Friday, June 17, 2011

Wall Street Vultures Mop Up Athen's Blood

So Goldman Sachs sells their built-to-fail CDOs as wonderful investments to its clients, which include state pension funds. Now, as states are failing due to lack of tax revenue (unemployment, foreclosures) and the mandate to balance their budgets, Goldman swoops in like a vulture to pick off jewels (like toll bridges) for bargain-basement prices (Indiana). Wall Street never loses. They pick the politicians, they write the legislation, and they hire the government toadies as their lobbyists when they leave government.

Greece has to pay 29% on its bond issues and nobody’s buying. S&P threatens to downgrade 3 French banks and they don’t even have great exposure. If Greece goes, who’s next? Ireland, Portugal, even Spain? How far does the damage go? Who is holding CDSs on the losing side? How much bloodletting is there?

The banksters grin as they watch Athens burn and bet short on European banks.

Geithner, Bernarke and Obama are very silent about the tentacles of their machinations in the Eurozone creditor bailout. Make no mistake, it's either them or us, and it's always THEM.

Tim Geithner, the U.S. Treasury Secretary, insisted that an Irish bailout go to creditors and the taxpayers should take the fall, just as he did with AIG. You may not recall, but Geithner authorized that AIG pay (which means the government paid, which means the U.S. taxpayers took the fall) Goldman Sachs, the biggest credit default swap player insured by AIG, 100 cents on the dollar. He could have negotiated for a lesser deal. God knows (Goldman knows, not the same thing) that those structured financial vehicles built on subprime mortgage sand and bet upon weren’t worth half that. In Edward Harrison’s website
Credit Writedowns
, he details Geithner’s involvement with the indebted Eurozone:

UCD economics professor, Morgan Kelly’s article in the Irish Times last month appeared to reveal for the first time that a hitherto unknown player in Irish economic affairs, US Treasury Secretary Timothy Geithner had played a pivotal role in the IMF/EU bailout negotiations last November 2010.

According to Morgan Kelly “The deal was torpedoed from an unexpected direction. At a conference call with the G7 finance ministers, the haircut was vetoed by US treasury secretary Timothy Geithner who, as his payment of $13 billion from government-owned AIG to Goldman Sachs showed, believes that bankers take priority over taxpayers. The only one to speak up for the Irish was UK chancellor George Osborne, but Geithner, as always, got his way. An instructive, if painful, lesson in the extent of US soft power, and in who our friends really are”.

This came as a major revelation. And since the publication of that article, Taoiseach Enda Kenny came under pressure to discuss the matter with President Obama on his whistle-stop visit later in May, and yesterday Tanaiste Eamon Gilmore who is in Tanzania and met there with US Secretary of State, Hilary Clinton, was asked if he had brought up the “matter” with her.

But what “matter”? I suppose we want to know why someone from the US would interfere in a bailout for Ireland. If that is what we want to know then Wikileaks has already provided the answer apparently. In their release of US State Department cables, there is one which reportedly seems to explain exactly why the US had a keen interest in bondholders in Irish banks being repaid: Secretary Geithner was concerned that if Ireland refused to repay bank bondholders then, in the words of Britain’s Telegraph “that could have spread contagion to the entire European system, to which American-backed “credit default swaps” were exposed to the tune of €120bn”. Wikileaks appears not to have published any cables beyond February 2010 on its website, and presumably this cable from Secretary Geithner is dated towards the end of the 2010, so an attempt will be made with the Telegraph to get the source cable and this post will be updated with any response).

As we watch the Eurozone disaster unfold, it is again the people who are taking the fall. Only in the cradle of democracy they’re not so polite. They don’t understand why the banksters, who caused all this mess (one day check out what the Greek government swapped for its airports; if you said, “Magic beans,” you would be too generous) are getting paid while the rest of the population suffers huge cuts in pay, major layoffs, huge tax increases and other austerity measures. These measures are so onerous they are toppling governments. Not in the Arab Spring, but in Europe. In Rachel Donadio’s article in The New York Times, people are questioning the choices of their governments and wondering if the fabric of society will remain intact:

>“A year ago it was bad, but not like now,” said Irene Anastasiou, 22, a quiet marketing student who has been taking part in a peaceful sit-in in Athens’s central Syntagma Square for the past three weeks. “I am a young Greek girl. I have dreams, and they destroyed them,” she said of the government.

In Greece, “clearly there is a sense that this society is reaching the breaking point,” said Jens Bastian, an economist at the Hellenic Foundation for European and Foreign Policy in Athens. People are asking: “ ‘Where is this going to lead? Why are we making these cuts? Why do I have to accept that I have less income? What’s the larger purpose of this?’ ”

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