What people don’t realize is that the banking system is a global banking system. All of the banks around the world are tied together. Who do you think owns all of this Greek debt?
Unfortunately U.S. banks own a large percentage of it. European banks own a lot as well. And even China has a pretty large stake in it. If Greek fails, that is likely to cause banks throughout Europe, the U.S. and Asia to fail as well.
First Greek fails to pay back a European bank. That causes that bank to be unable to make their payments to a U.S. bank. That causes the U.S. bank to be unable to make their payment to China. And so on.
It is lined up like dominos and once the first one falls, the others will be right behind it. If Greece goes under, the entire global financial system will be right behind it. This is why so many countries are fighting so hard to keep Greece afloat.
And it is something Americans should take very seriously.
However, as we have already seen, bailing out Greece doesn’t work. They were already bailed out once, and here they are now needing more money again. All they can hope to do is give Greece enough money that they can keep them afloat for a little while and hope that a miracle will occur somewhere.
That miracle is that one of these countries is going to have to cut their spending so dramatically that they can actually begin to pay down some of their debt. It doesn’t appear that is going to happen, either in Europe or the United States.
It’s just a question of time before somebody defaults and the dominos begin to fall.
No comments:
Post a Comment