With George Papandreau now calling for Greek referendum on the latest bankers bailout, the stage is now set for a European-wide bank-run with contagion that would spread like wild fire to the US banking system, which will take the US banking system down like a house of cards, which it is a house of card. Already, MF Global is the first victim of the sovereign debt crisis in Europe, not the last, it is just the beginning. US banks insured the debt through Credit Default Swap. Greek default will undoubtedly trigger the call on CDS.
With numerous reports showing that over 65% of the Greek people would vote against the latest banker's rescue package (50% hair cut), a total default and Greece exit from the Euro-zone is getting closer to being a reality. When Greece vote down the latest bailout the precedent will be set for the rest of the European countries to default as well.
Greek's debt default is sufficient to take down the whole European and American banking system if the printing press is not set to full blast. But with printer-happy Ben Bernankie as the head of the Fed, it is very likely the printing press will be set to work overtime, probably able to prevent total financial collapse at this time, but will set in motion the beginning of the end of the fiat monetary system (currency collapse/hyper-inflation).
But before that happens, European bank run would cause a massive spike in the US$ index as traders and investors rush out of Euro and into the US$, for temporary reprieve, because the US dollar is next to collapse. There is nowhere to run and nowhere to hide except in real assets (gold, silver, commodities, etc), and that is also another reason why Central banks are now going into overdrive in their attempt to push the price of commodities and gold and silver down. Their greatest nightmare is a stampede out of fiat paper currencies and into real asset.
Greece's total default on their debt will set in motion a contagion that could grow too big for any central banks or countries or their concerted efforts to handle. How long will the end game (debt of fiat monetary system) takes, only time will tell, as it depends entirely on the responses of those in charge of the government and their printing press.
