Remember meForgot password?
    Log in with Twitter

article imageOp-Ed: Making money out of Greek misery — The hedge funds win again?

By Paul Wallis     Dec 23, 2012 in World
Sydney - While Greeks suffer for the greed and insanity of their former governments, some people are doing very nicely out of Greece’s horror story. The hedge funds, for instance, are making a few more billions so they don't get cold this Christmas.
The New York Times has a nasty saga of manipulation and unwarranted influence of hedge funds and their lobbyists. Yes, filthy rich hedge funds have lobbies making them billions while poor and jobless Greeks can’t even get the time of day from their own government.
A short, disgusting story
The story is simple enough. Greek bonds went through the floor. Hedge funds started buying them up at a few cents each, then parlayed the value up using their buying power. When a “collective action clause” allowing governments to buy back bonds at lower prices was threatened, the lobby kicked in, in the form of the Washington-based (where else?) Institute of International Finance.
The IIF persuaded Europe’s leaders (there must be another word) to pay a significantly higher price. The result was that the hedge funds achieved huge profits. The bonds were bought at 6 to 15 Euro cents and sold at 28-33. Taxpayers yet again financed the stars of “private” enterprise.
The logic was that if the EU didn’t buy at a higher price, future investment in bonds in countries like Greece, Portugal, Spain, Italy and Ireland would be in doubt. So the possible effects on bonds that don’t even yet exist and which will be governed by different rules were the deciding factor.
So the financial sector, which created and facilitated these sickly, unfathomably stupid and law-evading mega loans which were never going to be repayable, got the commissions and some of the repayments. It then got the benefits of the crashed bonds as well, and more taxpayer money to add to the profits. We’re talking about huge profits throughout the process.
(True, some private investors had to take big hits on their failed Greek bonds, but they bailed out at 50% and the bonds then nosedived after the deal was made. Some bondholders successfully refused to take anything less than 100% of their value, God alone knows why. There was no obligation to pay them anything but the generally accepted price. Presumably some hedge funds are more influential than others.)
Taxpayers to the rescue, again and again and again
You have to wonder why so many rabid capitalists are against taxes. They seem to be getting the full benefit of every single tax dollar paid around the world these days. Defence contractors, subsidies, oil companies, you name it, there’s not one single snout out of the trough. In the US, most big companies live on at least a few government contracts paid for by taxes. It's in finance, though, where the really big handouts are almost compulsory.
In Europe, the shades of the class structure apparently extend to fiscal incest. Like the monarchs of old, the management ideas of the EU vary from advanced to antiquarian. Do the privileged scum of the unspeakably corrupt royal hangers-on of the last 1000 years still have that same range of talents which destroyed the Bourbons, the Romanovs and the Hapsburgs? The old empires fell apart as much through economic mismanagement as for any other reason.
Like the old empires, the EU is looking very top heavy with too many influential people dictating terms to the EU government. The net effect has been to cast the EU into a hideous recession, make Spain and Greece almost uninhabitable for their citizens, and these absurd, very step-on-able little office boys continue to make billions?
It’s fascinating. I doubt whether any of these Grande Dames of Delirium could stand any regulatory scrutiny at all. Why do they have this influence? Do they have associations with the EU Parliament? Probably. Are these associations safe for EU Parliament members? Are EU Parliament members benefiting personally in any way from these truly ridiculous deals?
The EU Parliament has some choices:
1. It can redefine itself as a charity for the ultra-wealthy, like all other governments
2. It can open a zoo in the Parliamentary chamber to provide a clearer perspective of its policy moves
3. It can revive the entire EU economy overnight by declaring fiscal bullshit a tradeable commodity with related derivatives
4. It can reassure investors that like the US, any alleged democracy in favor of the public interest is purely cosmetic and has no basis in fact
5. It can establish a wildlife refuge for its citizens, move them into it and leave the rest of the continent free for bankers, lobbyists and hedge funds
It’s starting to look like the EU flag represents blue blood and tinsel stars. Is the EU going to work or going to the dogs? Time, rather sadly, will tell.
This opinion article was written by an independent writer. The opinions and views expressed herein are those of the author and are not necessarily intended to reflect those of
More about greek bonds, Hedge funds, collective action clause on bond redemptions, Greek bailouts
More news from
Latest News
Top News