Believe those who are seeking the truth. Doubt those who find it. Andre Gide

Sunday, May 16, 2010

Beware of Greeks Bearing Debt

I cannot believe that Greek Prime Minister George Papandreou is a stupid man. So I attribute the following to how low a politician can find it profitable to stoop:

Greek Leader Considers Actions Against U.S. Banks

Here are some choice bits.

Both the Greek government and its citizens have blamed international banks for fanning the flames of the debt crisis with comments about Greece's likely default, actions that are causing the country's borrowing costs to soar.

Right. Those big bad international banks (you know...the ones that lent you all that money)...they are now trying to scare everyone into thinking you won't repay! Greek citizens themselves, running amok through the streets of Athens, have done nothing themselves to fan these flames. Nope, nosiree.

Papandreou also said a parliamentary investigation will examine the rapid swelling of Greece's debt and international banking practices to examine whether the financial sector engaged in "fraud and lack of transparency."

I think I may have been wrong: perhaps he is stupid. Shameless, at the very least. Stupid for believing that anyone won't blush at the hyprocisy underlying this statement.

The Greek leader also urged more regulation of the markets which, in his view, are now betting against the European governments that have poured billions into them since the global financial crisis began in 2008.

Yes, yes...let's have a regulation in place that prohibits anyone from taking bets against Greece. What a wonderful idea. Practical too.

"We are ready to make the changes ... we have made our mistakes. We are living up to this responsibility. But at the same time, give us a chance," Papandreou said.

I think that people would dearly love to, Mr. Papandreaou. But you are making it very difficult!

Note to the PM: If you want lower borrowing costs, then why not pawn one or two islands? No one would take you seriously, of course. Which is precisely the point, I'm afraid.


  1. Maybe Papandreaou isn't _that_ stupid:

    Greece is almost bankrupt. On May 19, 8.5 billion Euro of Greece bonds mature, and Greece does not have the money to pay its debt. Will Europe give a shoulder to Greece? The bonds have lost 12% in the past year, meaning that the public was aware of a non-negligible probability of government default.

    And I sit in my cozy home, and wonder why the investors panic. If Europe does not thank Greece for its monetary carelessness with a 120 billion Euro present, then Greece is dead. And then nobody will buy bonds of any other weak European country, and Portugal and Spain will follow suit. And the European Union will die as well. Simple backward induction tells you that the 120 billion will end up in Greece. In fact, as the statements of the Greek Finance Minister show, in Greece they did this backward induction as well.

    But Aumann tells us that we cannot agree to disagree. So if the bonds lost 12%, and since I have no additional information that the public does not possess, then indeed there is (or at least, was) a non-negligible probability of default. Was there indeed a chance that Europe would not pay for Greek’s irresponsibility? Was the drop in the bonds’ value necessary to convince Merkel and Sarkozy that the market believes that the existence of the EU is in danger? Anyone has a clue?

  2. Papandreu is a socialist. He is not stupid, the people who elect/believe him are. He says the things that are expected from him to say if he wants to stay in power. He knows Greece will be bailed out anyhow, so why worry, just talk and delay, like most politicians, especially in that part of the world, the aim is to stay in power as long as you can and "apres moi le deluge".