Yet another crash in the financial system was delayed only by the decisive action of European politicians and European central banks. With the decision to print money at an accelerated speed, they tried to at least close the leaks in European and especially French banks.

The French banking system was on the brink of collapse by Sunday night and only the decisive action saved the banks and French state from collapse.

We already noticed the concerted action against France in the CDS market quite some weeks ago. Last weekend France became illiquid. This was a logical reaction to the silly idea that Governments and states would be able to manage financial markets. The opposite is the case. States have to borrow from these markets, but not to tell them what to do.

US rating agencies do their best to put pressure on the EU and the Euro. But so far the Europeans still stick together and fight the pressure. EU governments sit down this weekend and deal with their debt situations, while NO-ONE is there to take on the much larger US debt issue.

On Top of that diversion we have an incident which might come as a trigger for a potential US Dollar collapse. The BP oil-platform spill in the Gulf of Mexico caused, which seems to be due to deregulation caused by the Bush administration under active participation of the former Vice president. A fail-safe system was obviously not implemented at the oil-platform. The spill now gives the rest to large parts of the American travel and leisure industry, as well as to fishing in the area. So far nobody can predict the end of the oil-leakage.

The cost involved to clean-up and restore economic growth in this area might be the final trigger for the US debt burden to follow the Greek example. With setting the Greece precedence for a western country to implode within days, investors have now a good understanding what can happen. When US spreads will finally start to implode you will start finding European, Asian and middle-east investors to scream for a rating downgrade.

Weeks ago, Greece needed 11 billion Euro to refinance. Its Prime Minister wanted to have access to the Euro bail-out money, not to pay the upcoming interests, but for general expenditure!

Now, today, the EU decided on a € 145 billion default delay package. The idea is to take Greece off the markets. No further refinancing at market rates will be required from that point on. After Government Motors in the US, we will have Government Greece in Europe. But of course once that happens, we will see the whole Eurozone implode.

The next candidate causing Pain is Spain. S&P downgraded the consulting resistant country. Spain failed to implement any measure promoting growth. My recommendations have been ignored, unfortunately. As a result, massive deflation will follow as Spain can no longer refinance at the current financing cost. The cancer of contagion has started to spread around the Eurozone. It does not help any longer to focus on its origian. The metastasis is going to kill the patient anyway. But giving 145 billion Euros away as palliative medicine, is far too much.

Greece can no longer hold-up its game against market powers. Today, the Greek prime minister asked the IMF and the EU for financial help as his country is finally unable to deal with the financial stress caused by a skyrocketing high debt burden and a faltering economy. The last ingredients were the 2% jump in yields on Greek bonds on April 22nd 2010, after Eurostat announced that the country falsified its financial statements , again. Greece is now officially unable to deal with debt-refinancing under normal market conditions. This is what we call default. The EU and the IMF now come in and will put drastic financial reforms into place. The markets will however continue to short Greek bonds. The country has lost trust and everybody knows that the EU bailout is only delaying the issue. And it is not a bail-out of the Greek government; it is a bail-out of German and French banks. It provides us another couple of weeks to deal with the fallout of the crisis. Behind closed doors we hear already talks on one or more new European currencies and it is likely that Europe and the Euro zone are not going to survive the Greek debacle. No one can take on the 900 Billion Euro Greek debt. That is the biggest issue. This week the pressure which mounted in the markets came from investors who tried to fire sale Greek bonds. But there are very little buyers. What seems to be an isolated, Greek issue, is much more. 900 Billion Euro in debt are suddenly devalued and someone holds this loss in his books. On top of that a significant number of CDS contracts will have to be adjusted and payments have to be made.It will be a costly default for insurance companies, banks and money market funds. Investors might now have learned that even developed countries can default. Silently they will use the Greek experience as a template for other countries, such as the UK and the US. Usually this learning experience takes about four weeks time. By then we will see new rules and requirements for government bonds coming from the investor side. The time of easy money seems to be over. With the Greek default the western economies have started to enter technical dynamics which are difficult to control. A fast rise of western bond yields is most likely the outcome. The shadow of Inflation is showing up on the horizon.

With yields rising to 8.3 percent, there is no air left for Greece. Even the IMF can no longer do the magic and rescue a state which cannot even pay its interests at market rates.

The latest rise in Greek bond yields is far above anything we have seen before in the Euro area. According to Financial Times Germany, Market makers stopped basically to price the bonds. This might be a reaction to an attempt to reduce short selling of bonds. But as everyone knows – playing against the market does usually not work in the long run.

Greece now needs to refinance, urgently. Another tender is planned on April 23^rd, the day which I announced more than a month ago as a very critical day for the bond and stock markets. Especially the Euro could plunge if the decision for Greece to leave the Euro-zone is not met, this week.