naked capitalism

rjs says:

hope you dont mind this: its output of the bing translator on your french story;

On February 6, on this blog (it is here), I annonçais that Greece was victim of speculative attacks on the part of a large Bank of American business and “hedge fund” (hedge funds) American pariaient on a default in payment of Athens. Until then, we certainly knew that there was speculation, but no one had yet managed to put a name to those who sought to destabilize Greece and the euro area. At that time, my informant had discouraged me to mention names, from which an article quite frustrating, for you and me. But since then, market rumours are made more precise and their names are openly cited in the media, even if it is with good reason, very carefully. The Greek Government itself shall now openly in question. I can therefore confirm that, according to concurrent sources, Goldman Sachs and speculative Fund managed by John Paulson would be the two main actors attacks against Greece and the euro. I’ve already detailed you in my post from February 6 speculation mechanism and I will therefore see are not.
More shocking, in this case, is without doubt the role played by Goldman Sachs, at a time, advises the Greek Government, and supports secrecy, positions against Greece and the euro. This disorder role is illustrated by the recent case recalled by February 8 Spiegel and the New York Times February 14 (1): in 2002, the Bank of American case helped Greece, against remuneration of 300 million dollars in “creative accounting” operation designed to cover up some of its debt (I will come back in a future column). It is not neutral that at that time Vice President Europe’s Goldman was other than Mario Draghi, become since Governor of the Central Bank of Italy, and just see the position of Vice-President of the European Central Bank him pass under the nose. This special role of Goldman Sachs is illustrated by the fact that the Bank has always been member of syndications in Greece (just as in Portugal): it is a consortium of banks loaded by a Government to put its debt of investor when it is not sure you can directly put on the market by public tender.
Remember also that on 25 January, Greece has managed to put paper in 5 years for an amount of 8 billion euros then that she did at the outset that 3 billion: demand reached EUR 25 billion! In syndication placed Greek paper, there is of course Goldman Sachs. So far, nothing as very familiar. It is then that a curious fact occurs.
After this spectacular success, everyone thinks that the markets are calmés, since they come to express that they believed not a defect in Greece. And indeed, this is the lull. But as soon as Wednesday, it is again the storm. An article in the financial Times, single log that read market, operators has indeed just assert that China refused to buy a ‘private placement’ inclined Greek borrowing EUR 25 billion by… Goldman Sachs. What is it? When a Government is concerned to put its debt, it asks directly to a bank to do so on behalf of one or more investors. It is a sign of panic. And the fact that Beijing would have declined the offer is downright alarming. In short, two reasons to flee from Greece markets. This will be belied but markets will require still Athens a yet higher risk premium to their benefit. Those organized brain gain on all fronts: their loan relate them more as well as their CDS these supposed to guard against a default of the borrower (see my post on February 6) State insurance.
The problem is that this leak is amazing, this type of operation being supposed to remain completely secret. However, since then, the financial Times has revealed that in fact it was the number two of Goldman Sachs, Gary Cohn, who went in November and January to Athens to try to convince the Greek Government to use its services to place debt China EUR 25 billion. In vain. And by an express fact information was then broadcast, virtually making Greece knees and forming fall the euro.
As of today, Échos Simon Johnson, the former “chief economist” economist the IMF wants the European Commission investigating the actions of Goldman Sachs. This actually seems to win (2).

(1) This case is definitely not a sample secret.Par, Mark Brown and Alex Chambers described the operation in their article published on September 1, 2005 in Euromoney explicitly titled: “How Europe ‘ s Government have enronized their debts”.

(2) See also embarrassing questions it poses to Mario Draghi.

mangy cat says:

re canadian rashers
at the opposite end of america, argie president krishistina f.k. has decreed the contradiction as resolved
for her, one thing leads to another

MichaelC says:

Merkel better hope the wrath of the EU is spent on GS before Deutsche Bank’s derivatives get an airing. All the IBs, Anglo and Euro are already TCTS. Alas, Goldman won’t be the sacrificial lamb. Fun times ahead.

john c. halasz says:

Here’s the FT account from a couple of days ago:

http://www.ft.com/cms/s/0/87c3d0c6-1b30-11df-953f-00144feab49a.html

MyLessThanPrimeBeef says:

Yves should start a daily ‘What is Goldman doing today?’

My guess is they are taking a break from attacking Greece to speculate in oil.

charles says:

Yves,
the really interesting article from Quatremer is the preceding one http://bruxelles.blogs.liberation.fr/coulisses/2010/02/les-march%C3%A9s-financiers-am%C3%A9ricains-attaquent-leuro.html

“D’après mes informations, les deux hedge funds qui tiennent l’essentiel du marché grec des CDS ont été furieux de n’avoir reçu que 2 % du dernier emprunt grec (lancé le 25 janvier, pour une durée de 5 ans, il a recueilli 25 milliards d’euros de demande, pour 8 milliards finalement levés). Comme ils ont acquis beaucoup de CDS, il leur fallait, pour garantir leurs gains (en cas de chute des taux desdits CDS), mettre en face du papier, c’est-à-dire des emprunts d’État ….
Car ils ont un gros problème : pour l’instant, ils ne peuvent pas vendre ces CDS sinon ils feraient eux-mêmes baisser les cours. Pour montrer leur force de frappe, et faire grimper encore les CDS, ils attaquent donc la Grèce en créant de la panique …
… Même jeu pour la banque d’investissement américaine qui espère, à terme, pouvoir prêter directement de l’argent à une Grèce devenue incapable d’emprunter sur les marchés. Une fois le pays à genoux, elle ira voir le gouvernement pour lui proposer un prêt à un taux évidemment prohibitif…
Afin d’accroître la panique, ces hedges funds et la banque d’investissement américaine se sont mis à vendre à tour de bras de l’euro, suivis par des investisseurs tétanisés. Si l’euro baisse, n’est-ce pas parce que la zone euro va éclater ? Ce qui justifie que l’on exige des taux d’intérêt toujours plus hauts de la Grèce, du Portugal et de l’Espagne…”

which translate roughly in

“According to my sources, the two hedge funds that holds most of the Greek market for CDS were furious to be alloted only 2% of Greek Government last issuance (launched on the 25/1 for a 5Y maturity, it attracted 25 billion euro bids, but 8 billion only were issued). As they had a lot of CDS, they needed, in order to lock their profit, to back it with Government paper. So now they have a big problem : They can’t sell their CDS because it would reduce the spreads. To show their muscles, and make the spread climb even higher, they attack Greece by creating panic….
Same game for the American Investment Bank (sic) who hopes, eventually, to lend directly money to a Greece that cannot borrow any more in the market. Once the country is on its knees, it will go and see the government to propose a loan at a usurious rate.

In order to increase the panic, these hedge funds and the American investment bank started to sell euro in size, followed by scared investors. If euro goes down, shouldn’t it be because the euro zone will explode? That justifies asking ever higher interest rates to Greece, Portugal and Spain…”

It is a classic, “blame the short seller” story. I am surprised that you are actually on this side of the choir Yves. What Paulson says to Greek and Euros government is essntially the same thing that Chanos said to Skilling at Enron : they are (not only Greece !) massively lying on their national accounts and can’t expect to have the trust of markets for ever.