Beware The Ides of April

Over 2,000 years ago, Julius Caesar was warned by a soothsayer to beware the Ides of March. Today, DeutscheBank warned the financial world of the Ides of April. Greece is running out of money and could default on its government debt as early as April 9.

It's no surprise for anyone who can do non-Common Core math. Greece was going to default sooner or later because its debt levels are higher than its GDP.

It's similar to a household that brings in $100,000 a year, but has $115,000 in credit card debt.

Although the default process will be painful to Greek citizens and the country's creditors, it needs to happen. No country, corporation or citizen can borrow and spend their way to prosperity any more than a barfly can drink his way to sobriety.

After every boom, there comes a bust. What goes up must come down. Laws of economics, finance and mathematics can't be broken without consequences.

If some people think that so-called “American Exceptionalism” is a Get Out of Economic Jail Free card to avoid the same fate as Greece; well, they're sadly mistaken.

The Petro-Dollar system (or the backing of the dollar with oil after Nixon closed the gold window in 1971) has propped up King Dollar on the global currency throne for four decades. And it allowed the US to borrow, spend and print money like Charlie Sheen banging 7-gram rocks of crack cocaine in his Hollywood mansion.

With the Petro-Dollar system going away, the US will have to (literally) pay for its economic and financial sins. The dollar will devalue even faster, with high – and possibly hyper – inflation in the not-too-distant future.

When will these financial chickens come home to roost? I have no idea.

That's because there's so much manipulation and intervention in financial markets around the world. Central banks and governments have kept this fiat-based fantasy going with the financial equivalent of duct tape and baling wire.

What fueled most economic growth around the world – and the cause of our current malaise – is too much borrowing and debt. Speculation, greed and Wall Street PR launched the Dot.com Boom, and the Echo Boom in stocks and real estate in the mid-2000s.

But debt to an economy works like booze and drugs for a long-term addict. At first, the highs are great and the hangovers aren't too bad. But over time it takes more and more of the drug to get the same high... or increasing levels of debt to get the same financial “high” in stock market and real estate values.

The drug and financial addict both come to the same place: They know that if they keep taking the drugs, they'll soon be dead. But if they stop taking the drugs, the short-term sobriety shock could kill them – even though it's the healthier option in the long run.

That's where America and most Western countries are today: Heavily dependent on debt, with the same difficult choice as the addict. 

Only time will tell how much damage a Greek default will inflict on the Western financial world. I believe one thing is certain: After this Greater Recession/Depression, Americans will have a much healthier respect for debt than before.