Hedge fund speculation against Greece

This video is called Gerald Celente: Hedge funds affecting the Euro.

By Ulrich Rippert in Germany:

Hedge funds speculate on Greek default

8 March 2012

Today is the deadline for private investors in Greek government bonds to decide to what extent they will voluntarily participate in a debt relief deal. The Association of International Finance (IIF), which negotiated the so-called “haircut” with the Greek government, has warned of catastrophic consequences should the debt swap agreement fail to be implemented.

IIF President Charles Dallara said Tuesday that an uncontrolled default of Greece would cost more than a trillion euros, as the resulting panic on the markets spread to Spain and Italy. Under the headline “Fear of a Trillion Bankruptcy”, the German financial newspaper Handelsblatt reported Wednesday that some banks were “speculating on a decline of the euro”.

The American hedge fund Greylock was the first to refuse to participate in a debt haircut for Greece and has since been followed by other large private investors. Uncertainty over a voluntary debt solution for private creditors led to severe losses on the stock markets on Tuesday. The German DAX at one point plunged by three percent.

A voluntary debt swap is part of the agreement reached by the finance ministers of the euro zone at the end of February. Their approval for a second financial package for Greece of more than €130 billion was subject to two conditions: first, the implementation of savage austerity measures, and second, a debt haircut for private bondholders amounting to 53.5 percent of the nominal value of their Greek bonds.

The social cuts were adopted by the government and parliament in Athens in the face of increasing popular resistance. But private creditors are stepping up their own offensive and demanding new conditions.

This is despite the fact that the banks and investment funds involved in the debt deal have already been compensated. The new €130 billion “bailout” package for Greece involves transferring €93 billion to the banks in return for their write-off of €107 billion of the face value of their Greek bonds. This is under conditions where the banks involved have long since written off the bulk of these bonds.

The terms of the relief packages for Greece were dictated by the banks and have led to an increase in the financial and political power of the international financial aristocracy. As a result, the reactionary profit motives of a handful of the most rapacious private investment groups are now able to determine the fate of Greece and other euro countries.

Under the headline “Hedge Funds Threaten Debt Deal,” the Süddeutsche Zeitung writes: “Hedge funds with racy names like Marathon, Saba or Vega hold up to a quarter of the Greek bonds held in private hands.” The newspaper points out that if a number of other hedge funds follow the lead of Greylock, the acceptance rate of the deal rapidly falls below the necessary 90 percent.

What is publicly presented as the financial markets’ “sacrifice,” a “waiver” by private creditors, giving up over half of the value of their Greek bonds, is in fact a financial gift to the banks; here.

On November 4 US prosecutors imposed a $1.2 billion fine on hedge fund SAC Capital Advisors for engaging in insider trading “on a scale without known precedent.” The hedge fund is owned and managed by Steven A. Cohen, who has become enormously wealthy through SAC’s operations. His 2012 net worth was estimated at $9.4 billion: here.

5 thoughts on “Hedge fund speculation against Greece

  1. Parliament rubber stamps labour laws

    SPAIN: Parliament pushed through the right-wing government’s vicious new labour laws today by a 197-142 majority.

    The vote rubber stamps the changes introduced by decree last month which make it cheaper and easier to fire workers.

    Unions have vowed to continue opposing the new rules, which coincide with a 23 per cent unemployment rate which is expected to rise.



  2. Workers shut down Athens transport in one-day strike

    The metro, trams, and ISAP trains in Athens ground to a halt on March 1, as workers staged a 24-hour stoppage against the government’s austerity programme, including the slashing of wages and pensions.

    Many workers have already taken early retirement in order to avoid facing even more cuts, with the resulting lack of staff causing serious operational problems.


    Culture Ministry staff in Greece to continue protests

    Staff employed by the Culture Ministry announced this week that they will protest against the austerity programme every Thursday in March. In October 2010, staff employed at the Acropolis in Athens held a three-day strike to protest the loss of 320 temporary employees’ jobs. The strike ended only after it was brutally suppressed by riot police mobilised by the previous PASOK government of Prime Minister George Papandreou.

    Medical staff protest in Thessaloniki, Greece

    On Wednesday dozens of emergency medical workers employed by the National First Aid Centre (EKAB) held a rally in Thessaloniki, Greece’s second city. The workers are protesting against a new nationwide civil service payroll scheme that will result in deep pay cuts.

    One of the protesters involved told Kathimerini, “We are already owed money from May and June, and now because of the retrospective cutbacks many of us will get paid just 100 euros [US$133] a month for the next three months”.

    Workers employed by PASOK protest non-payment of wages

    Staff employed by Greece’s Panhellenic Socialist Movement (PASOK) held a protest Wednesday at the party’s headquarters in Athens to demand the payment of four months’ wages.

    The action involved several dozen staff who blocked the front of the building on Ippocratous Street for an hour. PASOK was elected in 2009 and immediately began to impose an unprecedented austerity programme. It is now part of the unelected coalition of Prime Minister Lucas Papademos, with the conservative New Democracy party.

    PASOK is heavily indebted and owes an estimated €120 million ($160 million). It has been forced to borrow against future state funding.



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