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The Fuse on the Global Debt Bomb Has Been Lit
Greece defaulted on a debt payment to the IMF last night at midnight.
Regardless of anything else, we have now seen a developed country “go over the cliff” in terms of negotiating debt payments. This will have global implications for other indebted countries in terms of negotiating tactics going forward.
As I write this, the markets are moving higher on news that Greek PM Tsipras is willing to accept the bailout offer that the IMF made before the default. The markets are misreading this. That bailout offer has expired even if the IMF allows such a deal, the damage has been done.
At the end of the day, the “Greek” issue is in fact a “debt” issue. And Greece is just a drop in the ocean of debt sloshing around the financial system.
Consider that Puerto Rico is on the verge of default. Again the issue here is not the individual region’s debt, but the DERIVATIVES based on the debt.
The VIEs are the off-balance sheet vehicles that triggered the massive chain of counterparty defaults which de facto collapsed the U.S. financial system in 2008. The VIEs are where the credit default swaps and other nebulous forms of OTC derivatives bet slither around.
Global debt and gross derivatives outstanding are much bigger than in 2008. And, except for the Plan B hyperinflation of the money supply, Central Banks are out of bullets.
Source: Investment Research Dynamics
Puerto Rico’s debt alone represents billions in dollars worth of collateral for financial firms. It is no coincidence that the firms that insure this debt are imploding.
That moves looks an awful lot like the one that kicked off the 2007-2008 collapse.
The markets may be moving for Greece, but the fact of the matter is that the fuse has been lit on the global debt bomb. It’s now only a matter of time before the REAL explosions begin.
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Well I don't see amy contagion at all (yet)
Spanish and italian bonds are not panicing and yield is low,,Spread between these bonds to German bunds are low...
and Cd market doent show any sign of breakdown....
So the show goes on....
Pheonix Capital with it's trend and the market with its trend
18 -20 Billion Detroit
33 Billion Chicago
72 Billion Puerto Rico
271 Billion Greece
1.1 Trillion States Debt
National Debt
http://www.usdebtclock.org/
The fuse may be lit, but It may also be a few miles long.
If Greece can balance the budget which seems possible, and can get tax collection working, tHe EU is on toast.
Make frIends with Putin get a bit of employment going on infrastructure projects and Bingo!
Greek people may have to eat olives and feta to get over the hump.
I lived in Melbourne Oz for 25 years, Greeks are smart business people, and excel in food. All the best Alexis Break the fucking mould.
It's time to LIGHT THIS CANDLE! (The Right Stuff)
Greek fire in 3... 2... 1...
Only 50 copies left! How long has Phoenix been running that line?
This whole situation is very bizarre. If the European banks are so leveraged that they can't allow Greece to default why do they insist on austerity which has driven the greek economy down 27% making Greece's ability to pay even less. The Troika have resisted any reasonable compromise with Greece to repay. Now Greecce is finally resisting because the European banks have only used the debt crisis as a way to get firesale prices on Greek assets. They want to drive Greece into the ground then buy them up cheap to make more money but in their blind greed they are destroying the European financial system. Mutual destruction is sure to follow. Like a nuclear war, the only way to win the game is not to play.
It is only a matter of time before the real explosions begin... you are so right... July 4th is just a few days away...
when the fed can just print or make japan / EU etc print, what does it matter, its ponzi money & its all gona come crashing down, the only question to ask is "when" will they let it happen?
Agreed. I expect they will somehow crush PM's first, then release the one world solution.
That said I'm still stacking as often as I can.
PR is going to be interesting since they are neither fish nor fowl or good red meat. They'll need a large bail out, but who'll do it?
Puerto Rico is chickenfeed.
The entire debt of PR is barely 10% of the US annual defense budget.