Argentina.. It may take a decade for things to recover.

Pain is nothing new, just the cost of others.

Sun, 06/19/2011 - 22:48 | 1383663 Caviar Emptor
Caviar Emptor's picture

Sound economics? Accepting reality? Don't be ridiculous. We're busy running a global Ponzi and you're talking transparent markets. Lol. 


Sun, 06/19/2011 - 22:45 | 1383664 PulauHantu29
PulauHantu29's picture

Bailouts and Bonuses...that's what this is ALL about.

Sun, 06/19/2011 - 22:47 | 1383671 MisterAmbassador
MisterAmbassador's picture

I thought this was what it was all about...

Sun, 06/19/2011 - 22:45 | 1383665 KennyG09
KennyG09's picture

Hey if people like getting anal raped by banksters, let them say you're too negative. They deserve what's coming to them.

Sun, 06/19/2011 - 22:49 | 1383667 MisterAmbassador
MisterAmbassador's picture

Good Nigel Farage clip from the current "Things that make you go hmmm...."

Farage fears civil war in Greece, predicts military will seize control of Greece.


It should download and open with Windows Media Player.



Mon, 06/20/2011 - 09:58 | 1384655 MachoMan
MachoMan's picture

If a repudiation of the debt by the lead donkey on the debt trail could cause a cascade of copycats, then I think a military takeover of the lead donkey could do the same.  As a result, I suspect should that occur, then citizenry of indebted nations should take a long hard look at how they proceed and seek to avoid a similar conclusion...  proactively...

Sun, 06/19/2011 - 22:53 | 1383676 mt paul
mt paul's picture

• Summary for Week Ending June 17th

The key releases this week will be...

existing home sales on Tuesday,

new home sales on Thursday,

and durable goods

 final estimate for Q1 GDP on Friday.

economic cholesterol 

Sun, 06/19/2011 - 22:54 | 1383678 ambrosiac
ambrosiac's picture


A soft, drawn-out default (keeping the EE intact and Greece in the Eurozone)

rather than a catastrophic one is theoretically possible, but politically unpalatable

to the ruling party.  Achieving a small primary surplus goes through undoing so

much partisan pork barrel, cronyism etc that it amounts to the final scene in SAW

-- chopping off your own foot.



Sun, 06/19/2011 - 22:54 | 1383681 JuicedGamma
JuicedGamma's picture

Five Stages Of Bankruptcy
1. Denial and Isolation.
2. Anger.
3. Bargaining.
4. Depression.
5. Acceptance.

I think we are at 1.5

Mon, 06/20/2011 - 10:00 | 1384661 MachoMan
MachoMan's picture

I'm thinking more ~3.5ish

Sun, 06/19/2011 - 22:52 | 1383682 Re-Discovery
Re-Discovery's picture

What is the tradeable value of this post?

Sun, 06/19/2011 - 22:52 | 1383683 buzzsaw99
buzzsaw99's picture

the usa will not allow any bond holders (except gm) anywhere in the world to become impaired. They sure the hell won't allow a domino effect nor will they allow a reduction in bank bonuses. [/sarcasm i wish]

Sun, 06/19/2011 - 22:58 | 1383689 holdbuysell
holdbuysell's picture

Banksters are still in denial.

"Who gives a shit, it's gone." -- Major League

Stages of Grief:

The stages, popularly known in its abbreviated form DABDA, include:[2]

  1. Denial — "I feel fine."; "This can't be happening, not to me."
    Denial is usually only a temporary defense for the individual. This feeling is generally replaced with heightened awareness of possessions and individuals that will be left behind after death.
  2. Anger — "Why me? It's not fair!"; "How can this happen to me?"; '"Who is to blame?"
    Once in the second stage, the individual recognizes that denial cannot continue. Because of anger, the person is very difficult to care for due to misplaced feelings of rage and envy.
  3. Bargaining — "Just let me live to see my children graduate."; "I'll do anything for a few more years."; "I will give my life savings if..."
    The third stage involves the hope that the individual can somehow postpone or delay death. Usually, the negotiation for an extended life is made with a higher power in exchange for a reformed lifestyle. Psychologically, the individual is saying, "I understand I will die, but if I could just have more time..."
  4. Depression — "I'm so sad, why bother with anything?"; "I'm going to die... What's the point?"; "I miss my loved one, why go on?"
    During the fourth stage, the dying person begins to understand the certainty of death. Because of this, the individual may become silent, refuse visitors and spend much of the time crying and grieving. This process allows the dying person to disconnect from things of love and affection. It is not recommended to attempt to cheer up an individual who is in this stage. It is an important time for grieving that must be processed.
  5. Acceptance — "It's going to be okay."; "I can't fight it, I may as well prepare for it."
    In this last stage, the individual begins to come to terms with her/his mortality or that of a loved one.
Sun, 06/19/2011 - 23:00 | 1383692 Baptiste Say
Baptiste Say's picture

"The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned."


Seems to me the constitution removes the ability for the USA Federal level government to default on debt, it's funny to see how the constitutional types are quick to ignore this part when they can see a quick way of making decades of excess and grandour fade away.


In reality a default would mean:

1. A instant global depression.

2. A quick recovery.

3. United States with no manufacturing output and no ability to borrow to expand output.

4. Relative economic power would shift further to China, Japan, Germany, Australia, Canada Brazil and any nation that a) has surplus export capacity b) doesn't ignore it's debts.

5. Millions of Americans would become wetbacks as they cross the border to Mexico and Canada to find lucrative remittance based jobs mowing lawns and cleaning pools for $2/hour.

Mon, 06/20/2011 - 00:39 | 1383961 HungrySeagull
HungrySeagull's picture

Whaaa? Mowing the Great White North?


Or enduring death by a thousand cuts trying to mow dirt and gravel down south?

Mon, 06/20/2011 - 03:56 | 1384243 robertocarlos
robertocarlos's picture

America would annex Canada and a small war would break out.

Mon, 06/20/2011 - 09:59 | 1384671 MachoMan
MachoMan's picture

shall not be questioned necessarily equates to cannot default?  You're forgetting the golden rule of judicial constitutional construction and interpretation...  "what result do we want?"

Sun, 06/19/2011 - 23:00 | 1383693 Steroid
Steroid's picture

High cholesterol is good. It prevents you from melting!

Sun, 06/19/2011 - 22:59 | 1383697 zorba THE GREEK
zorba THE GREEK's picture

 How many times have these countries defaulted before? It's old hat for them.

 Why is it so different now? Someone is always left holding the bag and the world

 goes on.

Sun, 06/19/2011 - 23:04 | 1383698 G-R-U-N-T
G-R-U-N-T's picture

Debt slaves or default to be free...Their choice.

Sun, 06/19/2011 - 23:00 | 1383699 HungrySeagull
HungrySeagull's picture

JUBILEE!!!! 50 years! Wipe it all clean and start over.

Just like wetlands, all that bad stuff filtered out of the river as it goes from Mountains (Of crap) to the Sea.

Sun, 06/19/2011 - 23:00 | 1383700 Kreditanstalt
Kreditanstalt's picture

Want a scoop?

Why aren't the news media mounting a 24-hour vigil outside any facility likely to get the drachma-printing contract?  Because they WILL need them in a hurry and plans are likely NOW underway...

Sun, 06/19/2011 - 23:11 | 1383714 zen0
zen0's picture




Well, I went to the doctor
I said, "I'm feeling kind of rough"
He said, "I'll break it to you, son
Your shit's fucked up."
I said, "my shit's fucked up?"
Well, I don't see how--"
He said, "The shit that used to work--
It won't work now."

had a dream
Ah, shucks, oh, well
Now it's all fucked up
It's shot to hell

Yeah, yeah, my shit's fucked up
It has to happen to the best of us
The rich folks suffer like the rest of us
It'll happen to you

That amazing grace
Sort of passed you by
You wake up every day
And you start to cry
Yeah, you want to die
But you just can't quit
Let me break it on down:
It's the fucked up shit


Do NOT follow this link or you will be banned from the site!