Monday, 27 June 2011


Those Wacky Sons of Sun in the financial sector have dreamed up another spiffing wheeze for making money out of nowhere. Which the rest of us will have to pay for in future taxation.
The Greek economy is collapsing and the Greek Government seems likely to default on its loans from the financial sector, which it obtained by selling Government Bonds to the financial sector. Some of the whizz kids who bought these bonds are getting nervous and worry that they won't get their money back, so they are selling on the debt to other whizz kids at a discount, thereby cutting their losses. For example, they might have 100 million Euros of bonds but in order to get something back on them they'll sell them on for 60 million Euros rather than lose everything. The other whizz kid buys these discounted bonds in the hope that the Greek Government gets another bale out from Germany, the IMF, the EU or wherever because they reckon that when there's a bale out they'll be able to demand and get the full face value from the Greek Government and thus make a profit, in this example, of 40 million Euros. A neat trick if you can pull it off.
But where does the money for the bale out come from? Either by taxes raised by the German  Government, EU, IMF or whoever by them borrowing the money from the financial sector. So once again, Governments end up borrowing money from the financial sector to pay back the money they borrowed from the financial sector. And eventually, when the wheels come off, us poor mugs who pay our taxes foot the bill for the whole shebang.

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