The idea behind "The Producers" is based on desperation. A producer has gone broke with failure, and figures maybe super-failure can make him whole.
The Greek Helios project is just such an idea. The idea is that Greece will devote land to solar panels, then sell that power back, and in so doing cut its current crippling debts over 25 years.
The claim is that as many as 10 Gwatts of power will be installed, enough to get the country out of debt.
If only it were so easy.
Solar panels cost money. Big money. You have to pay off that money before you're able to sell a drop of power.
As the number of panels producing power soar, as they will, the value of electricity produced with panels drops.
At some point, probably 10 years out, you're not getting enough money from the electricity to handle the ongoing payments on the solar panels. Since Greece has no cash, they're borrowing the money for this.
As I say, solar panels make great economic sense. But what Greece is proposing is the equivalent of, in 1971, claiming you're going to put in a bank of supercomputers and sell time-share computing power to companies all over the world, and then make money 25 years out. The technology is going to change, my friend. The price of that compute time is going to decline.
It's going to end in tears.
Fortunately the government seems to have recognized that and come up with a new idea. Sink the Euro with a referendum in order to get a better deal.
CDSs were the same kind of insurance that was "bought" and "sold" in the U.S. mortgage mess. They were at the heart of the "big shitpile" because they essentially turned straw into gold. With someone promising to make good on bad loans, a banker could write anything up. And did.
With governments pressuring bankers to take debts they knew were dodgy, in the middle of the last decade, the CDSs had not yet blown up the American marketplace. So bankers bought them as a hedge against the loans they were writing, and wrote them. If Greece goes bust the paper becomes due, and no one has the cash to pay off.
So to get the deal done Merkel had the banks claim their haircut was "voluntary." Since it was "voluntary" the CDSs didn't come due. The Eurozone breathed a sigh of relief.
The referendum is a gun to the head of this idea. If Greece votes no, there's no way you can call the resulting bankruptcy "voluntary." The notes come due, and lots of people go to the wall. Maybe Europe itself goes to the wall. So Greece promises the referendum, and in the run-up the markets all go to heck in a handbasket, and the pressure could force Europe to offer an even better deal -- say 80% forgiveness on a "voluntary" basis in order to make certain Greece votes "yes."
Here's how Greece sees it. Let Europe see the abyss, as Greece saw it in the deal negotiation. Let Europe decides if it wants to blow this thing up, as Greece saw the possibility that no one would lend it money, and it would be forced to create a new currency that would, in essence, steal the life savings of every Greek through inflation.
So now the bankers have a choice. They can offer that better deal, or they can spend the next two months preparing for a total Greek default. They can negotiate, on their own, the terms on those CDSs, they can see who will go to the wall, and who might take a haircut on their guarantees, and what everyone can live with, with their eyes on a hard deadline.
Meanwhile, prices on debt in Portugal and Spain and Italy and Ireland, the other weak sisters in Europe, fall to the floor and yields rise to the sky. The uncertainty causes those economies to crater, putting more pressure on Europe to either do Greece a better deal or see the whole thing explode, meaning all the region's major banks disappear, taking depositors' money with them.
It's going to be a very un-merry Christmas throughout Europe and no one knows what's going to happen. Which means it's going to be a very un-merry Christmas here as well. But it will be better for Greece, Greece thinks, than the alternative.