It is call derivatives and other leveraged financial tools invented by US Wall Street that is screwing up the situation. Greece’s GDP is a small fraction of the EU. The entire EU can absorb Greece bonds if Greece defaults. Problem is the derivatives are leveraged at ratios of 40 or more to 1. Thus for every Greek dollar, the derivative holder can lose 40+. Furthermore in the past derivatives were never traded in an open market with full transparency. So up to this day no one knows how big this market is. Estimates range from 55 trillion to 1.5 quadrillion. No one knows who owns how many. Many EU investment banks and firms play with derivatives. That is why ECB, IMF, US banks, US Fed Reserve, US Treasury, every EU finance ministry, major banks and etc cannot afford Greek default.
“It is call derivatives and other leveraged financial tools invented by US Wall Street that is screwing up the situation.”
That is exactly right.
So, absorb the Greek bonds, and sink the banks holding the derivatives. Pay insurance on the depositors and tell the investors and stockholders, they’re out of luck.
Assuming, of course, they’re not your national banks...
This derivative thing is driving me nuts. I just can’t my head around it. We need to let the people playing these games go bankrupt.