Expect massive deflationary pressures to pick up soon.

As part of his "negotiations" (other names apply...) Alexis Tsipras of Greece tried to smooth talk the Germans into accepting a haircut in the form of "perpetual bonds".  The Japanese have a name for this face saving move.  They call it "gift loans".  They will owe you the money forever but you will never be repaid.  Tsipras wanted to give the Germans the option of agreeing to a partial default without having to admit as much to the German people.  Of course, with the new wave of conservatism that is sweeping the planet, the German bankers knew that such tactics would not work and would simply draw anger away from deadbeat Greeks to to the German bankers who agreed to such terms.

Without such terms, Tsipras is going to default.  Of course, the full truth is that he always planned to default.  Why only partially default?  To save your good name and credit rating?  Bzzzzt!! Too late!  Everyone already knows that Greece is not a good credit risk and their bond rates have been skyrocketing as proof.  In fact, the Germans saw Tsipras' offer as insulting and ridiculous.  It was DOA and everyone knows it. As a result, the Germans are starting to talk tough like they have all the good cards and you can read about it on Mish's blog.  I strongly suggest that anyone reading this go read that blog post and read each link carefully because what you are likely witnessing here is the early stages of the breakup of the EU breakup which I have long believed would be part of the fallout of the collapse. In fact, I took it one step further in this post and suggested that the US might also de-unify when things got bad enough.  It is clearly not out of the realm of possibility.

In any case, markets hate uncertainty and global corporations will hate a global deflationary depression so this does not bode well for the stock market.  Sure, the US government can continue lying to us about unemployment and how the economy is doing but people already know that things are far worse than the con man in chief would have us believe.  This is why the dems got creamed in the mid terms.