Soros bets against Euro

[David Guyatt]

Plus the running sore of battle between the Greeks and Germans on possible Greek bankruptcy.

http://www.dailymail.co.uk/news/worldnew...euro.html#

Man who broke the Bank of England George Soros 'at centre of hedge funds betting against crisis-hit euro'

By Karl West
Last updated at 5:06 PM on 26th February 2010


Traders make a series of huge bets against single currency
Fund managers could make hundreds of millions profit
Greek PM says he will protect country against speculators
Merkel: The euro is in a 'difficult situation' for the first time


The man about to break the euro? George Soros is said to be placing large bearish bets against the single currency

The man who broke the Bank of England in 1992 is said to be at the centre of a plot to cash in on the demise of the euro.

George Soros's investment business Soros Fund Management is among a group of heavyweight Wall Street hedge funds which have launched a series of massive bets against the euro.

The bets came after an all-star 'ideas dinner' in New York where some of the world's most powerful currency speculators argued that the euro will plunge to parity with the U.S. dollar.

The single currency has been under enormous pressure because of Greece's debt crisis, plus financial worries in Portugal, Italy, Spain and Ireland.

The euro traded at $1.51 in December, but has since fallen to $1.34.

Traders are borrowing 20 times the size of their bet, boosting their potential gains and losses so that a euro move to parity with the U.S. dollar could represent a 'career' trade.

If investors put up $5 million to make a $100 million trade, a five per cent price move in the right direction doubles their initial investment.

Details of the secretive dinner emerged in the Wall Street Journal just days after Mr Soros warned in a newspaper article that the euro could 'fall apart' even if the European Union (EU) can agree a deal to shore up support for stricken Greece.

He said: 'Makeshift assistance should be enough for Greece, but that leaves Spain, Italy, Portugal and Ireland. Together they constitute too large a portion of euroland to be helped in this way.'

Mr Soros, who made more than $1billion when the pound was ejected from the Exchange Rate Mechanism on Black Wednesday in 1992, believes the structure of the single currency is 'patently flawed'.

------------------------------------------------------------------------------------

More...

'The Nazis took our gold, they should at least thank us': Greek deputy PM's extraordinary attack on Germany over debt crisis'.
------------------------------------------------------------------------------------


Hitting back: Greek PM George Papandreou blames 'speculators' for preying on the country's troubles

He believes that unless the European Commission is given sweeping powers over taxation and spending, the single currency will always be vulnerable to financial turbulence in individual states.

'If member countries cannot take the next steps forward, the euro may fall apart'" he added.

Mr Soros's investment house, Soros Fund Management, did not respond to calls.

In a separate move last week, traders from Goldman Sachs, Bank of America's Merrill Lynch unit, and Barclays helped a separate group of investors to bet against the single currency.

The trade involved buying an inexpensive 'put' option that will provide its holder a big payoff if the euro falls to the level of a single U.S. dollar within a year. K

The euro-dollar parity put is a cheap way of ensuring that if the euro sinks dramatically within a year, an investor will generate big returns.
A going price for the bet is around 7 per cent of the amount that a parity-trade would pay off. So, for an investor seeking a $1 million bet, the cost is $70,000.

This means that the market currently assigns roughly 14-to-1 odds that parity will be reached. In November, the odds were around 33-to-1, said a person who has seen the trade's pricing.
Greek prime minister George Papandreou last night hit back at the 'speculators' who he blames for preying on the country's troubles.

Following a visit by EU economic inspectors, he told the country's parliament that the worst fears about Greece's economy had been confirmed.

Greece is desperate to restore the confidence of investors in its debt after revealing that the previous government understated its budget deficit by half.

The EU is also pressing the country to take radical measures to cut its deficit to prevent further damage to the euro.

Greek officials said the EU inspectors, who were visiting Athens with experts from the International Monetary Fund, delivered a grim assessment of the nation's economy.

They said Athens will miss its targets for reducing the deficit without the sort of deep spending cuts that have already sparked loud protests on the streets of the country.


With friends like this: The cover of the German magazine 'Focus' this week, which shows the Venus de Milo giving the finger by a headline accusing Greece of swindling its way into the euro


Row: Greek daily Eleftheros Typos ran this depiction of the statue of the goddess Victoria, atop the Siegessaeule in Berlin, holding a swastika earlier this week in reaction to the Focus cover

Outlining the precarious nature of Greece's finances, Mr Papandreou said: 'There is only one dilemma: Will we let the country go bankrupt or will we react? Will we let the speculators strangle us, or will we take our fate in our own hands?

'We must do whatever we can now to address the immediate dangers today. Tomorrow it will be too late, and the consequences will be much more dire.'

The Greek leader also called for more solidarity from the EU on its debt crisis, as he announced plans to visit Germany, whose backing would be vital for any EU financial.

But a row is still festering between Berlin and Athens over the crisis.


Tight spot: German Chancellor Angela Merkel said the situation was 'difficult'

A Greek consumer group called for a boycott of German goods today after a German magazine blasted the country as 'cheats.

The new trade war came as Angela Merkel admitted the euro is in 'a difficult situation' for the first time.

She spoke as German magazine Focus ran a cover image of the armless Venus de Milo somehow raising her middle finger under the headline 'Cheats in the euro family' to suggest that Greece deliberately misled EU peers to swindle its way into the euro.

The cover sparked outrage in Greece, prompting the demands for a boycott. A Greek newspaper has also hit back, running an image showing the statue of the goddess Victoria atop the Siegessaeule in Berlin holding a swastika.

'The falsification of a statue of Greek history, beauty and civilisation, from a time when there (in Germany) they were eating bananas on trees is impermissible and unforgivable,' a statement from the Consumer Institute (INKA) said.

'Greeks are no crooks, we want the German government to condemn this most improper publication,' said INKA president George Lakouritis.

'If you have such friends, what do you need enemies for?'

INKA distributed leaflets in central Athens and in front of German-owned consumer electronics store Media Markt, urging Greeks to heed the boycott.

Merkel's government has so far deflected appeals to promise aid to heavily indebted Greece. Opinion polls show that a majority of Germans oppose a bailout.

Germany's ambassador to Greece, Wolfgang Schultheiss, said yesterday he regretted that German press reports caused offence. 'Germany is firmly on Greece's side,' Schultheiss said after being summoned by Greece's parliament speaker Filippos Petsalnikos.

But it wasn't enough for Mr Lakouritis. 'The ambassador's statements were not satisfactory,' he said.

Yesterday Mrs Merkel admitted that Greece's debt crisis has plunged the euro into a ‘difficult situation'.

The admission from the leader of Europe's biggest economy prompted fresh fears about the collapse of the single currency.

In the gravest sign yet of the international threat posed by Greece’s crippling debt crisis, Mrs Merkel warned for the first time that the eurozone faces a ‘ dangerous’ period.

The beleaguered euro initially fell in the wake of her comments.

There was also fresh speculation that Greece’s international credit rating may be downgraded.

On a dramatic day which also saw money markets around the world fall:

* The head of Germany’s leading debt management agency warned the euro would collapse if any member defaulted on its debt
* U.S. regulators said they would investigate whether investment bank Goldman Sachs helped Athens disguise its budget deficit.
* EU inspectors visiting Athens told authorities they see a deeper than expected recession.


Unrest: Greece's debt crisis led to more protests in Athens on Wednesday as workers revolted against the government's austerity plan

The developments came as Greece was recovering from a day of rioting which accompanied a second national strike over plans to curb the country’s huge budget deficit.

Yesterday, while Mrs Merkel insisted the single currency would survive the crisis, she acknowledged that soaring debt levels in Greece and other southern European countries had put the euro at risk ‘for the first time since its introduction’.

In a further sign of concern, Carl Heinz Daube, head of the state-run German Finance Agency, warned of the ‘collapse’ of the euro if Greece or any other member defaulted on its debt.

Last night, Federal Reserve Chairman Ben Bernanke told the U.S. Senate banking committee that regulators would look into ‘a number of questions’ about how Wall Street firms such as Goldman Sachs helped Greece arrange complex financial deals to disguise its deficits.

International rating agency Standard & Poor’s yesterday indicated that it may downgrade Greece’s credit rating again, but insisted it did not expect the country to go bust or quit the euro.

The euro initially fell against the dollar on the back of the developments, but rallied late on to reverse its losses.

[Jan Klimkowski]

Ah yes - the noted philanthropist, George Soros - the great believer in the "Open Society"

In truth, a financial parasite feeding at the same trough as Goldman Sachs. :call2:

Good to see the tabloids doing their bit with some visceral imagery.

Good to see the Greeks revolting against Shock Therapy as well.

Bring it on.

[Peter Lemkin]

Plus the running sore of battle between the Greeks and Germans on possible Greek bankruptcy.

http://www.dailymail.co.uk/news/worldnew...euro.html#

Man who broke the Bank of England George Soros 'at centre of hedge funds betting against crisis-hit euro'

By Karl West
Last updated at 5:06 PM on 26th February 2010


Traders make a series of huge bets against single currency
Fund managers could make hundreds of millions profit
Greek PM says he will protect country against speculators
Merkel: The euro is in a 'difficult situation' for the first time


The man about to break the euro? George Soros is said to be placing large bearish bets against the single currency

The man who broke the Bank of England in 1992 is said to be at the centre of a plot to cash in on the demise of the euro.

George Soros's investment business Soros Fund Management is among a group of heavyweight Wall Street hedge funds which have launched a series of massive bets against the euro.

The bets came after an all-star 'ideas dinner' in New York where some of the world's most powerful currency speculators argued that the euro will plunge to parity with the U.S. dollar.

The single currency has been under enormous pressure because of Greece's debt crisis, plus financial worries in Portugal, Italy, Spain and Ireland.

The euro traded at $1.51 in December, but has since fallen to $1.34.

Traders are borrowing 20 times the size of their bet, boosting their potential gains and losses so that a euro move to parity with the U.S. dollar could represent a 'career' trade.

If investors put up $5 million to make a $100 million trade, a five per cent price move in the right direction doubles their initial investment.

Details of the secretive dinner emerged in the Wall Street Journal just days after Mr Soros warned in a newspaper article that the euro could 'fall apart' even if the European Union (EU) can agree a deal to shore up support for stricken Greece.

He said: 'Makeshift assistance should be enough for Greece, but that leaves Spain, Italy, Portugal and Ireland. Together they constitute too large a portion of euroland to be helped in this way.'

Mr Soros, who made more than $1billion when the pound was ejected from the Exchange Rate Mechanism on Black Wednesday in 1992, believes the structure of the single currency is 'patently flawed'.

------------------------------------------------------------------------------------

More...

'The Nazis took our gold, they should at least thank us': Greek deputy PM's extraordinary attack on Germany over debt crisis'.
------------------------------------------------------------------------------------


Hitting back: Greek PM George Papandreou blames 'speculators' for preying on the country's troubles

He believes that unless the European Commission is given sweeping powers over taxation and spending, the single currency will always be vulnerable to financial turbulence in individual states.

'If member countries cannot take the next steps forward, the euro may fall apart'" he added.

Mr Soros's investment house, Soros Fund Management, did not respond to calls.

In a separate move last week, traders from Goldman Sachs, Bank of America's Merrill Lynch unit, and Barclays helped a separate group of investors to bet against the single currency.

The trade involved buying an inexpensive 'put' option that will provide its holder a big payoff if the euro falls to the level of a single U.S. dollar within a year. K

The euro-dollar parity put is a cheap way of ensuring that if the euro sinks dramatically within a year, an investor will generate big returns.
A going price for the bet is around 7 per cent of the amount that a parity-trade would pay off. So, for an investor seeking a $1 million bet, the cost is $70,000.

This means that the market currently assigns roughly 14-to-1 odds that parity will be reached. In November, the odds were around 33-to-1, said a person who has seen the trade's pricing.
Greek prime minister George Papandreou last night hit back at the 'speculators' who he blames for preying on the country's troubles.

Following a visit by EU economic inspectors, he told the country's parliament that the worst fears about Greece's economy had been confirmed.

Greece is desperate to restore the confidence of investors in its debt after revealing that the previous government understated its budget deficit by half.

The EU is also pressing the country to take radical measures to cut its deficit to prevent further damage to the euro.

Greek officials said the EU inspectors, who were visiting Athens with experts from the International Monetary Fund, delivered a grim assessment of the nation's economy.

They said Athens will miss its targets for reducing the deficit without the sort of deep spending cuts that have already sparked loud protests on the streets of the country.


With friends like this: The cover of the German magazine 'Focus' this week, which shows the Venus de Milo giving the finger by a headline accusing Greece of swindling its way into the euro


Row: Greek daily Eleftheros Typos ran this depiction of the statue of the goddess Victoria, atop the Siegessaeule in Berlin, holding a swastika earlier this week in reaction to the Focus cover

Outlining the precarious nature of Greece's finances, Mr Papandreou said: 'There is only one dilemma: Will we let the country go bankrupt or will we react? Will we let the speculators strangle us, or will we take our fate in our own hands?

'We must do whatever we can now to address the immediate dangers today. Tomorrow it will be too late, and the consequences will be much more dire.'

The Greek leader also called for more solidarity from the EU on its debt crisis, as he announced plans to visit Germany, whose backing would be vital for any EU financial.

But a row is still festering between Berlin and Athens over the crisis.


Tight spot: German Chancellor Angela Merkel said the situation was 'difficult'

A Greek consumer group called for a boycott of German goods today after a German magazine blasted the country as 'cheats.

The new trade war came as Angela Merkel admitted the euro is in 'a difficult situation' for the first time.

She spoke as German magazine Focus ran a cover image of the armless Venus de Milo somehow raising her middle finger under the headline 'Cheats in the euro family' to suggest that Greece deliberately misled EU peers to swindle its way into the euro.

The cover sparked outrage in Greece, prompting the demands for a boycott. A Greek newspaper has also hit back, running an image showing the statue of the goddess Victoria atop the Siegessaeule in Berlin holding a swastika.

'The falsification of a statue of Greek history, beauty and civilisation, from a time when there (in Germany) they were eating bananas on trees is impermissible and unforgivable,' a statement from the Consumer Institute (INKA) said.

'Greeks are no crooks, we want the German government to condemn this most improper publication,' said INKA president George Lakouritis.

'If you have such friends, what do you need enemies for?'

INKA distributed leaflets in central Athens and in front of German-owned consumer electronics store Media Markt, urging Greeks to heed the boycott.

Merkel's government has so far deflected appeals to promise aid to heavily indebted Greece. Opinion polls show that a majority of Germans oppose a bailout.

Germany's ambassador to Greece, Wolfgang Schultheiss, said yesterday he regretted that German press reports caused offence. 'Germany is firmly on Greece's side,' Schultheiss said after being summoned by Greece's parliament speaker Filippos Petsalnikos.

But it wasn't enough for Mr Lakouritis. 'The ambassador's statements were not satisfactory,' he said.

Yesterday Mrs Merkel admitted that Greece's debt crisis has plunged the euro into a ‘difficult situation'.

The admission from the leader of Europe's biggest economy prompted fresh fears about the collapse of the single currency.

In the gravest sign yet of the international threat posed by Greece’s crippling debt crisis, Mrs Merkel warned for the first time that the eurozone faces a ‘ dangerous’ period.

The beleaguered euro initially fell in the wake of her comments.

There was also fresh speculation that Greece’s international credit rating may be downgraded.

On a dramatic day which also saw money markets around the world fall:

* The head of Germany’s leading debt management agency warned the euro would collapse if any member defaulted on its debt
* U.S. regulators said they would investigate whether investment bank Goldman Sachs helped Athens disguise its budget deficit.
* EU inspectors visiting Athens told authorities they see a deeper than expected recession.


Unrest: Greece's debt crisis led to more protests in Athens on Wednesday as workers revolted against the government's austerity plan

The developments came as Greece was recovering from a day of rioting which accompanied a second national strike over plans to curb the country’s huge budget deficit.

Yesterday, while Mrs Merkel insisted the single currency would survive the crisis, she acknowledged that soaring debt levels in Greece and other southern European countries had put the euro at risk ‘for the first time since its introduction’.

In a further sign of concern, Carl Heinz Daube, head of the state-run German Finance Agency, warned of the ‘collapse’ of the euro if Greece or any other member defaulted on its debt.

Last night, Federal Reserve Chairman Ben Bernanke told the U.S. Senate banking committee that regulators would look into ‘a number of questions’ about how Wall Street firms such as Goldman Sachs helped Greece arrange complex financial deals to disguise its deficits.

International rating agency Standard & Poor’s yesterday indicated that it may downgrade Greece’s credit rating again, but insisted it did not expect the country to go bust or quit the euro.

The euro initially fell against the dollar on the back of the developments, but rallied late on to reverse its losses.

LOVE those magazine covers! New kind of warfare:fight:
As to Soros - the anti-Midus - whatever he touches turns to crap.

[Jan Klimkowski]

Monty Python does Germany versus Greece:

http://www.youtube.com/watch?v=F2kAnTZBnTg

Basil Fawlty does the Germans:

http://www.youtube.com/watch?v=yfl6Lu3xQW0

[David Guyatt]

Monty Python does Germany versus Greece:

http://www.youtube.com/watch?v=F2kAnTZBnTg

Basil Fawlty does the Germans:

http://www.youtube.com/watch?v=yfl6Lu3xQW0

hehehe. I loved them. "Knobby Hegel".

[Austin Kelley]

A Turning Point in Europe

February 27, 2010

By Chris Marsden
Source: WSWS


Wednesday’s general strike in Greece, involving 2 million workers in the public and private sectors, marks a turning point in the political situation throughout Europe. It represents the most significant manifestation of a growing movement of resistance to the attempt by Europe’s governments and corporations to make workers pay for the economic crisis and the multi-billion-euro bailout of the banks.

At the very onset of this new movement of the working class, two fundamental characteristics have emerged: the movement assumes a cross-border and international character, and the workers immediately come up against the bankruptcy of their old trade union and political organizations—all of which are wedded to a nationalist program.

Indeed, austerity measures are being imposed by governments of the official “left” no less than those of the “centre” and “right.”

This week saw a succession of strikes and protests throughout Europe:

On Monday, Lufthansa’s 4,500 pilots in Germany struck. In France, air traffic controllers struck alongside workers at six French oil refineries. British Airways cabin crew voted by over 80 percent to strike.

On Tuesday, protest rallies took place in Madrid, Barcelona and Valencia against the austerity measures of the Spanish Socialist Workers Party (PSOE) government of Jose Zapatero. Trade unions in the Czech Republic announced that public transport would be halted next week.

A one-day general strike of the public sector is planned for March 4 in Portugal over the extension of a wage freeze as part of measures to cut the deficit from 9.3 percent of gross domestic product to 3 percent by 2013. French pilots have also announced plans to strike later this week.

These strikes and protests are only the initial response by Europe’s workers to the offensive being waged against them. The broadest mobilizations have been in those countries where the most savage cuts have been announced.

Portugal, Italy, Greece and Spain—the so-called “PIGS”—have been targeted by the banks and financial speculators and ordered by the European Union to drastically slash their budget deficits. This will set a precedent for similar cuts across Europe. But the fact that industrial unrest has spread to Germany, France and the UK indicates the potential development of a truly pan-European movement.

The same underlying tendencies that have given rise to the reemergence of the class struggle in Europe exist in North and South America, Asia and Africa.

Many of the protests and demonstrations were relatively small—a factor utilized by the financial press to demand that the respective governments stand firm in imposing austerity measures. Nevertheless, the more perceptive commentators were clear as to the broader implications of these actions. Writing in the Independent, Sean O’Grady stated that the strikes marked the onset of “Europe’s Winter of Discontent.” They “promise to be just the start of the greatest demonstration of public unrest seen on the continent since the revolutionary fervour of 1968,” he continued.

Commenting on the political impact of austerity measures that will see millions thrown into unemployment and social services gutted in Greece, Portugal, Spain and Italy, he noted, “The democratic strains in nations that had been ruled, well within living memory, by fascist leaders or the military are growing.”

The basis for a continent-wide social and political movement is rooted in the common problems faced by workers in a globalised economy dominated by huge international banks and corporations. These organizations, and the financial oligarchy they represent, are demanding unprecedented cuts in social programmes, wages and pensions in order to pay for the trillions of dollars handed over by European governments to the banks. They are speculating against any economy that is seen as debt-heavy and unwilling to carry forward the necessary attacks on the working class, thereby increasing the financial pressure on the targeted governments.

As yet, the objectively international character of the movement developing in Europe finds no political or organizational expression. On the contrary, everywhere it meets with the determined opposition of the trade unions, to the point of outright sabotage.

This week saw the betrayal of many of these initial attempts at resistance by the working class. The German pilots union, Vereinigung Cockpit, called off the strike at Lufthansa on its first day, and the General Confederation of Labour (CGT) called off the strike against the oil giant Total in France. In both cases, the unions capitulated without having won any of the workers’ demands. For its part, the Unite union announced yesterday that its members’ mandate for strike action against British Airways would be put “on hold” while further negotiations take place.

Those protests and strikes that have gone ahead are, from the standpoint of the unions, designed to let off steam rather than mobilize a political movement against the governments that are imposing austerity measures. The unions portray their respective governments as mere hostages to either the European Union or the speculators, rather than the political representatives of the capitalist class.

The most draconian cuts are being imposed by social democratic governments that came to power as a result of popular hostility to right-wing governments—PASOK in Greece, the PSOE in Spain, and the Socialist Party in Portugal. In every instance, they were elected with the support of the trade union bureaucracies, which have remained their allies as promised reforms have given way to austerity budgets.

The aim of the unions is to regulate social tensions and ensure that they do not pose a threat to big business and the state. A spokesman for the Greek General Confederation of Greek Workers (GSEE) made this clear when he said that imposition of PASOK’s planned austerity measures would be “tragic because it will provoke social unrest and clashes.”

Ireland is cited by global financiers as the model to be emulated for imposing cuts in wages and services of between 10 and 15 percent. The ability of the Fianna Fail government to do so is entirely dependent on the Irish unions, which called off strikes against the budget that had involved hundreds of thousands of workers.

The Irish Congress of Trade Unions is limiting action against the government to a public sector work-to-rule. Its leader, Jack O’Connor, declared, “There will be those who will represent us as endeavouring to reverse the budget and undermine the democratically elected government. I want to state emphatically that agreement can be reached.”

Whatever the intentions of the trade union bureaucracy, anger over the cuts being dictated by the banks and corporations will continue to grow. Their efforts to police this opposition, to stifle and betray it, will only lead to the development of a mass movement that must, of necessity, take the form of a political rebellion against the trade unions and the governments they defend.

There is no national solution to the crisis facing workers in Greece, Spain, Portugal or anywhere else. They are being thrust into a common struggle against globally-organised capital. The fundamental question facing the entire European working class is the adoption of a socialist and internationalist program as the basis for a new political leadership and new mass organizations to wage the class struggle in opposition to the nationalist and pro-capitalist organisations of the official labour movement.

Chris Marsden


From: Z Net - The Spirit Of Resistance Lives
URL: http://www.zcommunications.org/a-turning...is-marsden

[Austin Kelley]

"Greek Mess, Euromess, Western Nations Mess, World Mess?"

March 03, 2010

By Immanuel Wallerstein


Everyone is discussing what Fortune magazine is calling the "Greek maelstrom" and everyone is pointing the finger at someone else. Whose fault is it? The Greek government is accused of cheating and allowing Greeks to live beyond their means. The European Union is accused of having created an impossible structure for the euro.

Or is the fault with Goldman Sachs? It is accused of having enabled the Greek government to falsify its accounts when it sought to join the euro monetary system. It is accused today of engaging in "credit-default swaps" that make the situation of the Greek government even more vulnerable, but to the bank's profits. The head of credit strategy at UniCredit in Munich says this is like "buying insurance on your neighbor's house - you create an incentive to burn down the house." Chancellor Angela Merkel of Germany calls Goldman Sachs' actions in 2002 "scandalous" and Christian Lagarde, France's Finance Minister, calls now for greater regulation of credit-default swaps.

Niall Ferguson says that "A Greek crisis is coming to America." He calls this "a fiscal crisis of the Western world." Ferguson is preaching the evils of public debt and of the concept of a "Keynesian free lunch," which in the end is a "drag on growth." Paul Krugman says it's a "Euromess" because Europe should not have adopted a single currency before it was ready to have political union. But now the euro can't be allowed to break up since it would trigger a worldwide financial collapse.

Meanwhile, it seems everyone is pressuring the Greek government to reduce its public debt as a percentage of GNP from over 12% to say 4% in say four years. Can it do this? Should it do this? The Greek government says it will do something. This "something" has been enough to bring about massive strikes of farmers, hospital workers, air traffic controllers, customs officials, and all those who are being asked to reduce their income in the middle of an economic crisis and increased unemployment.

Should Germany do something? The Germans don't want to for two principal reasons. The first is the prospective demand of other states in economic difficulty (Spain, Italy, Portugal, Ireland) for the same thing. The second is the internal pressures of their citizens who see any help to Greece as money that is being taken away from them, when they too are feeling an economic squeeze.

On the other hand, if Greece (and other countries) squeeze their citizens to pay down the debt, it means reduced purchasing power for imports - first of all, from Germany. And this means in turn a downturn for the German economy. Josef Joffe, the editor of Germany's Die Zeit, groans: "Europe has become a huge welfare state for everybody, for states as well as individuals."

Meanwhile, the euro is slumping and the dollar is once again, for a moment, a "safe haven." Ferguson warns us that "US government debt is a safe haven the way Pearl Harbor was a safe haven in 1941."

When an analyst in the Financial Times suggested that Germany was going after all to bail out Greece, a German reader commented: "So what you're saying is give them your money to spend in your shop." But isn't that just what the Chinese do when they buy U.S. Treasury bonds?

What these multiple cross-cutting analyses of short-term blame and short-term gain miss is that the problem is worldwide and structural. Banks exist to make money. The games Goldman Sachs has been playing (and other banks as well) has not only been with Greece, but with many, many countries - even with Germany, France, and the United Kingdom, even with the United States.

This is because governments wish to survive. To do this, they need to spend enough money to prevent a "maelstrom" and civil uprising. And if they don't take in enough taxes to do this (both because they don't want to raise taxes further and because a weaker economy means less overall tax income), they must "massage" their accounts by borrowing. And covert borrowing (from banks, for example) is better than overt borrowing, since it enables governments to avoid criticism, until the day when the secret gets revealed, and there's a "run on the bank."

Greece's problems are indeed Germany's problems. Germany's problems are indeed the United States' problems. And the United States' problems are indeed the world's problems. Analyzing who did what in the last ten years is far less useful than discussing what, if anything, can be done in the next ten years. What is going on is a world-wide game of chicken. Everyone seems to be waiting for who will flinch first. Someone is going to make a mistake. And then we'll have what Barry Eichengreen has called "the mother of all financial crises." Even China will be affected by that one.

by Immanuel Wallerstein



From: Z Net - The Spirit Of Resistance Lives

URL: http://www.zcommunications.org/greek-mes...allerstein

[Jan Klimkowski]

C21st Lebensraum.

German MPs suggest cash-strapped Greece should sell islands
Published: 4 Mar 10 13:47 CET
Online: http://www.thelocal.de/politics/20100304-25667.html

Greece should sell some of its uninhabited islands to raise cash to avoid bankruptcy, two German parliamentarians from Chancellor Angela Merkel's centre-right coalition suggested on Thursday.

"The Greek state must sell stakes in companies and also assets such as, for example, unpopulated islands," Frank Schäffler, a member of parliament for the pro-business Free Democrats, told the Bild daily.

Marco Wanderwitz, an MP for Merkel's own conservative Christian Democrats, said Athens should provide collateral for any money it receives from the European Union to help it out of its debt crisis.

"In this case, certain Greek islands also come into question," added Wanderwitz.

"We give you cash, you give us Corfu," the Bild commented.

Greece has around 6,000 islands off its coast, of which only 227 are inhabited, according to the country's National Tourism Office website.

The cash-strapped country Wednesday launched a fresh round of draconian austerity measures in a bid to rein in a ballooning budget deficit that is more than four times above EU limits.

The Socialist government increased sales, tobacco and alcohol taxes and cut public sector holiday allowances to save €4.8 billion ($6.5 billion), equal to about two percent of gross domestic product (GDP). Pensions in the public and private sector were also frozen.

Merkel is set to hold talks with Greek Prime Minister George Papandreou on Friday to discuss the situation in Greece.

AFP (news@thelocal.de)

http://www.thelocal.de/politics/20100304-25667.html

[David Guyatt]

I have a better idea. Sell ringside seats at the Parthenon for the ritual beheading of senior bankers who haven't shown gratitude for having been rescued. I'll pay to see that.mokin:

Anyway, this is the same sort of deal the Germans are suggesting that saw US companies pick up Tiger nations assets for fire sale prices, after a coterie of hedge funds manipulated the crash of the Tiger economies circa 1998 -- beginning with Thailand, but extending to Korea, Singapore, Japan etc.

They made a fortune sending these countries crashing to their knees by betting against them, and then cherry-picked the assets the most desired.

[Jan Klimkowski]

I have a better idea. Sell ringside seats at the Parthenon for the ritual beheading of senior bankers who haven't shown gratitude for having been rescued. I'll pay to see that.mokin:

Count me in.

Anyway, this is the same sort of deal the Germans are suggesting that saw US companies pick up Tiger nations assets for fire sale prices, after a coterie of hedge funds manipulated the crash of the Tiger economies circa 1998 -- beginning with Thailand, but extending to Korea, Singapore, Japan etc.

They made a fortune sending these countries crashing to their knees by betting against them, and then cherry-picked the assets the most desired.

Yes, indeed.

However, I suspect that German MPs Schäffler & Wanderwitz weren't supposed to be quite so explicit about the nature of the Shock Therapy to be applied to Greece.

Also, I doubt that inherently valuable Greek assets such as Mediterranean islands will all become packed with German naturists, naked except for the odd article of lederhosen, refusing to form orderly queues...