On Monday morning, before the latest series of optimistic rumors and realistic denials was unleashed, Latvia's outgoing President Andris Berzins had a surprisingly accurate observation in an interview with Latvian Independent TV when he said that "this [Greek] debt is so big that everyone understands that it won’t be repaid."
We find this statement to be amazing because this may be the very first time an official has actually told the truth about not only Europe's but the global debt crisis, in recent history. Granted, it does miss one key distinction, namely that all the risk exposure to Greece has been shifted from European private banks to the all too public European taxpayer, but that's a story for another day.
Berzins had some further observations that were likewise amazing, adding that "loans to Greece have just bought time so that those in power don’t have to take decisions. This is like a game: who can hold out longer by not showing that this money has been lost? This burden has become bigger and there obviously is no possibility to repay."
He concluded that the "debt writedown of Greek debt will come after bankruptcy of state."
Well that, or hyperinflation. But that can only occur in local currency, i.e., New Drachma, terms.
So if a "No" vote wins on Sunday, Greece will basically end up with precisely the outcome that everyone has been terrified to mention: a clean balance sheet and the hope of an actual recovery, granted with much interim pain. Incidentally a debt restructuring, one way or another, is precisely what Syriza's goal has been from the very beginning.
And yet, there was one problem with this statement. As we noted on Twitter:
“The Greek debt is so big that everyone understands that it won’t be repaid,” Latvia president. Has he seen US debt?— zerohedge (@zerohedge) June 30, 2015
Since our questions was rhetorical, and since there is no way of knowing if Mr. Berzins has looked at the US debt, we decided to make it easy not just for him, but for everyone else, and show where the real debt that will never be repaid is held.
Luckily, the USD which is the world's reserve currency, and which is the only reason the chart above is possible, will remain so in perpetuity, because this time it will be different.