Via Mark J. Grant, Author of Out of the Box,
Tragedy (Ancient Greek:, tragoidia, "the-goat-song") is a form of drama based on human suffering that invokes in its audience an accompanying catharsis or pleasure in the viewing. While many cultures have developed forms that provoke this paradoxical response, tragedy often refers to a specific tradition of drama that has played a unique and important role historically in the self-definition of Western civilization.
The Synopsis of a Greek Tragedy
The days have passed since January 13, 2010 when I first expressed my opinion that Greece would default. Weeks and months have come and gone; Athens has been rescued by the Troika, private bondholders were forced into a Draconian swap as the Germans attempted to soothe their citizens and boatloads of money has been dumped into the Greek economy and into the Greek banks. The demands for “austerity measures” heaped upon the citizens and the economy of Greece has sent the marginally poor into the streets and into bread lines and caused a Depression in Greece based largely upon the imposition of the Troika’s demands that Greece must curtail the standard of living which was initially granted by Greece joining the European Union. The hand that fed the beast became the hand that began the slaughter and as the lifeblood was sprayed upon the concrete floor; the rest of Europe tries to decide when to turn off the life support while the patient agonizes between life and death in its present condition. Greece is, in fact, in the death throes of its existence as brought about by its addiction to the cash that was offered and then is being restricted. It is the bleakest of nights in Troy and the soldiers are slipping out from the horse.
“The god of wine looked around at the assembled crowd. “Miss me?”
The satyrs fell over themselves nodding and bowing. “Oh, yes, very much, sire!”
“Well, I did not miss this place!” Dionysus snapped. “I bear bad news, my friends. Evil news. The minor gods are changing sides. Morpheus has gone over to the enemy. Hecate, Janus, and Nemesis, as well. Zeus knows how many more.”
Thunder rumbled in the distance.
“Strike that,” Dionysus said. “Even Zeus doesn’t know.”
-Rick Riordan, The Battle of the Labyrinth
While some with knowledge of the actual conditions liken the situation to some sort of Armageddon, the markets largely ignore what is about to happen because they have been told and re-told a series of lies about the fiscal state of Greece and have focused upon the small size of the country which will turn out to be one grave mistake in judgment. The markets have had a slew of propaganda directed at them informing them that the horned goat was a passive sheep but the veil of deceit is about to be lifted which is why I think that the reality of what is about to take place is nowhere close, not in one hundred leagues, of the coming actuality which has not been priced into the markets with any sort of accuracy. I shall endeavor to explain.
Almost everyone has focused upon the sovereign debt, that it is no longer placed at the European banks and that it is resident at the European Central Bank which is protected by all of the nations in Europe. This is true, as far as it goes, but the summation does not go nearly far enough. The hit, when it comes, will require the ECB to be recapitalized, will be felt at the IMF where the United States will take 16% of the hit or around $16 billion which will be trumpeted in the Press by the Republicans and waved like a banner in the Press. The recapitalization of the ECB will require hard cash from the nations in Europe which is quite different than promises and contingent assurances so that nations may get downgraded as a result of their capital outflows. The EIB will also take a hit and it may get downgraded but all of this just focuses upon the sovereign debt and is non-inclusive of the rest of the story or even of the truth of the sovereign debt.
Greece has $90 billion in derivative contracts that will likely default and the losses will then have to be taken at the French, German and American banks. The contractual obligations of the nation will probably get revoked which will impact the health providers, Greek companies providing goods and services to the country and the Greek banks which have been lending money on these obligations. The number here is someplace between 20-40 billion dollars as far as I can find data to understand the breadth of the problem. The banks will probably renounce their obligations to other European banks which is not included in the sovereign debt figures and will certainly have a significant impact. The Greek banks who have their debt guaranteed by the sovereign in an amount just shy of $100 billion will also likely default and this $100 billion is NOT counted as a part of the Greek sovereign debt as it is a contingent liability and hence not counted by Europe except that the contingent is about to become a quite real liability and an additional hit to the ECB so that the number bandied about in the Press for the Greek liability at the ECB is nowhere close to reality. Then there is the municipal debt which is found throughout the European banks and insurance companies. Next is the loans, the mortgages and other debts that have been securitized and pledged to the ECB and other European banks which then rehypothecated the securities and also pledged them to the ECB as collateral so that there is a cubed effect that is going to be set-off as the house of cards implodes in upon itself. The number is approximately $1.3 trillion in total and all of it is going to default as Greece heads back to the Drachma and thumbs its nose at those that placed them in the “iron maiden” demanding not only confession but absolution which, in the end, will be denied.
"The god on the cross is a curse on life, a signpost to seek redemption from life; Dionysus cut to pieces is a promise of life: it will be eternally reborn and return again from destruction”