Greece Default will bring Wall Street down

Discussion in 'Latest US & World News' started by raymondo, Feb 22, 2012.

  1. raymondo

    raymondo Banned

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    Today , international ratings agency Fitch said it had cut the long-term rating on Greece's sovereign debt by two notches, from "CCC" to "C", putting it at the bottom of the speculative grades and just one step above formal default.
    A Fitch statement said it now felt a Greek debt default was "highly likely in the near term."
    We know that Greece is bankrupt and they have defaulted , But using that single word ," Default" , officially , will bring down Wall street .

    And here is why -- this Post develops into a nightmare of deceit and global concern , if you can handle something more complex than mainstream media releases


    In an article titled “Still No End to ‘Too Big to Fail,’” William Greider wrote in The Nation on February 15th:

    There is one bit of bad Banks behavior that Uncle Sam does not have the funds to underwrite: the $32 trillion market in credit default swaps (CDS). Thirty-two trillion dollars is more than twice the U.S. GDP and more than twice the national debt.

    CDS are a form of derivative taken out by investors as insurance against default. According to the Comptroller of the Currency, nearly 95% of the banking industry’s total exposure to derivatives contracts is held by the nation’s five largest banks: JPMorgan Chase, Citigroup, Bank of America, HSBC, and Goldman Sachs. The CDS market is unregulated, and there is no requirement that the “insurer” actually have the funds to pay up. CDS are more like bets where a massive loss by the casino could bring the house down.

    It could, at least, unless the casino is rigged. Whether a “credit event” is a “default” triggering a payout is determined by the International Swaps and Derivatives Association (ISDA), and it seems that the ISDA is owned by the world’s largest banks and hedge funds. That means the house determines whether the house has to pay!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

    The Houses of Morgan, Goldman and the other Big Five are justifiably worried right now, because an “event of default” declared on European sovereign debt could jeopardize their $32 trillion derivatives scheme. According to Rudy Avizius in an article on The Market Oracle (UK) on February 15th, that explains what happened at MF Global, and why the 50% Greek bond write-down was not declared an event of default.

    If you paid only 50% of your mortgage every month, these same banks would quickly declare you in default. But the rules are quite different when the banks are the insurers underwriting the deal.

    THE INCREDIBLE MF GLOBAL DISASTER ( come on , you have never heard of it , because it is dynamite)

    MF Global was a major global financial derivatives broker until it met its unseemly demise on October 30, 2011, when it filed the eighth-largest U.S. bankruptcy after reporting a “material shortfall” of hundreds of millions of dollars in segregated customer funds. The brokerage used a large number of complex and controversial repurchase agreements, or "repos," for funding and for leveraging profit. Among its losing bets was something described as a wrong-way $6.3 billion trade the brokerage made on its own behalf on bonds of some of Europe’s most indebted nations.

    Avizius writes:(Remember , he was mentioned and identified earlier)

    An agreement was reached in Europe that investors would have to take a write-down of 50% on Greek Bond debt. Now MF Global was leveraged anywhere from 40 to 1, to 80 to 1 depending on whose figures you believe. Let’s assume that MF Global was leveraged 40 to 1, this means that they could not even absorb a small 3% loss, so when the “haircut” of 50% was agreed to, MF Global was finished. It tried to stem its losses by criminally dipping into segregated client accounts, and we all know how that ended with clients losing their money. . . .

    However, MF Global thought that they had risk-free speculation because they had bought these CDS from these big banks to protect themselves in case their bets on European Debt went bad. MF Global should have been protected by its CDS, but since the ISDA would not declare the Greek “credit event” to be a default, MF Global could not cover its losses, causing its collapse.
    The house won because it was able to define what “ winning” was. But what happens when Greece or another country simply walks away and refuses to pay? That is hardly a “haircut.” It is a decapitation. The asset is in rigor mortis. By no dictionary definition could it not qualify as a “default.”

    That sort of definitive Greek default is thought by some analysts to be quite likely, and to be coming soon. Dr. Irwin Stelzer, a senior fellow and director of Hudson Institute’s economic policy studies group, was quoted in Saturday’s Yorkshire Post (UK) as saying:

    It’s only a matter of time before they go bankrupt. They are bankrupt now, it’s only a question of how you recognise it and what you call it.

    Certainly they will default . . . maybe as early as March. If I were them I’d get out [of the euro].


    The money made by selling these derivatives is directly responsible for the huge profits and bonuses we now see on Wall Street. The money masters have reaped obscene profits from this scheme, but now they live in fear that it will all unravel and the gravy train will end. What these banks have done is to leverage the system to such an extreme, that the entire house of cards is threatened by a small country of only 11 million people. Greece could bring the entire world economy down. If a default was declared, the resulting payouts would start a chain reaction that would cause widespread worldwide bank failures, making the Lehman collapse look small by comparison.

    Some observers question whether a Greek default would be that bad. According to a comment on Forbes on October 10, 2011:

    It is the “contagion,” however, that seems to be the concern. Players who have hedged their bets by betting both ways cannot collect on their winning bets; and that means they cannot afford to pay their losing bets, causing other players to also default on their bets. The dominos go down in a cascade of cross-defaults that infects the whole banking industry and jeopardizes the global pyramid scheme. The potential for this sort of nuclear reaction was what prompted billionaire investor Warren Buffett to call derivatives “weapons of financial mass destruction.” It is also why the banking system cannot let a major derivatives player—such as Bear Stearns or Lehman Brothers—go down. What is in jeopardy is the derivatives scheme itself. According to an article in The Wall Street Journal on January 20th:

    Hanging in the balance is the reputation of CDS as an instrument for hedgers and speculators—a $32.4 trillion market as of June last year; the value that may be assigned to sovereign debt, and $2.9 trillion of sovereign CDS, if the protection isn't seen as reliable in eliciting payouts; as well as the impact a messy Greek default could have on the global banking system.

    This article is based on the sources mentioned in it -- check before whining
    Principally , Ellen Brown who is an attorney and president of the Public Banking Institute,
    William Greider writing in the Nation
    Rudy Avizius writing in the Market Oracle ( UK )
    Weiss Research Institute
    Global Research Institute
    Myself for introduction and editor /presenter .
    Songs by Razorlight


    I highlighted this same basic problem in a Topic in November . Responses were zero .
    It's worth the effort because what it reveals is more horrible than any Horror film you have seen .
     
  2. DonGlock26

    DonGlock26 New Member Past Donor

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    Not many takers on the EU's woes. I think socialism is failing on both sides of the pond. And, yes, a EU collapse would hurt the US.

    _
     
  3. raymondo

    raymondo Banned

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    The key to the report ( imo ) -- putting on one side general fraud and deceit on a massive scale -- is the leverage used by MF Global , and by implication "Uncle Tom Cobbely and All "
    It is a lovely example ( however grotesque) , for showing how something comparatively small -- Greece indebtedness-- could crash the whole system through the leverage ratios used and the totally interlocking nature of the all the players .
     
  4. DonGlock26

    DonGlock26 New Member Past Donor

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    I'm a nationalist, mate. I don't want the US tied with a failing continental Europe either.

    _
     
  5. raymondo

    raymondo Banned

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    I know it's God Bless America , and Freedom this and that , and Guns lovely Guns --- but you have become interlocked with the rest of the planet through the financial institutions , whether you like it or not .
    Banks , Insurance Groups plus the Federal Reserve = America .
    Neither ordinary Europeans or Americans realise it .
    There is nothing big you can do without taking "us " with you , and vice versa .
    That is why the Topic is , " Greece will bring down Wall street".
     
  6. DonGlock26

    DonGlock26 New Member Past Donor

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    Well, that's a mistake. As Obama's racist pastor use to say....."the chickens are coming home...to roost."

    I think the Germans, the UK, and the US will resist going down with Southern Europeans. Let's hope that it works.

    _
     
  7. Jango

    Jango New Member

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    It will be a modernized version of the domino theory. Greece is obviously the first that will topple, the real problems begin when Italy and Spain join them. Just wait until austerity hits the US head on.
     
  8. Slant Eyed Pirate

    Slant Eyed Pirate New Member

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    The only thing Bankers do is shift people's money around. Let them all fall, if gov'ts have any sense left there would be no bailouts, but I'm not hopeful.

    In the end what should happen is that people who do real work and saved their money would be fine, the parasites who make bets on other's mortgages deserved to be left out begging on the streets.
     
  9. Jango

    Jango New Member

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    This is going to be a bigger disaster than most people realize...
     
  10. Pollycy

    Pollycy Well-Known Member

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    No problem! I finally got this whole thing figured out... no matter what happens, Bernanke and the Fed, along with the European Central Bank, and Christine Lagarde of the IMF will print trillions of dollars, euros, or whatever in order to preserve and support the banking systems, and buoy-up the stock markets. :party:

    When this clot of internationalists are ready, they'll pull the props out from under everything and everyone, and institute a one-world economy, followed by a one-world government. But, this latter development is still probably about ten years away. Don't worry about it... if you aren't dead by then, you'll probably wish you were, so just kick back and relax because there's NOTHING you can do about it anyway....
     
    RP12 and (deleted member) like this.
  11. bacardi

    bacardi New Member

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    yup.....famine and martial law......bring it on! :)
     
  12. bacardi

    bacardi New Member

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    yup.......they will print trillions upon trillions of euros and dollars......this is why I cant understand these fools that think gold is a bad investment now LOL :)
     
  13. ThirdTerm

    ThirdTerm Well-Known Member

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    The EU is trying to come up with a comprehensive blueprint for putting the public finances and the economy of Greece back on a sustainable footing. In addition to those prohibitively expensive bailout packages, devaluing the euro further could ease the pressure on Greece's economy. The British pound has been devalued significantly since 2007 to cope with the economic crisis.
     
  14. bacardi

    bacardi New Member

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    it wont work......sooner or later greece will default!
     
  15. Lil Mike

    Lil Mike Well-Known Member

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    I would say they already have. Part of the terms of the new bailout package is that private bond holders are getting screwed, losing up to 70% of the value of their bond holdings.

    The ECB of course is not. The bonds they hold are still worth something, but the practical effect is a partial default on privately held Greek government bonds.

    So Greece went bankrupt, but they are keeping it quiet.


    Greek Bailout…Again
     
  16. Rollo1066

    Rollo1066 Member

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    I think default by Greece will have a minor negative effect on the stock market in the USA when it occurs but not a major or long lasting effect. I'm reasonably sure that at some point Greece will default on Her debts as they are more than She can afford to pay. The austerity policies being forced on Greece don't help as they actually reduce Her ability to pay.

    I guess this is bad news if you are owed a lot of money by the government of Greece. I don't know anyone who is.

    The Greek economy is a pretty small percent of the total economy of Europe. The likely long term effect it that the Greek government would have a hard time borrowing outside its own country and would have to pay a higher interest rate than a country that hasn't defaulted. It might not be higher than the current rate, as they would have more money to pay the new debts after the old are written off.
     
  17. Pollycy

    Pollycy Well-Known Member

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    If it weren't for central banks' (including the Fed) manipulation and fraud, the price of gold would probably be north of $3,000/oz. And, if it weren't for Bernanke's reckless, irresponsible "printing" up the money supply 300% since summer of 2007, the housing bubble would already be over with, the recession it caused would be over with, and interest rates that support the value of the American Dollar would have levelled off at 6% - 8%.

    Instead, everything in our economy has been twisted, mangled, and illegally bailed-out, misspent, and wasted. Through the rest of 2012, the "recovery" which has been buoyed up by the various "stimulus" fraud balloons will hold long enough for President Bernanke and his handpuppet, Obama, to be re-elected. Starting in 2013, the bottom will be pulled out and everything will go straight to hell... followed by the arrival of the much-anticipated one-world economy and one-world government that internationalists like Bernanke have been toiling away for since the end of World War II.

    Meanwhile, the only response "conservative" Republicans have is to do "war dances" about morals, abortion, religious freedom, etc.? In my nightmares, I see a rotting corpse called the United States of America....
     
  18. bacardi

    bacardi New Member

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    Ireland and Portugal are next....possibly spain too :)
     
  19. Jango

    Jango New Member

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    And once those countries fall, I think the US, as well many others, will fall too.

    Agree?
     
  20. The Wyrd of Gawd

    The Wyrd of Gawd Well-Known Member

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    This is what happens when people don't support their government operations with the necessary tax revenue. The Greeks thought that they could always live off of borrowed money and now that the bills are due they don't want to pay them.
     
  21. bacardi

    bacardi New Member

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    of course the US is in center stage on this collapse drama....europe is just a side show! :)
     
  22. sherp

    sherp New Member

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    Does the slide mean those OWS clowns are done cause there will be no Wall street????????
     
  23. waltky

    waltky Well-Known Member

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    But will it be enough?...
    :fart:
    Greek Woes Weigh on European Economy
    February 23, 2012 - European Commission reversed its previous growth forecast and predicted 0.3 percent economic contraction contrasted with commission's estimate just three months ago that eurozone economies would grow by 0.5 percent this year
    See also:

    Greek Credit Downgraded Even With Bailout
    February 22, 2012 - The Fitch financial services company is again downgrading the credit rating of Greece, saying that the debt-ridden country is "highly likely" to default on its financial obligations even after securing a new bailout from its European neighbors.
     
  24. Jonsa

    Jonsa Well-Known Member Past Donor

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    Greece won't default. Its only a lousy $40 billion or so. That's a rounding error in the US budget.
     
  25. Jango

    Jango New Member

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    Sorry, I'm American. Always a nationalist first. I feel for Europe though, I do. I feel for everyone. But I gotta stay real and focus on the people around me that matter most.
     

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