Could
Greece's situation be characterized as a huge
economic-social-political "experiment"? And if so, who are
those who conduct it?
by
system failure
Greece
is entering one more year of an unprecedented economic recession and
still, no optimistic signs can be seen in the horizon. When the
financial crisis erupted in 2010, there were already many people who
spoke about an experiment that was taking place, for the first time
in a region of a developed economic zone.
Could
Greece's situation be characterized as a huge
economic-social-political "experiment"? And if so, who are
those who conduct it?
Part
1 - Events right before the eruption of the crisis
In the
mid-October of 2009, Goldman Sachs suggested
to Greece a new financial product which would
ease, at great extent, the huge borrowing needs of the country for
the rest of 2009 and 2010 since some older bonds, of huge value, were
expiring during that period.
However,
Goldman's proposal was not accepted by the Greek side. A few days
later, Fitch downgrades Greece from A to A-, leading the country out
of the top rating category. At the same time, stocks of the National
Bank of Greece were sold massively in the NY stock market, as well
as, subsequently, to the Athens stock market leading general index to
a significant fall. At the same time, the price of Greek bonds was
falling, the price of Greek CDS and interest was rising, as well as
the cost of lending for Greece.
During
the first days of November, a team of Goldman Sachs arrived in Athens
to persuade the Greek side change its mind and close a new deal of
financial lending, according to which the Bank of China would be
involved in lending Greece, gaining some share in the National Bank
of Greece and in the Greek Organization of Railroads, as a return.
While
the negotiations were in process, the stock price of National Bank of
Greece was rising in NY and Athens stock markets. At the same time,
the pressure on Greek bonds and CDS stopped. Eventually, negotiations
were not successful, as the Greek side rejected Goldman's proposal
for good.
Nearly
the next day of this rejection, massive stock selling of the National
Bank of Greece was recorded again in NY stock market, as well as
stocks of the big Greek banks Alpha and Eurobank, and finally, stocks
of the whole Greek banking sector. Prices of the Greek bonds rapidly
dropped while Greek CDS and loan interest were rising rapidly,
bringing Greece closer to default, as it was more and more difficult
to re-fund her debt.
On
December 12, Fitch downgrades Greece further, rating the country with
BBB+, while announced that further downgrades are possible. S&P
with Moodys followed, downgrading Greece during December. The result
was a massive selling of Greek bonds and skyrocketing of country's
lending cost.
This
means that, for at least 10 years there was no problem with interest,
despite that everyone knew the real deficit figure, but the problem
suddenly appeared in 2009 when, "accidentally", the Greek
government rejected Goldman Sachs' proposal for a new "financial
product". Within a short time, rating agencies downgraded Greece
skyrocketing her lending cost.
In other
words, as long as Greece was playing the game of Goldman Sachs,
giving economic benefits inside the Greek territory, there was no
problem with lending. When the new government stopped giving such
benefits, probably because no one knew where would lead in the
future, international banksters-speculators mobilized every mean that
they had (rating agencies, media etc.), in order to show who is the
boss and that there is no way for the country to avoid default,
except of playing with their rules.
[2]
Comments
Post a Comment