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Sunday, November 20, 2011

Europe under attack: the Greek gamble as an Example

Author Thomas Ramseyer
Behaveour of the finance ministers: as they are not dumb, some very important questions are to be raised !!!
Do Insiders take advantage to the disadvantage of the Greek population suffering from the severe measures taken by the political and economic leaders? 
Insiders are European Governments (lead by Germany) , Top EXECUTIVES (Politicians, Ministers, Presidents, Bankers), Portfolio Managers throughout the world, European Central Bank, Greek authorities, Greek Central Bank, Big International Bank as well as US Banks having caused the desaster in particular. 

As European Union's countries thus their taxpayers grant the refinancing of the roll overs, no risk is taken because it is all or none.

1) USA attack Europe - after Switzerland (UBS and other reasons) and other countries - by wistle blowing bankers talking about whatsoever gimmiks they may have invented to the debit of Greece.

2) USA's reason: like always the domestic citizens' focus have to be mislead to set up troubles abroad. (away from oilspilling, gulf of mexico, which is the responsibility of the US government (Obama) in the first place: it is easy to blame everybody but their own officials)

3) Europe proves to be incapable to deal with the crisis aggravated by politicians and the media. Europe is NOT comparable to the United States. Europe is but an association, not a political powerfully built United Europe. Thus the countries abroad have to deal bilaterally with each of EU's countries. Bruxelles is just a greedy teethless paper tiger with no real power. President as well as ministers just are a big laugh.

4) Everybody ignorant
The Europeans, Bankers, Politicians, Topmanagers, Newspapers, Broadcasters are just ignorant; they have no clue. Or they pretend so for whatever reason.

5) For the sake of fulfilling the German and French dream Greece will never go bankrupt. Have you ever seen any country go bankrupt since the year 1900 ???  .....  NO ! ! !  Countries invent new currencies after wars (Reichsmark, Deutsche Mark) or cut two or some more zeros (nouveau franc, ancien franc) to have easier calculus in bars on the street and in the stores. All this to make it possible for foreign countries to invest in infrastructur. 

6) If Greece ever would go bankrupt it would not really affect Europe nor its economy. Greece just would start from scratch. Even not from scratch because all durables - Houses, factories, infrastructure, in short real goods (everything which can be touched) as well as the foodproduction - are still existing. Greece can live on its own; fully fledged agrosector, Tourism still strongly going; infrastructure available and others, you name it. 

7) EU implement USE
Best thing to do for Europe will be the inaugeration of the United States of Europe (USE ). Thus Greece, Portugal, Italy being comparable to California and other starving locations throughout the US.

8) Roller-coasting USD
Did anybody ever complain about the US $ deteriorating from CHF 4.30 to CHF 0.70 within 50 years???  NO and again NO !!!  So what are we discussing about the EUR coming down from all time highs to some reasonable level. (Remember 2003 EUR vs CHF 1.28 to rise to some 1.43 in 2004 and finally to culminate at roughly CHF 1.74.)

9) Helping package for Greece
The so called helping package of the EU-States led by Germany and France never is money lost; it is only facilitating the liquidity situation of Greece because former investors do not want to roll over the Bonds.

Thus the ones stepping in to roll over the EU-secured greek debt will get it back when the trust in greece's economy and political leadership picks up. 

Governments NEVER redeem bonds and other liabilities - their custom is to roll over
By the way Governments of the north-western hemisphere never pay back their loans and other debts. E.g. USA, Germany, Switzerland, France, Italy and so on use to augment their debt on a regular basis.

Others like Brasil and Argentina ripped off the investors. This to restart from scratch. Being heavily indebted then (1980s) meant power so they even threatened the worldwide financial community.

Russia did pay back its pre-communist debt only when it wanted to tap the world wide capital market again. In fact Russa used a deferred issue to redeem the historic debt. Because of the widely spread opinion that Russia would never pay back pre-communist debt, there were bonds trading at levels of some 23 % in the early 2010s only to recover upon the announcement by 2004. 

European Central Bank's weird role in the Greek Case
Everybody is upset because the ECB is buying Greek bonds and debt. This is considered not being ECB's real task. As ECB and everybody else know, the rest of the European Union will grant the funds to roll over Greek debt.
Thus by buying Greek bonds at a level of 50% or less (two to three years' maturity ECB will make a profit of some 50% to the debit of investors forced to sell because of the Rating agencies meekly declaring Greece's investment grade going down the drain.

(Taxpayers, mandatory savers and private investors are the big loosers in this game. This through Insurance Companies, Pension funds, Banks, Funds and others because those rating adicts are forced to sell any credit below BBB.)

1) Greece buys its own debt at market prices e.g. 50% or any low price levels.

2) Greece buys back its own debt below par through reliable channels [swiss style of the seventies, no talk nor rumeours, use different brokers, disperse orders through zipped mouth actors].

[The debt still counts for the nominal value on the Greek balance sheet. (Just have a look at its national accounts after valuing the debt by market price levels, you will be surprised.)]

3) ECB will easily refinance this activity at low interest rates because of European Union's guaranty.

The solution where Greece silently buys back its own debt - refinanced at low levels by ECB thus granted by EU is the only remedy to solve the problem. To get hold of further funds REPO-transactions with ECB are applicable. 

Questions to be raised
1) Unfair activity ECB buying Greek debt
Is it fair that ECB and other banks buy Greek debt at 50% of it's nominal value, knowing that such debt is going to be rolled over at 100% to the disadvantage of the GREEK CITIZENS ???

2) Whatever leader not considered dumb
As Politicians, Executives, ECB-Manager aren't dumb-boys for sure - a lot of them equipped with university degrees - do they want to cover up hidden activity or are they as ignorant regarding financial matters as an Appalachian Mountains' hillbilly boy?

3) Corruption, yes or no . .
Are they corrupt in a soffisticated way believing not staining their whitishly clean wests???

Only question number 2) is relevant. 

The responsible people in charge must be removed from their seats and locked up for collusions' reason until they prove not guilty. When proven not being guilty they have to stay away from their seats for failing to take appropriate measures for what so ever reason. 

copyright Thomas Ramseyer