naked capitalism

Richard Kline says:

To my mind, there has clearly been a significantly predatory trajectory to attacks on the Euro bond market. That market was vulnerable, an area where the Wide Boys could make a killing because the Eurozone lacked the governance structure to make a ready response, and in fact had political divisions which trammeled a swift or effective response. Wonder where all those 61 profitable days came from? Some of this action surely figured int.

—But while the activity may well have been substantially malevolent, the EU put its upper parts in the stocks without a key to get out; they did it to themselves. Significant changes in how the EU and the Eurozone operate will be necessary to protect themselves from further pillaging, so perhaps the long-term result will be salutary. But one thing we have likely seen very nearly the end of, here, is the end of naivety regarding what it takes to manage a major currency in the present global environment. The Wide Boys found an exploit—attack the tiny cripple and short the rest—which those red faces in Europe now have to sew up.

PJM says:

Dear Yves, I dont believe that Greece has a real case to win in the court od law. And seems to me this suits are a vendetta agaisnt american institutios because others investment banks were playing that game with Greece, not only americans banks.

But I congratulate you for this statement:

“As we mentioned late last week, the EU is in the process of putting rules in place to restrict predatory behavior by private equity and hedge funds. Tellingly, the US is trying to characterize these efforts to impose rules as protectionism, when that is not their aim (by the same token, food and product safety rules may have protectionist side effects, since not all exporters may be able to meet those standards, that is typically not their main objective).”

I like yours opinions when are fair.

Let me tell you what I think. In fact, some atacks to the euro and his debt are deliberated because Europe wants to stop OTC derivatives operations that are used to manipiulate and rig the markets and stole the investors. These atacks from some american and british banks and their hedgefunds arms are concerted with the Admnistration Obama that covers this bullshit proteccionism excuse.

What looks to me is that a lot of american opinion makers are blind, to be polite, with this kind of war, between american oligarchs and his Administration Obama against Europeans, because we want to stop this nasty behaviour in the OTCs market. And inst only the war agaisnt our wish to regulate OTCS but also the hedgefund industry, when some masters think that are pure capitalists without law and order.

What is sad is seeing american people to be lied by their leaders, like Geithner, who is the lawer of these “pure capitalists” and “gods”, as tehey like to show to others.

What is sad is seeing how easy is for some to manipulate and rig the markets and profiting with their behaviour and nobody has guts to fight this predatory behaviour. What is sad is seeing wild west capitalism in the core political system, in the Admnistration Obama and in the both Houses, Congress and Senate.

Whats is sad is seeing absolutely impossible profits in normal free markets, as they make money everyday without losses. Everybody who understands markest and lives in the sector knows that is impossible unless you rig, manipulate and cheat others markets participants.

But as I said before, I salute you for your understanding what is the purpose of europeans when we want to regulate OTCs and derivatives markets. Thanks and cheers to you.

tz says:

It is more like factory with flammable substances keeps getting fire alarms and the sprinklers go off.

Insurance company complains.

The man from GS installs silent fire alarms and puts a master valve on the sprinkler system, and puts a few fire extinguishers around. For a decade the fires continue, but are put out by the extinguishers.

Then the whole factory goes up in one big woosh of flame.

Insurance company says they won’t pay, but factory owner counters that GS said it was safe and Insurance company knew about and approved of the changes since they didn’t have to pay out.

If there wasn’t this obfuscation, Greece would have to have paid a higher rate or cut benefits over the last 10 years – it would have been gradual rather than catastrophic.

This is the same thing as liars loans, and banks apparently can sometimes push back loans that were fraudulently made (e.g. if they said they checked income but didn’t really do it).

Greece is sovereign so can make the rules (ask UBS about maintaining secrecy from foreign tax authorities). They can probably nullify contracts or retroactively apply an expansive definition of fraud (contracts aren’t always valid as written, and if you accept an invalid IOU you would be out the money).

This greek tradgedy will have several acts. Start making popcorn.

moe Green says:

Great Piece.

Narrative fallacy and projections…..

Fascinating how people project the U.S. system onto other nations–heck most americans have a limited grasp of the U.S. system. Lot of piecing together of some facts gleaned from the press and basic investment instrument defintions…

Greeks may or may not have a case but hard for U.S. folks to grasp that European legal system is principle based not rule based. Also, Parliamentary systems deliver very different results and approaches than the Presidential strong man and appointed executive branch (Ministers stand for elections, Secretarys wholly follow president etc…).

It will be interesting but nobody can predict what will happen in the best of cases. Projecting half understandings of the U.S. to other nations will yield nada!

Love your work Ives. Some great posts and some probably teenagers in a basement in Omaha…