This is the real question that I wonder if anyone, Papandreou, Merkel, Bernanke, Geitner... anyone... knows the answer to: Assuming Greece is going to default in some fashion, can a $600 bn+ implosion of insurance payouts (CDS) that will sink banks across the continent and ripple across the Atlantic be avoided, or is the inevitable being avoided just long enough for some derivative positions to be unwound before the fire sale?
NYT: Derivatives Cloud the Possible Fallout From a Greek Default
In other words, if Greece is Lehman, then is SocGen (or some other Euro bank) AIG? If so, who throws out the Euro-TARP? Surely not Merkel's Germany.
This crisis has the potential to become very disorderly.