Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.
good for you talos.

Beppe Grillo's Blog

My name is Beppe Scienza. I am a lecturer with the Department of Mathematics at the Turin University and I (unfortunately) deal above all with the topical issue of the abuse of savings. In the case of Greece, the issue is somewhat complex, and more than a little contradictory since, just a few weeks ago the television news and newspaper headlines were telling us certain things such as: "Greece has been saved", "Greek public debt successfully restructured" and "Greek bankruptcy averted". Then, suddenly, a couple of weeks ago, anyone who had, let's say, 10-thousand Euro in Greek Government Bonds, would suddenly have received 24 different bonds in return for his/her original Bonds and, when he/she proceeded to add up the respective values of these new Bonds, he/she would have discovered that they have a total combined value of only two thousand Euro. In other words, Greece was saved and I lost 80% of the money I invested, so what shall we call this? The truth must be told, and that is that there have been two separate misrepresentations here:
  1. one perpetrated by the top politicians and the members of the European Union and its Central Bank, who said: "We are going to rescue Greece", "No way can Greece be allowed to fail under any circumstances" and "Greece must be saved" but meanwhile, they were hastily making preparations for Greece to go bankrupt, and
  2. the second misrepresentation, which came a little while later because the fairy tale that is now doing the rounds is that Greece has been saved.
The restructuring of the Greek bonds, and God forbid they should go the same way as the Italian ones have, occurred in two phases:
1) first a proposal was put to the banks, provident funds and insurance companies, asking them to accept that the bonds they held be replaced with new government bonds and accept that the values be cut. In effect, the vast majority of these so-called institutional investors accepted this proposal although, as to just how willing they were to accept the proposal, I refer you to what the head of the German Commerzbank, Martin Blessing, had to say with regard to the acceptance of the restructuring of the Greek public debt, namely that: "This is about as voluntary as a confession made to the Spanish Inquisition". Whatever the case may be, the Central Bank somehow managed to convince the banks to accept this deal and that's their business.
What's not their business is that immediately thereafter, even those investors who had not agreed to the deal suddenly found themselves in that same boat, in other words the nominal value of the bonds they held was halved and their market value dropped by 80%. Now, in technical terms, this effectively amounts to "default" and is called insolvency. Whenever someone (whether it be a Country's Government or a private enterprise) is obliged to make interest payments or to repay any invested capital and fails to do so, in essence this amounts to bankruptcy, although in technical terms it is called insolvency or default. Greece has gone into default and is in a state of insolvency as regards those investors who did not agree to the restructuring deal. Greece has failed to meet its obligations and this is called insolvency, so Greece is effectively bankrupt. This is not the first time that that Country has gone bankrupt and indeed all Greeks will undoubtedly remember the statement made on 10 December 1893 by the then Prime Minister Charilaos Trikoupis, who said in Greek: "Δυστυχώς επτωχεύσαμεν" (distihós eptohéfsamen), which translates as "Unfortunately we are bankrupt".
So the Country was bankrupt then, and similarly it went bankrupt once again in the 30's. The Greeks truly can, and do honestly say "Δυστυχώς επτωχεύσαμεν ξανά" (distihós eptohéfsamen ksaná), or "Unfortunately we are bankrupt once again". So, let's stop bullshitting everyone by saying that Greece has not gone bankrupt because Greece has indeed gone bankrupt!

Same face, same race
However, it must be said that there is something rather strange about this whole restructuring deal and that is that it has not affected everyone equally because something happened that, if such a thing was to happen in the case of a private company, it would be called preferential bankruptcy and would be classified as a criminal offence. By the end of 2011, Greece's public debt amounted to 380 billion Euro, which is extremely high and more than 170% of GDP. One would expect that that figure would have at least been halved by now, yet it hasn't, but why? Well, prior to the restructuring and prior to the voluntary agreement to the public debt cutting proposal, a little sleight of hand occurred whereby the codes of all the bonds held by the European Central Bank, the Bundesbank, the Italian Central Bank, etc, suddenly changed and these bonds remained unaffected by either the proposal or the mandatory value cuts. These bonds, which remained as they were except for the new codes, received their interest earnings in full and the full value of the ones that had expired was paid out, no bankruptcy there then!
Now we can't honestly say that any private individual benefitted from all of this, but only the same old European Union financial system that lent the money in the first place. The action may even be justified, however, it is nevertheless rather strange and was discussed and even object to by Bundesbank President Weidmann, who felt that if the truth be told, this action appeared to be very strange indeed. So Greece was indeed bankrupt, but not when it came to the Greek Government Bonds held by the various central banks.
At this point, the important thing is not to become embroiled in any legal action against Greece and not to hand over any money to attorneys that promise to instigate legal action to recover at least some of the money that has been lost. Sovereign States are called "Sovereign States" precisely because the can decide not to pay their debts if they so wish, so either we declare war against them or that's the end of the story. Now no one is thinking of declaring war against Greece, however, it is important not to throw good money after bad by instituting legal action, even if there is a good chance of winning it in Court because, although a number of parties won legal cases against Argentina, some even in the American courts, it all came to nought because they won the court cases but they never did get any of the money awarded to them.

One question that many people are asking themselves is: "How come we have gotten to this point?" It is said that it happened because the Greeks were falsifying their public accounts and was making a mess of it too. This is true, undoubtedly Greece was utilising derivative contracts, which is the reason behind the disasters in many of our Italian municipalities, regions and provinces. Greece had even done this with Goldman Sachs, for example, when Mario Draghi was with Goldman Sachs, just in the interests of accuracy. They had hidden the shortfalls and had made the public debt appear to be less than it really was. All of this in unquestionably true, however, it must also be said that a little more diligence, adroitness and farsightedness by the European Union and the European Central Bank would also have gone a long, long way indeed. How is it possible that no one had any suspicions whatsoever until finally, in 2010, the financial markets began to become concerned about Greece? How come, since Greece's entry into the Eurozone, in other words for an entire decade there was never any suspicion that perhaps someone in Greece was busy fiddling the books or making things look better than what they actually were? Maybe everyone chose to look the other way because various other Countries, such as France, Italy or Germany were perhaps also doing something very similar. Someone had to know what was going on. Not everyone at the European Central Bank or the German one is a total idiot. There must have been some suspicion that all was not as it seemed, yet no one ever said anything. It would have been better if they had said something earlier, back in 2007 for example, when Greece's public debt amounted to only 115% of its GDP.

merkel is in a devilish bind of her own making, either she loses right wing industrial/bankster political support in germany, result: career down in flames.

or: europe jettisons greece like so much useless ballast and the rest of europe realises the hangman's rope austerian policy is and rises up to roundly defeat it.

and angie gets to go down in history as the willing idiot who pulled the lever, judge, jury and executioner all in one 3-fer!

when europeans realise the depths of this scam, and not only their fond faith in the humanitarian and peace-loving EU project was in reality just a way to hold the patient in coma while harvesting individual organs for sale to the invisible idiot with the groping, pickpocket, increasingly visible hand.

the 4 trillion E question is will EU citizens stand idly by seeing their sovereignty, nay even their national patrimony ripped from under their feet to keep the 1% in profits?

we may be learnedly helpless (good description of bloggers!), we may be spinning from the avalanche of lies coming from most media and our leaders, we may be senile and rendered penniless, hungry and thrown into the street, but their gamble that we aren't going to make any fuss as we go kettled into the alleys and brutalised by rentathugs, or herded into the showers of zyklon B to cleanse us of our fiscal sins.

people are not going to go into that good night as passively as our lords and masters, living in the past might wish.

why did it have to come to this indeed! as usual, the powerfreakery of a few greedy bastards determining the fate of millions of the duped.

the best they can hope for is we take our own lives and save them the trouble, as is sadly proving often to be the case...

the comeuppance for these parasites will he unstoppable once it kicks in properly, as their provocations practically guarantee that result. they have sated desire of honest governance with a consumerist ersatz satisfaction, as that is removed, expect sparks to fly and people who have nothing further to lose throw themselves into the gears of an unjust machine.

frau merkel is toast either way. she's lucky if she isn't carbonised... lecturing people after raping them is hardly fetching behaviour, and thatcher's drooling decrepitude surely also awaits her senescence.


'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty

by melo (melometa4(at)gmail.com) on Tue May 1st, 2012 at 03:21:17 AM EST
To give you some idea about the scale of the fraud involved. Pension funds in Greece were forced to participate despite the objections of their managers. Unlike the banks they were offered no recapitalization as a carrot. So i.e. the Journalists' pension fund went form a 2 billion in savings to 700 million Euros overnight. But furthermore the Bank of Greece which is managing the accounts of many if not most public institutions did something unprecedented. They took the money not only from the savings accounts but even from the current accounts of Hospitals, Universities, Public Authorities (the Pharmaceutical Regulatory Agency among others), bought government bonds without informing anyone from these institutions, and then pretty much decimated these accounts to the point that they were unable to pay bills and salaries... Interestingly a few weeks before the PSI took effect, the then Finance Minister (and now PASOK leader) Evangelos Venizelos, passed a law (hidden in some other bill) which gave immunity from prosecution to all BoG employees involved in managing public institutions' assets.

The road of excess leads to the palace of wisdom - William Blake
by talos (mihalis at gmail dot com) on Tue May 1st, 2012 at 07:01:36 AM EST
[ Parent ]
so there's reason, not just instinct, not to trust this man further than you can throw him, and with his girth, that ain't far.

he looks like the very personification of all that's sleazy about greek politics.

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty

by melo (melometa4(at)gmail.com) on Tue May 1st, 2012 at 07:06:12 AM EST
[ Parent ]
If you are referring to Venizelos he, as a high profile legal scholar, is the guiding power behind almost all laws in the past 20 years, that have secured and institutionalized "diaploki", the marriage between, big business, media and politics that has created the de facto new Greek elites. He has masterminded the laws protecting Ministers from prosecution, laws that have reduced protection of forests and the environment, laws that give away the air-waves to the Oligarchs, that protected the bankster involved in the Proton Bank scandal. He was also the person in charge of the Olympics' preparations etc. etc. Truly PASOK could not have a more emblematic leader...

The road of excess leads to the palace of wisdom - William Blake
by talos (mihalis at gmail dot com) on Tue May 1st, 2012 at 07:38:45 AM EST
[ Parent ]
Truly PASOK could not have a more emblematic leader...
...and his would be the perfect head with which to adorn the first spike.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Tue May 1st, 2012 at 10:16:34 AM EST
[ Parent ]
Machiavelli would not object. A little dismemberment does the elite some good.
by de Gondi (publiobestia aaaatttthotmaildaughtusual) on Tue May 1st, 2012 at 06:24:10 PM EST
[ Parent ]

Did you see the size of this guy? It would take a lot of dismemberment to do the job......

by Euroliberal on Wed May 2nd, 2012 at 09:48:57 AM EST
[ Parent ]
Actually the girth, height and beard of Cola di Rienzo betrayed him as he tried to steal away from Campidoglio dressed as a woman. He was properly run through after being held an hour before the Roman crowd, hacked to pieces and displayed in an near-by square. When his remains were burned several days later, written testimony has it that the fire lasted days due to his considerable reserves of fat.

No one missed him, a demagogue populist, although he was later sanctified in the 18th century as some sort of noble spirit.

by de Gondi (publiobestia aaaatttthotmaildaughtusual) on Wed May 2nd, 2012 at 11:24:24 AM EST
[ Parent ]
heh, looks can deceive, but...

he'd have fit in perfect with the berlusconi cult, did he learn his statecraft there perchance?

makes jack straw look friendly!

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty

by melo (melometa4(at)gmail.com) on Tue May 1st, 2012 at 03:04:55 PM EST
[ Parent ]
I'm having a WTF moment here...

guaranteed to evoke a violent reaction from police is to challenge their right to "define the situation." --- David Graeber citing Marc Cooper
by Carrie (migeru at eurotrib dot com) on Tue May 1st, 2012 at 05:04:17 PM EST
[ Parent ]
There is some version of the events here, but I haven't found a detailed account in English somewhere yet...

The road of excess leads to the palace of wisdom - William Blake
by talos (mihalis at gmail dot com) on Tue May 1st, 2012 at 05:37:30 PM EST
[ Parent ]
Would Greece be the anonymous country discussed by Gustavo Piga in "Derivatives and Public Debt Management"?
by de Gondi (publiobestia aaaatttthotmaildaughtusual) on Tue May 1st, 2012 at 06:18:14 PM EST
[ Parent ]
why, because of how fat the guy is, or my bad taste in bringing it up?

more likely because this guy takes 'overfed crook' to new levels.

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty

by melo (melometa4(at)gmail.com) on Wed May 2nd, 2012 at 05:49:12 PM EST
[ Parent ]
I want to know why the devilish games of falsification are being portrayed as secretive or hidden, and yet there are articles such as this one published many years ago:


Equally murky is the exact effect of Goldman Sachs' transactions on Greece's publicly reported national accounts. Since the deficit was a comfortable 1.2% of GDP in 2002, it is more likely that the cashflows were either used to help lower the debt/GDP ratio from 107% in 2001, to 104.9% in 2002 (by funding buybacks) or to lower interest payments from 7.4% in 2001 to 6.4% in 2002. But why did the large negative market value of the swaps not appear on the liability side of Greece's balance sheet?

The answer can be found in ESA95, a 243-page manual on government deficit and debt accounting, published by the European Commission and Eurostat in 2002. As revealed by Piga, the drafting of ESA95's section on derivatives was the subject of fierce arguments between the government statisticians and debt managers of certain eurozone countries.

The statisticians wanted derivatives-related cashflows to be treated as financial transactions, with no effect on deficit or interest costs, and with the derivatives' current market value stated as an asset or liability. The debt managers opposed this, insisting on having the freedom to use derivatives to adjust deficit ratios. The published version of ESA95 reflects the victory of the debt managers in this argument with a series of last-minute amendments.

Goldman of course claimed that Eurostat was consulted:

http://www.risk.net/risk-magazine/news/1593054/corrigan-goldman-sachs-consulted-eurostat-greece-curr ency-swaps

Eurostat then claimed ignorance:

http://www.risk.net/risk-magazine/news/2070897/eurostat-continues-deny-knowledge-greece-goldman-swap s

Eurostat is apparently like many of us. The past is the past. There is no history there. But of course, Eurostat is then also claiming incompetence by claiming ignorance since the publishing trail for the deal is widely known. Only Eurostat seems unaware.

Perhaps the powers that be are relying on journalistic amnesia. After all, the very person who wrote the original 2003 article, Nick Dunbar, recently wrote a piece about the deal in which he seemed to aver that the deal was first uncovered in 2010. Either Dunbar has much editorial oversight in his work or else he has a severe amnesia about the things he himself has previously written about.

Did people know? Well, if you're following the budget deficit reports of the countries in the Eurogroup's sights, you already know that statistical manipulation is still occurring. Whereas Ireland has been prevented from properly logging the nature of outstanding banking debt that the nation is responsible for, Portugal has been allowed to shift debt (1.9% of GDP) from its current account to a pension account which is strictly off the books and thus allows Portugal to meet its requirement.

by Upstate NY on Wed May 2nd, 2012 at 09:57:51 AM EST
[ Parent ]
Looks like the rule of thumb is: "So long as most will either ignore, not remember or not understand you can use the truth freely."

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Wed May 2nd, 2012 at 10:07:53 AM EST
[ Parent ]
I messed up the big block quote directly after the first link. Those are not my words.
by Upstate NY on Wed May 2nd, 2012 at 03:39:22 PM EST
[ Parent ]


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