How Long Will It Take?…” I cannot stress how important it is to be positioned where you want to be NOW!”
By Bill Holter
GoldSeek.com
Thursday, 7 May 2015
I could have titled this piece “The Inevitable” or “It’s not a matter of if, but when” but I have another thought in mind and want to look at Greece from another angle. Yes, either of those two titles would have sufficed because a Greek default is inevitable and only a matter of when.
My thoughts this morning are “how long will it take” to drag everything down with their default? As mentioned yesterday, the ratings services, creditors and even “official” sectors are furiously trying to figure out how to not call a default a “default”. This is of utmost importance because what is left of our global “rule of law” will destroy the derivatives markets from the inside out. This needs little explanation because it is black and white, “grey” however is what the power structure is desperately hoping for.
If Greece is considered to have defaulted, rather than having some “splaining to do”, there will be billions worth of “paying to do”. Greece has 350 billion euros of debt owed, this amount is surely “covered” by CDS (credit default swaps). The reality is probably 10 times this amount but let’s assume it is only this 350 billion. Liquidity has and is drying up ALL OVER THE WORLD, a 350 billion euro hit will bankrupt many entities, not to mention those who actually hedged and …don’t get paid. You see, there are two sides here, the debt itself and at least an equal amount of CDS …so now we are talking an absolute minimum of 700 billion euros.
And remember, banks all throughout Europe (including the ECB itself) hold Greek bonds at par (100 cents on the dollar) because Greek debt, even though everyone knows its not worth the paper it is printed on is mandated as tier one capital. “Tier One” meaning the “safest stuff” and worthy of bank portfolios “carefully safeguarding” depositor funds. I hope you see the humor in this, sub-sub prime student loans are probably now safer than Greek debt.
Now to the title itself, how long will it take? For what? For a total meltdown, THAT’S WHAT! Will we see some sort of slow burn where convulsions show up now and then, or the other extreme, a complete meltdown? In my opinion we may see both for a couple of weeks or maybe even two months. It is possible that those rendered insolvent get overnight injections and don’t admit to anything. This may work for a short time but as always, insiders will know and start slipping out the back door.
The Rest…HERE
