The Collapse of Greece Might Bring Collapse to Us

The Collapse of Greece threatens to bring ruin to our banks, which will then be bailed out by our government at our expense.

eu greece

Why is the current debate over the future of Greece important to you? Yes, you, on Main Street, USA. This short article provides answers—read it. The brilliant Charles Hugh Smith is the author: “The Catastrophic Costs of Extend-and-Pretend Are about to Crush Europe.”

Like a star which has expanded and now cannot maintain its grand state, Europe’s extend-and-pretend economy is now poised to experience a supernova implosion.

The costs of ill-conceived policies are always paid by someone—usually those with the least political power. In ill-conceived wars, the costs are paid by the soldiers on the ground and their families, and the civilians who suffer collateral damage.

 The costs of ill-conceived financial policies end up being paid by taxpayers, savers, borrowers and those who lose their jobs in the inevitable bust. Those who conjured up the disastrous policies slink away to plush villas or defend their stubborn addiction to failed ideologies in the media (see Keynesian Cargo Cult and Paul Krugman).

Unless “hard” deadlines are extended (and that’s all the elite seem capable of doing—“extend and pretend,” as the essay describes), the next week-and-a-half could unleash financial Hell on Europe, and the entire world financial system.

What did Europe buy with its $245 billion bailouts of Greece? Nothing. The $245 billion—equal to the entire GDP of Greece—squeezed the citizens of Greece while leaving the kleptocracy in charge—the worst possible outcome.

If policymakers had rejected extend-and-pretend and grasped the nettle in 2010/2011, Greece would be through the painful period of adjustment to its own currency. Deprived of the euro gravy train, its ruling kleptocracy would have collapsed or been ejected by the people as a failed regime.

JPMorgan Chase, Citigroup, Goldman Sachs, HCSB—all the big players have created a poisonous daisy-chain of debt, and if Europe goes down, we go down with them thanks to financial derivatives bets that have paid off handsomely for our international bankers, while they laid off the risks on U.S. taxpayers through a provision in the CROmnibus bill passed late in 2014.

Those risks will begin to enter economic reality the moment Greece is expelled from the Euro.

By the time extend-and-pretend finally reaches its maximum limits, the resulting implosion is so large that the shock waves topple regimes, banks, currencies and entire nations.

Like a star which has expanded and now cannot maintain its grand state, Europe’s extend-and-pretend economy is now poised to experience a supernova implosion.