Disorderly Greece Default Could Cause Trillion Euro Fallout

By Alex Chambers

LONDON, March 6 (Reuters) - A disorderly default in Greece would likely necessitate outside support for Spain and Italy to stop the threat of contagion, and could cause more than 1 trillion euros of damage to the euro zone, a group of bondholders warned.

"There are some very important and damaging ramifications that would result from a disorderly default on Greek government debt," a document from the Institute of International Finance said. "It is difficult to add all these contingent liabilities up with any degree of precision, although it is hard to see how they would not exceed 1 trillion euros."

The document was obtained by Reuters from a market source. It was dated Feb. 18 and marked "IIF Staff Note: Confidential".

The IIF wants bondholders to sign up for a bond swap deal by a deadline on Thursday, aimed at saving Greece more than 100 billion euros and putting the country on a more stable footing.

Comments

[Realist2011]

06:18 PM on 03/06/2012

Let Greece default. It's time to end this madness in derivatives and leveraging. The default will trigger payouts of many of the swaps, which are nothing more than pure insurance fraud. They were bought to hedge losses on assets the buyers didn't own the first place, the very definition of insurance fraud.

The expected results will be massive losses on the part of the buyers of the credit default swaps, crashing the derivatives market and putting many companies out of business. A loss of a few hundred companies in the "financial markets" could only be described as an "excellent start". They created this disaster, making profits now and socializing the inevitable debts when their vaunted system crashes. Time for them to pay up, hopefully with their failure and departure from the world.

[bc906]

11:45 AM on 03/06/2012

And we don't want to get a handle on our debt, its gona be a lot worse when the US can't print anymore money

[rdimitrir]

10:59 AM on 03/06/2012

Another fake crisis manufactured by banksters with the sole purpose of strangling progressive European democracies into submission and erasing decades of social and economic progress.

[mrJJ]

09:44 AM on 03/06/2012

Source: Bloomberg

Goldman Secret Greece Loan

Goldman Secret Greece Loan Shows Two Sinners as Client Unravels

On the day the 2001 deal was struck, the government owed the bank about 600 million euros ($793 million) more than the 2.8 billion euros it borrowed, said Spyros Papanicolaou, who took over the country’s debt-management agency in 2005. By then, the price of the transaction, a derivative that disguised the loan and that Goldman Sachs persuaded Greece not to test with competitors, had almost doubled to 5.1 billion euros, he said.

http://www.bloomberg.com/news/2012-03-06/goldman-secret-greece-loan-shows-two-sinners-as-client-unravels.html

[Jettson5]

10:23 AM on 03/06/2012

And these are the same people who run the US Treasury Dept and the Federal Reserve. Wonder why our country is being destroyed? Their form of free market capitalism is destrying not only us, but the world!

[HmblDog]

09:08 AM on 03/06/2012

let em default. let's see if the credit default swap market works. people paid good money to hedge their bets. they should be able to collect when a default occurs.

[shadow013]

09:07 AM on 03/06/2012

This isn't about "saving Greece."
It's more like the big bank servicers that do not report foreclosures to the real estate trust balance sheets promptly, carrying false numbers on their books for many months.
Is there any modern economic problem that can't be solved with funky bookkeeping?