Streetwise Professor

February 14, 2010

When Speculators Attack

Filed under: Derivatives,Economics,Financial crisis,Politics,Uncategorized — The Professor @ 8:46 pm

Spain’s intelligence service, Centro Nacional de Inteligencia (CNI), is investigating “speculative attacks” against the country (via the CDS market), and Europe generally (via the currency market).  This article in El Pais tells the story.  Based on my shaky Spanish, it seems that Zapatero is blaming “Anglo-Saxon” speculators and journalists and pundits with conspiring against Spain, and the European project generally.

The speculators are indeed out in force, and there is a game of chicken between them and the European governments individually and collectively.  But the speculative attack is driven by the shaky finances in the Eurozone, and especially in Greece, Spain, Portugal, and Ireland.  The politicians have created the opportunity through profligate fiscal policies, and it is more than a little rich to hear them take umbrage at the markets holding them accountable.

If you chum the waters, Mr. Zapatero et al, why are you surprised when the sharks appear?

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  1. I’ve read in the NYT today that the good people of Goldman Sachs and the other Wall Street investment banks “helped” Greece (and presumably Spain, Italy, etc) by offered loans disguised as up-front payments in return for future revenue from things like airport duties and lotteries.

    If I was a leader of any of those nations, I would use this opportunity to annul these agreements on the pretext of defending the nation against Anglo-Saxon financial terrorism. Perhaps that’s the plan?

    Comment by Sublime Oblivion — February 14, 2010 @ 9:14 pm

  2. Um, Mr. Zapatero hasn’t been particularly profligate. Spain’s present public debt/GDP ratio is well lower than the one left by the Dubya Administration in 2008. But then, SWP has never been one to let facts get in the way of a satisfying ideological spleen-venting. Of course, Spain has run a budget deficit during a global financial collapse. For an example of the consequences of fighting a depression by “introducing labor market flexibility” (i.e. slashing employment and wages) and trying to balance the budget, one need look no further than Latvia, with her ~30% GDP decline and quadrupled unemployment rate over the past couple of years. Monthly births in Latvia have declined by ~10% from last year, Latvia has close to the highest population decline rate in the world.

    Comment by rkka — February 14, 2010 @ 9:36 pm

  3. “SWP has never been one to let facts get in the way of a satisfying ideological spleen-venting.” Wow!

    I guess we would also have to dismiss Standard & Poor’s comments on their recent downgrade of Spain’s debt as “ideological spleen-venting.”

    Poor Spain. In such strong economic condition and yet so maligned by ideologues.

    Comment by Charles — February 15, 2010 @ 9:10 pm

  4. Um, you think the ratings agencies do credible analysis?? One big take-away from the whole mortgage-backed securities debacle is that they don’t. At best, they are a trailing indicator of conventional wisdom. At worst, actively harmful.

    Comment by rkka — February 16, 2010 @ 7:47 am

  5. To
    The people of the so-called PIG states of the EU.

    To my own Irish kin, about which our own ancient Celtic character mix has for so
    many centuries attracted the savagery, destruction and burning wrought by the
    genetically-challenged Anglo-Saxon hordes, I would warn that the A/S have now
    teamed up with a smarter tribe which is obsessed with gold and must claw
    it in from wherever it may be ( check the seemingly innocous ads for
    your dearly-remebered Mother’s jewellry. These ads are in every country.

    One wonders what will happen when the Chinese buy up the African gold mines ?

    In regard to the present global situation and in particular to the PIG countries,
    Portugal,Ireland and Greece,and earlier examples such as Argentina and Singapore,
    one can see a definite pattern of peaceful, well-run, mature states being
    suddenly attacked as if by some financial virus which paralyses economic functions
    devalues the victim country’a trade and assets, and manages also to highlight
    some personal or professional failure on the part of one or more of its leaders.

    Similarly, ‘old faithful countries’ like the UK can be whipped into a frenzy
    to go to war and to go the peaceful shires to bestir the simple peasants to
    go to evil empires to destroy Auks and others in truly heroic causes. Those who
    organise the frenzies and the wars sit quietly in hidden ‘untouchable’ places
    at their computers and command centres, just pressing the right buttons.

    At this time. the PIG countries are on the ‘delete’ schedule.

    The Remedy ?

    The PIG countries need to act. Since they are a large part of the EU, the
    EU itself. It has become too strong. And Germany has been identified as an
    economic ‘enemy’ by some elements in the PIG countries.

    Germany is as much a victim as ny of the pig states and is scheduled for
    future ‘taming’

    The cause for global collapse is so patently obvious yet none dare suggest it.

    It is an evil condemned in every one of the World’s religious and moral
    frameworks, dating from the ancient Chinese, Indian, Sumarian,Aztec, Christian,
    Hebrew and mystic records.

    It has a polite name. Usury. It means the demanding of unearned money, a form of
    tax levy on money loaned,and is now commonly called Interest. It Western bank
    practice it is accepted that money is an organic entity which generates its own
    value when it is static, or stored and kept in vaults.

    Islamic banking holds that such practice is Haram and evil and encourages
    corruption. QED. Western Banking ‘manufactures’ non-existing’ debt, and
    actually sells debt incurred, whether by individuals or countries as assets
    to other interests.

    This has created the present Chaos where banks and secret pressure groups can
    cause whole countries to fail and slide into anarchy.

    The Governments of Greece, Spain, Ireland and Portugal, along with Germany,
    France, Italy – and with responsible countries across the World need a
    wake-up call to abolish Usury banking. Remove the virus and bring banks back
    to their original purpose, to support and nourish human enedavour in just and
    honest ways.




    Comment by Kim Dexter — April 23, 2010 @ 6:55 am

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