New sensation as ‘troika’ effectively takes over the running of Greece


Rift between Berlin & Bankfurt widens: Papandreou allegations won’t help

A poll published on the 18th of May 2011 in Greece showed that 77% of the electorate had no faith in Mr. Papandreou’s ability as a Prime Minister to handle the Greek fiscal crisis. A lifelong Socialist, Papandreou is seen to have completely lost the confidence of his core voters, largely as a result of his acquiescence in the austerity measures demanded by Brussels, the ECB and the IMF. But new allegations from the floor of the Athens Parliament suggest that the Prime Minister may well have ensured his own lifeboat is well-stocked. This will widen the gap between Angela Merkel, and ECB head Jean-Claude Trichet. While Merkel has long advocated a cautious restructuring of Greece’s debt, Frankfurt-based Frenchman Trichet categorically rejects any form of debt deferral for Athens. Bold?

Recently, in an interview on Greek television, Member of Parliament for New Democracy, Panos Kammenos, made allegations that if true would point to a massive scam undertaken by senior members of Greece’s ruling elite.  These allegations were repeated by Mr. Kammenos on the floor of parliament and given support by the leader of LAOS, Mr. George Karatzaferis. In a nutshell, they allege that Papandreou and members of his team presided over the sale of 1.3 billion dollars worth of credit default swap contracts (CDS on Greek sovereign debt) on or around December of 2009, shortly after coming to power. The $1.3 billion worth of insurance protecting against a Greek default was bought during the spring and summer of the same year, by the Hellenic Postbank, a public banking arm of the Greek government. (In other words, public funds to be used for public insurance against default).

Were it to be cashed in today, the policy would pay out in the region of $27 billion – a substantial amount to put against spiralling debt management.

But the Greek government is no longer in possession of this $27 billion of CDS. It was sold for  a minimal profit soon after being bought. A Swiss-based wealth-mamagement firm set up the same year, IJ Partners, bought the insurance – says Kammenos.

What was public money is now, mysteriously, become very private money. And there are some disturbing names among the officers and clients of IJ Partners. The firm, based in Geneva, has a number of well-known Greeks serving as either managing partners or members of the board, including former IMF economist Miranda Xafa (who intermediated Greece’s dealings with the IMF) – a former CEO of Piraeus Bank….one of the banks named in a law suit for secretly shorting Greek government bonds during the period in question. Another upstanding Greek citizen working there is Theodore Margellos, a high-profile export mogul who, according to Kammenos’ speech on the floor of parliament, is accused of falsely passing off imported corn from Kosovo as Greek produce.

IJ’s Vice President, Mr. Jose-Maria-Figueres, shares board membership of a separate private company with  the Prime Minister’s own brother, Mr. Andreas Papandreou Jr.

Association doesn’t spell guilt in a Court of Law, but at the time that the Hellenic Postbank of Greece sold the CDSs to IJ, Prime Minister George Papandreou was consulting personally with the IMF about how to proceed with what became the Greek bailout package. News of these discussions had not yet leaked – and credit markets had yet to uncover the extent of the impairment to Greece’s national balance sheet.

Yet the Athens Government decided that, rather than present the CDS insurance policy as a profound reassurance for the markets, it would sell it….to a Swiss outfit crammed with senior Greeks – and known to the Papandreou family. Rising bond yields caused by speculation about Greece’s lack of funds to service was the main factor pushing Greece into the clutches of the IMF. And Greece probably wouldn’t be in quite the position it occupies today.

There’s more. Greek bonds were being sold short by the usual banking suspects in Europe and the United States: including Goldman Sachs – who only three years previously had held a private seminar for the previous Athens administration, the purpose of which was quite obviously to mislead the EU officials in Brussels about the depth of Greek indebtedness.

With Greek bonds thus under short-selling fire, the Central Bank of Greece then took an inexplicable decision: to change the legal settlement period for shorting government bonds from 3 days to 10 DAYS. The direct effect of doing this was to massively pump up the value of the Greek CDS insurance already sold to IJ Partners. The side effect, of course, was to massacre the bond price and spike yields from them….in other works, knacker the Greek debt strategy completely.

None of this is conclusive proof: but the wealth of circumstantial evidence suggesting graft and complicity is more than enough to give the whole affair a very nasty smell…..and further convince Fritz in die Berlinerstrassen that the Greeks should not be given any more money. That in turn puts Frau Merkel in an impossible position, because she wants Fritz’s votes (the bonkers anti-nuclear energy decision is as clear a piece of evidence to support that view as we’re ever going to get) but she also wants a Greece remaining in the euro – and effectively a chattel of ‘Grossdeutschland’.

Beware of Greeks selling swaps. And be very, very afraid of geopolitics getting in the way of financial common sense. As Der Spiegel correctly asserts this morning:

‘The cold war between Berlin and Frankfurt reached a new high last week. Should Germany implement its plans, the ECB would have to cut off funding for Greece, monetary watchdogs warned. The consequences for Europe’s banks and the Greek economy would be devastating…..After a year of collective aid, the situation in Greece has not improved. On the contrary, almost all economic indicators have reached alarming levels. Meanwhile, the reform process has stalled and the country is making little progress. This is the conclusion reached by the so-called troika, consisting of the ECB’s economic and financial policy investigation and intervention team, the European Commission and the International Monetary Fund (IMF). In their quarterly report, which they expect to release at the end of this week, the experts maintain that Greece is failing to meet almost all agreed to fiscal goals.’

The Papandreou allegations could be the spark that finally ignites widespread violence among the Greek citizenry. Looking at the evidence against both medium and short-term causes of the debt-hole, it’s easy to understand their burning anger.


  1. It sounds too complex a woven web to just be thought up on the spur of the moment given the apparent ease with which at least certain parts of the claim appear to be able to be checked.

    Where else in Eurozone is the same thing being planned / perpetrated?


  2. Should we be surprised? No. Those arrogant european trash politicos, jack delor in particular, who pushed the euro and permitting countries like Greece to join have a lot to answer for. They may well be reponsible for a future almighty financial crash the like of which we have never before experienced. It will create chaos.
    Related? Not sure. At Tesco today their charge for a tub of Kalamata olives had risen from £3 to £4. Now we know the Greek economy is in an awful mess but a 33.33% increase in their olives is absurd. That’s the last tub of Greek olives I’ll be buying.


  3. Paul Craig Roberts is a fascinating guy. Look him up on google or wikipedia. I know because I knew him 30 years ago when he was Asssistant Sec of the Treasury in the Reagan Administartion. He was the Godfather of supply side economics that introduced the Reagan tax cutting deregulation agenda having advocated the same previously as an Editor of the Wall Street Journal. But along the way, about ten years ago, he realised the average American was getting the shaft and facing a declining standard of living because of the way globalisation was being implemented. He has since advocated a more populist, almost protectionist, agenda and cutting back the Defence budget and the US’ illegal wars. For this he has been ostracised and lost one distinguished professorship when the university bowed to the demands of the Bush II White House. They claimed he was unpatriotic.

    It is obvious that the US is dysfunctional and on the road to nowhere and needs a new paradigm. George Stiglitz, the Nobel prizewinner, and Paul Craig Roberts are about the only two voices making sense on that side of the pond.


  4. Pingback: At the End of the Day | The Slog

  5. Papandreou is not even Greek, but a US born citizen of a non-Greek and indeed non-European tribe. He is a member of the elites many call the Illuminati and his mission is to scuttle Greece and steal the wealth of the people and nation’s natural rersources.

    The Greek people must apply the full penalty of the law upon him and his family, who are of course accomplices.

    Sorry, I can’t write anymore, some trashy celebrity is on TV and after this I have to watch overpaid men kick a ball around and then analyse the game with all my intellectual prowess.


  6. “The Greek people must apply the full penalty of the law upon him [Papandreou] and his family, who are of course accomplices.”

    But all members of parliament in Greece are automatically immune from prosecution, don’t you know? They can’t be touched.

    I read earlier today that one Greek MP is putting forward a bill which would change this, but not entirely – it proposes that Greek MPs only be prosecutable months AFTER they have left office!


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  12. It s definitely TESCO that is earning the £1 difference, not the Greeks !

    Some Greeks these days do not have electricity at home !!!, cause we have to pay the overplaced interests of supposedly “loans” that are already paied back …


  13. guys, this george katarzaferis guy is a pillar of the regime, a amjor chameleon who has supported the “memorandum”that is savaging the greek economy. He was called “a big patriot and a responsible politician” by the traitor papandreou. please revise, don’t give credit to regime pillars!!!


  14. I agree that the fact that he was born in the US and was influenced by US culture is significant in understanding him. But where his ancestors were from is not relevant. Unfortunately, there are plenty of 100% Greeks who were/are traitors. Papandreou could not do his deeds alone. He has plenty of help from his party.

    But I do agree with you that he and his pals are doing their best to sell Greece’s wealth in a going out of business sale. And I do agree with you and hope that justice will prevail and Papandreou will be stopped.


  15. Prime Minister George Papandreou must be executed immediately by a firing squad publicly without trial, his entire family arrested, held in prison until Ten Billion Euros they stole are paid back to the legitimate Greek government which will be elected, this time around if any politician is suspected of fraud or treason he or she will be executed, no more games, If the EU does not approve they can go to Hell, we pull out of the EU and sign a defence agreement with Russia or China. Papandreou’s cabinet will be arrested too and found guilty by association with the Prime Minister and executed, some members of the cabinet will be spared only if they bring back all the funds they stole and give up their citizenship. All other heads of past political parties must give up their citizenship and leave Greece before they are tried, found guilty and executed. The death penalty will be re-instated in Greece for political traitors.
    I will restore dignity and freedom to my fellow Hellenes.
    Stylianos Stylianoudis
    Chairman, Hellenic National Center Party


  16. Oh boy

    You really are pissed off, but will you be leading the charge of will you be waiting at the back until the PTB run out of bullets. But anyhow good luck, a revolution won’t help Greece now but it will really help the other piigs and maybe us too. So please shoot your traitors so that traitors in other country’s get the message and change their ways, if they ain’t too stupid.


  17. First, if I sell CDS then I am selling protection not buying protection so your terminology is wrong.

    Second, if I quote the amount of the protection then that is the face value of bonds that I protect. My loss can never be more than the face value so my contract can never be worth more than the face. So how $1.3bn becomes $25bn is beyond me.

    Third, if I buy protection (which is what I think you mean) then that has no initial value (pre-CDS big bang as there was no upfront) and I close out the position then the position will be worth close to nothing. OK. So what? If I sell a position that is worth close to nothing to someone else who pays me close to nothing then that is fine.

    Fourth, why would holding this insurance protection give confidence to the markets. Surely it would panic the markets to find out that Greece has a massive problem. Also, a trade of this size would move the markets massively and the parties who sold protection would be very very suspicious once they find out who the counterparty is.

    Lastly, according to the DTCC, the net outstanding notional of CDS is $3.7bn. This is far less than the $25bn you mention and suggests that this number is false since all CDS positions have to be registered at the DTCC. In fact the net outstanding has never been higher than about $6bn.

    There is a lot of confusion here.


  18. Fred Bloggs, u and ur counterparts in your sector can parish in hell, u r the evil of humanity, ur practises r destroying innocent lives/ dreams/ hopes from the masses who simply don’t give a rats about ur paper wealth, and how it should or shouldn’t operate. I am not affiliated or practise any political ideology, I am a simple humble productive working class citizen of the planet who has no desire to allow and be controlled by the wannabies of the so called new world order regime. rot in hell, cause when u r dead, u will b a very long time dead. A proud and a non corrupted traitor of a Greek.
    The public wealth and vast resources on Greek territories, including under water, is not for sale, and not to be stolen by external forces. The Greeks do not fight like heroes, heroes fight like Greeks, u r not Greek, stop trying.


  19. Dear John,

    Your article regarding “PAPANDREOU ACCUSED OF GREEK DEBT ‘LIFEBELT’ FRAUD” was very interesting and unfortunatelly true.



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  23. Pingback: Hermano de Papandreu investigado por enriquecimiento fraudulento con la deuda griega. Con apoyo gubernamental. | Todos Somos Griegos

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