Two interviews: The gruesome Greek sideshow continues while the main game is played out off camera

Once more, Athens is replete with TV crews from all over the world, eager to relate the latest in the long running saga of whether/when/how Greece will default. Meanwhile, the real game is being played out elsewhere, in the corridors of power in Frankfurt, Brussels, Berlin, Washington where no serious person bothers to discuss Greece as such, courtesy of having larger fish to fry.

Their discussions may occasionally mention the sideshow of the Greek debt but, believe me, they are centred upon the French and German banks (something I have been saying for a while now). The main question that keeps exercsising their mind concerns the manner in which Greek debt has been blended by the banks into new complex derivatives that involve the banks’ own (private) bonds. Thus, on top of the relatively small exposure to Greek debt, the French and the German banks have created monuments to their idiocy; huge new (off  the books) synthesised debt whose basic property is that it is almost impossible to know which bank owns bonds issued by which other banks, with bits and pieces of Greek debt thrown in for good measure. In short, a Greek default threatens the eurozone’s bank with another moment of truth, similar to that we experienced when Lehman’s collapse revealed the intricate webs of debt whose tenticles had entered every recepticle of financial activity worldwide. Europe’s dithering is the result of being caught between a rock and a hard place: Wishing to push Greece into default (as an alternative to throwing good money after bad) but also knowing that a Greek default will unveil the banking sector’s sorry state. Not wishing to alter the eurozone’s architecture, nor to unify its banking sector, they do what they are good at: venting anger, baking ‘plans’, renouncing their plans, spreading roumors of a ‘final solution’, denying these rumours and, lastly, going to bed at night as clueless as they were in the morning. 

How does one explain all this in a short interview on tv or radio? I am damned if I know. Nevertheless, here is my effort. Click here for my attempt to explain the above on Dutch tv (Nieuwsuur’s main evening news program; jump to 19′) and here for a similar effort on Canadian radio (CBC, jump to 2′).


  • I do not have the abilities to draw little animated comics, hence I leave it to your imagination….

    An empty stage, a Wall with the EU sign and EU Commission written on it. Then you hear Oll -lala- Rehn’s whimpy and extremely annoying distinct slang…

    ‘Gentlemen, will the first group (-eh) please enter the stage (-eh) now as we all agreed upon (-eh) and line up (-eh)!’

    Then a select set of Ireland, Greece, and so on, 11 members in total enter the stage, facing the observer, and this is all we see.

    Suddenly, they turn around, drop their pants one after the other, and bend over. Camera moves along in close up and after the last pant dropped goes to total.

    On the naked butts, from left to right, the Country Flags are tatooed on, and starting with IRL also a giant letter S then Greece with a giant O, then Portugal with a giant V and so on until you see SOVEREIGNTY.

    Only then we see Olli with his pants down and his dick with a ESM tatto, ready for action….

    – – – –

    You may ask, what triggered such strange picture 😉

    Well here is my explanation:

    Signs of ECONOMIC TOTALITARIANISM – The European Stability Mechanism, ESM

    While the German parliament votes on the ESFS on Thursday, here, the ESM shall be my subject of sticking some red flags into it.

    ARTICLE 8 – Authorised capital stock

    The authorised capital stock shall be EUR 700 000 million.

    hmmm, ok, I get that.

    ARTICLE 9 – Capital calls

    ESM Members hereby irrevocably and unconditionally undertake to pay on demand any capital call made on them by the Managing Director pursuant to this paragraph, such demand to be paid within seven days of receipt.



    But wait, it gets even better….

    ARTICLE 10 – Changes in authorised capital stock

    The Board of Governors…may decide to change the authorised capital stock and amend Article 8 and Annex II accordingly.

    Now that comes in very handy, doesn’t it? Let;s start with 700 billion, we can change that any time we see fit. Right! Article 9 means that we are unconditionally and irrevocably required to cough up. Great stuff!

    That’s not all, now here are the real cherries on the cake:

    ARTICLE 27 – Legal status, privileges and immunities

    The ESM shall have full legal personality;

    The ESM, its property, funding and assets, wherever located and by whomsoever held, shall enjoy immunity from every form of judicial process except to the extent that the ESM expressly waives its immunity for the purpose of any proceedings or by the terms of any contract, including the documentation of the funding instruments.

    Want some more?

    4. The property, funding and assets of the ESM shall, wherever located and by whomsoever held, be immune from search, requisition, confiscation, expropriation or any other form of seizure, taking or foreclosure by executive, judicial, administrative or legislative action.
    5. The archives of the ESM and all documents belonging to the ESM or held by it, shall be inviolable.

    Now, how is that for starters? A EU Institution that can not be legally challenged by executive, administrative or legislative action is totalitarian. No government can take them to court, no legal action can be taken, nothing can be confiscated.

    This is per definitionem a totalitarian institution they are trying to establish.

    So what about the people running the show?

    ARTICLE 30 Immunities of persons

    In the interest of the ESM, the Chairperson of the Board of Governors, Governors, alternate Governors, Directors, alternate Directors, as well as the Managing Director and other staff members shall be immune from legal proceedings with respect to acts performed by them in their official capacity and shall enjoy inviolability in respect of their official papers and documents.

    Oh really? I guess this is the Anglo Irish Bank executives wet dream, 100% legal, executive and administrative immunity for staff, assets and all paperwork produced.

    A new EU institution that we are legally bound to transfer wealth to within seven days of their notice, they can indict us, but not the other way around. EU’s wealth in a single EU Institution that is unelected.

    ….Sieg Heil!



    • Without any disrespect , or any sort of ironic mood .

      It is very similar to what it’s been going on in Greece for the last 18 months .

      And the main argument supporting it is : it’s absolute democracy because , it’s been voted by a government that people have voted . So it’s not totalitarianism but True democracy .

      And this i can bet , it’s going to be presented as the one and only solution . Your future prosperity is at stake if you don’t surrender to this plan . That’s what they are going to assert .

      ( i have 18 months experience on that as a greek , don’t forget )

      If there is any lesson to be learned by it , to my understanding ( i say it with bitterness ) , is that never propose something to another person for a solution , that you are not ready to apply it yourself .

      It’s an absolute necessity for countries that can’t pay back to loose part of their sovereignty according to Soible ( if i remember correctly )

      Before you accused me for vengefulness , think of this : Greece has put all its assets ( without its debts , just profits -> ports , railways , airports , natural resources , private property of citizens , etc. ) in a company as liquid assets and gave its control in another foreign private company . And left all the debts to the state . That’s the “european solution ” to save Greece and re-ignite greek economy .

      What if such thing is voted in your parliament and then , your banks go bankrupt and cannot repay your debts …

      I am not an economist , but if someone with economic background has a different opinion , please state so .

    • Hi Ilias,

      Yes and this:

      Before you accused me for vengefulness , think of this : Greece has put all its assets ( without its debts , just profits -> ports , railways , airports , natural resources , private property of citizens , etc. ) in a company as liquid assets and gave its control in another foreign private company

      never…. NEVER should have happened! It is outright grand larceny and one needs to look only at the history of the IMF to find confirmed that this in deed is their strategy. The IMF is nothing but the banking Mafia, their extended arm.

      Your future prosperity is at stake if you don’t surrender to this plan .

      …and yes again!

      This way they campaigned with lies and fear mongering for the 2nd Lisbon referendum in Ireland, and this way the ECB-EU-IMF austerity was advertised by the establishment. I quote “There is no other way!”

      It was and still is all just too darn obvious, really.

      If I think of Greece these days Ilias, it is with a bitter sarcasm, we are witnessing the loss of democracy all over Europe, and they started it in Greece. …Sickening!

    • Hi Georg , in Greece , the whole thing started when they voted a law , where the minister of finance could sign and validate any deal . They said , it was for practical reasons because the finance of minister had , that time , to sign lots of treaties . Therefore it was impractical if any deal had to go through voting in the parliament . That was their main argument . I don’t make this up . Now , we don’t know what the minister of finance has signed . WE DONT KNOW . Because signed documents don’t show up in the parliament .

      By giving some non-elected people , the power to increase at will the funds they want , BE SURE they are going to use it for their own interest .

      If they want to increase the help funds , they should explain the problem and their solution to the people . They should explain to the people also why their solution will work and then ask their vote . Ask the full amount they want in advance .
      By giving the parliament to vote a blank check is the most dangerous thing .

      I agree with everything you say !

    • Yeah, the behind closed doors procedures increased tremendously since this bullshit started, secrecy is enemy of democratic functions.

      I read that people are occupying the ministerial offices now. Then we have the wall street occupiers which are slowly getting more attention.

      Perhaps, if people start to occupy places of finance in Dublin, Frankfurt, London, Brussels etc, they may start to listen…. perhaps.

      I am a simple man Ilias, I do music and photography, and I think, what really counts is family, friends and neighbors. I have no investment in stock markets, I have no treasure chest filled with gold or precious stones, and I guess in ‘their’ eyes I am a poor man, but there are more poor men like me than there are rich men like them, many many more…. There is always hope!


    • I share your viewpoint about what matters in life . In Greece though , at this time , it’s not a matter of differences in way of living . A peaceful , “poor” , creative , family life is not possible 🙁

      Personally i don’t think that things can change through demonstrations and protest of traditional form . The ministries are occupied by its working people and become available after a couple of hours , which may lead of course to a loss of control on the side of the government, but i am not that optimist … .

      I am not sure , but there is a common awareness not to allow the government implement what has promised . This includes civil servants as well .

      This is a good lesson for those who believe that a nation can be ruled by enforcement and not a social contract . Relations of any kind become extremely complex if credibility and mutual trust are lost .

      I have a very bad hunch about the wage cuts at this moment . I believe they are not after the money of the wage cuts , but use the frustration of the people as a diversion , to implement the giving away of the state wealth without drawing the attention of people on that .

      I draw your attention to Egypt as an example that demonstration , protest and mass media is not a recipe for success .

  • Yani, do you have more specific info about these “complex derivatives” that you say have been created that include Greek bonds? Banks, as far as I know , do not create complex products for their own sake. They do it to sell them to customers. I have worked in a department that’s trading OTC and listed structured products based on various underlyings (equities,fixed income, forex, even hedge fund – funds). All these products are products that a 3rd party can buy through the bank and there is nothing secret in terms of the components that make those up. Are you referring perhaps to some sort of unknown CDOs? Do you have specifics on those products, who issues them, who trades them? Are they securitized?
    I understand how a bank’s own bonds and CDSs on them might be a play if that bank takes a severe haircut on its Greek bond holdings and not supported by its government. To the extend this might be necessary I can understand the ongoing off the record discussions and thus hesitance in declaring officially a huge Greek haircut or total default. But throwing in a mix of Greek debt in some off book derivative products is something I’ve not seen discussed anywhere yet.

    • Of course they do create them via special vehicles that are semi-detached from the them. Initially, you are right, they do this to pass them on, to sell them to willing fools. But when these derivatives start selling briskly (under the counter), then they start buying each other’s ‘products’. Just like they did prior to 2008…

    • Chris, thanks for the link to yet one more entertaining (I hope) Michael Lewis story.
      I will reply to your comment without first reading his post hoping that I won’t be missing an answer relevant to what Yanis is alluding here with his post. It doesn’t seem to me that Yanis is talking about any Greek debt CDSs. The net exposure against those was being reported somewhere around 5 billion according to DTCC a few months ago. DTCC was set up to report 90% of CDS contracts.
      So not sure what Yanis is alluding to . He’s talking about some “under the counter” products set up through special vehicle departments of banks. Not sure if he means Lehman Repo 105 and 108 type of accounting gimmicks?

    • What is “under the counter”: Transactions that are not registered on any publically accessible registry and which do not appear in the banks’ books.

    • Sure. Around 359 billion euros. That’s the public debt. What we do not know is how much new Franco-german banking debt has been ‘synthesised’ with the Greek public debt…

  • Εάν κατάλαβα καλά τα λεγόμενα, το πρόβλημα χωρίζεται σε δύο μέρη: στο βραχυπρόθεσμο, δηλαδή τι κάνουμε για να σταματήσει η κρίση και στο μόνιμο, δηλαδή πώς θα σταματήσουν οι τράπεζες ανεξέλεγκτες να εκδίδουν cdo και λοιπά τοξικά.
    Ακόμα και αν η ομολογοποίηση του χρέους κατά Μάαστριχτ, αντιμετωπίσει το βραχυπρόθεσμο, το υπόλοιπο χρέος παραμένει ως μόνιμο πρόβλημα, μια και η Wall street δεν είναι διατεθειμένη να ακούσει την συμβουλή του πρώην προέδρου της FED (hedge funds όχι με καταθέσεις κλπ.)
    Εάν είναι έτσι, η modest proposal δεν φαίνεται να συνιστά πλήρη λύση. Σωστά;
    ΥΓ: εξαιρετική η διάλεξη στην Σπάρτη!

  • Right, Yannis

    If an astronomer believes that the Earth is at the center of the Universe, then s/he will go piling up modifications on her or his theory to accommodate data into the theory…

    The thing would be hilarious – the astronomer remaking theory, day after day -, if it had not become tragic – people actually dying because of economic beliefs similar to the Earth being at the center of the Universe.

  • Yannis hi,
    when you talk about the products that the banks have invested in, in such an idiotic and unorderly fashion over the last ten years i suppose, are you refering to mutual funds?

    • No. I am referring to CDO like synthetic derivatives that are issued by special vehicles that are semi-detached from the banks.

  • Yanis,

    Do you take any comfort or hope from the ‘rumours’ over the weekend that the EFSF would be turned into a TARP and levered up or turned into an insurance company?


    • If I could believe it, I would indeed find some hope in it. Not ecstatic about the idea of turbocharging a toxic institution. Unless its job was only to recapitalise banks. Then it would be OK., But if it lends fallen states too, we will be in greater trouble soon…

  • Yannis;

    Extremely refreshing to see a gentleman such as yourself speaking about the “TRUE ISSUES” behind the Post 2008 Global Financial Collapse.
    The Hellenic Community of Vision for the Future, both within Greece and overseas, are quite at work for the last 3 years getting the “Inside Story” out on Credit Defaults Swaps, Derivatives, and the Wall Street, New York and London Banks’ Casino Run Worthless “TOXIC ASSETS” and “Financial Securities WASTE” dumped onto the world stage for at least the Last Decade or so.
    Mortgage Backed Securities, Derivatives, Credit Default Swaps,…. All GARBAGE….. and you and I, as well as the well-informed global population, which is growing by the day, all know that this so called “GLOBAL DEBT” is not owed by the Citizens of Nations, but the Banks which created it as “WORTHLESS ASSETS” Contracts.

    I agree with you on all the points which you have made during your interviews with Greek Television and Radio, on Max Keiser,and all your other interviews.

    The Politicians have a very bad habit of not going forward with Common Sense or Logic, for they have neglected the People for Final Fantasies.

    We are always here to assist GREECE, Europe, and the Labouring Populations of the Global Community, and have Plans on a NEW FINANCIAL Global Partnership Union between Nations in collaboration with Global Organizations, to see that Citizens of the Globe and Future Generations prosper on a more Solid Foundation for the benefit of all mankind.

    The Trans-Atlantic Economic System is Collapsing under it’s own doings.

    The Bail-Out Packages WILL NOT WORK… Period…, for they defy the Laws of Finance and Economic Success, as those who promote such programs have NO Idea of what “LOGIC” tells the Knowledgeable and Well Informed Individual.

    As a Patriotic Hellene, I commend you for your work, and I urge you (as I am sure I won’t have to urge you) to continue your work.

    Our Hellenic Forefathers have taught us to Place Hellenism and the World among the Stars and in REAL TERMS, and they also taught us to STAND UP AND FGHT THE DECEIVERS AD TRATORS OF INJUSTICE.



    John A. Koulouris

  • An interesting and revealing extract from the book “The Age of Empire 1875-1914” of E.J. Hobsbawm, which is about The Long Depression (1873-1896), and I think it’s also related with the current crisis and its repercussions.

    A distinguished American expert (D.A. Wells) observed that “the most noteworthy peculiarity (of depression of trade) has been its universality; affecting nations that have been involved in war as well as those which have maintained peace; those which have a stable currency based on gold, and those which have an unstable currency …; those which live under a system of free exchange of commodities and those whose exchanges are more or less restricted. It has been grievous in old communities like England and Germany, and equally so in Australia, South Africa and California, which represent the new; it has been a calamity exceeding heavy to be borne, alike by the inhabitants of sterile Newfoundland and Labrador, and of the sunny, fruitful sugar-islands of the East and West Indies; and it has not enriched those at the centers of the world’s exchanges, whose gains are ordinarily greatest when business is most fluctuating and uncertain.”

  • Concerning the fate of Greece, the recent diplomatic heat on Cyprus concerning the drills may also imply that not everyone is playing the same game. Whereas a block in the EU is trying to seize control of weakened countries the East does not seem to try to control through politics but rather through force. We’ll see how this fares.