A conservative is a man with two perfectly good legs who, however, has never learned how to walk forward.
Franklin D. Rossevelt
Dupe, of a thread you created.
How Greece could take down Wall Street
"Those who cannot remember the past, are condemned to repeat it."- American Philosopher George Santayana
so many european banks hold greek debt and many american banks hold debt of those banks that hold the greek debt, so if one goes they all could go......add to that the fact many american insurance companies hold credit default swaps against greek debt and so you have a perfect storm brewing in the financial world!
The ECB has got the big EU banks covered by making unlimited funds available. They can write off their Greek bonds without facing liquidity problems, which was the big fear. The bond swap scheduled for March 12 will not trigger default swaps according to the board that decides these things.
The big market players are turning to growth now since that is the best way to get all this new money that has flooded into the banks. The crises in Greece was engineered in part to extort money from the EU. That has been accomplished and trying to squeeze more now would be counterproductive in their thinking.
The points at issue are contagion -- what goes for Greece should go for every other country in the EZ --- Cyprus , Ireland , Portugal and Italy now , and Spain and France "tomorrow" PLUS
Banks have borrowed one trillion from the ECB and only a small amount of that covers Greek liabilities .
What else is it that requires such huge resources?
We all know it is banks liquidity , which underlines how near they are to going under .
When the Equities markets collapse later in the year , asset values will crash again and Banks will need the same type of rescue facility .
There is only so long you can use imaginary new money to prop up never ending debts .
There comes a point when the system collapses .Inevitable .
What happens to the European Union if Greece defaults?
Because in my mind, the strain of a Greece default would cause an imbalance to the rest of the system, naturally so, since all systems are interconnected. And since Greece is not alone with financial worries, the added strain to the system proves to be a burden too heavy for those already weakened to hold, which maximizes pressure on the strongest states, which ultimately begins to sappen their remaining strength as well. Nevertheless, the burden proves enough to be the catalyst to topple several other states that are plagued with a debt crisis, like Spain, Italy, and Portugal. Tens of millions of people will need to be supported by the already weakened remaining EU members, as well, the International Community. And I think that bares some questions.
What countries outside of the EU could sustain sizable aid packages to maintain a crumbling EU?
Is there not a time when the tap of aid coming from the US to the UK stops?
I do believe that it is in the cards for this unfortunate set of events to occur. I also believe that there will be a myriad of other complications for most of the world to deal with as a result.
Nevertheless. There is always the possibility that Greece doesn't default, and that they keep getting aid. But ultimately, I think the way the issue is being solved is going to create a problem unique in itself, which would likely put us on the brink once again.
The Greek crises is over for now. 85.8% of debt holders of debt under Greek law have consented to the restructuring. That covers $234Billion in Greek Bonds, about half the debt.
The people in charge of these things have declared that CDS contracts are to be paid out but they estimate the amount of CDS payouts on this debt at only about $3.2Billion.
So, this leave Greece with about $200Billion in debt that is still outside the agreement. Overall CDS exposure to Greek debt is calculated at about $70Billion by one estimate.
Investors who exchange their bonds are set to receive up to 30Billion Euros, about 15% of the outstanding debt and another 5.5Billion for outstanding interest payments immediately. The rest will come from the new bond issue.
Investors who hold bonds outside of Greek law and refuse to exchange their bonds will get nothing from the immediate funds release. They will have to fight for their money through the courts or, if they have a CDS, pursue the counter party for settlement, both routes fraught with potential problems. The CDS counter party may default itself if too many claims come flooding in. And pursuing sovereign bond default through the courts can take decades and produce little result a la Argentina.