Sure but what is the derivatives exposure of the big banks? Derivatives dwarf the totals of nominal debt. Deutsche Bank alone has over $54 Trillion in derivatives exposure globally. Exactly how much of that is tied directly to Greece is hard to ascertain, but when the numbers are that huge, it can take one very small domino to start the whole chain collapsing.

Greek debt doesn't work very well as collateral now. That limits the amount of derivatives you can build on Greek debt.

Yes but when the numbers are so huge a tiny loss in the underlying instrument can create a catastrophic loss to the derivatives. A Greek default could easily impact derivatives exposure elsewhere, Spain, Portugal, etc...

Derivatives were huge in 2007-8 because banks had written insurance on debt structures they thought were 100% safe, and they priced the insurance that way. So you had AIG looking at enormous potential losses against a tiny profit and tiny collateral. No one has thought Greek debt was safe since 2008. They already defaulted (okay, "restructured") their debt to private bondholders in 2012. If that didn't cause the banks to fail, doing it again in 2015 won't either.

Once you could put money on Greece defaulting at near the same price as Germany defaulting. Wish I had got that memo.

That fact probably explains this whole mess. Reality is a bitch.

I think the important thing is how does this affect my investment portfolio and due to some idiots in greece who decided to not honor there debts,my investments lost money.

when I lose money due to people not honoring debts this is how i think Germany should deal with it.

https://www.youtube.com/watch?v=ZomwVcGt0LE

Does the greek guy even care about my portfolio no of course he doesnt. they just dont want to honor there debts well screw greece I am booing there team in the next major sporting event for this.

You are crying over losing money on a risk you took on? That's on you as well as Greece.

I know I gamble all the time on many things stock market poker etc.

I have made money over the years and getting in good is what I try to do.

I of course did not get in good with my timings and yes thats on me.

it is Greece fault that it went against me so yes Paul you are right.

But I dont want to post posts hating on myself cause that would just be weird.

I am annoyed with myself and Greece but I will just boo greece.

When is next euro championship i want to boo them now.

Next year, but they are already out. They lost to Faroe Islands twice (I **** you not).

Evidently the Greeks have voted no to the EU offer. If this leads to the GREXIT it will be interesting to follow. I think it will be a painful transition requiring humanitarian aid to soften the blow.

The Greeks just committed national economic suicide, led by two delusional lunatics named Varoufakis and Tsipras.

For everyone's sake, Greek people's especially, I pray the polls are wrong.

People keep framing this as Germany vs. Greece. It's really not. It's about the countries even poorer than Greece being forced to finance Greece's fiscal fantasies.

Where you seeing this?

According to the BBC no exit poll has been published.

found this on the twitters

Luca Di Marco ‏@luca_dimarco1 1m1 minute ago

Official - #Greece 8.35% out of total: No 59.95%, yes 40.05%

Good for Greece imo. There will be confusion but there was no recovery possible with the German monetary policy and demands.

'live' result tracking at: http://ekloges.ypes.gr/current/e/pub...2params%22:{}}

Recent snapshot:

Registered	3.441.178
Reporting	38,78 %
Voted	59,32 %
Invalid/Blank	5,66 %
	61,08 %
	38,92 %

ok krugman

Confusion is an odd way to describe certain economic ruin.

What's about to happen in Greece is going to make a 25% contraction look benign.

While it's true only a small fraction of bailout money was actually spent by the Greek government, it doesn't change the fact Greece actually hasn't paid interest or had "debt burden" for some time. Leaving the Euro zone will make their $5~10 billion deficit, depending on who you believe, (Nobody really believed the Greek estimates of primary surpluses for 2015 by the way) all that more impossible to pay.

You're assuming that the EU will abandon them.

It's possible but that's a fairly unlikely result of all this.

It certainly would be more difficult if they had to pay it in dollars or Euros. They don't though.

I am not.

I am assuming the every bank will stop dealing with Greek businesses and every Greek with a working passport will leave. What the Greeks don't seem to understand is even if Germany wanted to give, they cannot. Merkel was not posturing she threatened "euro will fail" if Greece is allowed to duck its fiscal responsibilities. If Greece doesn't get in line, Spain, Portugal, Italy, and even France are right behind.

It's annoying, economically mutually destructive, and kind of stupid that the path of least resistance outcome is one in which both Greece and rest of Europe suffer greatly. But long term, that may be the only way. Put bluntly, Europe will eventually have to give in to Greek blackmail but they cannot do so without making an example of, punishing, and yes, humiliating the Greek people first.

Imports make up almost 30% of Greek GDP.

Yeah, they will pay in Euros or USD.

The payments they could make with drachma will have much lower purchasing power so you still end up with a massive contraction in real terms.

What? You were talking about the Greek government's budget deficit

I refer you to last paragraph.

The foreigners aren't going to keep drachmas. They will be looking for USD/Euros.