Guest Post: The First Dominoes: Greece, Reality, And Cascading Default

Tyler Durden's picture

Submitted by Zeus Yiamouyiannis from Of Two Minds

The First Dominoes: Greece, Reality, And Cascading Default

Greece is the epicenter of a drama that threatens to unwind with all the intrigue and subterfuge of ancient Greek myths and tragedies. As with the legend of Icarus, big, and now bigger, transnational banks provoked the gods with their wax-and-feather financial fabrications to create the appearance of soaring wealth. Now that they have flown too close to the sun and their wings have melted, these banks are being brought to earth by the obligations and consequences imposed by their fabrications.

Rather than take responsibility, these banks seek to appease the gods by sacrificing taxpayers. In fact, if one looks closely, these banks aspire to be gods themselves. They clothe themselves in their indispensability and shield themselves from accountability with tales about how many innocent citizens will be hurt if they don’t get their next bailout. It is as if they say, “We are above the law… We are the law.” Mathematics, legal enforcement, restraint, humility all must fall under the sword of their hubris.

In the end, just as with a Greek tragedy or a Yeats poem, this center cannot hold and things fall apart. When one abuses the laws and principles of mathematics and capitalism, claiming to be a faithful servant, consequence and accountability eventually catch up. The breaking point inexorably nears. Citizens are beginning to think, voice, and act: “We can do without the false idols that call themselves banks. In fact, we need them to be dissolved for us to survive and thrive.”

Reality is the revenge of the gods.

Not just about fairness: Everything unwinds

This is not just about fairness anymore; it is about the exposure of central, global illusions that affect everyone, not just banks. For the last three plus decades, debt-fueled “growth” has instilled a life sense that everyone gets rich, values always go up, and no one has to pay. If those illusions evaporate than those citizens complicit in this failed fantasy may actually join forces with the realists (those who knew it was a scam all along) to produce unified citizen revolt. Hell hath no fury like the people spurned and lied to, even if many had some responsibility in welcoming and fanning those lies.

The implicit deal was this: We will collude so everyone gets rich going forward. We will collude so no one has to pay if there is any unwinding. (But, hey, it’s a new era, and that’s not going to happen!) Open default breaks the illusion, and austerity breaks up the collusion. This is why default has to be hidden, deferred, restructured. It is not just about chaos around party/counterparty risk (in particular, cascading claims that are not backed by anything). It is not even just about finance. It’s about all the other things that will unwind, culturally, politically, and psychologically, if Greece defaults and sets into motion the necessity of someone actually paying up. In short, recognition of reality has disastrous consequences for the status quo and its control myths.

The infinite growth meme unwinds: The cancerous economic obsession with infinite growth in a finite world is already unwinding, but will hit full force with cascading defaults. It is one thing to have a “slowdown,” and another to have your economic brakes lock up on you and your gears slammed into reverse. About the only thing that seems to be growing currently is the number of people partially employed or permanently unemployed. As a humorous aside, the situation is getting so pronounced that quality of life might actually have to replace quantity of possessions as the cultural indicator of the good life, and what would that do to the economy?

Politicians’ power of the purse unwinds: Greek politicians, like many other Western politicians, will do almost anything to get re-elected. The easiest way to do this is to pay people off, particularly government workers and constituents, in the form of generous benefits or pet projects. What happens if your tax base will not support this? You sell your political soul, defer, and/or hide the true costs of your largesse behind undisclosed derivative deals with Goldman Sachs that eventually put your entire country’s sovereignty in jeopardy. As a result, Greece’s former prime minister, George Papandreou, is now out after a very short term in favor of a unity government. Shady deals funded unsustainable perks that not only inflated popular expectations but created catastrophic debt and risk.

Guaranteed entitlements unwind: So now that the illusion of infinite growth is being exposed, the corresponding ballooning entitlements that enticed the larger public to become complicit in the illusion are becoming unglued. It would take almost a decade of gross national product to pay off the U.S. unfunded liabilities for Social Security, Medicare, and Medicaid, which exceed the staggering sum of 100 trillion dollars.

Retirement and health benefits cannot be paid out of fake prosperity and “notional” (i.e. imaginary) values. They require real services and products and an accepted public medium of exchange. (I will leave off the argument as to what constitutes “real” and “accepted” since even fiat currencies are dubious in this regard.) People will be forced to adjust their expectations and adapt their realities. With public and private pension plans also complicit in derivative scams to fund benefits, it will be no surprise if many pensions simply declare themselves bankrupt in the next decade.

The maximum profit mandate unwinds: We have reached such heights in our hysteria about growth and our psychological addiction to more-more-more, that we have seen stock prices fall, even with record revenues, if the corresponding company doesn’t meet expectations of even higher growth and revenue. It is getting to the point where a company cannot simply have a solid year and just pay out its dividends and maintain its good health. Instead companies have to be ever hopped-up on economic steroids and cost-cutting (i.e. shipping jobs to virtual slave labor in China) so as to not fall short of expectations.

These steroidal practices are destroying the companies and the means by which consumers can afford products and services. A relentless short-term focus serves no one in the end. “Maximum” less and less corresponds with “optimum,” because present assets can be cannibalized or revaluated to give short-term boosts to numbers, creating medium- and long-term systemic and foundational deficits that destroy the health of a company and its surrounding society. Hopefully the idea and practice of optimum profit will replace maximum profit as the Great Unwinding continues.

The central question:

The central question, obscured by all the hand wringing and crocodile tears is simply this: Why should public citizens who have no stake in private enterprises, who received no profits or dividends, who had nothing to do with creating losses, be forced to pay for private losses? The only legitimate answer is, “They shouldn’t.” Period. Anything that does not acknowledge this tenet is not functioning capitalism, and if it is functioning capitalism it cannot violate this tenet.

Yet we witness apologist expert after expert excusing this fatal breach in capital practice as “regrettable but necessary to save the system.” They seem not to have noticed that the system has already killed itself by violating its own foundational laws and principles. If anything, current conventional practice might be accurately described as an all-out anti-capitalist assault on democratic free enterprise.

So now the follow-up question is easy to answer: “Why are we paying for something we did not buy and had no hand in creating?” The answer: We no longer have functioning capitalism. Call it what you want— corporate socialism, crony capitalism, cancer capitalism, plutocracy, kleptocracy, oligarchy, neofeudalism— the system we have now is the equivalent of an individual going up to a complete stranger on the street and shaking that stranger down for “protection money” to pay for the individual’s underwater house mortgage.

As this simple fact grips the population, and people wake up to the present economic reality, there will be increasingly organized moves toward civil disobedience and alternative economy. “Cannot pay” will merge with “will not pay” since the only way to re-establish health and integrity in a corrupted economic system is to starve the cancers that have taken it over. This has already started with Occupy Wall Street, strategic defaults, and riots in Greece.

So if someone asks you, seeking to appeal to your fear, self-interest, and need for approval, if you are willing to “be responsible for bringing down the global system,” your answer should be an emphatic, “Yes.” “Are you asking if I want to bring down fraud, theft, abuse and the cancer that global finance has become for me, my neighbors, my children, and my children’s children? Are you asking me if I want to replace the current broken system with something that serves actual people? Not only, ‘yes,’ but ‘heck, yes.’”

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Gully Foyle's picture

Mrs.Carberry: Fecking Greeks!

Colm: It isn't the Greeks, it's the Chinese he's after.

Father Ted: I'm not after the Chinese!

Mrs.Carberry:I don't care who he gets as long as I can have a go at the Greeks. They invented gayness!

falak pema's picture

this Carberry lady needs to get her upholstery redone or her cherry dipped in wine. It'll make her whine for gay times.

The Big Ching-aso's picture



This could very well be the slowest dominoe game in history played by the slowest dimwits in the universe.

Cognitive Dissonance's picture

"Guest Post: The First Dominoes: Greece, Reality, And Cascading Default"

It is inevitable.


battle axe's picture

If it is INEVITABLE, which I agree with, then lets get on with it, because you know what the next party is, IRAN!

Mr Lennon Hendrix's picture

Naw, the next party is the facebook IPO, then the Eurponzi collapse, then Iran.

CPL's picture

I'm torn between Iran and Europe, they are in a position to sit and make faces at the problem as long as the money is printed even if nothing is produced.


The Facebook IPO is a definite roll call item that will over shadow any real news like a B grade celebrity like Whitney Houston dropping dead from their own bad habit..

Bwahaha WAGFDSMB's picture

Fresh water, topsoil, fisheries, oil reserves, all the things we depend on for survival are declining. 

The human population is in overshoot.

Die off is guaranteed.

It's a mathematical certainty.

It could be the end of western civilization.

malek's picture

You still believe that 40 year old fairy tale?

Bwahaha WAGFDSMB's picture

Which fairy tale are you refering to?  That the earth is finite?  That mathematis is true?  That humans can't live without eating?

malek's picture

That you, like the Club of Rome at 1970, seem to believe it is inevitable for densely populated parts to have massive famine occurring very soon.

Very strange the inevitable didn't happen, not within 10 years as forecast, not even within 40 years...

Before you respond with the usual "but this time it's gonna happen, this time it's different!", let me ask you: what would need to happen for you to change your mind?

DogSlime's picture

It is inevitable.

...but it still doesn't actually happen and all this delay makes it much worse when it does.

Makes me sick.  The only reason I can think of for the delay is that it gives the elite extra time to consolidate their positions and have one last (big) bite at the cherry.


I wish I could believe that the guilty will eventially be brought to justice :(

Cognitive Dissonance's picture

"We" could certainly hasten the collapse if "we" just withdrew our support. The problem is that over the last 50 years any degree of independence from the machine has we as a culture (and most importantly we as individuals) are for all practical purposes completely dependent upon the machine for support and subsistence. Just in time delivery to supermarkets and gas stations are just one very small example of how our world will be rocked when the retread comes flying off the rim.

If for no other reason, our collective dependence upon the machine will extend further and further into the future this inevitable collapse to way past the point where any 'sane' person could conceive it possible. No 'sane' mouse wishes for, or even helps, destroy the very environment upon which it is dependent upon.

Welcome to the machine. It is us and we are it.

DaveyJones's picture

gardens are your greatest weapon

forexskin's picture

Welcome my son, welcome to the machine.
Where have you been? It's alright we know where you've been.
You've been in the pipeline, filling in time,
provided with toys and Scouting for Boys.
You bought a guitar to punish your ma,
And you didn't like school, and you know you're nobody's fool,
So welcome to the machine.
Welcome my son, welcome to the machine.
What did you dream? It's alright we told you what to dream.
You dreamed of a big star, he played a mean guitar,
He always ate in the Steak Bar. He loved to drive in his Jaguar.
So welcome to the machine.

LowProfile's picture

One can go even further:  Buy as much PM as you can, cut costs to the bone (forgo eating out, movies, etc., move to a cheaper apt, etc.), run up and then default on debt, go on social services, only pay cash, etc.

Eventually the camel gets one straw too many.

Be the straw!

BLOTTO's picture

For those in the know...

How do you - me - We - keep it together without completely going nuts?

What keeps one from snapping?



LowProfile's picture

Meet reality on it's terms.

Decide what is truly important in your life.


Simplify your life.

Make a plan, stick to it.

Follow through.

Since you have no control over the big picture, resolve to enjoy what is happening.


Acet's picture

Have a backup plan, maybe even a backup plan to the backup plan.

Setup multiple options to cope with difference scenarios of colapse, invest more for higher likelyhood situations, less for lower likelyhood ones.

For example, from preparation against highest likelyhood crisis to lowest likelyhood ones:

  • Have at least a year worth of savings in case you loose your job
  • Have money in bank accounts with more than one bank. If at all possible one of those accounts should be abroad.
  • Have some money in cash at home to protect yourself against a bank colapse. About a month worth. Even if the government guarantees scheme pays back the money from the accounts, until that happens you will want to have some money.
  • Put some of your savings into PMs to protect againt high inflation and even currency colapse. If you live in a country with higher inflation and ultra-low interest rates (say, like the UK), gold is a great way to simply preserve your wealth
  • Store enough long lasting food to feed your family for at least one month. Large cans of freeze-dried food will last up to 25 years. This protects you against a colapse in the food distribution system, including due to things like severe fuel shortages.
  • Keep highly portable food, water, first aid and survival gear in a bug-off backpack, learn survival skills. If living in the US you might want to add weapons to it. This is for the societal colapse risk. Also works in case of a large incident, like for example a flood or earthquake.
  • Buy a farm, learn to farm, make friends with your neighbours there.

I'm not saying you need to do all these things, just layer a couple of these so that you're prepared against the scenarios that you feel are high probability. If things get worse, layer some more.

Meanwhile, live your life normally and enjoy as much as you can - you have the peace of mind of knowing that if the brown mater hits the rotary impleller you're ready.

[I've had the lowest level backup plan (keep lots of savings) in place for years now and it has given me peace of mind, allowed me refuse to take shit from employers and take more risks when searching for a new job and even saved my hide when a big crisis hit my life]

roccman's picture

My daughter is a type I diabetic.


I try not to think just how connected i/we are to the machine.


we are also connected in other - much more important and lasting ways.


Mer-ka-ba folks - it's real - it's measurable (60' diameter around your body).

this "reality" is just a tiny fleck of the much - much bigger picture.



CPL's picture

Well, speaking of food. 


The port of Athens is the largest part of the European cold chain for food storage, last I heard it was burning and diesel is tough to find.


I expect nothing but interesting news about people missing a meal or all of them in the next week.


JIT is officially broken in Europe regarding food.

GeneMarchbanks's picture

This ain't America, food is local.

CPL's picture

It's where the food is stored for JIT. 


Strawberries grow in May and June.  Potatoes all year if there is no snow or they die.  Same for Cabbage, Carrots, Cauliflower.  Etc.


All countries are part of the cold chain.  The idea of anyone in europe providing their own wheat, barley or corn is laughable.  It hasn't been done in a century, two world wars and mustard gas saw to that.



GeneMarchbanks's picture

'The idea of anyone in europe providing their own wheat, barley or corn is laughable.'

You're clueless about Ag in Europe. Visit villages even outside the EU and you'll see even gypsies don't go hungry.


Dr. Engali's picture

It is inevitable. But unfortunately along with the collapse of economies war isn't to far behind.

scatterbrains's picture

Not to mention all those brokerage accounts that need to be disappeared via the re-hypothocation explosion once the collapse occurs. Everyone short these markets waiting for their pay day when the wheels come off are going to have their day stolen from them yet again. I wouldn't be surprised if in the aftermath people with long only accounts/pension funds/mutual funds etc get x % of their funds back in the new world currency where as shorts will get zero. Imagine that   lol.


DaveyJones's picture

Of all the other players, Archimedes is the Greek that fits "this bill." We've been given a lump and it isn't gold, it's growing larger and now the lies are spilling over. 

Alea Iactaest's picture

That lump sounds like a tumor.

SheepDog-One's picture

Yes a cascading default catastrophy is innevitable and upon us now....however all is quite splendid for tomorrow and tomorrow...

Bwahaha WAGFDSMB's picture

It has been inevitable for a long long time.  Greece is not the first domino.  Lehman was not the first domino.  The discovery of fosil fuels was not the first domino.  It all stems from the urge to reproduce.  Un-sustainability is in our DNA.

falak pema's picture

FINANCIAL INQUISITION : We judge you by OUR standards, not yours; move on.

The message of the Oligarchs

LongSoupLine's picture



Don't worry...AAPL's above $500. and Starbucks coffee is still hot.  What could possibly go wrong?

(Edit:  To whomever junked I really need to put "sarc/" at the end of my statement?...idiot.)

LongSoupLine's picture

Ahhh yes...nothing like a smoking hot cup o' Greek Starbucks, eh?

Deo vindice's picture

(Edit:  To whomever junked I really need to put "sarc/" at the end of my statement?...idiot.)

I gave you a plus.

The problem is that as the current world system unravels at exponentially increasing speed, folks' sense of humour is diminishing proportionately.

LowProfile's picture

Well, FUCK 'EM if they can't take a joke.

TheFourthStooge-ing's picture

LowProfile said:

Well, FUCK 'EM if they can't take a joke.

Hey, that's the motto of my church!



Hippocratic Oaf's picture

"For the last three plus decades, debt-fueled “growth” has instilled a life sense that everyone gets rich, values always go up, and no one has to pay"


Once the can gets too big, who has the ability to stub their toe on the kick down the road?

fijisailor's picture

"Guaranteed entitlements unwind" 

Yes these so called entitlements that I PAID for for so many years.  The word "entitlement" signifies that I must be some sort of leech on society

GeezerGeek's picture

Clearly, those of us no longer employed and contributing some part of our wages to the common good are leeches. It is not as if we had a choice regarding participation in paying for Social Security or Medicare, because slaves don't have choices. The central government thinks it has the right to control everything - people, corporations, religious institutions, etc. It thinks it can force us to buy healthcare, it thinks it can force employers to give free birth control measures, it even thinks it can force us to embrace depravity.

It's time for a massive reset, here and worldwide. It will come, whether we want it or not.

Dr. Engali's picture

Part of the problem with benefits is that the amount is paidd in isn't enough to cover what is taken out. SSI is a ponzi scheme that requires a new person in the system to pay for the next person going out. I'm not disagreeing with your statement I am just commenting on the current structure of the benefit.

kridkrid's picture

Yup.  It's kind of a battle of semantics when people want to argue whether or not it is a Ponzi scheme... and of course it doesn't really matter... all that matters is that A) it can't be sustained and B) It isn't what it is implied to be.  

forexskin's picture

perfect recipe to continue the intergenerational war started during vietnam...

"but i paid into (the ponzi) ______"

at least with madoff, once people identified the criminal, they were disabused of the notion that they'd get back what the put in.

here, the cognitive disonance of identifying sugar daddy (government) as the criminal is just too profound.

"yea, so we're broke, but we still have a government, and they promised to pay!"

(secret - this government is not of, by, and for you, it *thinks* it owns you. internalize that fact, and the illusions fall away.)


kridkrid's picture

Preach it, brother.  300 million sold on an illusion.  It's pretty impressive.

masterinchancery's picture

But they blew the money you paid on vote buying social programs, so what have you done for them lately?