Gonzalo Lira outlines why Greece matters. In a word, contagion. Contagion is the Achilles heel of all debt Ponzis. A little debt default here and there is no problem when there there is debt capacity remaining and to be realized. But, when debt saturation is the reality, debt defaults cause other debt defaults from counter-parties who depended on showing the defaulted debt as an asset on their balance sheets. The result is a catastrophic loss in confidence of current and potential debt holders. The holders panic and try to unload the debt as fast as they can while it still holds some value. The potential debt buyer holds his nose and says “pee yoo” and withdraws his bid, vacating the market to the the scavengers who want to roll the bones and pick the rotting carcass for a quick speculative trade.
The entire global debt paper Ponzi can come undone in a matter of hours. Yes sir, shit, meet the fan.
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