What would happen if?

It's a question we never hear discussed, elaborated or answered in the media.

It's something I have never fully understood and found out the full cycle of events and consequences of.

It is something we are threatened with and I would be grateful if someone could explain it.

Can I start from saying I am not coming from an antimondialist or an "Indigne" point of view I just want to understand what would happen if...

If countries defaulted and made no further payments on this ephemere global debt that we all hear about.

I'm not looking for the answer "The financial system would collapse" I'm trying to find or get to the real long lasting effect this would have on generations much further down the line.

I could however just be being dense, but would love to have a fully reasoned explanation of the steps and what would really be so bad.

ooof! but all possible. I hope not, the Euro may survive and if it does will perhaps learn then become a force to be reckoned with.

The ECB’s SMP portfolio is still over €200 billion. If Greece defaults or reverts to the drachma, there will be losses on the SMP’s holdings. Those losses would accelerate as other countries leave (Spain, then Italy followed by Portugal.) If some of the private banks or national central banks the ECB has been supporting can’t pay for their secured lending in a post Grexit world, the ECB takes those losses. With the size of the ECB balance sheet, those losses will 10’s of billions in a heartbeat, and could grow into the 100’s of billions. The ECB either has to make the losses disappear with some money printing, or collect money from the “member states”. But guess what, by the time that occurs, you are pretty much left with Germany, France, Austria, the Netherlands, and Finland with any real ability to pay, and at least a couple of those are likely to say no (Finland one obvious example). The ECB’s losses are “joint and several” so ultimately Germany and France will pick up the entire tab. Watch your wallets.

Just had a shufty, good stuff and combine the Ponzi schemes with what Christopher, Ian, Richard, Celeste and others are pointing out above and you'll wonder about your original question because there's the matter of 'what money' given somebody has probably skeedaddled with most of it in the entire world already. Or call me cynical. Back to bartering...

This looks very interesting, I'll have a read this evening.

Yes, starting with the 'idealism' of FB. Let's see where it goes and how rich its founders become since that is the real objective for them.

You know that stuff better than I. I observe it as a part educated economist but I scent you are exactly right.

there is another site proving the "nothing is real" theory one step further. A social networking page whereby the users, or members own the shares, and therefore, the votes. Simply by joining up, you get a peice of this. Heard about it?? Zurker??

Well, if you had invested in precious metals at the beginning of the industrial revolution, they have minimally kept pace with and have mostly out performed stocks and bonds in real term ... just saying. Friday, MS had to spend millions to prop the FB price back to $38 at the end of the day. But anyone who bought at the begining and sold mid-day made a nice short term killing. In and out of Facebook --'kinda like its phone app. But that is how anyone seems to be making money in this market... the faster the better, Nobody wants to hang on with stocks in thier portfolios over the weekend given Spanish bank bad loans rose in March to their highest levels in 18 years and there seems to be overall concensus that Greece will default even with EU interventions. The market is pricing in a rolling default thoughout Europe. I think money is to be made in the timing and lost in long-term.

Well, yes and no. At the beginning of the Industrial Revolution we were still investing in what we would find in the 'New World', thus ivory, precious metals, gems, silk and such things that were luxury goods in limited supply were expected to eventually come on main stream. The world is in a similar situation to then because there is a lot of investment in sheer illusions. At the same time food, water and also electricity generating companies are a solid long term proposition as you see it. That of necessity. Telecommunications and media will somehow thrash their way through too I suspect. Most of the rest is ephemeral and will consign itself to oblivion when the time is reached. FB has probably even begun the process before its flotation given how many people are bored with it, fed up with change and so on and there we have the other element, human endurance and impatience in the contemporary world. That can kill even the most sophisticated game of what you call musical chairs.

I do not know where there is a reasonable investment for the long-term. Sort -term, I think it is like a game of musical chairs. You play until you can't. I do know that this type of in-out trading cannot continue indefinately; by its nature it is illusionary and no real value is created. I have been hearing pundits proclaim that the world is in the same place as the world was at the beginning of the industrial revolution with companies like Facebook. I do not see it. I see Monsanto, Conaga, Archer Daniels Midland -- the basic food and water producers being the long-term investment future particularly in the industrialized west..

That's where we have arrived Christopher, where do we have left to go and is it worth it?

Ponder this: most of those flash-trades a/k/a robo-trades originate from the City of London -- mostly for tax and regulatory reasons. These trades are excuted by computer running algorithems within the nano-second of a electron moving over the wire on every exchange, worldwide. All without the intervention of humans. If you have a retirement invested in an ETF or mutual fund... your fund is creating its 3-6% ROI (and your retirement income) by reason of the 23 second trades simply on the velocity of the trading. Institutional investor/traders rarely have control long enough to attempt changing directors or officers, let alone take action to influence corporate boards.

Precisely one of the things accelerated by online trading is the time, the automation of trading is human guided and the size of blocks traded is phenomenal. It does not inspire the confidence of more convention economists who are waiting for major mistakes such as the virtually complete takeover by majority holding of a strategic company by the Chinese or its like. That would put the proverbial cat among the pigeons.

Hmmm, yes, to an extent. But then the controlling interests in companies have surely long been in the hands of institutional investors.

Something that I find rather scary is that the average duration of stock ownership in the US is of the order of 23 seconds, and that something like 70% of trades are automated.

Yes, because of the number of online companies floated it was inevitable. Most things like FB have unbelievable amounts of shares - 900 million, for heaven's sakes. Imagine trying to sell that stock with the old market system. In the 19th century companies with shares had 1000 as a rule and that was as far as anyone dared stetch 'ownership'. Now most people could have a share, but think what you need to get voting rights in a company - 20,000 shares are the like. So it is no longer for mere mortals who wish to make a few bob, it is explicitly for those who have a lot and want to earn much more. The internet has seen that blossom.

Well, yes, but smoke and mirrors nonetheless - he has control over 56% and of a life and death type that is so hard to distinguish from de facto ownership I cannot be bothered playing that nonsense game.

What do you mean, Brian, when you say that since the internet the amount of shares has grown vastly?

I read that Zuckerberg has "only" 28%, but he has B shares. He also has arrangements with other B shareholders that give him control of something like 56% or 58% of the votes. The difference between A and B shares is that B's have 10 votes to each A vote.

But yeah, I agree, it's smoke and mirrors and emperor's-new-clothesery. It'll be intriguing to see how it plays out.

Mark Zuckerberg is proving the nothing is real thesis with 503.6 million shares in Facebook, giving him 56% as the largest shareholder. 900 million shares in something that does not really exist other than as a site on the web. For heaven's sakes, somebody with enough skill and malice could contrive a super virus that would destroy FB once and for all in just minutes. How real is that? Likewise, given how much finance is similarly stored, think what could happen to the entire financial world if just one genius 12 year sat in his room and made a little virus with the potential to plague all electronic media into total collapse. Impossible? Just an idea.