# Greece defaults. What's next?



## BillS (May 30, 2011)

Greece defaulted last Friday. They forced everyone who held their bonds to swap them for other bonds that were worth less. The European Central Bank exempted itself from any losses. The Greek government passed a law retroactively requiring minority bond holders to agree on a deal imposed on them by other bond holders. Greek bond holders lost 74% of their money and it could be years before they see the rest of it.

While it seems like a done deal with no consequences it's much more than that. By changing the bond contracts after they were sold they've established a dangerous precedent that other governments are likely to follow. That will make it more difficult for other EU countries to sell their bonds in the future. The ECB exempting itself from losses and forcing its losses on private parties won't help the bond markets either.

The default triggered credit default swaps, essentially insurance policies on the bonds. The amount has been reported as only $3.2 billion. The economic collapse blog has the figure as $70 billion. I don't know if derivatives will be triggered by this or not. Derivatives are basically bets on things that will happen. The dollar amount on them could a hundred times more than the credit default swaps.

http://theeconomiccollapseblog.com/archives/greece-has-defaulted-which-country-in-europe-is-next

It's going to be interesting to see what else happens next. I've read enough things in the past to conclude that Greece would be the first domino to fall and a lot of bad things could happen soon afterward. A lot of banks are expected to be affected and would supposedly require the Federal Reserve to pump untold amounts of money into the banking system to keep it solvent. We learned from the financial crisis of 2008 that the Fed did a lot of things secretly that only came out later. That's likely to happen this time too. It's expected that other countries like Portugal, Italy, Ireland, and Spain will be the next ones affected. We'll see if their financial positions take a sudden hit now that Greece has defaulted.

What happens next? Other EU countries should see immediate increases in their borrowing costs. If the Fed creates a lot of new money we should see sudden increases in inflation. Gerald Celente has been predicting a bank holiday where the value of the dollar is instantly lowered. Lindsey Williams has predicted that the dollar will lose 40% of its value this year.

Any thoughts?


----------



## ContinualHarvest (Feb 19, 2012)

I dont understand why the banks weren't required to have a larger pile of capital in reserve to cover losses. 
Well, the next few paychecks will be going into some additional preps for me.


----------



## mojo4 (Feb 19, 2012)

I've been watching precious metals. They've continually been going up this year faster than food prices. Just try finding a dealer who will sell at spot is a pain because everyone is holding on expecting the euro collapse to send prices rocketing up. Might be better to invest in food or supplies instead of gold n silver. Just my opinion though.


----------



## jungatheart (Feb 2, 2010)

Looking into the future of the US I see the same thing happening. Obama has already overridden the rule of law when he put the Automobile Unions at the head of the line and private bondholders told to eat ****. Laws don't mean anything anymore. Whoever has the power makes the laws now and they don't even have to make sense. 

You donated to Obama? Well, the laws now favor you. You can do anything you like and not get arrested ala John Corzine. It's all about power and as Mao said: Power comes from the barrel of a gun. 

Inflation is theft period and the powers that be will steal everything they can from us and there is not much, short of revolution, we can do about it. Pretty smart really. They steal unimaginable amounts of money, everyone knows they're doing it and no one can do anything about it because law enforcement at that level is part of the corruption. Thieves certainly have learned the system well and become politicians.


----------



## Immolatus (Feb 20, 2011)

I've been following all of this pretty closely on ZH. Seems like CNBC and Bloomberg dont report this as a big deal, especially CNBC. I dont get it. Im beginning to think that its just my (and apparently everyone on ZH)general negativity that leads me to believe that this is a really big deal.
A sovereign nation defaults, the 'bailout' ( I think I heard at least 75% of it) is going straight to the (foreign) banks to cover the existing loans. How this could possibly help Greece is beyond me. Its not a bailout of Greece, its a bailout of the banks. Again. I would think that Greece is going to get worse, I thought I saw that their GDP dropped to -7.5% from ~-5% last quarter.
I didnt hear anything about the derivatives, I thought that when they referred to (I paused to actually read the article so see if it was the same as I have been reading on ZH over the last few months) 'derivatives' they were talking about the CDS's. What other instruments are they referring to?
The real point of all of this to me is that if the ECB is doing all of this bailing out, where is this 'money' coming from? Is the only real answer the printing press? I thought Germany was dead set against all of this printing? I think theres gonna be some real disappointment if/when they actually do an audit of their phys ('physical holdings' -gold) at the NY Fed, and maybe, just maybe ask for it all back. Wait, maybe it was the Swiss, not Germany. But I remember hearing that the Dutch wanted to do the same, at least an audit, if not the physical return.
If the ECB is just running the presses then the € (had to look up that symbol) is done, which means that all of them (cept maybe Germany) are done too. If the rest of the EU nations collapse around them, Allemand cant hang on for long either.
*Honestly I dont see how this doesnt have a huge negative effect on the world markets on Monday. If it doesnt, wouldnt that mean the whole deal is so completely rigged (like we dont all know that already) to the point that its meaningless to the average citizen untill the system crashes all at once? *
But what do I know? _(Really, I know nothing.)_
From what I gather, Portugal is next. Funny too, cause we have a family trip to Lisbon planned for August. Good times ahead!
Greece is going down the tubes. 20% unemployment (50% for the young!), no money to pay their debts, endless printing by the Fed/ECB cant be good.
If they bail out (pay the banks off) all of the PIIGS with what can only be newly printed money (where else could it possibly be coming from?) that can only lead to devaluation of the €, which would mean a pop for the FRN ($, but its not a dollar, its a Federal Reserve Note, which isnt the same, or even real money, its debt, I think) until everyone wakes up to the fact that we are in the same boat. I have yet to hear an explanation of how the system continues the way it is with all the printing going on.
Its not true, theyre not actually printing the money, they have all this cash stashed somewhere?
No money is actually changing hands, they just shift some money around in accounts digitally, so its not actually changing the money supply?
Look, theres something shiny over there, and American Idol is on so dont worry about it?
Greece will actually default at some point, and be forced to go back to the Drachma, right? Or does the ECB have to continue doing this forever (which isnt possible, but for the sake of discussion) to keep the system going?
If there is no more road to kick the can down for Greece, the same will happen to all of the PIIGS, and the rest of the EU. Then us. Then what, the Greatest Depression of them All? The Mother of all Depressions? (MOAD-cant find the trademark sign...)
Maybe everything is just fine, and Greece defaulting is meaningless. Until it isnt.


----------



## partdeux (Aug 3, 2011)

I'm absolutely confused as to how the CDS, greek default, and banks are working... or not I have a feeling that we haven't seen all the details of this yet.


----------



## sailaway (Mar 12, 2009)

I've begun to think our global economy is like a hurricane, 2008-2010 was the front wall and now we are in the relatively peaceful calm eye, then the back wall will hit us. Probably after our elections or the beginning of 2013. 

Gas just shot up .40/gal to $3.89/gal, I see $5.00/gal this summer around here. That may kill the economy faster. Home prices are remaining flat or going down. Add in the international economic problems and we really have headaches.:gaah:


----------



## DKRinAK (Nov 21, 2011)

*IT's the Monday after*

Well, it the Mondat after the Greek default.

Gold is still about 1700USD/oz, Sliver still trading with the same narrow trading range of last week, both down from the week before - gold having lost 100USD/oz over te last couple of weeks.

So, it would seem impact om PM is minimal.

The DOW is up 20 points since the opening. So far, meh.

I suspect most have seen this coming for ...months, if not longer. The impact to bond sales is still an open question.

But Greek bond default = total worldwide meltdown, no so much as yet. Then again, Ohio has a bigger GDP than all of Greece.

Still, it;s worth watching.


----------



## Immolatus (Feb 20, 2011)

I think they call it, 'priced in'.
None of this makes any sense. Someone is deluded. I hope its not me. I just cant get bogged down in this stuff, it'll drive me nuts. Could all these people be so wrong? Is everything really just fine? I guess we'll wait and see.


----------



## Padre (Oct 7, 2011)

*What's Next*

PORTUGAL... then Spain, Italy, the UK, France, and finally US and then of course the rest of the world economy.


Eat drink and be merry 
for tomorrow we die.
:beercheer:


----------



## Woody (Nov 11, 2008)

True the world did not implode when Greece defaulted. As George Carlin said, it is a big club and you’re not invited.

A while ago when the stock market was having big swings, up 300 one day down 300 the next the MSM news credited the swings to world events. It is down 300 yesterday due to uncertainties with Greek debit. The next day up 300 due to Greece’s future looking better, it is all crapola! And, we do not get to see what is going on in the background. Remember when the Fed was ‘partially audited’? All of a sudden there are TRILLIONS of fiat dollars being blasted around all between world banks. And about national debts, how are they ever supposed to be paid back, not enough money exists in the system to pay them back. Heck the loans were made with no actual money to back them. Fractional reserve banking. Fake finances, invisible money, non-existent money! I believe they can play this game as long as they want, well… not really as things have to fall apart in the end.

So, how is Greece supposed to pay back this money they owe? More and more folks there have no job so are not creating any wealth, they are costing. Fewer and fewer folks have any money to travel and spend there so less money coming in. Fewer and fewer folks have money to buy whatever they make so even less money coming in. Where is this cash going to come from to pay anyone back? Heck, they are having troubles supporting themselves. Let’s say they cut back to making their debit not grow anymore, the proverbial ‘balanced budget’. That still does not give them any extra money to pay back their debits. So, they roll over the debit and borrow more money to survive. It is a never ending cycle of paying interest on fiat money. So, they pay interest which creates more fiat money and they can borrow more fiat money to pay it back with. The US is in the same boat, just getting there much faster now.

And pumping untold amounts of money into the system? Well, yeah. That is because there is not enough current existing fiat money for anyone to come close to paying anyone back. They HAVE to create more to keep the Ponzi scheme going. Creating more money in the system means each new dollar is worth less. Goods cost more, the price of PM,s go up… Not really go up it just takes more dollars to buy some, their value stays the same. Next, less and less people have money to buy things so pay less in taxes. The Govt has less and less money to pay back their debit. So, how to solve this? Print more fiat money!!

Sorry. The more I read on how this whole stupid system is created the worse it seems to be. Final result? Eventually no one will have ‘faith’ that federal reserve notes are worth anything. Costs for basic goods are prohibitive for the average person. They take to bartering with actual goods that they need and can produce themselves. The Govt gets pissed because these folks are ripping them off by not paying taxes. That is as far as I get. But with more and more ‘laws’ being passed by our superiors taking away our rights to do anything to fight back, it is not looking good. Heck we can no longer protest wherever and whenever we like!!! Tracking the surfs, watching the surfs, getting any information they can on us. It sure looks to me like they are expecting some kind of trouble.


----------



## partdeux (Aug 3, 2011)

Woody said:


> True the world did not implode when Greece defaulted.
> 
> Sorry. The more I read on how this whole stupid system is created the worse it seems to be. Final result? Eventually no one will have 'faith' that federal reserve notes are worth anything.


It's not going to happen over night... but it will happen


----------



## BillS (May 30, 2011)

The big banks lost a lot of money on bad real estate loans. The laws were changed so that the banks weren't forced to write off the bad debt or even show it as a footnote on their financial statements. The Fed lends them money so cheap that they can buy Treasury bonds and make money that way. The same thing will happen here. They'll carry their Greek bonds as an asset at 100% face value. You won't be able to find out which banks lost money on Greek bonds or credit default swaps by looking at their financial statements. It could be years before we find out how much money the Fed lent in secret loans to banks around the world. I think the only way we'll know in the short term is if we see a sudden drop in the value of the dollar.


----------



## Immolatus (Feb 20, 2011)

BillS said:


> The same thing will happen here.


The same thing is happening here.


----------



## partdeux (Aug 3, 2011)

BillS said:


> The big banks lost a lot of money on bad real estate loans. The laws were changed so that the banks weren't forced to write off the bad debt or even show it as a footnote on their financial statements. The Fed lends them money so cheap that they can buy Treasury bonds and make money that way.


Laws were not changed, Fannie and Freddie took on the toxic mortgage loans AND "assets". Essentially making the banks whole again...

Follow the money
Govt spends the money it doesn't have
Fed creates the money
Govt creates an obligation to the Fed with interest
Govt sells bonds with interest in exchange for cash
Govt loans banks the money at no interest
Banks buy the bonds

Banks borrow money at 0% interest, and buy govt notes at some interest rate. Govt borrows money from Fed at 6% interest.

If I haven't glazed your eyes over yet, who is the Fed? Govt you said, that would be a big fat no. The banks are the actual owners of the Fed.


----------



## md1911 (Feb 9, 2012)

partdeux said:


> Laws were not changed, Fannie and Freddie took on the toxic mortgage loans AND "assets". Essentially making the banks whole again...
> 
> Follow the money
> Govt spends the money it doesn't have
> ...


Sounds like a ponze scime to me. A really big one at that. And the public will be the ones left holding the bag when it crashes down on us.


----------



## partdeux (Aug 3, 2011)

md1911 said:


> Sounds like a ponze scime to me. A really big one at that. And the public will be the ones left holding the bag when it crashes down on us.


Social Security is a big Ponzi Scheme...

If this comes crashing down, I expect we will have bigger problems than who might be holding the bag, like coming up with a tradeable currency.


----------



## BillS (May 30, 2011)

md1911 said:


> Sounds like a ponze scime to me. A really big one at that. And the public will be the ones left holding the bag when it crashes down on us.


You could say that the public is left holding the bag either way: the government could force the big banks to write off all the toxic mortgages. Then they'd be insolvent and require more bail outs. Or they can carry the big banks with ultra-low interest rates and allow them to make money buying Treasury bonds until the real estate market comes back and make all those toxic mortgages good investments again. The whole problem was created by the Federal Reserve with artificially low interest rates that fueled the housing boom.


----------



## Davarm (Oct 22, 2011)

The big question that I have is why have we not heard more about this in the News? 

I have been watching for info on it every day since this thread started. AARP informed me that I am now a Senior but I dont think that I've been having senior moments about the whole Greece matter.

Is it not that big of deal, has it been overlooked by the media, is it being ignored or is it being intentionally "browned out"?


----------



## Woody (Nov 11, 2008)

Because no one cares about the FED or Greece, or the Fukashima melt throughs poisoning us and the earth for generations to come, or the GOP primary vote rigging, or how happy Libya is now, or what a fun place Iraq is now, or Portugal and their decriminalizing drugs and how well it is working out, or how many women/children/innocents the US drone bombing in countless countries killed, or the fact that the US is the ‘terrorist’ in countless countries, or Israel having nukes and not letting the IAEC inspect them, or punishing the bankers who forged documents to illegally foreclose on homes…

All we care about is what happened on the dancing show and Lindsay Logan’s shenanigans and when Justin Beeber’s birthday is and what those bad guy Iranians are sneakily up to! Those are the important things we need to know!!!


----------



## partdeux (Aug 3, 2011)

Davarm said:


> The big question that I have is why have we not heard more about this in the News?
> 
> I have been watching for info on it every day since this thread started. AARP informed me that I am now a Senior but I dont think that I've been having senior moments about the whole Greece matter.
> 
> Is it not that big of deal, has it been overlooked by the media, is it being ignored or is it being intentionally "browned out"?


Because it is so poorly understood by 99.9999%

Greece is a tiny country, their debt is less then our daily deficit spending, and has no significance to the US... There are very few people that can see the big picture, that's why I appreciate Chrismartenson.com. Most of the people there "get it".

It's like the global warming and/or oil issues. Everybody is so concerned about their mantra, virtually nobody is looking at the big picture.


----------



## Immolatus (Feb 20, 2011)

Davarm said:


> The big question that I have is why have we not heard more about this in the News?
> 
> I have been watching for info on it every day since this thread started. AARP informed me that I am now a Senior but I dont think that I've been having senior moments about the whole Greece matter.
> 
> Is it not that big of deal, has it been overlooked by the media, is it being ignored or is it being intentionally "browned out"?


Ahem. Officially...old. 

Its not made into a big deal because the whole system is based on confidence and faith. With no faith or confidence in the system, it falls apart. This isnt even conspiracy type stuff, its the truth. If everyone thought the way everyone on ZH and all related sites, and most of us here, felt, then the system would crash immediately. If everyone was paying attention, and thought about what is going on, knew how the system runs and what keeps it going, you would cease to participate in it, and everything would fall apart. Simple fact. And noone really wants that, even those of us who think the system is screwed. All of those who have a vested interest in the sytem, which is most people, the MSM, politicians, bankers, those getting govt bennies, and anyone who is not totally self sufficient, which is what, 90 some percent of the population, cant be havin that. so the myth is perpetuated. There are prolly many who know whats up, but realize theres nothing they can do, or are afraid of the truth and realize at least personally its better to continue with their merry lives than to worry about it.
Thats really the heart of the matter.
Now if youre Greek, youre actually living in it. Ergo, mass protests and riots. Even the tea party (since hijacked by the Republicans so much so that they arent to my knowledge backing RP which proves it) and OWS realize that there are huge problems, but have different views on what those problems are.
Iceland has gotten it right. They were in the same position as the Greeks, and just said no to the whole deal and got out of the system. The rest of the PII(G)S are now realizing that the Greek way means death for their sovereignty, and a life of deb slavery. Theres already been rumblings in Spain. Greece has more debt now after the bailouts. Totally screwed, but theres not really much the man in the street can do. At least in Europe they have a history of r3v0luti0ns. We are both too stupid, and lack the cojones to do anything about it, maybe even after its too late.


----------

