Greecing The World!…”the entire financial system is Greece to one extent or another.”

Wednesday, April 22, 2015
By Paul Martin

By Bill Holter
Wednesday, 22 April 2015

Soon to be front page news again will be Greece and their insolvency. The question will remain (for a time) whether or not they stay in the Eurozone, leave by choice or get “kicked out”. I am not even sure if being forced out is a legal option, we may see.

The latest pieces of news has been a claim that Greece will be funded with a monthly credit card payment of 5 billion euros by Russia …then denied by Russia. The other news was “federal Greece”, after raiding pension plans is now confiscating local reserves for the “good of the nation”. The populace is getting very antsy as demonstrations and violence have begun to erupt.

Let’s look at the second piece of news first as it was most predictable, as was the reaction. Of course “confiscation” of balances were going to occur sooner or later, this was a given and also a given to spread elsewhere. History is strewn with precedent where bankrupt governments scratch and claw at anything they can get their hands on, did anyone not expect this? Greece is mathematically broke and in the same boat as a homeowner who lost a job. They are digging into retirement balances, the credit cards are all maxed out, they have already borrowed from relatives and are in the process of selling their furniture and anything else not nailed down. They are broke, any monies lent to them might as well have been placed on a bonfire for the heat value because they will not be paid back.

Which leads us to the 5 billion euros Russia allegedly will “forward” or lend to Greece. If this is true, it’s another masterful move by Mr. Putin! NATO sanctions will run out within the next 60 days and must be renewed (voted on) in order to be renewed. NATO participants must vote unanimously to renew the sanctions, Mr. Putin may have pulled a page right out of American politics …just buy a vote and go on down the road? I suspected this would happen, if true, even though it buys a little time (maybe a month or two), it does not change the big picture at all. Greece is broke, they cannot nor will they ever pay back what has been borrowed (especially post 2012 debt). They will default one way or the other and sooner rather than later.

So why does tiny Greece matter to anything in the grand scheme. Going back to my last article “The Mother of All Margin Calls” is at the root of it. Greek debt even to this day when everyone knows Greece will not ever make good on their debt, is carried on the books of bank portfolios at 100%. It doesn’t matter that trades are done at less than 50% of par or much less, Greek debt is used as “tier one” capital …and HERE LIES THE PROBLEM!

The Rest…HERE

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