This is the month when the future of the eurozone will be decided. This week, Greek leaders will meet with European officials to discuss what comes next for Greece. The new prime minister of Greece, Alexis Tsipras, has already stated that he will not accept an extension of the current bailout. Officials from other eurozone countries have already said that they expect Greece to fully honor the terms of the current agreement. So basically we are watching a giant game of financial “chicken” play out over in Europe, and a showdown is looming. Adding to the drama is the fact that the Greek government is rapidly running out of money. According to the Wall Street Journal, Greece is “on course to run out of money within weeks if it doesn’t gain access to additional funds, effectively daring Germany and its other European creditors to let it fail and stumble out of the euro.” We have witnessed other moments of crisis for Greece before, but things are very different this time because the new Greek government is being run by radical leftists that based their entire campaign on ending the austerity that has been imposed on Greece by the rest of Europe. If they buckle under the demands of the European financial lords, their credibility will be gone and Syriza will essentially be finished in Greek politics. But if they don’t compromise, Greece could be forced to leave the eurozone and we could potentially be facing the equivalent of “financial armageddon” in Europe. If nobody flinches, the eurozone will fall to pieces, the euro will collapse and trillions upon trillions of dollars in derivatives will be in jeopardy.
According to the Bank for International Settlements, 26.45 trillion dollars in currency derivatives are directly tied to the value of the euro.
Let that number sink in for a moment.
And to think that the US debt clock is at 18 TRILLION and counting. That’s just a bit shy of what all of the euros are worth. Our current pResident is content with creating more debt saying essentially it’s no big deal. Good by United States of America soon.
It is the derivatives ( credit default swaps, primarily) that are directly tied to Greek government bonds that will be the first domino. In the 2012 Greek default enough bond holders were “convinced” that voluntarily writing down some of the debt would be a good idea. Since the writeoffs were “voluntary” it was technically not a default and therefore did not trigger the exercise of the CDSs. All that did was buy some time, the same band-aid wont work this time. Michael Snyder still seems to think that if the Greeks and the Europeans can just cooperate that there might still be some kind of resolution to the problem. He’s wrong. There are no more rabbits in the hat. Pay close attention to what happens in Greece, we are going to be seeing it here soon enough.
Thank you for that explanation. I still believe the “other shoe” is in mid air for the United States of America. This market and national debt rising cannot go on much longer before the economy fails due to our creditors desire for payment. Another question is where is the gold that we can’t seem to produce to turn over to the countries asking for their gold back.
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