Monday, March 8, 2010

Papandreou, Get the Hell Out of America

In a speech, that can only be deemed as desperate and embarrassing, this morning at the Brookings Institution in Washington D.C., Prime Minister George Papandreou spoke. He said:

While those on the other side of the Iron Curtain worshipped state-run economies as a god, we had created our own god. The free market.
Blaming the free markets for a Greek government that has far overextended itself is the mark of a desperate man. One has to ask, "What does a government debt crisis have to do with free markets?"

Papandreou went on to say that democracy is god:

Forgetting that, in democratic politics, god is the people. Both the state and the market are there to serve them.
Paging Hans Hermann Hoppe. Is democracy going to pay the Greeks bill? My sense is that if Papandreou gave the Greeks the opportunity to vote on stiffing the banksters, the voters would give Papandreou the same message Iceland gave to its government.

In other words, if Papandreou is so hot on democracy, instead of flying to the U.S. to try and prop up international bankster scams, he should get the hell out of America and put it to a vote of the Greek people, to see if they want to bail out the international banksters.

Instead, he begs for America to keep the global bankster scam going:

My conclusion is that cooperation between Europe and the US must be revitalized...
Cooperation how? This sounds like a set up for a money request.
He continues:

How does this relate to my country, Greece?

You are all aware of the financial crisis Greece has faced in recent months—the crisis that confronted me when I became Prime Minister last October.

After we took office, we discovered that the budget deficit was actually double—double—what our predecessors had told us, European authorities, and the Greek people. [As Janet Tavakoli has pointed out, I'm sure Papandreou was Shocked! Shocked!!-RW]

Our announcement of this discovery rocked investor confidence—not only regarding the finances of Greece, but also the soundness of the currency we share with our European neighbours.

All of you understand that this crisis, like Wall Street’s original crisis in 2008, risks spreading more widely. Many worry it could reignite the global financial crisis—and produce a Crisis 2.0.

That is why, in the past five days, I met with Chancellor Merkel and President Sarkozy, and previously visited with Gordon Brown and Jose Luis Zapatero, to convey my ideas on how to resolve this on-going crisis and how to prevent it from spreading.

And that is why I will meet tomorrow with President Obama—not only as a Greek leader, but also as a European leader—to discuss the important role I believe the United States can play to ensure that Greece, Europe, and America remain strong, healthy partners.
He then explains how he is going to crack down on tax evasion:

At the top of the list is tax evasion.

To give you just one measure of the scope of that problem: Fewer than 5,000 Greeks declare incomes of 100,000 euro or more. That pattern ends now.

We will be prosecuting offenders—no matter how rich or powerful—to show that we mean business.

The rule of law means that the law applies to all.

Such changes will bring in billions in unpaid taxes, and help underpin our return to fiscal health.
Good luck with that. Read Taki on the Greek willingness to lie and cheat the state.

Typical politician, after he states he is going to raise taxes by stopping evasion, he says:

If we’re not careful, higher taxes coupled with lower revenue could actually slow down our recovery.
After Greece ran an out-of-control budget and hid debt, Papandreou blames, surprise, speculators, i.e. people who want to bring financial instrument prices in line with reality:

Despite the deep reforms we are making, traders and speculators have forced interest rates on Greek bonds to record highs.
Here comes the pitch to the U.S.

...Europe and America must say “enough is enough” to those speculators who only place value on immediate returns, with utter disregard for the consequences on the larger economic system—not to mention the human consequences of lost jobs, foreclosed homes, and decimated pensions.

These market manipulations—which were at the heart of the banking system’s collapse—are still legal practice.

It is hard to fathom that we have allowed this to happen...But if Europe and America jointly step in to shore up global financial regulation—and to finally ensure enforcement of regulations—we can curtail such activities.

It is an encouraging sign that the American authorities have ordered some speculators not to destroy records of their trading in euros.
I would encourage US authorities to continue these investigations.
He talks about more U.S regulation, but this man is desperate, he really wants U.S. money through some vehicle (the IMF?) without strings attached.

Bottom line, no country, no company needs to fear short-sellers. A legitimate short-seller can't damage the internals of a financially strong company or a financially strong country. Banning short-selling, or credit default swaps, won't fix the problems for the Greeks, or for the other PIIGS. It will only extend out the crisis, ensnare more innocents and make the entire crisis worse.

Papandreou should go home, screw the banksters, declare bankruptcy and start over.


  1. Wenzel , your anakysis is right on but describing Papandreou as "desperate and embarrassing" you are too kind. This man is supposedly descended from the Greek "gods" and he is acting like a weasel. I will be deeply disappointed in the Greeks if he is not thown out of office.

  2. "It is hard to fathom that we have allowed this to happen"

    Elected Greek leaders did it. They didn't "allow" someone else to issue swaps.

    Desperate and embarrassing, you nailed it.

  3. Bob -

    You are clear that the anti nss campaign isn't about banning CDS or shorting..

    On the other hand, some of the short sellers like einhorn want CDS banned.

    What the anti NSS campaign wants is a bad on naked shorting and on selling directional bets in place of insurance.

  4. There are some serious mistranslations in the source you use.

    Here's the official version of the speech:

  5. @Lila

    CDS for countries with reponsible amounts of debt is even less of a problem than short selling is for sound companies.

    I see no way that a country that can pay its bills is going to be harmed by CDS trading.

  6. @ James Rothfeld

    The only difference that I have noticed after a quick perusal of the two translations is that the first uses the word "god" while the official uses the word "master".

    The first translation is certainly more dramatic than the official, but does nothing to distort the sense of what the Prime Minister was trying to get across that socialism and free markets were both adored and shouldn't have been.

    Since translations from one language to another can be difficult because of nuances in different languages, the only serious problem I can detect is your attempt to claim this is a "serious" mistranslation.

  7. Yes.. I agree cds shouldn't be banned. That's why it's odd that einhorn wants them banned.

    I just wanted to make it clear that the antinss campaign is not against cds but against the manipulation of that and other instruments.

    CDS by itself is not a problem. It doesn't seem to be relevant to the greek issue, although I didn't study that closely.

    Again - that's why the call to ban cds is either mistaken or deliberately misleading..trying to figure that part out now.

    The problem is fraud, which can vary every time.

  8. Mr Wenzel,
    Wait till Goldman Sachs, JP Morgan et al start manipulating the CDS markets of other sovereign nations' bonds. Iceland came first, Greece came second is it Britain next? It's all done for speculation and nothing else. A zero sum gain from sociopaths that add no benefit to the financial system other than to benefit themselves.

    You might think that governments have caught on to the Blitzkrieg (CDS OTC derivative) utilized by today’s Financial Reich.

    What difference does it make if you bomb Greece to its knees or just break them financially?

    With Wall Street in possession of Washington, it will be interesting to see what, if anything, is done about OTC derivatives. Without exception, these are weapons of mass financial destruction.

    OTC derivatives are the basis for the present crisis and nothing has been done to curtail them. Therefore, nothing has been done to correct the problem at all.

    The crisis is not over at all.

    Credit default swap OTC derivatives are weapons of real warfare. They are already operating against US state debt.

    Soon states will be falling like bowling pins. The US dollar will follow as it drops below .7200.

    "When a government is dependent upon bankers for money, they and not the leaders of the government control the situation, since the hand that gives is above the hand that takes… Money has no motherland; financiers are without patriotism and without decency; their sole object is gain."
    –Napoleon Bonaparte, 1815


  9. Wenzel, I just picked out the 'master' vs. gods. Thought it was relevant enough :) Cheers.