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What If Greece Says No?

Tyler Durden's picture


With Greece set to dominate the news flow once again in the upcoming week, the question on everyone's mind is what would happen "if Greece says no", preferrably with some more nuance than just "the end of the world." So for everyone inquiring, here is SocGen's Michala Marcusen with a full timeline of the "what if" scenario.

From Societe Generale

The Greek Parliament is due to vote on the Medium-Term Fiscal Strategy (MTFS) on June 28 and the associated implementation law on June 30. If all goes well, the Eurogroup will then meet on July 3 to finalise a new 3-year program for Greece. If the Greek Parliament votes No (a scenario to which we attach a 30% probability), the much need next €12bn tranche of the EU/IMF would be blocked and Greece would be left grappling for funding in a political vacuum pending a likely general election. In such a scenario, the EU would have to take aggressive action to stem contagion; and this could include reactivating  the ECB’s SMP. Even in a best case solution, the euro area debt crisis seems likely to run from one issue to the next with the over-arching solution of a new credible fiscal policy infrastructure coming into place only very slowly.

If all goes well …

A yes vote in the Greek Parliament to the MTFS will no doubt bring a sign of relief, and the immediate focus will shift to the Eurogroup meeting on July 3.

What shape will the new program take? We expect the Eurogroup to define a 3-year package effectively removing the need for Greece to access bond markets before 2015. While there is no final number as of yet, a package of €85-120bn seems likely split between new EU/IMF loans worth €40-70bn, Greek privatisation receipts of around €25bn and private creditor participation of €20-30bn.

How will private creditors participate? At last week’s Eurogroup meeting a subtle change to ESM seniority, making loans to Greece, Portugal and Ireland exempt from the rule (pending approval by national parliaments) brought a small first concession to private creditors. However, press reports suggest that private creditors (and this mainly concerns banks, who hold the bulk of the shorter dated Greek paper) want more enhancements before agreeing to some form of maturity extension. An additional concern is not to trigger a credit event in the process, which the ECB rightly fears could have unintended consequences. Press reports last week (Bloomberg) suggested a solution under which banks roll over 70% of the expiring amount, placing 50% in Greek 30- year paper and 20% in very high quality securities that would then back the Greek bond.

One idea that has popped back up in the debate, but only to quickly disappear again is lending to Greece to buy back its bonds cheaply in the markets. The idea hold substantial appeal from an economics points of view in that it would partially help solvency as opposed to just funding. Politically, however, the idea has been met with substantial resistance, and notably in Germany. This could nonetheless be one of the last minute jokers in finalising a deal for Greece.

Also, keep in mind that the voluntary private creditor solution put in place for Greece could well serve as a blueprint for Portugal (the EU/IMF agreement on Portugal, explicitly notes that Portugal should negotiate with private creditors to maintain their exposure to Portugal).

Will Greece fail at the first hurdle? Any new package for Greece comes with strict conditionality and with a review by the “troika” of the IMF, EU Commission and ECB every three months. Even with the best of will, Greece will find it very difficult to meet the targets and much relies on the ability of Greece to effectively collect taxes and privatise. Unions are already planning strikes for next week with the threat of disruptive power cuts. There is thus every risk that Greece will at some point fail to meet the targets set out. The question then becomes just how much tolerance the EU/IMF will adopt towards Greece. Even with a package in place, repairing the situation in Greece will be a long and painful process, and one fraught with risks.

Can Greece ultimately avoid default? The sustainability of Greek public finances depends critically on the snowball effect, i.e. the difference between nominal GDP growth and the funding rate and the level of the primary surplus. Greece’s public debt today stands at almost 160% of GDP, with a primary balance forecast at -2.8% in 2011 and nominal GDP forecast at -3.1%. Even with the attractive funding rates provided by the EU and IMF (just under 4% at present), the situation is clearly not sustainable. 

Making a back of the envelope calculation, we find that if Greece can sustain a primary budget balance and enjoy nominal GDP growth that exceeds the implicit interest rate on its debt by 1pp, it would take Greece 100 years to reach a debt-to-GDP ratio of 100%. If Greece in addition could sustain a primary budget surplus of 1% of GDP every year, it would take 50 years.

Theoretically, Greece can avoid default, but it depends critically on the ability to achieve growth, run a primary surplus and achieve a cheap rate of funding. If the rest of Europe wants to avoid Greek default, it seems it may be funding the country for many years to come.

Can the euro area avoid contagion? The risk of contagion from Greece is substantial. In building a new fiscal framework for Europe, the hope is one day to allow for an “orderly default” within the region. Last week’s EU Summit brought good progress on the ESM and EFSF, and the Six Pact (the new stronger version of the Stability of Growth Pact) is near completion. In our opinion, however, there is still considerable more work to complete and we maintain our view that ultimately a single euro bond and a single bank resolution mechanism (similar to the US FDIC) is required. Such mechanisms are still far out (years) on the political horizon leaving the euro area open to new bouts of tension.

…if Greece says No

A No vote to the MTFS by the Greek Parliament will cast Greece into turmoil and threaten wildfire contagion throughout the euro area.

What happens in Greece if Parliament says No? The country would be thrown in a political vacuum with an election then most likely being called. The centre-right opposition, New Democracy led by Antonis Samaras, is well positioned to win in the event of an early election. We note that Samaras is not opposed to austerity per se but wants a “different economic policy” not based on excessive taxation and with a strong focus on growth. Once in place, a new government would then have to renegotiate a new deal with the EU/IMF. The most likely outcome – similar to what we have seen in Ireland and Portugal – is that the new Greek government would in the end sign up for austerity.

Will Greece automatically default? A No would block the much needed next tranche of the EU/IMF loan of €12bn, leaving big question marks as to how Greece would fund coupon payments and bond redemptions in July and August.

Over the weekend, German MoF Schaeuble was very clear that a No vote from Greece could mean no funding for Greece from the EU. For funding, Greece would then have to rely on short-term paper until a new government could be formed and a new MTFS negotiated. The EU may in such an event ultimately agree to some form of bridge loan (similar to Portugal). The IMF could also agree to credit line. Any help from the EU/IMF would come reluctantly, and there is a nonnegligible risk that a No vote could put Greece in default.

Can contagion be stemmed? Contagion would run through government bond markets and via interbank funding markets. In both cases, the ECB is best placed to respond reactivating its Securities Market Program of government bond purchases and offering adequate liquidity to banks.

These measures will be primarily effective in tackling shortterm market tensions, but the euro area are still potentially at danger from seeing more countries (and notably Spain, and potentially even Italy) making recourse to the EFSF. Such a negative scenario would threaten not only the financial stability of the euro area, but the global financial system with severe consequences for the global economy. This also explains why, even in the event of a Greek No, euro area leaders would be keen to avoid experimenting a Greek default.

Conflicting time horizons

The main issue for the euro area remains one of conflicting time horizon. Fixing solvency for countries with weak public finances and shaping a new credibility fiscal policy framework for Europe will take time. Markets have little patience, and policymakers have every interest to accelerate wherever possible.


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Sun, 06/26/2011 - 21:41 | 1404376 The Aviator
The Aviator's picture

if greece says no, 2008 looks like a picnic. Better already be all in physical gold and silver

Sun, 06/26/2011 - 21:54 | 1404393 financeguru500
financeguru500's picture


Greece has nothing to do with the U.S. It will be just like Iceland all over again. Pretty much silence.


** if your going to junk me, how about posting a rebuttle instead of just being a dbag.

Sun, 06/26/2011 - 22:10 | 1404444 CompassionateFascist
CompassionateFascist's picture

Rebuttle: US banks exposed via Credit Default Swaps. Plus: psychology of contagion, which is non-rational but extremely real.

Sun, 06/26/2011 - 22:09 | 1404449 financeguru500
financeguru500's picture

Good point, I didn't know about the CDS. What kind of exposure does the U.S. have to greek debt?

Sun, 06/26/2011 - 22:31 | 1404495 bgilliam83
bgilliam83's picture

some guru, you don't even understand CDS.  Your mother should have swallowed.

Sun, 06/26/2011 - 22:34 | 1404516 financeguru500
financeguru500's picture

wow, I take it your one of the douchebags that junked me. Go fuck yourself. I understand how CDS work but I did not know that there was a significant exposure to the Greek debt. Even so, I will be the one who comes out of this being proven correct when nothing happens. You guys are running around like chicken little thinking shits going to hit the fan if greece doesn't accept a bailout.

Fact is, if the E.U., China and the U.S. are working to make sure that nothing bad comes from this then there won't be any issues. The banks who are exposed to the debt will be bailed out and that will be the end of it.

Sun, 06/26/2011 - 22:46 | 1404529 dcb
dcb's picture

there was an article in the nytimes on this this past week. nobody knows the amount, who has writtten what, and who has what exposure and what is hedged. it looks like they are starting to collect the data. The main problem is that it is a can of worms, and totally unknown. for me what the issue is about is that if there is a dafualt and shot hits the fan everyone knows the central banking emperor has no clothes. WTF have they been doing the past two years after lehman in closing down and limiting these derivative markets. the potential for this shows they have done nothing!!

Mon, 06/27/2011 - 00:43 | 1404714 Thomas
Thomas's picture

Am I the only one who feels like Bill Murray in Groundhog Day?

Mon, 06/27/2011 - 01:15 | 1404744 Orly
Orly's picture

Speaking of conspiracy theories...

Okay, Groundhog Day was a great movie- quite original- but had nothing to do with conspiracies...

But does anyone else find this tidbit interesting?

Seems one of David Cameron's boys offed himself in a Port-a-Potty.

It's getting thick...

Mon, 06/27/2011 - 04:48 | 1404845 falak pema
falak pema's picture

Its always gets thick in a toilet, especially a portable one. Imagine trying to party when the port gets imported from the window and exported down the flush. Some festival!

Mon, 06/27/2011 - 01:15 | 1404750 Michael
Michael's picture

Greece will take all the euro currency they will give them with no intention of ever paying that money back just like before.

Greece will say everything they need to on paper and get another $100b.

Just a bunch of words in exchange for all that money.

I'd do the same thing if I were Greece and go on a spending spree charging everything on the euro credit card too.

Of course I'd have no intention of ever paying that money back just like I have no intention of ever paying back the US national debt. 

Mon, 06/27/2011 - 05:01 | 1404849 falak pema
falak pema's picture

Now Greece is up for hock. It was part of the Turkish Empire for four hundred years. Since the end of the second world war the greeks have proved they are incapable of being efficient anywhere else than in a NJ sandwich fast food bar. So back they go into the German empire and will now be co-managed by China and ECB.

Southern Europe will soon be lumpenproletariat land; the coming new social order imposed by Oligarchy to make EUrope competitive with Asia as it rises, and fifty years time...long way to go, long time coming. Fasten seat belts piggies in your wallowing mud reservations. You be the European Apaches of the coming new in the USA...At least the Mediterranean has the sun, the sea and the olive oil...

Mon, 06/27/2011 - 05:54 | 1404867 tonyw
tonyw's picture

It's not just the banksters the Greek people and government are also to blame. Read this article about  The Big Fat Greek Gravy Train: A special investigation into the EU-funded culture of greed, tax evasion and scandalous waste

Read more:

Mon, 06/27/2011 - 10:48 | 1405371 MadeOfQuarks
MadeOfQuarks's picture


I predict they will agree to the package, then fail to live up to the austerity. Greeks are quite good at pretending to follow the rules.

Sun, 06/26/2011 - 23:02 | 1404573 Cole Younger
Cole Younger's picture

I thought I read here (ZH) a article that suggested U.S. banks have 126 billion dollar exposure. Spain and France owned the Greek bonds..U.S. banks hold the swaps on those bonds.

Sun, 06/26/2011 - 23:40 | 1404639 PY-129-20
PY-129-20's picture

Before 2008 I would've said a billion is a lot of money. But since 2009...

Mon, 06/27/2011 - 00:11 | 1404685 Ahmeexnal
Ahmeexnal's picture

Did DSK stop when the maid said "NO"?

Mon, 06/27/2011 - 01:28 | 1404760 wisefool
wisefool's picture

We probably could abort the baby if one got lodged in her throat.


- From a man who about to die and my name is Bill.

Mon, 06/27/2011 - 01:27 | 1404737 Manthong
Manthong's picture

$126B doesn't even come close.

Your money market accounts are 40% into HY Eurozone Bank debt.

And all of that insured, re-insured, hedged, chopped, chromed and toasted through swaps.

God only knows how deep the rabbit hole goes.

Sleep well.

Got silver?

Mon, 06/27/2011 - 07:01 | 1404915 mogul rider
mogul rider's picture

You are missing the best one. Your lovely Money Market fund.

Yup, through internediaries your MMF holds up 60% of Greece, Portugese, and Italian toilet paper.

You would be wise to go to cash during this upheaval as below a buck will the new mantra in the fall.

Even Ben Davies at King World mentions it. Do your research - your ass depends on it. And most importantly, get your head out of your ass.


Mon, 06/27/2011 - 07:28 | 1404931 Al Gorerhythm
Al Gorerhythm's picture

Fact is, if the E.U., China and the U.S. are working to make sure that nothing bad comes from this then there won't be any issues. The banks who are exposed to the debt will be bailed out and that will be the end of it.

Oh yes! They have such a great track record in keeping a lid on things and making the world safe and cosy! Look how they have managed the world so far! They get my vote for manager of the month award.  LOL. ( Now look what you've made me go and do. I never thought I'd type or utter LOL and now I've done it twice.)

Sun, 06/26/2011 - 23:31 | 1404628 lilika
lilika's picture

US Insurance companies insured the CDS. They're on the hook. To hell with them.

Mon, 06/27/2011 - 00:58 | 1404674 jonii
jonii's picture

financeguru500: Oh C'mon now. You still have a lot to learn about finance if you can not figure out what would happen if Greece defaults, esp after Lehman. Did you not read the article? Did you miss the Lehman crisis? It's not really about Greece. It's about if Greece sets a precedent and defaults, then bond markets will surely start dropping other PIGGS' sovereign debt and the contagion would spread. You cannot be that nieve to assume that Greece will default and everything will be ok b/c they don't have much direct exposure to other countries and their banks... another happy day eh? You don't think yields would spike on the PIIGS that are at risk of maybe following Greece's lead and defaulting on their own liabilities? Not to mention this time it would include Spain & Italy b/c fear would spread further. It would definitely relinquish a lot of the pain imposed on the indigenous people in those countries from austerity. Do you see the panic in world markets that already happens when there is any uncertainty surrounding Greece? A flight to safety where all risk asset classes drop and interbank lending dries up (although not to the degree of Lehman... not yet is my point). Would that not cause a run on the banks throughout Europe b/c of their overall exposure to the PIGGS? European banks have 2 trillion total in PIGS' (not including Italy) sovereign debt on their books, that includes private debt. No fear as these countries suffer from recession and aren't able to honor their obligations, both public and private debt? US MM funds are also invested in European banks' debt chasing higher yields so there is more exposure than you think. Is it really a mystery why many of the banks all over Europe are seeing their credit ratings downgraded. Have you not read why? How solvent do you think these banks will be once they write down the losses on their books? Wouldn't liquidity dry up again in the markets and investors liquidate and pull their funds from other banks not knowing which banks have the most exposure to the insolvent periphery countries which would make those banks' capital ratios plummet and render them insolvent. Not to mention the panic that would result if the ECB had to vote on accepting a bailout or printing more money to offset the losses from their exposure to Greek debt. They do not have enough capital currently to deal with such a loss. C'mon use your head. This isn't a walk in the park.

Mon, 06/27/2011 - 02:37 | 1404790 Raymond_K_Hessel
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Also, ECB has 30-50B of exposure to Greece and only 10B in assets...

Mon, 06/27/2011 - 03:15 | 1404818 Popo
Popo's picture

All true.  But rates will spike either way.   When it becomes clear that currency devaluation is the preferred course of action,  demand for higher yields will rise to compensate for forward losses from devalued currency.

One way or another,  in response to a default,  or in response to inflation -- rates *will* rise.   Not because of policy preferences,  but because of market demands.

And that is the brick wall we are speeding towards.

Mon, 06/27/2011 - 05:15 | 1404847 Reptil
Reptil's picture

No, it isn't. I'm not a guru, but I'll try to explain why IMO a default is the only way forward for a europe that wants to be free:

The banks in europe had 2 rounds of "stress tests" to gauge the risk of "contagion" and to prevent a liquidity problem. They said everything was alright, and solving the problems at the root of the 2008 and 2010 crises was not on the agenda anymore. It wasn't even a topic of discussion at several elections held in the recent past.
Right now the message, presented in the MSM (main stream media), is that there are "unresponsible, emotional" elements in society that are calling for stopping "help" for Greece, and that there are "responsible, concerned" financial experts (Juncker, Wellink, etc.) that say we must do this, or else the whole system will fall flat on it's back.

A couple of very simple points:

1. The PIIGS are technically insolvent, just like the rest of the financial world, with a few exceptions. A further bailout is not a "solution" to the underlying problem, it's "buying some time" to get it all sorted. Austerity, presented as a means to cut budget deficit, will have the effect of stiffling the economy, and throw away any chance of economic prospetity of all countries in question.

2. The bailout will be carried by the backstop; the taxpayers, and their children. These have nothing to do with the cause of the credit crisis (as it's still called here), but are seriously at risk since assets of investment, savings and communal banks have been put in the same bucket. Austerity means that public assets will change ownership, since governments value a "stable" financial system more than protecting the people themselves, which was their primairy function, as State.

3. The cause of the Souverign Debt crisis has often been called "cultural", and the differences between the northern and southern and eastern countries put in the spotlight. However, it's the EU (European Commission, European Parliament, all the different organs and their functions) who have been negligent of their appointed task: Keep a tidy Europe while the internal financial and economical connections flow, adjust and reset organically. THAT was the whole point of the euro currency. To create such a fertile ground. They failed miserably and fail right now. They are corrupt, and strike out against those that lay bare that fact. Their interests lie with the larger corporations, that are forming cartels, like Monsanto (against the wishes of almost ALL europeans), their modus operandi is to take money, hide it, then spend leisurely on bribing other politicians in the seperate countries. The call for more money, and power to come up with a "political solution to bridge the cultural gap between souverign states" comes from them.

4. Senior Bondholders of banks are the owners of private institutions who made profit by managing the stream of debt, and thus, money. They've taken huge risks, with the knowledge that their actions will be carried through any crisis by "their" representatives in the european governmental structures. Like in the USA, there's a "revolving door" policy. (Draghi being a Goldman Sachs man) There will be no "voluntary" contribution (haircut) of the senior bondholders in this latest "bailout", since this will technically be regarded as a default and will trigger the dreaded CDS. Of course this was known beforehand, that Greece held CDS.

5. In case of a "credit event" there will be contagion and a lot of credit will dry up overnight. But what is this credit used for? What fascillitated this credit? It made unbrideled malinvestments possible, even the most profitable course of action. In doing so, the euro currency (and the debt of the souverign countries who were foolish enough to "guarantee" these assets) has become from a means to make unhindered trade possible, a tool to lever huge sums of money (compared to souverign budgets) from the public balance sheets, through bailouts (liquifying the financial system) to banks, where it's been paid out as bonus, and settled (in part) the outstanding debt of these private banks.

6. Given the course of the "credit crisis", I can only come to one conclusion, that is that if the euro-european project is to be rescued, there needs to be a settlement of debt outstanding. This can only come in three forms: Default, inflation, or REAL substantial growth. To protect the citizens from the reckless course of the financial institutions there needs to be a banking reform, seperating the investment banks from the rest. But since this was decided on, but never happened, Default of the whole system is the only thing left open if any semblance of a capitalist system is to be preserved. Otherwise, we're talking about something that resembles Leninism (not communism) in form, and corporatism (Mussolini) in intent. Well, guessing you're an american, you should know, since you already have the same system in place... (zzzzzzzzz)

7. More and more are waking up to the reality, that (even if their memory is hazy and full of obstacles) this is a re-run of 2010, and will not solve anything. TPTB will continue on this course, but, contrary to the USA, this will lead in Europe to a civil war, after the northern countries' public assets have been plundered. A "credit event" will put the disconnect of the financial system's goals of those of the communities, and economy at large in the spotlight. The european Commission and the european burocrats are of course preparing for a repressive supra-souverign euro-state, with their "Treaty of Lisbon" as a foot in the door.

8. Right now, here, in the Netherlands, the artists and musicians are protesting, since their allowances, the whole sector is going to be cut off (save some regional orchestras) like a weed. This system has been carried and build up by taxpayers, with the collective idea that a contribution will render a greater result than just straight up market forces. Their complaints gyrate arount their idea (rightfully so, or not) that they're entitled to support of the country, so they contribute to the culture, which is according to some philoshophers "the operating system" of a society. What they don't (want to) understand is that those meagre euros they've recieved are but a drup of water in the ocean compared to the profit and risk of the financial elite. They don't understand that the handout was to keep them happy, and quiet, and dependent. Now they're not needed (apparantly) they're discarded. Of course Art will not be the first, they'll continue until they have ALL. Art will be the foot in the door, to "persuade" all other parts of the social-democratic society. They're not the "sacrificial lamb" they're the first victim of doing away with a whole system (that worked!). Again: PUBLIC EXPENDITURE WAS NOT THE CAUSE OF THE CREDIT CRISIS, CORRUPTION WAS. This is a shrewd idea, since it appeals to the libertarian forces in society (that call for stopping "handouts"), but is a double door, since it removes democratic oversight of public (taxpayer) funds. The model of "benign despots that remain invisible" is out the window. It's now us, or them, and their "solution" is heading straight off a cliff, and it will end in bloodshed if the greek politicians say "yes".

How about that for a walk in the park?

Mon, 06/27/2011 - 05:40 | 1404863 Ghordius
Ghordius's picture

Reptil, great answer. I do not agree on the "civil war" theme, though.
As per now the US & the UK look like they will go down the inflation "solution".
In the Eurozone there are too many countries which had too many zeros on their currencies in the last 50 years, so there is a major chance that default will be the preferred "solution".

Mon, 06/27/2011 - 05:51 | 1404866 Reptil
Reptil's picture

Thank you. Please expound? We nearly had one here after the politician Pim Fortuyn (a populist with dangerous ideas) was assasinated.

(this was put on neo-fascist groups and hate of immigrants, but was MUCH broader than that)

Right now, all of these forces are dormant.

Mon, 06/27/2011 - 06:13 | 1404875 Ghordius
Ghordius's picture

Perhaps it's only my opinion, and a very cynic one, too: I know that the recent assassination is shocking for the Dutch. From what I study about the history of the German Hyperinflation in the Twenties, there were hundreds of assassinations, mostly related to the fact that the "common worker" experienced a relative higher standard of living (rents going down, wages keeping up with inflation) which led to the fascists (claiming to represent a more and more a dispossessed "fixed rent" middle class) killing the "red" politicians.
Fascism is always lurking. Fear of inflation feeds that beast, which is always either dormant or awake. What I mean is one political assassination, while shocking, is not necessarily a relevant trend.

Mon, 06/27/2011 - 06:57 | 1404903 Reptil
Reptil's picture

True, and ideed these are just predictions, projections.

The main stream media censorship is something I've been looking at in amazement. When the truth finally breaks (too late to put any alternative in action) there will be anger. It's a huge "group think", but there's direction from above. Like other manipulations, there's the risk of an "overshoot" in the other direction. The flooding of the Calhoun Nuclear Plant as the terrible plight of the japanese people has been kept out of any news, I presume because of investments in the technology and supporting structures (incl. Uranium mines).

If free discussion, and peaceful solutions are ignored, and smothered in that "group think", at some point there's bound to be a problem when large groups of the population drop from "entitled citizens with a secured future" to "debt servants that are coerced into lower living standards".

But as mr. Taleb said: The black swan is the citizens of the USA and UK not protesting in front of the banks.

So you may be right.

Mon, 06/27/2011 - 07:54 | 1404962 malikai
malikai's picture

"Those who make peaceful revolution impossible make violent revolution inevitable." - JFK

Mon, 06/27/2011 - 11:53 | 1405594 Byte Me
Byte Me's picture


That was very good, informative non-rant. I agree that corruption is to blame along with your other points, but with a socio-economic system so captured as the current global one is, violence would sem to bethe only solution in the age of the blog. Fifty years ago the MSM could have easily spun it to a more naïve population of 2.6 billion peeps, now, in the age of data transfer, not so easy at all..

All it takes is for a fraction of the peeps in any given country to rise up and tell TPTB to "fuck off and shove it" and you're off to the races with an incipient revolution. How fast can you say MENA?

Now, our (western) PTB see this and go into brown trouser mode spinning MENA uprisings as "pro-democracy" or "anti-repression" or "rising against tyrrany" in the vain hope that it won't 'come here'. Tough Shit to TPTB, the powder keg is about to "change state" and it'll spread from Greece quite quickly imho.

Basically, with a system so broken, it's time to send a message to the Elite that Social Treason rendered by cocking up the system (and then robbing the peeps again to 'fix' it) is so unacceptable that so doing is a capital crime couped with asset sequestration for good measure.

Capitalism is fine, but if you fuck up - you die. Not pay some pathetic fine as a cost of doing business. Tha might improve some business ethics quite rapidly. Trouble is - with a system so captured, this likely has to be done by the people, starting in Athens perhaps.

Mon, 06/27/2011 - 12:13 | 1405638 Byte Me
Byte Me's picture



Mon, 06/27/2011 - 15:25 | 1406207 jonii
jonii's picture

Reptil: LOL. Interesting. Not saying I disagree, but are you really saying if credit dries up that that will have no effect on the economy? Also, who is going to fund the Greek gvmt once they hand out haircuts since their gvmts are still way too big and they will still need to borrow. How do you explain the panic everytime there is any uncertainty surrounding Greece? Will a run on the banks throughout Europe be just fine, and what about the ECB? Corruption was the cause of the credit crisis, I agree, but that corruption went from the rich down to the average man who thought, in Greece, that its ok to retire at 50 and not pay taxes. Now, where I disagree with the crisis and have a problem is that the banks and the rich reaped the profits while the average man was left paying everyone's bills including theirs. But, like they say about monetary policy, you can't push on a string, other people have to be complicit. Listen, I don't disagree that they will find a way to contain this b/c they know the repercussions if not. But I'm of the idea that the best course of action for the Greek people is to leave the Euro and devalue. Default and then internal deflation (lower wages and cuts) is not a good outcome. I don't see a good outcome, it's really about which causes the least damage. There is no walk in the park at the end of the day. Also, if I'm not supposed to call the crisis a crisis when I'm explaining it 3 yrs later, then what is the proper name?

Mon, 06/27/2011 - 02:53 | 1404801 Libertarians fo...
Libertarians for Prosperity's picture

Good point, I didn't know about the CDS. What kind of exposure does the U.S. have to greek debt?

Financeguru500 - Trying to have a civilized conversation with doomer libertarians is exceptionally difficult, and your experience this evening is no exception. I noticed that no one has yet to give you a real answer to your original question: how much exposure (direct claims and derivatives) do US and European banks have to Greece?

Please refer to pages 102/103 of the following report by the Bank of International Settlements. This would be a good start.

France and Germany have modest direct claims (~$57B and ~$34B respectively), and fairly insignificant derivative exposure. Notice how German and French banks only show ~$2B in exposure, compared to multiples more by the public sector. On the flip side, US banks have far more in indirect guarantees (~$34B) and have little direct claims, which is perfectly fitting given Wall Street's penchant for pyramiding ponzi schemes. The real danger is not necessarily Greece, but the collective value of all the PIIGS.  The Greek numbers aren't too alarming, especially when compared to the $180B AIG rescue.  But once you begin to add up the remaining PIIGS and the numbers begin to drift over $600B, then things get very worrisome.  

Hopefully, you'll find this more useful than "your mother should have swallowed."



Mon, 06/27/2011 - 06:06 | 1404873 Going Loco
Going Loco's picture

Not only more useful, also more courteous, thoughtful, and helpful. The cretins who junked your response are, I assume, red-necked urban hillbillies of the worst kind. I despise the junkers.

Mon, 06/27/2011 - 08:17 | 1404996 Calmyourself
Calmyourself's picture

The "mother" comment was a lot funnier..  You forget to address the contagion aspects of the exposure as default brings higher yields and the triggering of some nasty insurance contracts.  Frankly if you self label as a finance guru and then write what he wrote you sort of deserve the "mother" comment..

Mon, 06/27/2011 - 10:46 | 1405361 Reptil
Reptil's picture

here's some more:

not CDS since that's pretty vague. (ssshhh!)

Mon, 06/27/2011 - 07:39 | 1404949 max2205
max2205's picture

And watch the run on MMFs. Who wants risk when the yield is 0.01%

Mon, 06/27/2011 - 09:34 | 1405141 dbTX
dbTX's picture

the whole argument is moot. Greece will say yes, with their fingers crossed

Sun, 06/26/2011 - 22:13 | 1404450 NewThor
NewThor's picture

How many Credit Default Swaps have been taken out on 

Greece's default?

How much will need to be paid out? 

Who insured the Credit Default Swaps?

If Greece's default causes a domino effect in Euro land,

how many countries have to fall/default before it hits the USA?

Nostradamus mentions Europe collapsing then Americh falling 

next at the time "The comet runs...." which is in September/October.

This is like 2008 deja vu all over again.

Gasoline sky rockets, then deflates, then the markets go....



Sun, 06/26/2011 - 22:17 | 1404472 Orly
Orly's picture

Once a "small" loss is carried to the ledger, it will have to be written-down or hedged in some way, thus the dominoes start to fall all over the place.

There is an ancient Arab fable that says a man loaded his entire tent onto the back of a camel, including the last piece of straw...

Mon, 06/27/2011 - 01:07 | 1404739 Oh regional Indian
Oh regional Indian's picture

Arab fable, so apropos orly!

Is that the distant sound of a crack-back I hear?


Mon, 06/27/2011 - 03:54 | 1404834 Orly
Orly's picture

Remember all those bags of leaves?  I got poison ivy!

Sun, 06/26/2011 - 22:15 | 1404456 slow_roast
slow_roast's picture

You get junked for posting something you clearly didn't even bother researching.  If you had asked a question, you would not have gotten junked, but instead you made a naive statement, and thus were junked. 



Sun, 06/26/2011 - 22:26 | 1404494 financeguru500
financeguru500's picture

Greece is hardly exposed to a large amount of debt. In relation to the U.S. its chump change. What 120billion for a new loans to cover 3 years? Come on, if they crash it would hardly effect anyone. The European banks that are exposed will get bailed out by the E.U. which will in turn probably be receiving some money from the U.S.

I don't believe there is much to worry about.

Sun, 06/26/2011 - 22:35 | 1404505 bgilliam83
bgilliam83's picture

Research CDS again and synthetic CDO.  Our money hungry banks probably sold 100x more synthetic insurance than the actual default in the first place.   

Sun, 06/26/2011 - 22:35 | 1404519 financeguru500
financeguru500's picture

There are so many CDS that have been created that they tend to cancel themselves out, even if the number is in the trillions. Good luck with your argument but it will not be a megacrash like you think

Sun, 06/26/2011 - 22:47 | 1404534 bgilliam83
bgilliam83's picture

Again, wrong.  That would be the equivalent of betting on a baseball game and taking both sides and eating the juice.  I am more inclined to think the euro banks had a better handle of the situation and probably didn't "cancel out" the bets. Jesus Christ you are a moron.

Sun, 06/26/2011 - 23:06 | 1404583 financeguru500
financeguru500's picture


Actually, you are the one who is wrong. Just because you talk shit and sound arrogant doesnt make you correct.

You can also read up more on CDS on places like wikipedia but here's the short of it.

If there is "Trillions" of CDS at risk, there is a good chance that the insurance companies providing these CDS have hedged the CDS with other banks. The reason CDS tend to cancel themselves out is because many of the banks are all intertwined with hedging the CDS so that they don't have complete risk.

The same can be said about car insurance. Did you know that ALL car insurance companies in the U.S. hedge their insurance through the use of secondary companies. There is only 1 insurance company who doesn't hedge and carries 100% of the risk.

Sun, 06/26/2011 - 23:22 | 1404604 bgilliam83
bgilliam83's picture

No, you are the arrogant one.  I do not dare label myself a "guru" and then proceed to flood financial pages with this drivel

Sun, 06/26/2011 - 23:30 | 1404624 financeguru500
financeguru500's picture

I just created a name out of nowhere that goes along with the site(they even say at signup that originality of name creation would give a higher chance of getting approved or something along those lines). I'm not here flooding the site with anything. I don't try to profit off the comments I make and I don't represent any companies or interest groups. I am here to learn more about finance because I am just a college student who enjoys reading and learning about the financial markets. I responded to your posts after you made a completely uncalled for statement about me.

This is supposed to be a site where people can be civil and discuss things. Yet earlier you posted that my mother should have swallowed referencing that I shouldn't have been born because I made a statement that I did not know there was much exposure in terms of CDS with Greece.

With your kind of talk, you should be at some bar somewhere getting your face punched in, not here flexing your epn* talking to people like you know who they are.

Mon, 06/27/2011 - 00:01 | 1404672 Prometheus418
Prometheus418's picture

No, this is Fight Club.

Did you miss the bit where the articles are posted by Tyler Durden?

Mon, 06/27/2011 - 00:17 | 1404688 Rick64
Rick64's picture

 Don't let it get to you. Some people are just verbally abusive because of issues they have within. It shouldn't be neccessary to verbally abuse someone to make a point.

Mon, 06/27/2011 - 00:31 | 1404697 jonii
jonii's picture

financeguru500: If you can't see the panic that would result if Greece sets a precedent for other countries to default then you have ALOT to learn still. It's not about direct exposure. Why did liquidity dry up during the Lehman crisis? Nobody knew which banks were holding toxic loans that would render them insolvent? So if Greece defaults and Ireland and Portugal see how much easier it is to follow their lead then would that not spook the bond market and send interest rates flying b/c of fear those countries would be next and investors would start pulling their money from banks across Europe. Did you miss the FRA/OIS spread that blows out everytime there is uncertainty that surrounds this whole Greek crisis.

Mon, 06/27/2011 - 02:11 | 1404776 Akrunner907
Akrunner907's picture

The only thing you have to remember with CDS's is when the music stops, someone is left without a chair.  Some will be holding the bag for the $10-12 trillion in CDS product, it could be banks, pension funds, hedge funds...but someone is going to take it in the shorts. 

Mon, 06/27/2011 - 04:08 | 1404838 Escapeclaws
Escapeclaws's picture

A college student? Is there a single college student at ZH who is not a troll like Johnny Bravo or possibly Baby Blyth who has been accused of trying to out the violent libertarians by being a provocative honeypot, which may or may not be true? (I forgot who the accuser was, but what he said did seem plausible).

Mon, 06/27/2011 - 01:25 | 1404758 AndyR
AndyR's picture

@Guru, regarding the car insurance companies... scale in the millions maybe 1 billion... CDS scale... measured in the 100's of trillions IF you accept the consolidated method of calculating risk otherwise its a factor higher.

Also, the CDS's cancelling each other out... imagine this scenario... Greece defaults... Bank A (holder of the original CDS) defaults as well... now who pays Banks B-Z who are relying on the payout of A to pay for their CDS problems?

Mon, 06/27/2011 - 03:37 | 1404828 InvalidID
InvalidID's picture


Sun, 06/26/2011 - 22:35 | 1404518 Ned Zeppelin
Ned Zeppelin's picture

The problem is, it's not just Greece. . . . 

Sun, 06/26/2011 - 23:05 | 1404572 ViewfromUnderth...
ViewfromUndertheBridge's picture

We all have to consider why we may not be right in our opinions...hint, if there is not much to worry about why is Europe trying so hard to save Greece?


and here is (just) one instant transmission mechanism to the US...

I'm not worried either...I took the hint in 2008 and prepared.

Mon, 06/27/2011 - 03:45 | 1404830 InvalidID
InvalidID's picture

Why is Europe trying so hard to save Greece? Because the Euro was intended to compete with the Dollar as the WRC, if a nation fails within the Euro zone those grand dreams are over. So is the Euro.

Mon, 06/27/2011 - 06:44 | 1404905 Ghordius
Ghordius's picture

I don't agree with you. The Euro's "role as WRC" is an "external" view.
The interconnections of Europe led many companies to have accounts in several currencies, the Euro was born out of this.
For import/export purposes the Eurodollar is alive and kicking...
Tyler brought this up a short while ago with an article about the immense "excess reserves" of US Banks which might be the tip of the iceberg of all the Eurodollars sloshing around in the world, some of them in Europe.
For all purposes, a sizable amount of European companies and banks stand on two legs, EUR and USD.

Mon, 06/27/2011 - 12:27 | 1405675 Fanakapan
Fanakapan's picture

Imagine the USA as 50 soveriegn entities, and how many of those would then be posessed of Failing Economies ???  Europe just needs to accept that amongst its numbers are a few nations that will never be economically productive, and will be in effect Overheads to the Project, in much the same way that the USA accepts Arkansas. Greek GDP amounts to 3% of the Eurozone total, so it would be a piddling amount for the others to chip in to make up the difference between what they make and spend. The biggest problem today is the Fantastic amounts that have been run up by Greece in making the Deadbeat Rich even richer, a Benito or an Adolf would have the balls to simply wipe that crap out, and move on with accepting that Greece is a sort of semi welfare nation, that offers some nice vegatable and dairy products, and is a nice spot for a summer holiday :)

Mon, 06/27/2011 - 01:59 | 1404772 Dre4dwolf
Dre4dwolf's picture

I agree, if Greece says no it won't really make much of a diff, atleast in the short term.... Dow will drop maybe 2 - 300 points at most that day , the effects of a Greek default will be delayed some, but for sure if/when Greece defaults other nations will follow suite and THEN we will see a big impact.

Its not as simple as "greece defaults world ends".

Its going to take a few or more nations defaulting to bring down the fraudulant system thats currently in place.


Mon, 06/27/2011 - 07:48 | 1404956 j0nx
j0nx's picture

I junked you because you don't know the difference between your and you're.

Sun, 06/26/2011 - 22:36 | 1404520 ISEEIT
ISEEIT's picture

I love you ZH.

Pretty sure you won't last.

But even when you are gone; I will remember you.

Beauty is indeed in th eye of the beholder and perspective (timeline) is fundemental to valuation.

You people are amazing. You are good in a bad world.

I doubt that you understand the full impact of what you do. Changing lives requires love that most would not comprehend.

You fuckers seem to have figured it out and I drunkenly applaud you.

The thing is, when ZH goes away ( and it will) who/what will fill the void?

Sun, 06/26/2011 - 23:09 | 1404590 dark pools of soros
dark pools of soros's picture

"The thing is, when ZH goes away ( and it will) who/what will fill the void?"


 perhaps action?


Mon, 06/27/2011 - 08:51 | 1405039 Calmyourself
Calmyourself's picture

Nail hit directly on head.. Action, yes action..

Mon, 06/27/2011 - 00:10 | 1404680 Prometheus418
Prometheus418's picture

Project Mayhem, of course.

Though I'll second your drunken sentiment- I do a little talking here, but far more listening and learning.

Sun, 06/26/2011 - 22:48 | 1404542 Bunga Bunga
Bunga Bunga's picture

Greece is smaller than Argentina and the world did not go under, when it went bankrupt. Where is the "...but, but, but ... this time is different ..." ?

Mon, 06/27/2011 - 00:10 | 1404682 Imminent Crucible
Imminent Crucible's picture

Comparisons to Argentina are absurd and highlight your ignorance. Argentina's debt default amounted to about US$93 billion, borne by a population of some 37 million people. Greece's bailout package amounts to about US$150 billion to be carried by a population of just 11 million citizens.

More importantly, Argentina was not part of a multi-national currency union consisting of more than a dozen other nations using the same currency and bearing responsibility for one another's debts. Argentina could peg its currency to the USD, change or devalue it at will, without bringing down a pan-European banking system.

Here's what you don't know about Greece and its connection to the United States: If Greece defaults, its creditors don't get paid. Those creditors are giant Euro banks in Germany, the UK, Netherlands, France and other countries. Their tier capital ratios are already cripplingly weak. Many of those banks, such as Barclays, Societe Generale, BNP Paribas, Deutsche Bank, etc are also primary dealers, or have been primary dealers for the U.S. Treasury and serve as the primary market for Treasury debt.

U.S. banks are heavily interlaced with those banks and the Fed would have to step in, in the event of a Greek default, to prevent a pan-European banking collapse that would cripple economies on several continents.

The notion that the central banks can simply hand Greece the money to pay their debts is idiotic. NONE of those central banks has a DIME of real money. They could only issue credit, money from nothing, counterfeit funds. The addition of this kind of money (potentially over $700 billion EUR for the PIIGS) would result in severe inflation across Europe.

This devaluation of the Euro would add to the devastation of Euro economies as prices rise, business face margin pressures and consumers are forced to cut back on virtually all spending. My daughter and son-in-law returned today from Romania and Italy. They found the cost of living skyrocketing there (he is from Romania) with gasoline selling for $2 per litre (think $8/gal) and they paid $36 in highway tolls on a two-hour drive. Things are no better in Greece.

The money isn't there. Greece is insolvent. They must default. Even if they agreed to the IMF's punitive package, the Greek people will rebel and set the country aflame. To pretend it doesn't matter is the heighth of stupid denial.

Mon, 06/27/2011 - 01:27 | 1404755 Bunga Bunga
Bunga Bunga's picture

So you are essentially saying world must go under?

Mon, 06/27/2011 - 04:09 | 1404837 akak
akak's picture

No, merely the parasitical banksters and financiers, along with their political allies.

Mon, 06/27/2011 - 04:18 | 1404840 Escapeclaws
Escapeclaws's picture

Oh no, not again! TBTF banks--never heard that one before! Maybe this time we have a once in a lifetime chance to let them fail--we've already tried the alternative in the US and that has done nothing but enrich the Illuminati in the US. I'm beginning to think this "threat" is just propaganda--a way of terrorizing the population into acceding to bankers' demands. Enough threats already! Why does history repeat itself always?

Mon, 06/27/2011 - 09:10 | 1405080 malikai
malikai's picture

Why does history repeat itself always?

Ask this question to someone who'se favourite TV show is "Dancing with the Stars".

Mon, 06/27/2011 - 04:50 | 1404846 Urban Redneck
Urban Redneck's picture

It's not just the $150 billion in public debt, since a public debt default would bring down the Greek banks, the external debt comes into play, bringing direct Greek exposure to $500 billion before derivatives are counted.

Mon, 06/27/2011 - 00:16 | 1404686 ISEEIT
ISEEIT's picture


Are you fucking kidding me?

"Greece" doesn't even have a voice yet. Greece will not speak until after the vote by the traitors who will sell their mothers soul.

Is what it is.

Mon, 06/27/2011 - 00:20 | 1404687 ISEEIT
ISEEIT's picture


Are you fucking kidding me?

"Greece" doesn't even have a voice yet. Greece will not speak until after the vote by the traitors who will sell their mothers soul.

Is what it is.

Sun, 06/26/2011 - 21:44 | 1404379 ZeroSpread
ZeroSpread's picture

  ...German MoF Schaeuble 

Here: MoF .. Minister of Finance

In German, col: MoF .. Mensch ohne Freunde = Man without Friends


Any questions?

Mon, 06/27/2011 - 06:56 | 1404910 Ghordius
Ghordius's picture

hilarious! LOL!

Please remember that the German voters would not accept a Minister of Finance with a sense of humor! They like them dour, friendless and solid.

Schauble is a very intelligent man, with integrity (for a politician), don't underestimate him.

Sun, 06/26/2011 - 21:43 | 1404382 his name is rob...
his name is robert paulson420's picture

Just say no Bitchez!

Sun, 06/26/2011 - 21:44 | 1404383 bugs_
bugs_'s picture

the free men of the world beg you to say no.

Sun, 06/26/2011 - 21:48 | 1404385 topcallingtroll
topcallingtroll's picture

I think this is ultimately a lot like the USA debt ceiling negotiations.

A lot of theater.

The markets predict it will pass.  I trust the wisdom of the market on this one.

Sun, 06/26/2011 - 21:53 | 1404402 financeguru500
financeguru500's picture

I don't think Greece will accept. I think they will go the way Iceland did.

The U.S. on the other hand, they will accept the next debt ceiling raise with fanfare. There will be dancing in the streets etc etc. Asking the U.S. to not accept a debt ceiling raise is like asking a crackhead if he would like to decline some free crack.

Mon, 06/27/2011 - 00:08 | 1404676 Ranger4564
Ranger4564's picture

I believe a lot of people misunderstand what happened with Iceland and Ireland, as they're used as examples of potential outcome with Greece.  First, the financiers are in charge, and they are successfully achieving their aims.  The financiers likely decided that revealing their hand over Iceland wasn't worth it right now... we're talking an island, 300,000 population, and what, 50 billion dollar debt?  The financiers didn't forget Iceland, they just decided not to attack it right now. They will get back to it before we're done.  As for Ireland, it's in Phase 1 of the assault.  They've played along, so we're approaching Phase 2 where the debt obligation will be increased, and the burden on society exacerbated.  Greece is in Phase 2, and there really is no option to say no.  Recall, option 1 is bankers / industrialists / economists foisting the debt... refuse option 1 and option 2 is enabled, paramilitary / intelligence branches / insurgence... refuse option 2, and option 3 is enabled, military attack for some contrived reason.  If Greece tries to step away from the debt obligation and the sale of real assets, a protest / uprising will be enacted to allow the financiers to bring in UN Peacekeepers, who will overwhelm the Greek military and force the financiers plans on the population.  If not UN Peacekeepers, then rebels, or mercenaries... whatever will work to instill fear in the hearts of the people / government.  Eventually, Ireland and Iceland will be forced to sell assets also.  Next on the docket seems to be Italy, then Spain, then Portugal... they may be reordered... France is being prepared... note their 30 year refinancing... that will fail in the not too distant future.

Mon, 06/27/2011 - 02:34 | 1404787 Oracle of Kypseli
Oracle of Kypseli's picture

The scenario you describe is classic. However, in this case, I am not sure that even a small percentage of Greeks want to borrow more, unless hey take the loan without austerity and then default later. Therefore, internal turmoil may not be there. Unless an Archduke Ferdinand like event starts the fireworks.

Mon, 06/27/2011 - 05:29 | 1404860 Reptil
Reptil's picture

Yes, that's the plan. But it hinges, in Phase 1 and 2 around the coöperation of the greek people and european people, to "go along" with accepting a "solution". They can't bring in phase 3, not without upsetting the population of the northern countries, who will say: "If they don't want this themselves, why go along with it, since it isn't in our interest either (purely selfish reason)."
You have to understand, there's still a myth of "helping the greek" being build up in the MSM.

And that's their weak point: Economically, ethically it does not make sense. Only the financial sector want this.

Mon, 06/27/2011 - 07:02 | 1404922 Tabarnaque
Tabarnaque's picture

We need a serious revolution to get rid of the Bangsters and our current monetary system. What is happening in Greece is just a prelude to what will happen in the USA. How much of the USA's national assets will have to be paid to the banks in order to repay the debt? 


I believe that banking institutions are more dangerous than standing armies… If the American ever allow private banks to control the issue of currency… the banks and corporations that will grow around them will deprive the people from their property until their children wake up homeless on the continent their fathers conquered.


Thomas Jefferson. 

Mon, 06/27/2011 - 02:56 | 1404804 nathandegraaf
nathandegraaf's picture

The Greek politicians have no choice but to accept.  This is free money being given to them so long as they pay more taxes that they don't pay anyway.  It's a BS promise by a BS government for more BS paper so they can live a few more years.  Eventually, they will default but not next week. 

Sun, 06/26/2011 - 21:54 | 1404395 vegas
vegas's picture

So, on the optimistic side of things, growth could lead to stability in 50 - 100 years? How can you put this shit out with a straight face? Good thing you work for a sock-puppet bank, 'cause if you handed this "private research" to me you'd be out the door quicker than T-Pan could eat a gyros.

Sun, 06/26/2011 - 21:55 | 1404411 macholatte
macholatte's picture


Mon, 06/27/2011 - 00:06 | 1404677 Ranger4564
Ranger4564's picture

It's just propaganda... keep people destabilized, confused, in disbelief. 

Sun, 06/26/2011 - 21:52 | 1404400 ONEPurpose
ONEPurpose's picture

Just say no to all of it. 

For f*ck sakes it's a charade. 


For the financial sane Only.

Mon, 06/27/2011 - 00:09 | 1404683 Ranger4564
Ranger4564's picture

Agreed.  It is a charade, and the outcome is already known, and why is also already known. Why people act as if there are options or alternate outcomes is alarming. It's obvious, the nations are being sabotaged.  It's clear the financiers will win.  The only way to stop this, is for people across the globe, to protest in unison... overwhelm the police, military, and demand the resignation of every current leader, demand the head of every financier.  Otherwise, they win.

Sun, 06/26/2011 - 22:02 | 1404407 grunk
grunk's picture

If they say no, we're free. Derivatives killed the radio star.

Mon, 06/27/2011 - 00:10 | 1404684 Ranger4564
Ranger4564's picture

They cannot say No, and I urge you to get yourself a Shortwave radio before you lose that opportunity.  News will be from abroad, propaganda will be from regional sources.

Sun, 06/26/2011 - 21:54 | 1404408 The Aviator
The Aviator's picture

But the banksters can't let them say no. Silver Viral Project could get the masses into silver, sheople buying precious metals is the only way to win this war!

Sun, 06/26/2011 - 21:55 | 1404409 bob_dabolina
bob_dabolina's picture

What if Greece says no? 

Greece is getting Strauss Kahned.

Sun, 06/26/2011 - 21:59 | 1404412 Jovil
Jovil's picture

If Greece says no to the package hold on to your seats because PMs will rocket. Physical makes a lot of sense at times like this. Get rid of silver and gold paper like SLV and GLD.

Sun, 06/26/2011 - 22:01 | 1404431 HungrySeagull
HungrySeagull's picture

Let it skyrocket. Or drop, either way I am happy.

Mon, 06/27/2011 - 00:43 | 1404718 Prometheus418
Prometheus418's picture


As I tell my fiancee- with the box of silver I've been slowly hiding away, we're either going to be filthy rich in hell, or in a stable country with a nice coin collection.

I'd prefer the second, honestly- but if we gotta go the hell route, I'd rather be rich than dead.

Mon, 06/27/2011 - 02:44 | 1404793 HungrySeagull
HungrySeagull's picture

I don't see it as the rich part (Yes nice however...) I see it as freedom.

Also an oppertunity to make right something I failed to do 30+ years ago. When gold was at 200 and Silver nothing much more than the change in your pocket after a good lunch at Starbucks and Subway.

Mon, 06/27/2011 - 10:07 | 1405209 j0nx
j0nx's picture

I keep telling people that if the hell scenario plays out then your prep money would have been better spent on 22LR which imo will be the new currency if/when hell breaks loose. Buy all the silver you want but in the end it will just get taken from you by roaming bands of thugs or government seizure if worse comes to worst.

Sun, 06/26/2011 - 22:20 | 1404460 Boston
Boston's picture

If Greece says no, then Risk Off ensues.  

I'd bet silver and platinum could drop, first, before rebounding.  So if you want to buy more silver on the cheap, get some cash/liquidity ready to pounce on the temporary dip.

Sun, 06/26/2011 - 22:50 | 1404547 snowball777
snowball777's picture

Yes, nothing makes PM rocket like margin calls ringing every cell phone in the building at once; physical will make more sense after we bottom.

Mon, 06/27/2011 - 00:47 | 1404722 Prometheus418
Prometheus418's picture

That is assuming that the spot price and the physical have not already bifurcated, and you can take advantage of the paper price dip.

My experience last week was that the local coin shop is no longer trading at spot, and eBay has been higher for a while now.  Might not be the best idea to wait, but if there is a prolonged paper price dip, it might bring it down a little yet.  


Sun, 06/26/2011 - 21:59 | 1404421 user2011
user2011's picture

If Greece says no, then the Greece bond defaults. Then some of the European banks call help. Some of the US money market fund go burst. China will cry... Japan may cry as Euro tank and Greek bonds default.

Spain, Portugal and Ireland will be dead, as no one would buy their bonds.

Euro tank, gold shoots up. Everyone clearing the supermarket shelves.

Here comes the dark ages in Europe again.

Rich people will leave Europe and come to America. US housing will boom again because of the rich European refugees. America will be saved..

Sun, 06/26/2011 - 22:03 | 1404422 user2011
user2011's picture


Sun, 06/26/2011 - 22:05 | 1404429 HungrySeagull
HungrySeagull's picture

So what if they did say no?

About damn time someone said no.

Fuck it, let em say no and push through the falling dimonos.

Mon, 06/27/2011 - 03:09 | 1404817 oldman
oldman's picture

Good idea, Hungry

I'm tired of the conversation also. I just wanna see how it comes down and I'm only a step in front of death, so I hope it is soon.

In fact, either way, we are going to pay for this----so, 'What, me worry?'

I only sorry we are not having more fun with this---it has been a great trick!

Mon, 06/27/2011 - 09:13 | 1405086 jmcadg
jmcadg's picture

Yes let's get on with it now. Before we're bled dry.
But that's what they want isn't it?

The Greek people want no more bailouts. The government see an opportunity to get a bit more free cash, before going broke again in three months. They won't be able to fulfil the commitments expected, so we'll be here again, and again. The EU, ECB, IMF know it, but are so enjoying kicking the can.

Maybe the German people need to get off their arses and say no, I'm not going to give anymore money away, only for it to be pissed down the drain, by the Greek government, not the people.

So really this is all the people needing to say, fuck off banks and governments et al. We'll work this out ourselves.

Let's have a forest fire.

Sun, 06/26/2011 - 22:06 | 1404432 alien-IQ
alien-IQ's picture

looks like an exciting week ahead.

Sun, 06/26/2011 - 22:03 | 1404437 Piranhanoia
Piranhanoia's picture

a domino falls and hits 2 that hit 4, that hit 8 that hit 16,32,64,128,256....

Sun, 06/26/2011 - 22:12 | 1404447 sangell
sangell's picture

And just WHO has the authority to make Troika loans not senior to private creditors? Has the IMF signed off on this to say nothing of Finland, Germany, Holland etc. There is something rotten in Euroland when such major decisions are made without one iota of public consent or even debate.

Sun, 06/26/2011 - 22:42 | 1404532 Ned Zeppelin
Ned Zeppelin's picture

welcome to the real world of who actually decides things. 

Sun, 06/26/2011 - 22:09 | 1404451 kito
kito's picture

about the same odds, sadly, that texas says yes to the pat down law

Sun, 06/26/2011 - 22:11 | 1404453 Coffin Dodger
Coffin Dodger's picture

They just don't get it, do they? They can't see the game is over even as it stares them in the face.

After hundreds of years of unmitigated manipulation by banking cartels, they overstepped themselves once too often and their hand was laid bare in 2008, showing the utter greed and indifference to the vast majority of the world population. At the time too few of us noticed, many too frightened by change.

Those that could see and confirm that for generations we've all been duped - the harsh realities of the fraud and corruption, the captured politicians and the beneficial legislature - have been decrying it since. And you know what? - it's having an effect.

The pace at which realisation is dawning upon the 99% of us that keep them in the luxury they are accustomed to, driven by a rising consciousness bestowed upon us by the internet, is staggering. These truths are even beginning to take hold in the minds of some of the most sceptical. Once you've heard the truth and it makes sense, you can't unhear it. Once you've thought a thought, you can't unthink it.


They are scared shitless. Every single member of the club.

A caged tiger of enormous strength with staggering resources at their disposal. But caged nonetheless. Time is running out and their options are narrowing.

"You hear that, Mr Anderson?...that is the sound of inevitability..."

Our responsibility is to react to their futile actions in a calm, thoughtful and measured way.

Critical mass is growing.

Mon, 06/27/2011 - 00:28 | 1404692 Ranger4564
Ranger4564's picture

While I would like to share your enthusiasm, I cannot, but I do agree that a lot of people are at least giving the information more consideration as being possibly credible.  It's about time, I've been arguing these things for a long time.  The 99% of the people are unaware of this from their own reasoning for a specific reason... they are self serving cowards who want to be led.  They will do nothing to stand up to the oligarchs... they're constantly asking me why I am not fixing the broken system if I can see the problems so clearly. That's the incredible level of greed and self interest that the system breeds.  They want me to fix their broken capitalist system.  They want me to fix the broken political system.  So they can return to a working capitalist system.  Fuck that.  But one thing is sure... if these people had any courage at all, they would have apprehended this charade a long time ago and stopped it.  Therefore, they will do nothing now, even if they are aware of what is going on now... I know... they tell me they're scared, and they're still waiting for a leader / savior.  G'luck.  I say fuck 'em. There are 6.9 billion too many cowards on the planet and perhaps the oligarchs have it right.  Eugenics.

Mon, 06/27/2011 - 01:13 | 1404748 WorkOutWellForAll
WorkOutWellForAll's picture

So... this courage you presumably possess yourself, "standing up to the oligarchs" you recommend... this also entails ridiculing the frightened, cursing suggestions for reform, and then endorsing policies of mass murder.

God bless you, courageous American warrior!

Mon, 06/27/2011 - 08:27 | 1405009 Ranger4564
Ranger4564's picture

Did you read what I wrote?  I said I at least have the courage to look at the world for what it is, while most of the population forces the world to fit into an image that is palatable to the populace.  Yes, I have courage, because it is necessary... not because I want to die.  I am willing to be one on the line when the protest is called, but I cannot be alone... that would be futile... and I'm not that courageous I don't think.

Mon, 06/27/2011 - 03:17 | 1404822 oldman
oldman's picture

Ranger, they were just pulling your leg. They know that there is no way of fixing this mess-----it is out of control and the machine is dead. This is not serious---it is a joke---justice from the universe---If we called an all-species conference no other species would show up because they have been laughing at this species forever, even as we destroy them and our mutual habitat.

And we think this is a main event----we are really fucking stupid!

Sun, 06/26/2011 - 22:13 | 1404464 SmoothCoolSmoke
SmoothCoolSmoke's picture

Say no.  Roll out the tanks, and tell the banksters, "you want some of Greece?............come and get it." 

Sun, 06/26/2011 - 23:56 | 1404661 Sambo
Sambo's picture

A tank is no match for a missile.


Sun, 06/26/2011 - 22:22 | 1404473 Robslob
Robslob's picture

My first thought about Greece saying no:

Sun, 06/26/2011 - 22:22 | 1404474 NorthenSoul
NorthenSoul's picture

It is imperative that Greece say no. After all, no one had any obligation to lend to them, had they?

Hence, let the acid test of capitalism (proper allocation of losses) apply to the Euro Banks, which, quite frankly, fully deserve a multiple cock-punching kung-fu style.

It'll be good for them to get reacquainted with the basic lessons of Professor Pain, the best teacher there ever was when it comes to finance and trading.

I positively love the smell of raw capitalism in the morning, floating over the Acropolis; It smells...victory!


Sun, 06/26/2011 - 23:45 | 1404642 Assetman
Assetman's picture

Unfortunately, many of those wonderful Greek politicos see another bailout as being the only viable answer for them to plan for the final exit.  One more "extend and pretend", and they can make sure they have the plot of land next to W in Paraguay.

What I find more fascinating is what happens if the Greek government says "yes" to more bailout money and a loss of its sovereignity.  We know that the Greek people are capable of rioting-- but are they really capable of revolution???

I don't know the answer to that, but the Greeks will learn soon enough this particular bailout will not change the inevitable default.

Too bad the stoopid banks didn't spend all that time reserving for it.


Sun, 06/26/2011 - 23:54 | 1404656 financeguru500
financeguru500's picture

Its convenient that Paraguay doesn't extradite criminals either. Good for political criminals who have run their countries into the ground.

Mon, 06/27/2011 - 07:06 | 1404921 Ghordius
Ghordius's picture

Agree with you: 99.9% of all politicos will kick the can further down if they can, it's built in...
Greeks are perfectly able to do a revolution, they have done a few in the past.
You cannot expect the TBTF banks to reserve for unexpected losses if their standard mode is to make lot of money out of the bet that nothing changes. The models, the CDS, the leverage, it's all a way to make loads of money on the expectation that nothing will change - or better, that all will unfold as expected on the models based on the last twenty years of history.

Sun, 06/26/2011 - 22:20 | 1404478 Misean
Misean's picture

And if Greece says yes, you have at best, 2 months before TSHTF again even harder.

Sun, 06/26/2011 - 22:20 | 1404479 TexDenim
TexDenim's picture

Greece is not the problem, though it gets all the bandwidth. Take a look at Irish or Portuguese sovereign debt. They are at decade highs, and those countries are much more important than Greece. Greece is a goner, as Pimco has opined, and we should be paying more attention to the other marginal countries.

Sun, 06/26/2011 - 22:22 | 1404485 NorthenSoul
NorthenSoul's picture

It goes without saying the same refusal should be proferred by Ireland.

Someone tell us if there is a better way for the banksters to re-learn the concept of risk management and underwriting discipline.

Sun, 06/26/2011 - 22:35 | 1404509 mayhem_korner
mayhem_korner's picture

Europe is like a guy marooned on an island with no food.  First he cuts off a foot to fight the hunger, then the other, pretty soon everything below the knee is looking tasty and expendible...


Sun, 06/26/2011 - 22:34 | 1404515 chump666
chump666's picture

I like SoGen they called the sovereign debt crisis three years ago for the EZ.

155 socialist Greek MP's...gotta agree on the bill, with turmoil in the streets of Athens.

Chaos baby...

Mon, 06/27/2011 - 05:15 | 1404857 topcallingtroll
topcallingtroll's picture

The greeks are pussies. They dont have rhe balls to default.

Sun, 06/26/2011 - 22:40 | 1404525 Jovil
Jovil's picture

When TSHTF what are you going to do with your stuff.

Sun, 06/26/2011 - 22:42 | 1404526 treemagnet
treemagnet's picture

Its not the size of Greece - its the fragile structure of the world around Greece that can't take a hit - any hit.  When everyones assets are someone elses liability, theres no wiggle room left.  Theres your problem from my perspective.  Until then its diminishing tailwinds into structural headwinds.  (faint auto voice saying: "pull out - stall warning - pull up -stall warning - pu")

Sun, 06/26/2011 - 22:41 | 1404528 sangell
sangell's picture

I tend to see this whole Greece thing as less an economic issue and more like Greece as South Carolina in 1861. That's the 'contagion' the Euro boys really want to avoid. A string of secessionist states walking out of the Euro Union.

If it was economic 'contagion' they feared then the proper solution would be to shore up their national banks rather than make more loans to bankrupt states.

Sun, 06/26/2011 - 22:42 | 1404530 Jovil
Jovil's picture

When TSHTF what are you going to do with your stuff.

Sun, 06/26/2011 - 22:47 | 1404533 sangell
sangell's picture

I tend to see this whole Greece thing as less an economic issue and more like Greece as South Carolina in 1861. That's the 'contagion' the Euro boys really want to avoid. A string of secessionist states walking out of the Euro Union.

If it was economic 'contagion' they feared then the proper solution would be to shore up their national banks rather than make more loans to bankrupt states.

Sun, 06/26/2011 - 22:44 | 1404536 Lucius Corneliu...
Lucius Cornelius Sulla's picture

Hussman had a good write up on this last week.  Says that Greek default is immanent, but "Not yet".

Sun, 06/26/2011 - 23:04 | 1404567 Gordon Freeman
Gordon Freeman's picture

How can something be both "imminent" and "not yet"???

Sun, 06/26/2011 - 23:05 | 1404579 Lucius Corneliu...
Lucius Cornelius Sulla's picture

Basically, bond yields are predicting a default but not for a few years.  It is difficult to predict exactly how and when but it will happen.

Sun, 06/26/2011 - 22:44 | 1404537 SirIssacNewton
SirIssacNewton's picture

Greece won't say no.....because they, the politicians and most of the people, have enjoyed a standard of living higher than their GDP could support using debt.  To say no and mean it....would require them to return to the drachma and require they stand on their own two feet.  There would be a lot of pain for them in the next decade, but they could build something better and sustainable for themselves without the burden of all this bank driven debt.  If they say "yes"...which they will....they can continue to suck at the teat of mother EU until the milk runs dry.  Even if they don't make their targets, they will just ask for forgiveness and the EU will have to modify the deal again...and again...and again.... until they can't or won't.  Greece isn't Iceland.  I wish they were because I would rather we start to let the risk takers take the bath they avoided in 2008.  I don't want the pain, but I don't want amputations later.

Sun, 06/26/2011 - 22:54 | 1404555 Lucius Corneliu...
Lucius Cornelius Sulla's picture


Sun, 06/26/2011 - 22:49 | 1404541 A Lunatic
A Lunatic's picture

All of this Greece drama is just an excuse for the bankers and politicians to further their consolidation agenda through a continued policy of threats and intimidation. The working class of Greece is not threatening to burn the whole world financial system down, the fucking bankers are.

Sun, 06/26/2011 - 22:53 | 1404543 gnomon
gnomon's picture

Each individual Greek MP who even thinks of crossing the banksters will have a literal gun put to his head and the heads of his family, (going as far as third cousins).

(These are the times we live in).



Sun, 06/26/2011 - 22:56 | 1404548 zorba THE GREEK
zorba THE GREEK's picture

 Greece is just a miniature USA. Corrupt Government, overpaid unions,

 Rich not paying taxes. The only reason they are in a crisis is they can't 

 print currency like US, England, Japan and China. The U.S. has the

 edge over everyone else because we have the "world currency". So

 don't be surprised if the U.S. is able to extend and pretend for longer

 than anyone else. Don't short the dollar just because it is a pile of crap.

 Sometimes illusions last far beyond most peoples' expectations.

Sun, 06/26/2011 - 22:57 | 1404552 Jovil
Jovil's picture

When TSHTF what are you going to do with your stuff.

Sun, 06/26/2011 - 22:54 | 1404554 grunk
grunk's picture

Next stop: Portugal.

Next stop: Spain. 

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