Some readers may only have a passing interest in financial news and perhaps none at all when it comes to esoteric instruments like CDS's on Greek Goverment bonds, (In simple terms, this is like buying an insurance policy on Greek bonds, or any bonds for that matter, in case they default.) No matter, stick with me on this one.
You'll be aware that the Greek economy has recently been exhibiting all the characteristics of an ill fated passenger liner that set sail from Southampton in 1912. European Union ministers meet this week to try and hammer out a support package otherwise the Greeks may go to the IMF. No need to get bogged down with the quite complex geopolitics at play here but in the run up to this meeting the Greek government has been virulent in it's attacks on "speculators," who they blame for creating the crisis.
Prime Minister George Papandreou is among the global leaders that have been pushing for increased financial market supervision of CDS and a crackdown on market manipulation. In fact, he threatened to spit in the face of anyone who bought them and the silliness extended to the Spanish and Greek secret services saying they would spy on CDS traders in New York and London.
“We are in a state of war, in a battle against special interests, both at home and outside Greece. It is a battle against speculators and for transparency, so that markets are at the service of the people, not the other way around.”
No George my fine furry friend, idle tax dodging Greeks are the cause of the crisis, not the people who are highlighting the symptoms like only four citizens paid tax on earnings of over 1m euros last year.
Still with me because this is the good bit? Greek daily Kathimerini has uncovered that the biggest speculator, holding 15%, or $1.2bn of the total $8bn in Greek notional CDS is a firm which is about 600 yards from the Greek parliament in Athens............ the state owned Hellenic Post Bank (TT).
"With a position totalling 950 million euros, or 1.2 billion dollars, TT had the ability to shape momentum in the speculative derivatives market which the Greek government wants to be controlled."
Good to know we're not the only ones with an incompetent Prime Minister................... ho hum!