because so many aspects / potential consequences of this aren't actually financial, I posted it in this forum instead ...
from
(snip)"Since 2009, I’ve been warning that systemic risk remains high. However, from that time until today, investors have been willing to bet on the US Federal Reserve (and the world’s central banks) keeping a lid on things.
Until today.
Greece has erupted into full-scale, violent riots that could shut down the entire Government there. SHOULD this happen it’s the beginning of the END GAME for central bank intervention in the financial system.
Let me explain.
The only thing that has maintained investor confidence since the depths of 2009 is the belief that the central banks can continue to bailout/ intervene to control any financial problem.
Remember, we never actually “took the hit” we needed to take in 2008. The same junk debt remains in the system (it’s just been hidden by loosened accounting standards). The same enormous derivatives time bomb is still ticking (it’s over $600 TRILLION in size).
None of these problems were solved. None were even addressed. All the central banks did was lend more money to the insolvent big banks. Well, that and damage their sovereign balance sheets by taking on a ton of garbage debt (the Fed’s balance sheet is now over $2.8 TRILLION in size).
So in plain terms, the central banks took systemic risk that existed in the private sector and allowed it to spread to the public sector.
What does this mean?
That the next Crisis won’t just involve banks like Goldman Sachs, it will involve entire countries (including the US) going belly-up.
We’re already seeing it in Greece. That situation has made it very clear what happens when you combine public outrage with Government bankruptcy and systemic insolvency: SHUT-DOWN.
This IS coming to the US. And it won’t be long. Once the bailout wagon stops (first in Greece) the ensuing collapse will spread VERY quickly. The reason is quite simple: Greece is the Bear Stearns of the Sovereign debt Collapse.
So buckle up, because it was only six months or so after Bear Stearns that the Lehman disaster unfolded. Given the amount of leverage in the system today, we could easily see the issues hitting Greece today arriving at the US’s shores before the year’s end."(snip)
And just in case anybody has 'missed' current events in Greece ( because US mainstream news media barely covers it ) ...
from
(snip)"Greek police have fired teargas at protesters outside parliament as MPs prepared to debate new austerity measures required for the EU and IMF bail-out package.
Demonstrators who broke off from a strike rally in Athens responded by throwing yoghurt and stones.
Prime Minister George Papandreou faces the risk of a revolt in his Pasok party over the austerity package.
He has proposed a unity government to pass the measures, state TV reports.
He is seeking support for a new austerity programme of 28bn euros (£24.6bn; $40.5bn) in cuts to take effect from 2012 to 2015.
Thousands are taking part in a general strike, the third in Greece this year.
Ports, public transport and banks have been badly disrupted as the main public- and private-sector unions go out on strike.
State-run companies have also joined the walkout, while hospitals are only offering emergency care. However, airports are operating normally after air traffic controllers called off their strike.
A top credit agency has cut Greece's rating, making it the least credit-worthy nation out of 131 countries it monitors.
The Greek government said the downgrade by Standard & Poor's - from B to CCC - ignored its efforts to secure funding.
In order for the next tranche of rescue loans to go through, parliament must adopt the new austerity plan by the end of June.
'Fight the battle'
Police thwarted protesters who were attempting to blockade parliament and stop MPs getting in for the debate.
They sealed off the roads leading to Syntagma Square and created a pathway for deputies.
The Greek demonstrators are calling themselves the "indignants", linking themselves to Spanish anti-austerity protesters who set up camps in Madrid and Barcelona.
The square is awash with Greek and Spanish flags, as well as banners reading "Resist" and the battle cry from the Spanish civil war, "No pasaran" (they shall not pass), the AFP news agency reports. (snip)
and from
(snip)"Right now the communist trade union federation PAME is marching into the square - my estimate is about 200,000 people in this contingent alone. They are flanked by tough looking men carrying red flags with super-sized flag poles. This of course is to fend off anarchists, who so far have not turned up.
The square itself has been occupied for 22 days by so-called "indignados" - thousands of young people organised along the Spanish model.(snip)
(snip)"For all the leftist iconography plus the presence of that, by now familiar demographic, the Facebook youth - or "graduates with no future" - this thing has gone beyond left and right, it's no longer even a class thing. As the crowd around me erupts with the chant, "Greece, Greece, Greece!" it's clear that for many people it is the Hellenic republic versus the rest of the world.
Standing here amid a crowd that is frustrated, but not yet tense, which is hurling abuse and the occasional plastic bottle at the cops defending parliament it is strange to think this is the front line of the world's financial system. For if Greece defaults, the world leaders fear a second Lehman."(snip)
~



Reply With Quote

Bookmarks