This blog is very short, but it is a pretty important update as to what is happening in the Eurozone.
As my blogs have discussed for quite a while, Greece is now defaulted on their debt and is now able to write off 100 billion worth of Euro in exchange for 130 billion worth of euro rescue package. As a result of this event, I list a couple things I think will happen:
- $3.2 billion worth of CDS (Credit Default Swap) are about to explode.
- Italy, Ireland, and Portugal (countries that are in the same hole as Greece) will demand the same treatment. Therefore, this will make CDS situation much more worse than the current situation ($3.2 billion).
Currently, the ECB and the Feds are trying to print as much money as possible to keep the Eurozone together (Using Long Term Refinance Operation). In my opinion, they will continue doing this to stop from other eurozone peripheral countries to default because they know that this will ignite CDS to explode which will be catastrophic to the global financial system.
What would I do? My stance is always the same. Keep my assets outside of the banking system and go with as much physical assets as possibly. (Of course, some stocks and other specific paper investments make sense in some instances). Only a small window of time is left to make a choice...
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