How Goldman Sachs Aided Greek Spending and Why
Tuesday, February 16, 2010 – by Staff Report
The Greek crisis has taken on a decidedly sub-prime feel following revelations that Wall Street investment banks earned hundreds of millions of dollars over the past decade from transactions that helped the country hide billions of dollars of debt. The New York Times reported on the weekend that Wall Street tactics had played their part in worsening Greece’s financial position and undermining the euro by helping European governments to hide their mounting debts. The reports said that in 2001, shortly after Greece joined Europe’s monetary union, Goldman Sachs helped the government quietly raise billions of dollars. Athens was able to continue its free-spending ways while complying with the strict EU deficit regime, because the transaction was treated as a currency trade rather than a loan. Apparently, Greece wasn’t the only EU government to use these types of deals, where a government would raise cash up front in exchange for handing over the rights to a future income stream. They were also popular in Italy, Spain and Portugal. Greece has defended its use of financial derivatives, saying they were legal at the time. The problem for Greece is that it now finds itself under extreme pressure to cut its budget deficit by slashing spending and boosting its revenues. But the result of these past deals with Wall Street banks is that the Greek government has already handed over the rights to big chunks of its revenues, such as airport fees and lottery proceeds, for years to come. And, of course, the revelation that Greece participated in these Wall Street transactions has further undermined its credibility within the EU. Greece had already been criticized by the EU for supplying incorrect information about its budget situation in the past. – Business Spectator
Dominant Social Theme: It’s Goldman’s fault.
Free-Market Analysis: It has apparently emerged that Wall Street’s Goldman Sachs was not alone in helping Greece – and other countries – avoid EU-determined governmental budget limits. But the way this story is playing out, Wall Street is made to look like an enabler of bad and profligate Greek behavior. In fact, it seems a bit more complicated than that. Follow along (if you wish to) dear reader …
First we need to relate the story of a fine feedback we read somewhere explaining how (price) inflation was actually one of the causes of the current Greek predicament, and that the adoption of the euro itself had helped ruin the Greek economy. While corruption in Greece was certainly bad, the proximate cause of the current crisis, this feedbacker wrote, involved the one-size-fits-all euro. We were intrigued, as it was not an argument that has received a great deal of attention (though it rings true).
This person was of Greek descent and had visited Greece for years. His well-made point (or so it seemed to us) was that the euro was great for industrial Germany, and to a lesser degree France, but that it was hell for countries like Greece that had to import high-priced euro goods from industrial countries, while relying on lower-priced dollars and other currencies for their (tourist) revenue, etc. What this means practically is that Greek income went down while the nation’s import costs went up. This is one definition of price inflation. The Greeks started borrowing, buying houses on credit, etc., and so did the government.
Now actually we have heard something like this before. And it makes sense. Italy, Spain, etc. – these governments are all terrible black holes. But Germany’s government, we would venture to say is not that much better. What has apparently helped Germany is its industrial economy. Which brings us back to what we have been writing about the EU recently – that it is essentially a project that has massive benefits for Germany, so long as Germany agrees to be bound by EU conventions. Sort of like Gulliver being bound by Lilliputians.
Anyway, the EU is working out fairly well for Germany and a lot less well for the “Pigs” as they are called. And while the considered wisdom of the EU mainstream press is that the Greeks will do anything they need to stay in the union, we wonder when it is that Greek citizens will figure out that they have been sold downstream by their own elites – which wanted the upfront loot the EU was dangling – and EU bureaucrats themselves.
Greece is in for a long hard slog. The EU itself will insist on Greece reducing governmental “profligacy.” But what this may mean in reality is that Greek citizens, having struggled with painful euro-inflation for years are now to be slugged with a “euro recession” of indeterminate length and viciousness. “How’s that EU-thingy working out for you,” Sarah Palin might ask. We also believe the EU, Germany, somebody … is going to have to step in and help Greece unless the intention is to have Greece default. How bad is it? This bad:
The recent credit crisis was over a few trillion in bad, mostly US, mortgage debts, with most of that at US banks. Greek debt is $350 billion, with about $270 billion of that spread among just three European countries and their banks. Make no mistake, a Greek default is another potential credit crisis in the making. As noted above, it is not just the writedown of Greek debt; it is the mark-to-market of other sovereign debt.
That would bankrupt the bulk of the European banking system, which is why it is unlikely to be allowed to happen. Just as the Fed (under Volker!) allowed US banks to mark up Latin American debt that had defaulted to its original loan value (and only slowly did they write it down; it took many years), I think the same thing will happen in Europe. Or the ECB will provide liquidity. Or there may be any of several other measures to keep things moving along. But real mark-to-market? Unlikely.
The entire EU is faced with no good choices. It is coming down to that moment of crisis predicted by Milton Friedman so many years ago. And there is no agreement on what to do. (- MoneyWeb.com)
We haven’t predicted the breakup of the EU over Greece or the Pigs, only a great deal of pain, so far. But we have asked how long the long-suffering citizens of the EU will be prepared to tolerate an endlessly painful euro-experience. Eventually, the pain will be used as a cynical launching pad, we expect, for Europhiles to call for a political union to supersede the current economic one. Of course, this has probably been the plan all along, but we wonder whether it is going to work.
We think the EU is a despicable organization, clearly corrupt from heel to head, a dictatorial regulatory democracy of the worst kind, one apparently modeled on purpose after the USSR’s old bureaucracy. It is a kind of engineered coup of the power elite, a step toward creating and then integrating large national blocks in anticipation of ever larger, global economic union. Unfortunately, for the elite, the Internet has clearly become a focal point for organizing against the EU in Europe, and has even been a main force in keeping Britain out of the euro.
It is not surprising to find Wall Street mixed up in the Greek mess. And many may make a big deal out of it. But as bad as Wall Street is, the EU itself is worse – at least when it comes to culpability for the Greek situation. And boy does the EU have problems. You probably won’t read this elsewhere (which is why you read the Bell!) but the biggest problem the EU has is not the failing of the Pigs but the failing of the Euro promotion itself. And for this reason in this case, Wall Street’s (direct) involvement seems to us, for once, more a symptom than a cause.
The EU’s problems actually are far bigger than the Greece of the Pigs or the endless, looming economic crisis. The biggest problem is that the cynical plans of its leaders to exploit the inevitable currency crisis (one sure to come, they knew) are dimming thanks in large part we believe to modern electronic communications. There is an incredible amount of anti-EU sentiment on the Internet in Britain. And we have to think that there is a good deal of anti-EU sentiment being expressed elsewhere on the â€˜Net in Europe as well.
Conclusion: Here’s our point: When the bureaucracy of the EU attempts to “spin” the currency crisis toward a more perfect political union, watch out. The EU powers-that-be rammed the euro through. But building a stronger political union at this point in time, given the ubiquity and power of the â€˜Net and the increasing disillusion of EU citizens, may be a rougher haul than EU planners expected. Times have changed. Power elite dominant social themes are not looking healthy, and it is possible that the EU itself may fall victim. Couldn’t happen to a more deserving bunch.
Tuesday, February 16, 2010 – by Staff Report
Glenn Beck / Getty Images
This candidacy will self-destruct in five seconds… Texas Republican gubernatorial candidate Debra Medina imploded on the Glenn Beck (pictured left) radio program … when she said she didn’t have an opinion on whether the US government was behind the 9/11 attacks. Medina, who has literally come out of nowhere to quickly become a legitimate candidate in the Republican primary, first laughed when Beck said he had received emails from listeners saying she was a “9/11 truther.” “That’s the first time I’ve heard of that accusation,” she said, not exactly denying the charge. So Beck asked her straight up: “Do you believe the government was in any way involved in the bringing down of the World Trade Centers on 9/11?” Easy answer, right? Nope. “I think some very good questions have been raised in that regard,” Medina replied. “There are some very good arguments, and I think the American people have not seen all of the evidence there, so I have not taken a position on that.” That answer caused a stir in the studio. Beck quickly followed up by asking her if she would disavow any of her staff if they were “9/11 truthers.” “Well, you know, that’s a federal issue. We’re very focused on issues in Texas, on Texas state government,” she said. “I’m certainly not into mind control or thought policing people. We’ve got a very diverse team in this state and that’s because Texans are standing shoulder to shoulder to support and defend the Constitution. I frankly don’t have time, you know, to go through and do psychological testing on people and know every thought or detail that they have.” – Christian Science Monitor
Dominant Social Theme: Crackpots come in all colors and sizes.
Free-Market Analysis: The Glenn Beck program has provided us with an instructive lesson on the nature of modern political correctness. This article will use Beck’s behavior, as related above, as a jumping-off point to analyze the term within a 21st century context – at a time when the term, in fact, is a little less popular than it used to be. Perhaps the leftwing of Anglo-American axis is less powerful than it used to be, and thus inspires less animosity, or perhaps other media concerns have become more compelling. But the point we want to make is most pertinent, we think, and much larger than points that have been made about political correctness in the recent past.
This is indeed a term that became very popular in the later 20th century and yet was in a sense indefinable except as a collection of mores that seemed vaguely leftwing. Of course back in the early 20th century political correctness was indeed a socialist and even communist preoccupation. One WISHED to be political correct to fit into those organizations. The pejorative odor came later. We looked up political correctness in Wikipedia just to see how it was defined. Here’s what we found:
Political correctness (adjectivally, politically correct; both forms commonly abbreviated to PC) is a term denoting language, ideas, policies, and behavior seen as seeking to minimize social offense in gender, racial, cultural, sexual orientation, handicap, and age-related contexts. In current usage, the terms are almost exclusively pejorative, connoting “intolerant” and “intolerance” whilst the usage politically incorrect, denotes an implicitly positive self-description. Examples include the conservative Politically Incorrect Guides published by the Regnery editorial house and the television talk show Politically Incorrect. Thus, “politically incorrect” connotes language, ideas, and behavior, unconstrained by orthodoxy and the fear of giving offense.
In Marxist-Leninist and Trotskyist vocabulary, correct was the common term denoting the “appropriate party line” and the ideologic/ “correct line”. Likewise in the People’s Republic of China, as part of Mao’s declarations on the correct handling of “non-antagonistic contradictions”. MIT professor of literature Ruth Perry traces the term from Mao Zedong’s Little Red Book (1964).
The New Left later re-appropriated the term political correctness as satirical self-criticism; per Debra Shultz: “Throughout the 1970s and 1980s, the New Left, feminists, and progressives . . . used their term politically correct ironically, as a guard against their own orthodoxy in social change efforts”. Hence, it is a popular English usage in the underground comic book Merton of the Movement, by Bobby London, while ideologically sound, an alternative term, followed a like lexical path, appearing in Bart Dickon’s satirical comic strips. Moreover, Ellen Willis says: ” . . . in the early ’80s, when feminists used the term political correctness, it was used to refer sarcastically to the anti-pornography movement’s efforts to define a â€˜feminist sexuality’.”
Nobody really seems to like the idea of political correctness a whole lot. Yet it can still be argued that the term even today defines what can and cannot be argued within the “mainstream” of the Anglo-American media (and European media as well, of course). Here are issues that we would argue ARE politically correct. Beck touched on one of them in the Medina interview: US government culpability for 9/11 is NOT up for discussion. Adding to the list, we would offer the following (just for starters): That …
Al Qaeda IS a valid international terrorist force;
Israel is NOT an aggressive and even hostile theocracy;
the Anglo-American axis is NOT an aggressive force for war in the world;
the wars in Iraq and Afghanistan WERE justified;
national defense and national security CANNOT be a part time civil responsibility;
the environment IS degrading;
public education cannot EVER be eliminated;
government is OBVIOUSLY necessary;
public service is ALWAYS important;
the world is TERRIBLY overpopulated;
the world is on the BRINK of running out of food and water;
public/private central banking CANNOT be eliminated;
paying taxes is NEVER, finally, a waste of money;
no CORE service provided by Western governments could be done better and more efficiently in a competitive and private manner.
We’ve listed the above areas of “political correctness” only to prove what regular readers of the Bell already have guessed: that our impression of political correctness (in the 21st century anyway) has to do with being careful not to contradict the dominant social themes of the power elite! Until only a month or two ago, we would have added global warming to the list, but as has been amply documented, global warming is one elite promotion that seems to be dying a lingering and public death.
To return to the lead of this article, there are plenty of PUBLIC red lines that media and government proposes, and in his Medina segment, Glenn Beck was very clear about one of them – you don’t question whether the American government was involved in 9/11 if you want to run for public office. What is also clear is that after Beck conducted this interview, the backlash began. Medina has apparently surged in the Texas polls and Beck himself has been excoriated for “ambushing” Medina and asking her questions about an issue irrelevant to Texas politics.
And then there is this found in the feedback queue in response to a CBSNews.com story on the Medina Beck controversy, “Debra Medina Says Comments on Glenn Beck Show about More than 9/11:”
By Judiladybug February 12, 2010 4:28 AM EST … A VERY interesting development happened right after Debra Medina’s interview with Glenn Beck. Friends from Austin, Houston, Dallas & Fort Worth began getting robo calls from not only Perry but Hutch. They started within an hour or so after the Glenn Beck radio show, guess what enlightening news they had to share? That Debra Medina was not a worthy candidate because she is a 9/11 Truther.
Wow!! Isn’t that interesting. How was Mr. Perry’s team so ready to start a massive robo blitz with this new Truther news so quick? Looks like someone is getting scared, and that he had a little help from a friend. Some coincidences are just too coincidental to be brushed aside. I am not any more of a Truther than Ms. Medina, but I have friends that feel that certain things don’t add up with the 9-11 facts and questi ons OB’s birth certificate. Everyone has a right, not an obligation to question everything going on in our country.
Throughout the 20th century, and into the 21st, power elite promotions were so powerful, threatening and effective, that people – businesses, too, and, of course, government – carefully self censored, even when they could not explain how and why they came to their self-censoring determinations. This was the ultimate triumph of elite promotional memes – they exercised an iron-class hold over people’s imaginations and internal life. Yet of course it would be the Bell’s argument that all of that may be changing now as the Internet-driven conversation continues to rapidly expand.
Conclusion: The ongoing implosion of the global warming meme is perhaps a sign of what is to come. And so is the Medina interview on the Glenn Beck radio program. We’ve predicted that even the 9/11 meme would eventually come under fire, along with the endless and devious justifications for various Western national security and government military industrial complexes. The idea that only big government, spending trillions on domestic spying and overseas military campaigns, can properly defend Western citizens against terror attacks is the most well funded and well promoted elite promotion of the 21st century. But even this dominant social theme may be destined for the fate of global warming. Just give it time. And Beck, too.