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Archive for October, 2011

Greece GFC and Default!

Today I’m launching a new series on Conspiracies. I’ve previously covered some in other entries, so today we begin fresh, and the ones already covered are archived for your enjoyment.

Today I’m going to cover the Greek and USA debt crisis’s. In the USA the federal government bailed out the very financial institutions that caused the problem – yet in Greece the federal government is forcing their insolvent bonds upon their own banks (basically stealing their money) while at the same time plans are in motion to default on these bonds.

The GFC was caused by certain financial institutions deliberately conspiring a ponzi-scheme in which only they could profit from. To put it simply they approved loans to people who they knew were unable to repay the loans; and would then on-sell the mortgage to somebody else so that when the loan is defaulted on they can’t loose any money. It was in their interests to keep selling as many insolvent mortgages as possible and, in a sense “shorting them”, since they would make at least some money on each and every one, even if the speculators who are sold the loans loose their money and if the “clients” loose their homes. The reason why speculators bought these insolvent loans was because the financial credentials of the “clients” were misrepresented to make it appear as though the loan is legitimate. These conspiring forces are the same very ones who received huge government bail-outs.

The Greece finical crisis was caused in a very different way. When Greece joined the Eurozone they exchanged the Drachma (their existing currency) for the Euro. As a result interest rates dropped dramatically – by about 2% over the two year period 2001-2003 for instance. This in-turn made it easier for the Greek government to borrow vast sums of money cheaply. To make matters worse, the government lied about their deficit further devaluing their bonds and status internationally.

Doesn’t really sound as much of a conspiracy does it? Well here’s the problem… When you lie about numbers, and conspire to borrow more than you are telling the public – that constitutes a conspiracy, so indeed this crisis was caused by a short-sighted and ill-witted conspiracy to spend too much money too quickly to “boost” the economy.

It’s all money does it really matter? Let’s look at this another way now. Could the US-caused GFC and the Greek financial crisis have been caused by the exact same forces? Here’s what we know for certain – Goldman Sachs was instrumental in helping Greece disguise its mounting debts; Goldman Sachs was also one of the foremost responsible for causing the GFC (by selling bad mortgages and then selling them on to other speculators), and received a huge bailout from the US government.

Okay, let’s consider it this way. In 2004 Greece effectively admitted lying about its annual deficit in order to get into the Eurozone. EU’s rule is that no country is allowed to have an annual deficit greater than 3% of GDP. In 2009 Greece’s deficit was 15.4% in 2010 10.5%.

Any way you look at it the Eurozone was doomed to fail from the start. After all, by very definition alone it was based upon communist ideals. Greece would never have gotten into this position without becoming a member of the Eurozone; yet conversely it doomed them to this fate from the very start without even meaning to.

I am highly critical of the Eurozone and I think that the value of the Euro has not yet dropped to its true value. We’ll wait and see…

As for the US; since treasury, the federal reserve and banks/financial structures like goldman sachs remain in bed together the inevitable future is that the ponzi-scheme mortgage-shorting will continue and (naturally) create another financial crisis; although next time – hopefully – it will be more contained to the USA and Wall Street.