– On GRExit, SPAilout, And Draghi’s White Knight (ZeroHedge, Aug 13, 2012):
Via Mark E. Grant, author of Out of the Box,
“There was a free lunch just once. It was when Eve gave the apple to Adam and we all know how that turned out.”
As I stare out at the Maginot Line I will endeavor to predict the upcoming events in Europe for the balance of the year. I called Greece, Ireland and Portugal correctly so I have some standing here and while we all are only as good as our last call; I have my own small pin on which to dance. I think first and foremost that Greece falls by the wayside. I think as a matter of political reality, given the German polls, that Berlin will refuse to adequately fund Greece and that they will be forced back to the Drachma as a matter of Ms. Merkel’s desire for re-election. When this happens it will be a quite messy affair with some $1.3 trillion going into default which will also require the re-capitalization of the ECB and there will be a $90 billion hit in derivative contracts which may well affect certain banks past the point of what is currently recognized. The Greek banks, bankrupt now, will train off into the abyss and will be replaced by other European institutions. The honest truth is that the Greek debts have become so large and so impossible to pay that unless there is absolute debt forgiveness, which I think is politically impossible in Germany and a number of other European countries; the country must roll over as a matter of fiscal reality.