The New York Times previously wrote this, which I linked to —
Bets by some of the same banks that helped Greece shroud its mounting debts may actually now be pushing the nation closer to the brink of financial ruin.Echoing the kind of trades that nearly toppled the American International Group, the increasingly popular insurance against the risk of a Greek default is making it harder for Athens to raise the money it needs to pay its bills, according to traders and money managers.
The Globe and Mail writes this —
Mr. Papandreou argues that investor manipulation of credit default swaps is pushing Greece to the brink of financial ruin and dragging down the euro. European officials say they might ban some credit default swaps, while German Chancellor Angela Merkel called on Washington to help curb trading in the financial instruments.
But White House officials said Greece should focus on righting its economy and lowering its crushing debt.
Which brings me to this question — and if you know something more about this, please let me know, because (a) I’m not an expert (obvious) and (b) I’m curious to see what I’m missing (the only other thing I know of that I haven’t linked to re: this is the WSJ story) — since when did we arrive at a moral calculus where it was okay for one theoretical person to make money at the expense of eliminating a country?
Or is this just “economic hardball?” — i.e.,
Several US hedge funds have placed big bearish bets against the euro, with some speculating the single European unit will fall to parity with the dollar, The Wall Street Journal reported two weeks ago.
Papandreou said that for America, a weak euro meant a rising dollar that, in turn, meant a rising US trade deficit — “which will not help America’s economy rebound.
“If the EU — still America’s biggest trading partner — should falter, the consequences here would be palpable,” Papandreou said, speaking at the Brookings Institution, a think tank.
“Unprincipled speculators are making billions every day by betting on a Greek default. All this may sound a bit familiar to American ears.”
“Yet unlike the bankers, Greece isn’t asking for a bailout — let alone a bonus,” he added, referring to fat bonuses paid to top executives of banks that had sought government bailouts during the financial crisis.
Papandreou said it was an “encouraging sign” that the US authorities had ordered some speculators not to destroy records of their trading in euros.
“I would encourage US authorities to continue these investigations,” he said.
Time to hit the books!
