From Charles Hugh Smith:
… Here is a brief summary of the situation in Europe:
1. Greece is poised to default, the end-game everyone anticipated in 2011. It is not a matter of “if,” but “when.”
2. That default will trigger credit-default swap contracts, derivatives known as CDS that protect the owner from events such as default.
3. This will implode the shadow-banking system and the visible banking system, as those who sold the CDS (financial institutions) do not have enough cash or assets to pay the owners of the CDS.
4. The general idea is that sovereign default is…