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The direct losses of 4 countries (Greece, Italy, Spain, Portugal) leaving the EZone are estimated at 17 trillion. This would be the worst economic crisis in modern times and take more than a decade to overcome.

It is not the 'losses of 4 countries' that matters so much as the 'losses occasioned by the default and debt repudiation of 4 countries' and what really matters is who would suffer those losses. The answer is that the losses would be suffered by the wealthiest elements of Germany and France, along with pension funds that have been suckered into sharing that risk. The losses have already occurred, but TPTB have agreed that they do not have to be recognized as it cannot be said with total certainty that these losses cannot be recovered. Rebellion against the Troika by, say Greece, Italy, Spain and Portugal could break the denial that has kept the financial system semi-functioning.

The problem with such an event is that those owning the debt that is being defaulted won't just accept that their claims have to be written down and they have to lose money. OH NO! They will be demanding to be made whole until every poor person in the EZ has been thrown into a meat grinder and sold as hamburger, regardless of whether that will or will not make them whole.

The situation in the Euro-zone is similar to the real estate melt down in the USA. Much of the debt has been created by fraud, but it has all been mixed together or comingled, so now all is tainted. But the most powerful people, many of whom were responsible for the fraud, are demanding to be made whole and those they are blaming are not capable of making them whole. So what we have is an ugly drama of vindictive spite inflicted mostly on those who had nothing to do with the origin of the problem other than, perhaps, having voted for politicians who colluded with fraud. I guess the assumption is that the citizens are not like investors in a corporation who are only liable to the extent of the value of their stock.

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sat Mar 9th, 2013 at 11:01:32 PM EST
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