It looks like the Greek situation is going to cause some turbulence in financial markets tomorrow morning (Dow futures are down over 200 points Sunday night). From Northman Trader at theburningplatform.com:
Many times nothing happens for a long time. Then all of a sudden everything happens at once. Like a dam break. It builds slowly and then it bursts. Example: Who would have ever thought the Confederate flag would be taken down across the South during the same week that a rainbow flag is symbolically hoisted across the entire country? Just because things seem unthinkable doesn’t mean they won’t happen.
Take the global debt construct as another example. For decades the world has immersed itself in ever higher debt. The general attitude has been one of indifference. Oh well, it just goes higher. Doesn’t really impact me or so the complacent rationalize.
When the financial crisis brought the world to the brink of financial collapse the solution was based on a single principle:
Make the math workable.
In the US the 4 principle “solutions” to make the math workable were to:
1. End mark to market which had the basic effect of allowing institutions to work with fictitious balance sheets and claim financial viability.
2. Engage in unprecedented fiscal deficits to grow the economy. To this day the US, and the world for that matter, runs deficits. Every single year. The result: Global GDP has been, and continues to be overstated as a certain percentage of growth remains debt financed and not purely organically driven.
3. QE, to flush the system with artificial liquidity, the classic printing press to create demand out of thin air.
4. ZIRP. Generally ZIRP has been sold to the public as an incentive program to stimulate lending and thereby generate wage growth & inflation. While it could be argued it had some success in certain areas such as housing, the larger evidence suggests that ZIRP is not about growth at all.
If ZIRP’s true goal were to stimulate growth the result of this:
…would not have produced this:
No, ZIRP’s true purpose is actually much more sinister:
To make global debt serviceable. To make the math work without a default.
To continue reading: The Greek Butterfly Effect
See also, “Doomed Dinosaurs,” SLL, 6/8/15
STRAIGHT LINE LOGIC 
“The debt is not payable,” Mr. García Padilla said. “There is no other option. I would love to have an easier option. This is not politics, this is math.”
This article about Puerto Rico and its debt is a script of financial, political, and economic beauty worthy of flowcharting to see “if the math can be manipulated”. I wonder how much longer this situation could continue if Puerto Rico borrower just enough to only cover the interest owed.
Other options are being considered, but still–another Greece?
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