Understanding The Endgame
Wednesday, June 8, 2011
Executive Summary
- Greece as a case-study in sovereign debt collapse
- Why peak oil assures we will not be able to pay our debts
- Understanding the dynamics of a future of less/no growth
- Steps we as individuals need to be taking in preparation
- How to preserve purchasing power during the coming market rout
Part I – Death by Debt
If you have not yet read Part I, available free to all readers, please click here to read it first.
Part II – Understanding The Endgame
How might the end game for a debt crisis play out? We need look no further than one of the PIIGS for our answers.
Greece
Greece is in immediate danger of defaulting on its sovereign debt. As one of the charts in Part I makes clear, the pain of such a default will land primarily on German, French, and UK banks. Sure, they can probably kick the can down the road a bit longer, but it won’t change anything.
The levels of Greek sovereign debt alone are far beyond anything that can reasonably be repaid, even under very aggressive growth scenarios.
Debt May Exceed Size of Economies This Year for Greece, Portugal, Ireland
May 13, 2011
Greece, Ireland and Portugal, the euro region countries that needed 256 billion euros ($366 billion) in emergency aid to avoid default, may all see their debt loads exceed the size of their economies this year.
Greece’s debt, already the biggest in the euro’s history at 143 percent of gross domestic product last year, will jump to almost 158 percent this year and 166 percent in 2012, the European Commission said today in Brussels. Portuguese debt will surpass total economic output for the first time this year, growing to 101.7 percent of GDP, while Irish debt will reach 112 percent, the forecasts show.
As European Union officials consider boosting aid for Greece a year after its 110 billion-euro bailout, today’s report shows little sign of debt levels becoming more manageable. Soaring borrowing costs have left the three nations shut out of financial markets with investors increasing bets that Greece will become the first euro member to default.
“The market has realized that there are no short term solutions particularly for Greece and Portugal and some kind of restructuring is likely in the end,” said Marco Valli, chief euro-region economist at UniCredit Global Research in
by hammerup 
