Why Greece will NOT bankrupt in May

Since several months now, either we live in Romania, Greece or… USA, we keep on reading about the "Greek tragedy". Actually it has become something like a… soap opera. Every day we have new episodes, new events and situations. We hear and watch the heroes stating their… lines, plus special guests appearing. But what a surprise… it always happens something interesting: Some news in the end of the day leave the audience eager to find out more during the next day. "And so the story goes"…

Let us discover the truth, in a clear and simple way, which will help everyone understandwhat is going on…

Who have the Greek bonds in their treasury?
Greece has issued bonds worth about 300 billion Euro. Based on the information we read on the Greek media today:
Almost 15% of them (45 billion) are bought by Greek banks.
French banks have another 70 billion.
The Germans are also strong players with 45 billion.
About 140 billion is spread in the financial institutions and pension funds of several countries, most of them the ones belonging in the G20, the strong economies of Europe and the world.

What does it mean for all of us Greece to bankrupt or default?
Let us say that tomorrow morning Greece defaults and announces that it will pay 70 cents for every 1 euro of debt. Automatically we will have the following chain reaction:
Greek banks will be in trouble, as they will not be able to find the necessary capital to cover the damage. Most of them will face serious problems of survival.
All the banks (and countries) which hold Greek bonds, or bonds issued by Greek banks, will enter into big trouble. So if "Bank A" holds today Greek bonds worth 1 billion Euro, it will have to automatically declare this. It will instantly be considered as a major drawback. The shares of "Bank A" will collapse. Whoever else holds shares of "Bank A" (even if he has not any Greek bonds) will see his shares collapsing too.
All the countries where there are banks which hold Greek bonds will be in trouble too.
The problem will spread with geometrical growth, destroying countries and banks in few hours.
The domino effect will spread. For example, Greek banks will face trouble in their investments in the Balkans. But also the French ones too, for sure the German, probably the Austrian and the Italian ones. So who will finance the Balkans? Which bank will remain strong in Romania? Like this the Romanian economy will further decline, together with the rest of the Balkans.

Spill over effect: 8,7 billion Euro, causing damages of trillions…
So if Greece does not cover its bond expiring on May 19^th…
8,7 billion euro will be the actual damage.
But the whole amount of the Greek debt, summing at over 300 billion, will be considered dangerous (8,7 à 300).
Then all the banks which have part of these 300 billion Euro (plus the bonds issued by Greek banks) will be "exposed to investments which may lose part of the capital".
These banks have issued bonds themselves. How many billions? You should better say hundreds of billions or some trillions of Euro.
These banks belong to countries, which also issued bonds… many trillions of bonds…
The European Central Bank will be in trouble too. Because it will discover that it borrowed a river of billions to several banks, having as guarantee national bonds. If national bonds will start collapsing, then…

Will Eurozone be in danger?
After Greece, it will be Portugal, Spain and Italy (actually the attacks have started already). And many other countries will follow.
Eurozone will risk a possible meltdown.
What is the sign that this news will transmit to the investors? "Yes, Euro is nice, but it includes also economies which have defaulted".
So "Euro" currency will collapse as well.
So other billions or trillions will be lost by investors who trusted the currency itself.
Hundreds of thousands, or millions of people will lose their jobs.
Insecurity will be come the main characteristic of this decade.

What does this mean for Greece itself
The country will not find lenders for the next 5 – 10 years. Argentine defaulted several years ago. They may succeeded to pay much less than they owed, but also noone is willing to provide them a loan today, noone dares to buy their bonds.
Most probably the country will be forced to exit Eurozone and return to Drachma. Inflation will strike and Drachma will be devaluated.
Salaries, prices, incomes, everything will collapse. Poverty will knock at Greeks' door.

"Lethal spiral", once it starts
So, once it starts, it will not stop before it will burn everything. Like a "lethal spiral" (an expression that the famous George Soros likes using), which burns until all will be burned into ashes.

All Eurozone (and not only) is tied to Greece
So, this is why Greece is tied with Europe. The interests are too big and the amounts so small, in order to let a country like Greece to default. It is easier for everyone (16 countries and the IMF) to borrow Greece 120 – 140 billion Euro, instead of letting Greece fall and handle losses of trillions.

Greece will NOT bankrupt this May
This is why I am sure that until the crucial 19^th of May (when Greece must pay to its lenders 8,7 billion), every solution will be found. Greece will be probably saved, following a very strict programme which is under negotiation today. On the other side of the table you will find the experts of European Union (E.U.), the European Central Bank (E.C.B.) and the International Monetary Fund (I.M.F.).

"Is there any hidden risk?"
Definitely. If Greeks will not follow the programme they will agree with E.U., E.C.B. and I.M.F., then they will risk their bankrupsy. But it is difficult to imagine that Greeks will choose to return to… 1950, losing all and becoming poor. In the end of the day, Greeks may have made all possible mistakes, but they are clever enough to avoid a suicide…