Everything Is fine In Euroland. Merkel, "We Fixed It!"

Euroland is Saved! Asian Markets Up!  Euroland Markets up 5% !
The Dow up 367!  Hurrah! Were the cries of relief across world markets.
Euroland had agreed and devised a plan to make Greece's debt work and we are all moving on! Train wreck averted. Nothing to see here people!  Move on and by stocks! Really? All that debt trouble fixed and sorted out, but no clear plan is laid out. How they will do it?

Short answer, they lied. They haven't solved the huge gap between productivity of the Northern EU vs. the Southern EU (PIIGS).

If you don't have a life and took the time to explore the 15 page Euro Summit Statement you will find that.....

The 50% "haircut" for bond holders & private investors of Greek bonds is "Voluntary!"

However, every bank in Euroland will be insolvent if they take a 50% hit on Greek bonds, so no one will do it.  If they do, they will default. But they can't let Greece default because it will trigger payment of a huge amount - 100's of Billions - of (CDS) Credit default swaps OTC derivatives, which would bring down the global banking system as we know it. CDS's are used as insurance against bonds defaulting, like the AIG debacle.

But, this agreement is not considered a default for the banks because it is voluntary?!?!?!?  No people, it is a full default. No ifs, ands or buts, Euroland banks are going down.

Remember, Greece is spending over 150% GDP right now. Looking back in financial history, one will see that when a country spends more than 100% GDP for a period of time, that country collapses financially. Guess who just passed GDP spending of 100%?  Hazard a guess?  The good old USA.

They will try to paper over the problem in the short term, but yesterdays
euphoric rise on all of the worlds major stock markets was a myopic excuse to fleece the sheep once again. A slow gut churning ride to the bottom is headed our way.

Get a helmet.   We are in for a bumpy ride!