Ignorant European Elites Fume At Markets

[samclem]

The money is being used in part to repay Goldman Sachs and it's European bank cronies in full, for the fraudulent loans made to a previous (conservative) Greek government, so it could hide it's debts and enter the EU.

But the articles at the links you provided (to the NYT and WSJ) don't support your contention that the loans were fraudulent (unless the Greeks were the ones committing fraud by not disclosing these deals to the EU). From the NYT:

Wall Street did not create Europe’s debt problem. But bankers enabled Greece and others to borrow beyond their means, in deals that were perfectly legal. Few rules govern how nations can borrow the money they need for expenses like the military and health care. The market for sovereign debt — the Wall Street term for loans to governments — is as unfettered as it is vast.
“If a government wants to cheat, it can cheat,” said Garry Schinasi, a veteran of the International Monetary Fund’s capital markets surveillance unit, which monitors vulnerability in global capital markets.

People should stop blaming Greek workers for the fraud committed by Wall Street bankers. . . I don't understand why the European masses don't get this, why they don't kick out the bankers, why they blame themselves.

Where's the fraud by Wall Street bankers? And, history is full of examples of people paying the price for bad decisions by their governments--that's the way the world works. Maybe it's not "fair", but that's why elections are so important--there are no do-overs. The rest of the world doesn't care that "it's not our fault, it was the previous government that [wasted all that money/started that war/ruined our industries, etc] And the idea that the cash-starved Greeks would kick out bankers at this particular time is, um, "unrealistic". Unless they are forced to, by their new masters at the IMF and in Brussels.

 

[REWahoo]

Here is an article saying the Greeks blame their political system, not Wall Street:

What you will hear time after time, both at the protests and at workplaces and cafes, is that this crisis confirms the failure of the country’s political system. In other words, that for years politicians have been bleeding the country dry, looking after themselves and their friends and failing to build a robust economy and a country equipped to deal with the challenges of the 21st century.

There is anger at the pervasive, high-level corruption for which no politician is ever punished. People are also furious that no government has ever tackled influence-peddling in the public sector. The Greek branch of Transparency International estimated that Greeks paid almost euro800 million ($1 billion) in bribes last year. Why the Greeks are so angry

 

[EveryLady]

Here is an article saying the Greeks blame their political system, not Wall Street:

From the same article - Why the Greeks are so angry - Europe- msnbc.com

"This feeling of unfairness is compounded when tax evasion also goes unpunished. Salaried professionals and civil servants have their wages taxed at source but many Greeks do not. And, what they declare often bears no resemblance to what they actually earn. The government believes that tax evasion could be worth up to euro30 billion ($38 billion) a year, or 12 percent of the country’s GDP. Allowing one part of the population to consistently get away without paying while Greece’s public finances are propped up by the same people all the time creates incredible resentment. That’s why you hear many Greeks say they will put up with the austerity measures if the government ensures that everybody pays their fair share. If people believe that the usual suspects, who in many cases are wealthy businessmen, doctors and lawyers, are allowed to get away with it, then the level of anger will go up several notches.

A NY Times article describes Greek tax dodging as a way of life.

"How Greece ended up with this state of affairs is a matter of debate here. Some attribute it to Greece’s long history under Turkish occupation, when Greeks got used to seeing the government as an enemy. Others point out that, classical history aside, Greece is actually a relatively young democracy."

Greek Wealth Is Everywhere but Tax Forms - NYTimes.com

So we've got Greek attitudes towards taxes (inherited from Turkey) meeting up with the EU-style social compact (influenced by the early manorial system flipped around into the welfare state) meeting Wall Street-style capitalism (developed within a population whose ancestors fled authoritarianism and over-regulation and set up shop in a culture also influenced with a dash of Puritanism).

 

[Green Retirement]

Samclem and REWahoo:
The reason that the Goldman Sachs Greek Debt deal is fraudulent, is because Goldman Sachs helped/offered/enabled Greece to hide it's debts, so it could enter the E.U. In exchange, Goldman got all landing rights fees at their airports and such. Furthermore, Goldman shorted the Greek debt using derivatives, so they would win either way, just the way they did with the U.S. housing market and they are now facing criminal charges.

It would be the same as if you were trying to get a home loan, but your debt to asset ratio was too high, so I offered to take on and hide part of your debt, so you could qualify for the loan, charged you lot's of interest with a big balloon payment, and got to rent out your backyard pool on the weekends if you couldn't pay me back.

Because of our deal, you got the home, and everything was cool until you lost your job (recession) and couldn't make the payments. You ask me if you can re-finance the debt and maybe lower the outstanding balance, and I (Goldman Sachs) tell you I want all the money and I want it now. The bank (E.U.) discovers that you were hiding your debt from them and is pissed. But wait it get's worse.

Your wife and kids (the Greek people) had no idea that you entered into this horrible deal with me, and now discover that they can no longer use their pool, and may have to rent out a couple of their bedrooms as well to payoff some stranger - and of course they start yelling, screaming, and throwing dishes at you (riots in the streets).

I'm a former banker. Believe me when I tell you that what is happening in Greece, Greek workers being forced to give up their retirements to pay back Wall Street, is going to happen in the U.S. Again, it's already underway with the Wall Street/Congress/Obama axis of evil Budget Deficit Commission. Something every American should be trying to stop. I'm non-partisan. Both parties and the president are corrupt.

samclem: You are right, the American people will get what they deserve, ignorance is no defense. However, in defense of American and Greek workers, they are purposefully being kept ignorant. The financial and mainstream media works for Wall Street. Anyone who says anything counter to the spin being promulgated by Wall Street is labeled a crackpot conspiracy theorist - REWahoo I'm talking to you. And regarding your article about Greek corruption and samclem calling the Goldman Greek deals legal - Wall Street spent $350 million last year legally bribing our politicians - it's called "lobbying".

I saw the global economic collapse coming two year before it occurred. I tried warning everyone, I wrote about it on my blog, I told my sister to sell her house. I was laughed at by everyone. I also called the stock market bottom on my blog two weeks before it happened and told my friend to buy bank stocks. He ignored me. I could have made big money, shorting the stock market, the kind you read about, but it would have required robbing your 401k's and retirement funds, something my consience would not allow. Yes, I can provide links to my blog articles, but I'm not here to sell myself, only to help others.

Sorry for the long post and Happy Mothers Day to all the ER Mothers on this board.

 

[REWahoo]

Anyone who says anything counter to the spin being promulgated by Wall Street is labeled a crackpot conspiracy theorist - REWahoo I'm talking to you.

Thanks for alerting me else I may have thought you were talking to yourself.

Kidding aside, I don't see where I made any inference you were a "crackpot conspiracy theorist", I merely asked for something other than your own opinion to back up your statements. I truly am attempting to keep an open mind as to whether you are a (self-described) crackpot or a perceptive genius when it comes to dissecting the Greek financial crisis. Links to reputable sources would be a help, but I suppose that will be difficult since you've told us "The financial and mainstream media works for Wall Street." How about some not-so-mainstream reputable sources? Any you can cite that agree with your assessment?

I saw the global economic collapse coming two year before it occurred. I tried warning everyone, I wrote about it on my blog, I told my sister to sell her house. I was laughed at by everyone. I also called the stock market bottom on my blog two weeks before it happened and told my friend to buy bank stocks. He ignored me. I could have made big money, shorting the stock market, the kind you read about, but it would have required robbing your 401k's and retirement funds, something my consience would not allow. Yes, I can provide links to my blog articles, but I'm not here to sell myself, only to help others.

This sort of rhetoric doesn't bode well in defending your "I'm not a crackpot" status.

EDIT: Please note my comment does not agree or disagree with the accuracy of your quoted statement. My comment is intended to point out the tone in your message which says, "I know what's really happening and no one will listen". That may be true but I feel reasonably certain it will take more than your lone voice to be convincing to most of those reading this forum.

 

[Orchidflower]

Here is an article saying the Greeks blame their political system, not Wall Street:

Hey, that's just like what Chicago and the Democratic Machine have done to the State of Illinois! Cool...we have something in common.

 

[samclem]

GS had no requirement to report anything to the EU concerning their transactions with Greece (which were sales, not loans, technically, right?). Did the EU really investigate the Greek finances, performing true "due diligence" or did they see what was politically expedient? Here's another example of politics getting in the way of an objective appraisal of a situation, and why the market deserves more trust than political pronouncements. If we want to know the real odds of a Greek default, look at the interest rates on Greek bonds or the cost for default swaps.

I've heard from many people who claim to have predicted the magnitude and timing of a big financial event (the runup in gold prices, the bursting of the housing bubble, etc). I marvel that these folks aren't rolling in dough, since highly-leveraged legal bets can easily be made in all these areas, and even a thousand dollars could be turned into millions if one was sure of the outcome. Usually it turns out these folks have an amazing record, having predicted 2000 of the last 2 events.

 

[Sevo]

I'm the first to admit that I'm a "the glass is half empty" kind of guy but the only reason I'm not retired now is that I just can't make sense of universal fiat currencies all over the world. I've seen first hand what inflation, currency deprecations and political instability can suddenly do to the best laid plans of mice and men....... I wish that I could just buy into the religious feeling that some how the US is totally immune to the laws of economics that effect the rest of the world but I just can't. Our Debt to GDP is around 85 % is is rapidly increasing. Greece is 115% and they are in chaos . That is only a 30 point spread... I hope I am wrong, but I just don't see that much of a buffer between the situation they are in and where we are.

Hang on and hope.

 

[Green Retirement]

Hi REWahoo:
You wrote "Can you link a source or two to validate this conspiracy?" I gave you two mainstream media links to back-up what I wrote. There are plenty of non mainstream media voices, former bankers and Wall Street types like myself, who warned and are warning people. Go to youtube and look up Peter Schiff, Max Keiser, Jim Rogers, Nouriel Roubini, Michael Lewis and the list goes on.

The part of my post, where I claim to have predicted the global economic collapse and subsequent stock market bottom, which prompted you to write "This sort of rhetoric doesn't bode well in defending your "I'm not a crackpot" status.", can be backed up as well with links.

However, I am reluctant to provide those links, because I own a retirement planning company that helps people retire early, and because I respect the forum. I am not here to sell myself, or defend myself, but to honestly help others on the forum achieve an early retirement. If you really really want the links I'll give them to you.

As I wrote in my earlier post, I am a former banker with degrees in economics, marketing, and business administration, not a crackpot conspiracy theorist. I understand what is going on in Greece, Europe, and what is happening in America. I also understand and respect your challenging my assertions.

My motivation for writing what I wrote, is to explain what is going on behind the Wall Street owned media spin, to try and stop the unnecessary and counter productive self flagellation taking place by American and Greek workers, and to try and warn my fellow Americans about the currently active attempt by Wall Street and Washington to rob their retirements. I'm one of the good guys.

 

[REWahoo]

If you really really want the links I'll give them to you.

Not necessary as I have read some of your blog entries and posting links here would not be in keeping with the forum rules. I have no intent to get you in trouble with our crack moderation team.

My motivation for writing what I wrote, is to explain what is going on behind the Wall Street owned media spin, to try and stop the unnecessary and counter productive self flagellation taking place by American and Greek workers, and to try and warn my fellow Americans about the currently active attempt by Wall Street and Washington to rob their retirements.

I'm not sure I see much self-flagellation taking place in either country. What I do observe is the desire of American and Greek workers to flagellate Wall Street bankers and our political leaders. Seriously flagellate.

I'm one of the good guys.

I'll take your word on it.

 

[samclem]

I hope I am wrong, but I just don't see that much of a buffer between the situation they are in and where we are.

At least one big difference: There are nations and entities with enough resources and motivation to pull Greece out of the ditch--maybe. There's no one big enough to pull the US out of the ditch, nor would there be much motivation from (most) other nations to do so. There will be no bailout for the US.

 

[Bestwifeever]

.... I could have made big money, shorting the stock market, the kind you read about, but it would have required robbing your 401k's and retirement funds, something my consience would not allow....

You could have robbed my 401K and retirement funds? What?

 

[clifp]

Samclem and REWahoo:
It would be the same as if you were trying to get a home loan, but your debt to asset ratio was too high, so I offered to take on and hide part of your debt, so you could qualify for the loan, charged you lot's of interest with a big balloon payment, and got to rent out your backyard pool on the weekends if you couldn't pay me back.

Because of our deal, you got the home, and everything was cool until you lost your job (recession) and couldn't make the payments. You ask me if you can re-finance the debt and maybe lower the outstanding balance, and I (Goldman Sachs) tell you I want all the money and I want it now. The bank (E.U.) discovers that you were hiding your debt from them and is pissed. But wait it get's worse.

Your wife and kids (the Greek people) had no idea that you entered into this horrible deal with me, and now discover that they can no longer use their pool, and may have to rent out a couple of their bedrooms as well to payoff some stranger - and of course they start yelling, screaming, and throwing dishes at you (riots in the streets).

Sorry for the long post and Happy Mothers Day to all the ER Mothers on this board.

I agree that GS isn't a "nice" company and often go right up to the line of what is legal. However, the problems with your analogy are that the Greek Government is a sovereign they get to decide what is "legal" or not. GS was acting like a lawyer or a banker,who's client ask them to skirt a law. You can complain that it isn't ethical but to a large extent in both case the mortage and the Greeks is their own doing. The simple rule is don't borrow more money than you can afford to pay back. The difference between GS and most other banks is they were smart enough to recognize that their spendthrift clients weren't going to pay back them back and protected themselves. Frankly if the rest of the financial industry had been 1/2 as smart as GS the crisis would have been mostly averted.

 

[Nords]

Samclem and REWahoo:
The reason that the Goldman Sachs Greek Debt deal is fraudulent, is because Goldman Sachs helped/offered/enabled Greece to hide it's debts, so it could enter the E.U. In exchange, Goldman got all landing rights fees at their airports and such. Furthermore, Goldman shorted the Greek debt using derivatives, so they would win either way, just the way they did with the U.S. housing market and they are now facing criminal charges.

Your accusation of GS being the cause of the Greek financial troubles is at odds with the record of two centuries of Latin American, Eastern European, and African governments repudiating their debts for one well-intentioned reason or another. I remember how we used to make fun of the big American Wall Street bankers who'd rush to sell bonds in those countries, only to lose their shirts.

Was GS opportunistic? Unethical? Sure. But fraudulent? Won't stand up in a court of law.

Apparently the Greek government isn't capable of running the country either.

 

[CuppaJoe]

....
I could have made big money, shorting the stock market, the kind you read about, but it would have required robbing your 401k's and retirement funds, something my consience would not allow. Yes, I can provide links to my blog articles, but I'm not here to sell myself, only to help others.

Sorry for the long post....

You could have robbed my 401K and retirement funds? What?

Yeah, what? Phew!--I had a Keogh Plan instead of a 401k. nm, what?!! You could have robbed my retirement funds.

"Long post"! It reads more like a blog. GR, this is a discussion board and you may be pleased to note that you have some unfinished business over on your introductory thread:

http://www.early-retirement.org/forums/f26/hi-im-back-and-im-green-49540.html

 

[IndependentlyPoor]

The difference between GS and most other banks is they were smart enough to recognize that their spendthrift clients weren't going to pay back them back and protected themselves. Frankly if the rest of the financial industry had been 1/2 as smart as GS the crisis would have been mostly averted.

I don't know if this would have averted the crisis or not, but I do know what would have: regulations that make it impossible for an investment bank to make billion dollar loans to spendthrift clients who aren't going to pay them back, and then transfer the risk to others via derivatives.
Such practices may be "smart" for GS, but when they have the potential for destroying the world economy, they should be prohibited.

 

[CuppaJoe]

I don't know if this would have averted the crisis or not, but I do know what would have: regulations that make it impossible for an investment bank to make billion dollar loans to spendthrift clients who aren't going to pay them back, and then transfer the risk to others via derivatives.
Such practices may be "smart" for GS, but when they have the potential for destroying the world economy, they should be prohibited.

Interesting GS is in the same city as my former landlord who did this with apt. bldgs. It is perversely interesting and very sad to see his signs come off of buildings, he has lost or sold over a hundred of them since this crisis began. He had owned an S&L in the ‘80s that was bailed out. If we can watch people like him, we won’t need a crystal ball?

 

[Emeritus]

In collectivist societies and welfare states, the government takes a huge role in setting wages and working conditions, setting prices for various commodities (often foods, but frequently gasoline, etc) and in deciding who gets what--taking from some people to redistribute to others. Under a system like this, the government has placed itself (rather than the market and supply/demand) in the position of determining what "fair" prices/wages are. Under such a system, it is perfectly rational for people to take to the streets and demand higher wages or lower bread prices, because the government (as the determining authority) has to be pressured to change their policies. Country-wide work stoppages and protests are common. Under a market-based system, taking to the streets to get a raise or get lower prices doesn't occur to most folks--it doesn't make sense, as the government has, in general, not placed itself in the position of determining these things.

As our own government moves to place itself in the position of ultimate arbiter of "who has enough" and what the "fair" price for various products and services should be, we should be aware that this will justify more public demonstrations and possibly civil unrest as people try to influence these policies.

Without governments there are no meaningful markets. Anyone who thinks otherwise should go to Afghanistan and go into business. There is no government there and you can have a true free market, controlled only by killing. Only governments can guarantee safety and property and law. The government charges fees for such services. In a democratic government the people, the "owners" of the government, determine how to spend the fees. Whether a society is a welfare state has nothing at all to do with the state of the market. Germany is a welfare state. Markets work very well in some areas, and badly in others.
The great depression was created by the market economy. Exactly what mix of market and social control produce both the maximum quantity and fairest distribution of goods and services is unknown.

 

[Emeritus]

So we've got Greek attitudes towards taxes (inherited from Turkey) meeting up with the EU-style social compact (influenced by the early manorial system flipped around into the welfare state) meeting Wall Street-style capitalism (developed within a population whose ancestors fled authoritarianism and over-regulation and set up shop in a culture also influenced with a dash of Puritanism).

Those ancestors set up a heavily regulated state. They just wanted to oppress anyone who disagreed with them. Ever read details of the witch trials?
The USA has always been a heavily regulated state. Any nation that allowed one person to buy and sell another is a heavily regulated state. No European country had an equivalent of the Comstock act. I do agree that the extremely wealthy have bought enough politicians to exempt themselves from regulation.

 

[growing_older]

What everyone on this board, particularly this board should be aware of, is that Greek workers are being forced to give up their retirements to pay back Goldman Sachs. The same thing is going to happen in the U.S.

Okay, I understand you are warning us that many of the same forces that hurt Greece so badly could also hurt the US. If this is so, what are you suggesting that we do? Withdraw our retirement funds and stuff them in mattresses? Invest in gold, guns and seed corn? Work twice as hard and save twice as much so we'll have some left? What?

 

[haha]

Exactly what mix of market and social control produce both the maximum quantity and fairest distribution of goods and services is unknown.

Nope; it depends only on viewpoint. Mostly, people want to take from others, and have more for themselves.

Politicians play this with a twist. They take from about half of us, and give to a defined and ever larger set of "others" who have as their function producing votes. Then politicians open their private businesses of selling influence to wealthy donors. This not only helps get them re-elected but it also produces lots of lifestyle perks and even ready cash for politicos with a lot of influence to sell.

Ha

 

[Emeritus]

What we face in the USA is higher taxes , whomever we elect, or we will alternatively have a huge currency devaluation. Unlike Greece, our foreign debt is very manageable. Unlike many countries the USA actually accounts in part for its social security debt by issuing bonds to itself.
Paying for social security in the future will demand higher taxes, or lower payments.

 

[Emeritus]

Nope; it depends only on viewpoint. Mostly, people want to take from others, and have more for themselves.

Politicians play this with a twist. They take from about half of us, and give to a defined and ever larger set of "others" who have as their function producing votes. Then politicians open their private businesses of selling influence to wealthy donors. This not only helps get them re-elected but it also produces lots of lifestyle perks and even ready cash for politicos with a lot of influence to sell.
Ha

Actually they need money in the first place to buy the votes (AKA campaign contributions) , so they take from all of us and give it to those who will give them money, directly or indirectly. (you may mean this by "private business" )

 

[Basenji]

Actually they need money in the first place to buy the votes (AKA campaign contributions) , so they take from all of us and give it to those who will give them money, directly or indirectly. (you may mean this by "private business" )

Lobbying has a spectacular return on investment -- 22,000% on one tax bill, according to a U of Kansas study:
KU News - Tax lobbying provides 22,000 percent return to firms, KU researchers find

 

[brewer12345]

Raise your hand if you are now expecting a succession of sales pitches from Green TinfoilHat...