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Debt restructuring terrifies central banks because it exposes insolvency

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Often, if an entity can’t make bond payments, the payments are restructured. Not so with the Eurozone. Banksters their want their pound of flesh, even if it hurts the economy at large and pauperizes countries. Greece is a perfect example of bankster greed and selfishness. Big banks and central banks have loaned money to Greece to pay back previous loans. Most of the money flows back to banksters who are terrified their corrupt house of cards will come crashing down on them. Little if any of the money helps Greece.

Here’s why they are terrified. Sovereign debt bonds are used as collateral for big banks to do highly leveraged trades. If these bonds tank in value, which is what would happen in a restructuring, then their balance sheets and pretend solvency vaporizes.

Draghi won’t let this happen because he, like all Central Bankers in the world, is concerned about one thing: the bond bubble.

Globally, the bond bubble is $100 trillion in size. And sovereign bonds (the ones the EU doesn’t want to restructure) are used as the senior most collateral backstopping the big Eurozone banks’ derivatives portfolios.

Thus ANY debt restructuring in the EU would almost immediately blow up the large Eurozone banks because you’re talking about tens of trillions of Euros’ worth of trades having requiring margin calls/ new collateral arrangements.

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