The Greece Fire Errupts

Greece isn't going bankrupt, Greece is bankrupt and so is the European Union. They just don't want the people to know it yet. Read on......

The domino effect

Greece's economic problems are massive, with protests against the government being held almost daily. Now Prime Minister George Papandreou apparently feels he has no other option: SPIEGEL ONLINE has obtained information from German government sources knowledgeable of the situation in Athens indicating that Papandreou's government is considering abandoning the euro and reintroducing its own currency.

Alarmed by Athens' intentions, the European Commission has called a crisis meeting in Luxembourg on Friday night. In addition to Greece's possible exit from the currency union, a speedy restructuring of the country's debt also features on the agenda. One year after the Greek crisis broke out, the development represents a potentially existential turning point for the European monetary union -- regardless which variant is ultimately decided upon for dealing with Greece's massive troubles.

Given the tense situation, the meeting in Luxembourg has been declared highly confidential, with only the euro-zone finance ministers and senior staff members permitted to attend. Finance Minister Wolfgang Schäuble of Chancellor Angela Merkel's conservative Christian Democratic Union (CDU) and Jörg Asmussen, an influential state secretary in the Finance Ministry, are attending on Germany's behalf.

'Considerable Devaluation'

Sources told SPIEGEL ONLINE that Schäuble intends to seek to prevent Greece from leaving the euro zone if at all possible. He will take with him to the meeting in Luxembourg an internal paper prepared by the experts at his ministry warning of the possible dire consequences if Athens were to drop the euro.

"It would lead to a considerable devaluation of the new (Greek) domestic currency against the euro," the paper states. According to German Finance Ministry estimates, the currency could lose as much as 50 percent of its value, leading to a drastic increase in Greek national debt. Schäuble's staff have calculated that Greece's national deficit would rise to 200 percent of gross domestic product after such a devaluation. "A debt restructuring would be inevitable," his experts warn in the paper. In other words: Greece would go bankrupt.

And the point that is being missed is this. The EU was created for the sole purpose to be a competitor to the US. A conglomeration of European states to combat and offset the global prominence of the United States.

In the end, they have all thrown in together in the giant social experiment and now that the scheme can't support these floundering economies and there is no ability to simply print more money like the US does? They are going to go under.

Greece is the first, followed by Portugal, Ireland and probably Spain and yes, soon to be followed by the UK and France. Even though the Brits aren't tied to the Euro, there is no escaping the economic bounce and aftermath of having the rest of Europe collapse around them.

Meanwhile, on the other side of the planet, China is humming right along. Or so it seems. While China has thrived on American and western consumption, she too has been cooking her books to paint rainbows that don't exist.

Yes, they may succeed in getting the dollar trashed and the yuan accepted as the new global trading currency, but something tells me that by the time that happens, there will be larger fish in the pan and China will be revealed to be a paper tiger of finance.

Batten down the hatches peeps, there is rough weather ahead.