Greece has 171 billion dollars of bond payments due late next month and couldn't scrounge two drachmas together if their ouzo sodden souls depended on it. The party is over; all the furniture is broken; the bars are closed and nobody's got cab fare even if they could find one that hadn't been burned or overturned. Man, what a night...
The government stayed in power, until recently, by giving everyone everything they wanted. And people wanted plenty. The rich paid almost nothing in taxes (sound familiar?). The middle class could retire on generous pensions at fifty. The poor were given constitutionally protected civil service jobs instead of welfare. Mid-level city clerks had in-ground pools and sports cars, while the very rich danced on the graves of the tax collectors. Basically, it was quite a racket, at least while it lasted. Unfortunately, the very last blue bird of happiness was mistaken for a pheasant and devoured at a bacchanalian backyard barbeque somewhere on the Isle of Patmos, according to sources.
What to do? What to do? The loan sharks want their money and they want it now. Private banks throughout Europe, the IMF and the European Central Bank have all suddenly awakened to the fact that they've made some very bad bets (sound familiar?) and the Greeks are broke, except of course the very, very rich. And they're not particularly interested in the problem, when they can simply sail away on holiday until the whole ugly mess gets sorted out. (Please see above photograph.)
So why am I telling you this story? And more importantly, why should you care? Three very ugly little words: credit default swaps. What? Remember AIG, the quasi-governmental insurance company that almost brought down our own government in 2008? They bought and sold these Las Vegas style, exotic little insurance policies betting for, or against, any particular financial transaction's outcome, even though they often had no direct interest in the deals upon which they wagered. When they took these bets, they booked the exchanges as "income" and made their investors happily believe they were actually earning profits. Then somebody blinked. The bets were called in and so was the US Treasury, to the tune of 85 billion. And that's just one company.
Imagine, if you can, that nearly all of a nation's "sovereign debt" has these little poison pills attached to all that bad paper. The major banks in Europe would fail almost overnight, literally, if Greece defaulted. The US and Japanese banks would start collapsing the next day. It's called the Global Economy. No one is immune; no one except maybe North Korea. I guess we could always hit them up for a loan in the event of a real emergency...
Every leader of every modern nation has known this train wreck was speeding toward us all for at least two years. No one acted. Everyone pretended that the charred blue bird could somehow miraculously be raised from the smoking ruins and transform itself into some mythically glorious phoenix and save the day. Yeah right; monkeys will fly out my mythical..... first.
As a public service announcement, did I happen to mention that the private yacht above took five years and two billion dollars to build? It also has anti-ballistic missles and an escape pod submarine, just in case the bullet proof glass or steel clad master bedroom aren't quite enough. I bet Nancy Brinker wishes she had one. And now a word from this week's sponsor, Monsanto Ave. Honey Company. "We make sh*t that tastes good." And a very good night to you all.
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