Even a regular observer might have lost track of how many Greek rescue agreements were announced over the last two years. A default was impossible. It had been prevented, we were repeatedly assured. And yet, despite all of these many success stories, the Greek government nevertheless announced that it would not be repaying 100 billion of the 206 billion euros it owed to its creditors, while simultaneously signing up for 130 billion euros in new debt. Needless to say, there is almost no chance that any of that new debt will be repaid; this is nothing more than another flimsy support in the giant, extend-and-pretend structure with which the Federal Reserve, the European Central Bank and the International Monetary Fund are attempting to shore up the global economy.

The pretense isn’t likely to last long. The Greek elections this spring mean that a newly elected Greek government will be able to reject the spending cuts imposed upon its predecessor, just as the newly elected Spanish premier has already done by openly defying the EU’s budget limits. Although the markets have remained relatively calm despite the way in which the Greek default – and this has been officially declared a default by several of the relevant ratings organizations – should trigger various credit default swaps capable of taking down several large European banks, it is unlikely that there will not be serious repercussions, even if they take months to become apparent to the public.

Remember, all the major players in the financial industry knew that Lehman Brothers was in serious trouble months before its bankruptcy triggered the 2008 financial crisis that September. At this moment, attention is focused upon Austrian bank KA Finanz, which, according to Bloomberg, is looking at $1.32 billion in Greece-related losses. While this represents only one-fourth of the Austrian government’s bank-bailout fund, it indicates that European situation has moved from attempts at prevention to actual damage control.

The situation is not significantly better in the United States. The Federal Reserve’s Z1 report for the fourth quarter of 2011 was released last week, and although total credit market debt outstanding grew slightly, from $53.8 trillion to $54.1 trillion, the gap between the historical amount of credit growth required to maintain economic growth and the actual growth continues to widen. If total debt had continued expanding at its 60-year post-World War II average since 2008, Z1 would be $73.2 trillion, $19.1 trillion more than it presently is.

Government spending is the only reason the situation doesn’t appear worse than it is. The $300 billion in credit growth was entirely provided by the federal government, which borrowed more than $1 trillion in 2011, $326 billion in the fourth quarter alone. How long this can be sustained is unknown, but it is worth noting that federal and state governments now account for 25 percent of all U.S. debt, up from 15 percent only three years ago. At this rate, the United States will be facing a situation similar to Greece in less than seven years.

The truly interesting news, however, is coming out of Germany. More and more whispers are being heard concerning Germany’s plans to leave the euro, which would immediately shatter the European Union and bring the vast bureaucratic edifice of Brussels crumbling to the ground.

The outrageous German demands made to Greece that practically amounted to a second occupation of the latter, in combination with a new law that permits Germany to leave the common currency and the establishment of a $625 billion Special Financial Market Stabilization Fund, has some to believe that Germany has given up on attempting to save the other European banks and is now focusing on saving its own financial system.

While the end of the euro and the anti-democratic monstrosity that is the European Union would without question be a great step forward for human freedom in the long run, in the short term it would create a significant amount of economic chaos, enough to make 2008 look like the 2001 recession that was statistically erased by the historical revisionists at the Bureau of Economic Analysis. And it is far from certain that the end of the European Union’s faux-democracy will mark a return to genuine representative democracy, as it is entirely possible that it will instead lead to open rule by the new aristocracy that the Ciceronian political cycle predicts.

Of course, such a development could never take place in the United States, not where Gov. Mitt Romney, the son of Gov. George Romney, appears to have sewn up the Republican presidential nomination and is presently leading Barack Obama by five percentage points, 48-43, in the national presidential polls.

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