Greece crisis could be worse than Lehman failure

[A Greece default] would have potentially catastrophic consequences for holders not only of 340bn euros (£300bn) of Greek sovereign debt, but also for holders of hundreds of billions of euros of Greek commercial debt and tens of billions of euros of derivative contracts linked to Greek debts.

The contagion would then spread to Spain and Ireland. The European Central Bank hold more sovereign debt on those three countries than any other institution, which is the primary reason they are screaming the loudest about no writedown on the debt.

But the biggest problem, as always, is the derivative contracts. They can be highly risky, and are opaque and not traded on the open market. The amounts involved dwarf the actual sovereign debts. No one knows who owns what or where the risk is. Hence, this can lead to a liquidity crisis. The banksters of course will whine to governments that they will need more bails out because of all their toxic glop derivatives. Instead of more bailpouts, governments should follow the lead of Iceland and let the banks fail, then arrest the CEOs.

Eurozone finance ministers delay €12 billion in loans to Greece

Europe prepares for Spain failure

Portuguese-German bond spread at new record wide

Moody’s threatens to downgrade Italy credit rating

The cover of Der Spiegel says it all. The death of the euro. Plötzlich und erwartet (sudden and expected). Via Clusterstock

  • salamandra

    Most of protests are Staged and very well Orchestrated, they pretend fighting but do not hurt each other. This is worth it to get hundreds of billions from EU. Greeks are very smart; the deception started with the Trojan Horse and is going on with very well orchestrated “PROTESTS”. If you want Greece to be paid off, for the Enormous Army, Universal Free Health Care, Lucrative Pensions, and Taxes that they never Pay, then you pay them by yourself, PAY THEM OFF, BY YOUR OWN POCKET.

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