from TheEconomicCollapseBlog Website
This is the month when the future of the Eurozone will be decided.
This week, Greek leaders will meet with European officials to discuss what comes next for Greece. The new prime minister of Greece, Alexis Tsipras, has already stated that he will not accept an extension of the current bailout. Officials from other Eurozone countries have already said that they expect Greece to fully honor the terms of the current agreement.
So basically we are watching a giant game of financial "chicken" play out over in Europe, and a showdown is looming. Adding to the drama is the fact that the Greek government is rapidly running out of money.
According to the Wall Street Journal, Greece is,
We have witnessed other moments of crisis for Greece before, but things are very different this time because the new Greek government is being run by radical leftists that based their entire campaign on ending the austerity that has been imposed on Greece by the rest of Europe.
If they buckle under the demands of the European financial lords, their credibility will be gone and Syriza will essentially be finished in Greek politics.
But if they donít compromise, Greece could be forced to leave the Eurozone and we could potentially be facing the equivalent of "financial armageddon" in Europe. If nobody flinches, the Eurozone will fall to pieces, the euro will collapse and trillions upon trillions of dollars in derivatives will be in jeopardy.
Let that number sink in for a moment.
To give you some perspective, keep in mind that the U.S. government spends a total of less than 4 trillion dollars a year. The entire U.S. national debt is just a bit above 18 trillion dollars.
So 26 trillion dollars is an amount of money that is almost unimaginable. And of course those are just the derivatives that are directly tied to the euro. Overall, the total global derivatives bubble is more than 700 trillion dollars in size.
Over the past couple of decades, the global financial system has been transformed into the biggest casino in the history of the planet. And when things are stable, the computer algorithms used by the big banks work quite well and they make enormous amounts of money.
But when unexpected things happen and markets go haywire, the financial institutions that gamble on derivatives can lose massive quantities of money very rapidly. We saw this in 2008, and we could be on the verge of seeing this happen again.
If no agreement can be reached and Greece does leave the Eurozone, the euro is going to fall off a cliff.
When that happens, someone out there is going to lose an extraordinary amount of money. And just like in 2008, when the big financial institutions start to fail that will plunge the entire planet into another major financial crisis.
So at the moment, it is absolutely imperative that Greece and the rest of the Eurozone find some common ground.
Unfortunately, that may not happen.
The new prime minister of Greece certainly does not sound like he is in a compromising moodÖ
Prior to the summit on Thursday, Eurozone finance ministers are going to get together on Wednesday to discuss what they should do. If these two meetings donít go well this week, we could be looking at big trouble right around the corner.
In fact, Greece is being warned that they only have until February 16th to apply for an extension of the current bailoutÖ
And as I mentioned above, the Greek government is quickly running out of money.
Most analysts believe that because of the enormous stakes that one side or the other will give in at some point.
But what if that does not happen?
Personally, I believe that the Eurozone is doomed in the configuration that we see it today, and that it is just a matter of time before it breaks up. And I am far from alone.
For example, just check out what former Fed chairman Alan Greenspan is sayingÖ
The Greeks are using all of this to their advantage. They know that if they leave it could break apart the entire monetary union. So this gives them a tremendous amount of leverage.
Greek Finance Minister Yanis Varoufakis has even gone so far as to compare the Eurozone to a house of cardsÖ
After all this time and after so many bailouts, we have finally reached a day of reckoning.
There is a very real possibility that Greece could leave the Eurozone in just a matter of months, and the elite know this. That is why they are getting prepared for that eventuality.
The following is from a recent Wall Street Journal reportÖ
And if Greece does leave, it will cause panic throughout global financial markets as everyone wonders who is next.
Italy, Spain and Portugal are all in a similar position. Every one of them could rapidly become "the next Greece".
But of even greater concern is what a "Grexit" would do to the euro. If the euro falls below parity with the U.S. dollar, the derivatives losses are going to be absolutely mind blowing. And coupled with the collapse of the price of oil, we could be looking at some extreme financial instability in the not too distant future.
When big banks collapse, they donít do it overnight. But we often learn about it in a single moment.
Just remember Lehman Brothers. Their problems developed over an extended period of time, but we only learned the full extent of their difficulties on one very disturbing day in 2008, and that day changed the world.
As you read this, big financial troubles are brewing in the background. At some point, they are going to come to the surface.
When they do, the entire planet is going to be shocked.