CNN Money begins their story called “Greece: The Ultimate Doomsday Scenario” with the warning: ‘Things in Greece are bad right now, and if its leaders make a misstep in the next few days, they’ll get a WHOLE LOT worse’. The prospect of Greece defaulting upon its’ debt, once called the ultimate black swan event, is now a very strong possibility according to Zero Hedge after a new “Truth Committee on Public Debt” set up by Greece’s Parliament declared that Greece’s debt IS NOT LEGAL TO BEGIN WITH due to it being ‘odious’.
While an official from the US is now urging Greece to make a ‘serious move’ to pay off their debt, Greece says they simply don’t have the money to do so and will run out of it by the end of June if a bailout deal isn’t reached, setting up Greece’s exit of the euro and the European Union and preparing the potential dominoes that may fall next.
As Zero Hedge correctly predicted four years ago.:
Greece has effectively just declared that it will no longer have to default on its IMF (or any other debt) simply because that debt was not legal to begin with, i.e. it was “odious.”This has just thrown a very unique wrench in the spokes of not only the Greek debt negotiations, but all other peripheral European nations’ Greek negotiations, who will promptly demand that their debt be, likewise, declared odious, and made null and void, thus washing their hands of servicing it again.
Since there are many who do not quite grasp the possible consequences of a Greece exit from the euro and the European Union, we’ll share with you some predictions made quite recently by ‘experts’. Forbes told us recently that Grexit would be ‘a very bad idea’.:
Insolvency of the Greek central bank would frankly be the least of anyone’s worries in the event of a Greek sovereign default. The majority of Greek sovereign debt is held not by banks – even Greek ones – but by a range of EU institutions including the ECB, the EFSF and Eurozone governments through bilateral lending. And by the IMF . All of these institutions would lose substantial amounts of money if Greece defaulted on its debt.
Such a turn of events would also be disastrous for the eurozone as a whole, at least in the short term, because of “contagion”. This little-understood phenomenon demonstrated its destructive potential during both the banking crisis and successive eurozone crises. Panic, often irrationally, spreads from bank to bank, from bank to country, and from country to country, and something of the same is happening now.
Not to be outdone, Newsweek tells us about more possible ‘grave consequence’ of Greece leaving the euro, and turning to Russia.:
There could be serious repercussions if Greece fails to reach an agreement on their debt with the eurozone, and turns to Russia instead.
However, the New York Times doesn’t have such a gloomy outlook, though they add the disclaimer.:
It is the current doomsday scenario for Europe.
Greece’s bailout talks break down for good, and the country defaults. The European authorities sever life support to Greece’s banking sector, forcing the country to take drastic steps to stem an exodus of capital. Greece decides to drop the euro as its currency.
Greece’s unwinding sends shock waves through the global markets. Investors and policy makers have to quickly assess whether the storm is going to pass or gather strength.
Although Europe is better positioned to deal with a crisis than it was a few years ago, when Greece last teetered, there is simply no precedent for a country’s leaving the eurozone. And the big test may be only weeks away.
The videos below take a look at the likely exit of Greece from the euro and the EU from several different outlets including Russia Today, Bloomberg Business and the 1st one from Dave at the X22Report.