Noahpinion: On "Asian Values"

Noahpinion: On "Asian Values"

Bangkok Burning

I wrote a month ago about Thailand expressing my concerns over its future. Well, stuff happened fast. We all saw the 2 month siege in prime areas in Bangkok. Class antagonism was thick in the air denied, of course, by those on top. "Class? What class? We are Thais. We love each other!. Sure.

My latest column on this topic is here:

History Repeats Itself

Karl Marx was a man of great soundbites. One of his classic ones was this: History Repeats Itself. First as Tragedy, second as Farce.

It takes a novelist of history tales to drive home the point of how foolish this entire US war policy in Afghanistan is.

Read it here.

My Latest Take on the Thailand crisis

http://www.project-syndicate.org/commentary/shaw12/English

Burial Grounds of Empires

Yes I know i may sound like a broken record, but this is no laughing matter. Soldiers are dying, frankly unnecessarily, in Afghanistan while its head of state is fighting to the last soldier -- of the West which he despises -- while he steals money directly from US taxpayers, by far the largest providers of cash and while his brother, the opium king, is selling it to addicts in mostly higher income addicts who are, as you guessed it, mainly westerners, which Karzai also despises.

What to do? The report here cannot be more clear. Kabul has got the West by the balls.

Karl Marx, of all people, would be laughing behind his stupid beard. Afterall it was he who uttered those immortal words: "History repeats itself first as tragedy second as farce."

The US foray in Afghanistan is a farce. But actually it's worse. People, soldiers, innocent civilians, enemies, are dying everyday. But the enemies are dying at a slower rate than the "Good Guys".

This movie can only end in a farcical tragedy.

Quagmire in Afghanistan

Not many pundits were using that Q word 2 years ago. There is no need to thump my chest and say I did so even earlier. This is a national disaster of which bravado is misplaced. Now the Q word has become common.

Today's column in the NY Times by Bob Herbert is a powerful reminder how American presidents have not learned much from the disastrous Vietnam. Read here.

The reasons are various. One had to be the way they were "educated" where history courses are seldom part of the Liberal Arts requirement. You have heard me say this on many occasions already.

The most popular course at the top universities is Economics. How well that has served national interests? Well, quite apart from the recent financial crisis aided and abetted by the "smartest" crew on Wall Street mostly educated at the top schools, just look at how the "best and the brightest" have also helped their nation to become indebted to the Communist Party of China!

Herbert's column neglected to touch on a very pertinent issue in the mindset of Karzai. In his recent diatribe against the US and the "West", he used the P word, as in Puppet, to describe how the West was treating his regime. And he resented that. As part of his defiant "show you" exercises, he invited Iran's dictator to go to Kabul during which meeting both of them verbally attacked the "West", a short hand for Washington.

The US still didn't get it. Karzai was not actually wrong about the Puppet regime that he was. The US wants to fight the war and change Afghanistan to its image. Karzai was always meant to be the acceptable proxy of Washington's proxy. DC would not appoint some one who does not share its vision. To put differently, US wanted its own man running Kabul.

Of course that means the man in Kabul is effectively a puppet.

The problem for Washington in Kabul, and in the old Saigon, is to ignore something totally fundamental. Karzai's interests are not necessarily the same as those of USA.

US wants a democratic regime and to defeat Al Qaeda and the Taliban. Karzai has no desire to see a truly democratic society which may de throne him and to jeopardize the financial interests of himself, his brother and his extended family.

Karzai is an Afghan first and foremost carrying with him all the cultural and emotional "baggage" of millennium. How the US elite think they could miraculously change that baggage to their liking is indeed a sign of hubris and bad education.

So the US is mired in a quagmire supporting a regime that in fact despise the US and is perfectly willing to fight the war to the last US soldiers while the ruling family enriches itself on US taxpayers' largess and on the ignorance of Washington leaders with all its IVY League education.

A recent study shows close to half of the top leaders in Washington have a Harvard degree and close to 80% have at least one IVY League + Stanford + Berkeley degree. Very sad.

Afghan War "movie" is getting from bad to worse

Well, the inevitable happened. Karzai is now attacking the "West", mainly its principal patron, the US, because he is being depicted in the "West" as corrupt and that he managed to "steal" the last election declaring him the winner.

He has the balls to do that because he knows he has got USA on a noose: Washington wants to win the war more than he does.

Why does Washington want to hang on to this corrupt man as ally is evidence of how fundamentally wrong the US war policy in Afghanistan has always been -- propping up a corrupt dictator suddenly handed billions to fight an enemy who does not need the same fortunes to die. The war policy itself corrupts. An impoverished country with a life style and a culture mired in medieval times is suddenly given billions to spend with the purse string controlled by a handful of unelected leaders with their own ancient tribal agendas is a recipe for disaster.

The US couldn't even field an effective police force in Afghanistan, let alone an army, to fight is due to the same reason why the US failed in Vietnam. Your local ally government has no credibility among the people in whose name those government rule.

But as I have been saying like a broken record, US leaders do not read history and therefore, as the famous saying goes, are doomed to repeat the same mistakes.

Karzai's obvious despise for the "West" and for the US is recorded here.

Elite Education in the US of A

Something is very wrong with how the American elite gets educated by all those top ranked universities when famous alumni who went on to become leaders make the same stupid mistakes over and over again. Read this well-written op ed here by one of the most informed writers on the Muslim world on Afghanistan that is so vivid and heart wrenching you want to throw your computer out of the window.

Moral Quagmire in Afghanistan

So Prez Obama was just in Kabul days ago pressing Prez Karzai to crack down on corruption knowing full well his brother is a drug king. Guess what? Nothing is done. On the contrary US officials are saying, as they did in Vietnam, such drug runners are essential to the war's effort. Really? Didn't work then, wouldn't work now.

Read Prez Kabul's de facto response here to Obama's visit.

Bad Movie in Kabul

So Obama wants Karzai to crack down on corruption in Afghanistan? Read the lead story on Obama's unannounced trip to Kabul prior to touch down in this paper here.

I would be more appreciative if we had been spared of this embarrassing display of tiresome PR to placate the uninformed back home in good old US of A.

Asking Karzai to crack down on corruption is about the same as asking Don Corleone is tame mafia crimes in Brooklyn in Coppola's immortal movie Godfather.

Is there anyone in this world who keeps up with the news who still does not know Karzai's brother is the number one opium overlord in Afghanistan? Furthermore, have we not read that none other than the US military has pleaded with Washington not to crack down on that business because they need local tribal support?

Ok. To give "face" to Obama Karzai will do something about crimes. What is likely to happen is for his henchmen to crack down on all his brother's competition eliminating (and I don't mean just economically) those who do not submit to Karzai bro's orders. There will be relative peace because after the crackdown there will be just one monopoly of crimes standing that goes all the way to the palace of Kabul where the president sits.

Mr Obama, please spare us the theatrics. Get your troops out and let the Afghans deal with each other. What do your want to betray your own core values to defend opium and crime bosses? Is that worth losing thousands of American soldiers and civilians and suspending one's basic beliefs about drugs and violent crimes/

Afghan Policce & US Folly

Interesting article from Newsweek here.

US has spent $6 billion since 2002 on training up a police force of 98,000. An effective force is a central part of Obama's exit strategy. US experts admit less than 12% of the force is "effective". What does that mean? Not able to even catch thieves and police the streets "effectively". We are not talking about going to the mountains to catch Al Qaeda fighters, for chrissake.

Let's do the math. $6 billion on 98,000 police = $61,200 per head. Per capita income is $800. Al Qaeda or the Taliban don't have that kind of money let alone spend only on the "police" force. Yet these enemies have been able to hold off the mighty US military.

What does that tell you? To me it is senseless to fight in a country where your supposed allies are not motivated even if you show a fortune on them. They are mostly likely laughing their head off at your naivete and stupidity and are crying all the way to the bank. Cynical? Read the latest on how the US is helping the opium business in Afghanistan.

In case you have been avoiding the news for sometime, the opium business is monopolized by the brother of the president of Afghanistan, the "ally" on whom the US effort depends.

So, how could you motivate the police when everyone and his brother in law knows the US is in bed with the opium king?

Yoiu tell me.

Opium and USA

If you are caught with heroine and opium on US soil, you can look forward to many years in jail. It's a big federal crime. When it comes to foreign wars, beginning with the Vietnam War, USA abandoned all pretense to the values the nation had held dear.

During that war, the Americans not only tolerated opium cultivation they created a US run airline, called Air America, to transport opium from difficult hills up country to facilitate distribution on behalf of those hill tribes the failing US military wanted to win over to help fight the communists. Never mind the opium would end up in Los Angeles or New York. In war all is "fair" right?

But of course what the US did in Vietnam was illegal, but who cares, right? In the end the war failed to win hearts and minds.

Now, we are seeing the same tiresome movie. The US military is now openly in support of opium trade again. We are condemned to watch this B movie all over again. Never mind what the US used to stand for: the rule of law, respect for humane values and all that. They read well in textbooks. It's sad to see the decline of moral values in the USA.

You want to win hearts and minds in Afghanistan? Imagine you are a young Afghan. You grow up watching GI's supporting opium in your own backyards. You then get a scholarship to Yale. Would you have much respect for Washington leaders telling the world how to behave? I doubt it.

Read this heart wrenching report on the US involvement in Afghan opium trade here.

The "Mountain" has moved

In the classic Kurusawa movie "Ren", a rising warlord patiently watched the action of the dominant warlord of all warlords (WOAW) before he pounced. Finally he saw the opportunity when WOAW moved the bulk of his troops out of his impregnable fortress to attack the patient usurper. He uttered those simple words to his generals: "The Mountain has moved".

It's so zen. Mountains do not move. When they move it means the center of gravity, gravitas, the solidness has become "light" and vulnerable. In the movie the WOAW lost. It had lost its mind, it had lost its strategy, it had lost its "gravity".

This is how I read this article (here) about Applied Materials, the Rolls Royce of semi conductors in Silicon Valley is building in China its largest ever plant, and the largest of such plants with not only cutting edge technology of today, but putting down deep roots in China the platform for tomorrow's technology. This exercise is headed by one of the most important techies in the entire semi conductor business.

I do not argue that US companies should not invest abroad. They should indeed do so. However, what been happening is nothing short of moving the "Mountain". It's hollowing out of the core of what once made USA great.

Applied Materials and many other cutting edge firms are saying by their action they have "seen" the future, and it is in China. This is still a country of limited intellectual and political liberties, right? Yet, they see the future there?

Should that raise several red flags in the US of A? Do we see, hear serious debates and then actions to remedy the situation?

The issue is not really even about China. It is about the US of A. Why has it become what it has become, a place that a firm like Applied Materials no longer sees the company future in the nation's future?

We do know a lot of about some of the structural problems. Many blame China's "slave" labor wages attracting investments.

Relative wages play a part, but only up to a point. Go to MIT, Caltech, Berkeley or Princeton and visit their PhD programs in physics, electrical engineering, math and their cousins and you meet more Asian, particularly Chinese, students than "locals".

The "best and the brightest" young Americans all want to become investment banks and consultants. Money, do we not know, is galactic. Engineering? Physics? Too hard, too boring. No money. Civil Engineering? Who in their right minds want to work on building better roads, airports or dams?

The proverbial message is no longer just on that wall. It is not even a message anymore.

The story of Applied Materials in China is yet another floodgate being lifted. Another dyke widened.

The balance of global power, both soft and hard, is shifting so rapidly away from the US it pains to see the amount of low quality political debates in the main US media, especially on Fox News, where repeated assertions of USA being number 1 has become substitutes for intelligent analyses; that only the Democrats or anyone who is not Republican could fail to see that USA is a country blessed personally by God.

If anyone needs to be reminded how regressive USA can become, just read the latest on textbook changes in Texas as mandated by backward looking Republican stalwarts.

Long gone are the days of traditional Republicanism: fiscally conservative, culturally liberal and enlightened. The Rockefellers were Exhibit A.

Hubris and ignorance are lethal ingredients in all the falls of empires in the past. USA has an oversupply of both right now among its ruling elite in the Congress, in the media and in State politics.

China may have its cyclical comeuppance in another asset bubble that would take the market cap of its stock markets down a few pegs, but the underlying structural change is as amazing as the head in the sands of the Republican Party, the party which should be promoting growth and technology, but now spending its energy on backward looking rhetoric.

The final paragraph of the article is not a journalist trick to overstate in order to impress. Any frequent travelers to China who have talked to the young and the bright could recognize that voice.

China - The Mother of All Black Swans

This presentation here is too good not to be widely read.

Casino Greece

I am lured back from my "sabbatical" to this blog by the more revelation of how "credit-default swaps" derivative products designed to help Greece to "hide" its true indebtedness have come to bite its bottom. Read the full report here.

The following excerpts deserve a few of your minutes:

..."These contracts, known as credit-default swaps, effectively let banks and hedge funds wager on the financial equivalent of a four-alarm fire: a default by a company or, in the case of Greece, an entire country. If Greece reneges on its debts, traders who own these swaps stand to profit.

“It’s like buying fire insurance on your neighbor’s house — you create an incentive to burn down the house,” said Philip Gisdakis, head of credit strategy at UniCredit in Munich....

...But even before that issue became apparent, a little-known company backed by Goldman, JP Morgan Chase and about a dozen other banks had created an index that enabled market players to bet on whether Greece and other European nations would go bust.

Last September, the company, the Markit Group of London, introduced the iTraxx SovX Western Europe index, which is based on such swaps and let traders gamble on Greece shortly before the crisis. Such derivatives have assumed an outsize role in Europe’s debt crisis, as traders focus on their daily gyrations....

...there is fierce debate over what exactly is behind Greece’s recent troubles. Some traders say swaps have made the problem worse, while others say Greece’s deteriorating finances are to blame.

So who or what's to blame? Swaps or Greek fiscal irresponsibility?

The primary problem has to be the latter. If Greece had been fiscally strong, no "hi-tech" derivatives could produce a financial calamity. Those CDS prices would not have gone haywire creating a momentum of their own.

What is not clear to most outside the financial business is how that industry has morphed into a hydra-headed weapon of destruction if you are on the wrong side of the trade.

And the mathematical complexity of those WMD is simply beyond most mortals. Not just WMD, the global financial game itself is beyond the knowledge of most politicians and legislators who are, in theory, there to protect the stability of the society which elected them.

Unless you understand this point, you cannot understand how Wall Street has been able to run circles around Washington in the current financial crisis getting away with the metaphorical murder.

Of course Wall Street has been and is still aided by its intellectual allies in Larry Summers, Geithner and Bernanke who have a natural tendency to think like Wall Streeters.

However, even they, without spent any meaningful time in the trenches on Wall Street, trading day in day out, playing with billions, making and losing in seconds, don't really appreciate how quickly Wall Street can spot an opportunity faster than you can say: "Can you explain this to me, please, slowly?"

two cases in point. When Wall Street understood Washington got scared by the prospect of Great Depression V2.0, the honchos immediately got Washington DC to grant them a banking license to gain access to zero cost funds plus federal guarantees on loans.

With these two de facto cost less blank checks, Wall Street quickly amassed financial assets priced for Armaggeddon. Any surprise their 2009 profits and bonuses were off the chart? They played DC for fools.

Take Greece. Of course the good folks at Goldman Sachs knew what they were doing selling derivates to Greece to postpone its inevitable days of reckoning. Of course they didn't want to hold any Greek papers unless they could quickly off load them to someone else. So Wall Street did two things: they helped create a market for those instruments by financing a new company, Markit in London, to produce sovereign risk indices: iTraxx Sovereign Index.

With that Index and its sub-indices covering Western Europe, Asia and so forth Wall Street created, out of thin air, derivative products that bet on movements of those products. Hence a giant Sovereign Risk Casino came into existence.

Wall Street could then hedge against whatever positions they may have held in whatever sovereign papers in their own accounts. Or for that matter bet against any sovereign risk on a net basis.

Goldman Sachs, according to earlier reports, also sold back to the Greece Central Bank, some of the Greek papers they were holding.

It is not far fetched that Wall Street has been running and managing a global casino for some years. Goldman Sachs and others have been not merely financial intermediaries taught in universities, they are principals themselves by holding positions for their own accounts.

If Uncle Sam had come to its rescue, that global casino's ownership and management would have looked very different today.

But politicians in general and Washington in particular don't understand modern finance. Wall Street has successfully led them to believe the world needs this "casino" and only they, the same crew, can manage it, thank you.

One can be cynical and say politicians are only too ready to be corrupted without knowing how to make an honest living let alone a living on Wall Street, and Wall Street is only too willing and able to lead them by their nose. But is that cynicism too far-fetched?

Back to my sabbatical, friends.

Summing Up and a Sabbatical

Just about a year ago on March 1 I started this blog.

I said: "...There is much confusion and unhappiness all around regarding what is being done to bail out overpaid financial "geniuses" who got us into where we are.

Perhaps some straightforward thinking is in order devoid of patronizing and obfuscating technical terms preferred by those who run our system.

This blog hopes to contribute to that effort so that we, those who pay taxes and mortgages on time, may know what to do to make the system a little better in the future.

Towards this end all of us need to be a little more vigilant of future misdeeds committed by those we usually consider as our leaders or pillars of society: bank presidents, Treasury Secretaries, Central Bankers and elected officials.

Perhaps our vigilance will result in advance warnings before the next perfect storm could ever gather sufficient force to engulf us all as this one is doing right now"...

These days It is rare to find anyone who is not aware of how Wall Street went over board, how Washington DC has failed to put in rudimentary checks and balances reigning in Wall Street in exchange for a blank check; and how, as a politician, Obama has been self-destructing as a man whose promised changes one can no longer believe so readily.

After Obama compared multi-million dollar wages and bonuses paid to Wall Street leaders with those of baseball players, one can say for a high degree of certainty that Obama is essentially a "Chicago School" convert. Only alumni of that "Cathedral" could compare Wall Street pays with those of sports. Obama, as it turned out, ain't what many thought he was when they cast their vote for him as FDR V2.0. He is turning out to be "just another" politician.

Paul Krugman said it well, "Oh My God". He also said in conclusion: "He is clueless". To which I sadly concur.

The weight of money in influencing how public policies are formed in Washington, DC, indeed in so many other countries of varying degrees of political liberty, is perhaps the trend of the 21st Century.

If you detect a touch of helplessness and futility in what I have been trying to do, you are not wrong.

Here is what has happened:

The Great Depression V2.0 has been averted by the Fed and other major Central Banks printing money. However, due to the blanket no-question-asked way of doing so, a base is formed for another bubble down the road.

The unevenness with which public money has been spent lays bare how strong interest groups representing numerically small number of people, but numerically large sums of money, have managed to capture Washington DC.

USA is supposedly a true democracy. But in my view it is moving ever closer to a Third World Crony Capitalist model once dismissed in the land as corrupt and "Third World" with a barely disguised pinch of racist superiority. "We in the West don't do this sort of thing". "That" could only happen in "Asia".

Sure, mate. Whatever you wish to believe it's fine with me. We still live in the free world and we are all entitled to our opinions however stupid and wrong they maybe.

I am going to take time off to focus on other things including writing columns for publications, something I used to do far more regularly before I began this blog.

www.sinmingshaw.com lists most of my articles.

I want to add to that list. To do so, I will blog less frequently. So, it is not "adios", rather it is "hasta luego". See you soon.

Every now and then I could write something if I am so moved. But I shall not be writing everyday here. I hope you are not too disappointed.

If I publish something, I will alert you on this blog. So, check back every now and then.

Thanks to you all for being my regular readers. Until next time, keep well and keep alert for volatility in financial and other markets.

Ciao

Goldman Sachs and Global Financial Stability

An intriguing thought proposed by Simon Johnson at MIT:

"A rogue trader could destabilize a firm, such as Barings, and a rogue firm such as Goldman Sachs"?

Johnson's argument is well worth your time:

Goldman Goes Rogue – Special European Audit To Follow
Posted: 14 Feb 2010 06:22 PM PST

At 9:30pm on Sunday, September 21, 2008, Goldman Sachs was saved from imminent collapse by the announcement that the Federal Reserve would allow it to become a bank holding company – implying unfettered access to borrowing from the Fed and other forms of implicit government support, all of which subsequently proved most beneficial.

Officials allowed Goldman to make such an unprecedented conversion in the name of global financial stability.

(The blow-by-blow account is in Andrew Ross Sorkin’s Too Big To Fail; this is confirmed in all substantial detail by Hank Paulson’s memoir.)

We now learn – from Der Spiegel last week and today’s NYT – that Goldman Sachs has not only helped or encouraged some European governments to hide a large part of their debts, but it also endeavored to do so for Greece as recently as last November.

These actions are fundamentally destabilizing to the global financial system, as they undermine: the eurozone area; all attempts to bring greater transparency to government accounting; and the most basic principles that underlie well-functioning markets. When the data are all lies, the outcomes are all bad – see the subprime mortgage crisis for further detail.

A single rogue trader can bring down a bank – remember the case of Barings. But a single rogue bank can bring down the world’s financial system.

Goldman will dismiss this as “business as usual” and, to be sure, a few phone calls around Washington will help ensure that Goldman’s primary supervisor – now the Fed – looks the other way.

But the affair is now out of Ben Bernanke’s hands, and quite far from people who are easily swayed by the White House. It goes immediately to the European Commission, which has jurisdiction over eurozone budget issues. Faced with enormous pressure from those eurozone countries now on the hook for saving Greece, the Commission will surely launch a special audit of Goldman and all its European clients.

This audit should focus on ten sets of questions.

1) Which eurozone governments have worked with Goldman, and on what basis, over the past decade? All actions prior to and after the introduction of the euro need to be thoroughly reexamined.

2) What transactions has Goldman facilitated and how has that affected the reporting of European government debt? (Under the Maastricht Treaty, eurozone government debt is not supposed to exceed 60 percent of GDP.)

3) In the case of Greece, the accusation is that Goldman deliberately and in a premeditated manner conspired to hide the true degree of government debt. Is this true, and to what extent has Goldman helped other countries engage in similar transactions, e.g., countries now seeking entry to the eurozone?

4) What is the full extent of Greek and other government liabilities, if these are accounted for properly? Without this reckoning, it is impossible to design a proper level of European Union (or any other) support for weaker eurozone countries.

5) Are there non-eurozone countries that have also been aided and abetted by Goldman in this fashion? For example, are the UK and Switzerland implicated – and thus endangered?

6) Has Goldman extolled the virtues of government debt in Greece, or other countries, while at the same time helping to deceive investors on the true risks inherent in those debts? What were Goldman’s own holdings of these securities?

7) Is there evidence that Goldman has structured similar transactions for the private sector – enabling companies to conceal the level of their true indebtedness? Have securities issued by such firms also been endorsed by Goldman to the buying public?

8) Were Goldman’s US-based supervisors aware of Goldman’s activities in Greece and other eurozone countries? Did they condone activities that undermine the integrity of the European Union?

9) Where was the European Central Bank while all of this was happening? Has the ECB become dangerously enraptured with the new Wall Street and its “techniques”?

10) Did any responsible official really think that what Goldman was constructing was really some sort of productivity-enhancing financial innovation – as opposed to a sophisticated form of scam?...

...If the Federal Reserve were an effective supervisor, it would have the political will sufficient to determine that Goldman Sachs has not been acting in accordance with its banking license. But any meaningful action from this direction seems unlikely.

Instead, Goldman will probably be blacklisted from working with eurozone governments for the foreseeable future; as was the case with Salomon Brothers 20 years ago, Goldman may be on its way to be banned from some government securities markets altogether.

If it is to be allowed back into this arena, it will have to address the inherent conflicts of interest between advising a government on how to put (deceptive levels of) lipstick on a pig and cajoling investors into buying livestock at inflated prices.

And the US government, at the highest levels, has to ask a fundamental question: For how long does it wish to be intimately associated with Goldman Sachs and this kind of destabilizing action? What is the priority here - a sustainable recovery and a viable financial system, or one particular set of investment bankers?

To preserve Goldman, on incredibly generous terms, in the name of saving the financial system was and is hard to defend – but that is where we are. To allow the current government-backed (massive) Goldman to behave recklessly and with complete disregard to the basic tenets of international financial stability is utterly indefensible.

The credibility of the Federal Reserve, already at an all-time low, has just suffered another crippling blow; the ECB is also now in the line of fire. Goldman Sachs has a lot to answer for.

By Simon Johnson

How likely would any of the above 10 items be taken up by EU authorities? Good question.

Global Banking Compensation

Absent is Goldman Sach's Lloyd Blankfein compensation because it would be outside of the box on the left hand side. He reportedly took home over $80 millions versus "only" $19.7 millions by Jamie Dimon. Obama still didn't get it that these guys were grossly overpaid compared to the "market".

Greek Offensive

When your back is up against the wall the best defense is often a good offense. This is exactly what the besieged Greek Prime Minister is doing. Blame your domestic trouble on foreigners, even if they are in fact your fellow members of the same eurozone club, the club Greek begged to join as a symbol of its "developed" status when in fact it was and is still run like a banana republic.

What is Mr. Prime Minister doing?

FT reports:

..."In a harshly worded speech to the cabinet the day after the summit, which was televised live, Mr Papandreou claimed Greece was being used as a “laboratory animal” in a test of strength between the eurozone and financial markets.

“The EU’s own credibility is being tested,” he warned. “It must correct the mistakes it made over Greece, so it will be especially strict with us.”

Analysts said the speech was intended to rally trade unionists, who are threatening to increase strike action, as well as the governing Socialist party’s hardline faction"...

This is another example of how the bank is held hostage by a borrower of billions unable to pay. The bank needs him more to survive and the borrower can then play the bank like a fiddle.

That "harshly" worded speech was clearly intended also to shift national anger towards outsiders.

Greece will not wage war. But often in the past governments waged wars to divert domestic attention to somebody else. Today the Greek government is doing exactly that.

So predictable. So tragic.

The Greek Economy - A Glance

From the CIA FactB Book 2009:

- Greece violated the EU's Growth and Stability Pact budget deficit criteria of no more than 3% of GDP from 2001 to 2006, but finally met that criteria in 2007-08, before exceeding it again in 2009 by 12.7%. Public debt, inflation, and unemployment are above the euro-zone average; debt and unemployment rose in 2009,
- GDP - real growth rate: -2.5% (2009 est.)
- nvestment (gross fixed): 15.6% of GDP (2009 est.)
- Budget: revenues: $108.7 billion expenditures: $145.2 billion (2009 est.)
- Public debt:108.1% of GDP (2009 est.) 97.4% of GDP (2008 est.)
- Exports: $18.64 billion (2009 est.) $29.14 billion (2008 est.)
- Imports: $61.47 billion (2009 est.) $93.91 billion (2008 est.)
- Reserves of foreign exchange and gold: $NA (31 December 2009 est.) $3.473 billion (31 December 2008 est.)
- Debt - external: $552.8 billion (30 June 2009 est.) $504.6 billion (31 December 2008 est.)
- The public sector accounting for about 40% of GDP

You don't need a PhD in economics from MIT to conclude Greece is flat broke.
Wny is it broke? There can only be one answer: years of mismanagement by the "leaders" of the country voters kept electing to public office.