Chapter 15 Section 2 Greece was planted with a "Trojan horse"

Why Greece?Greece is the most vulnerable link in the entire euro country, the easiest to break through, and the easiest to produce the effect of four or two.Throughout the history of currency wars on Wall Street, which one was not carefully planned?After all, the outcome of failure is something they cannot bear. As early as 2001, Goldman Sachs had planted a "Trojan horse" in Greece. The New York Times, the Wall Street Journal, and other European and American media have reported in detail about Goldman Sachs' tactics in Greece. Let's get acquainted with this process. Everything starts in 2001.

According to the "Maastricht Treaty" signed by some countries of the European Community in 1992, the member states of the European Economic and Monetary Union must meet two key criteria, that is, the budget deficit cannot exceed 3% of GDP and the debt ratio is low. 60% of the GDP.Greece fell far short of these two criteria, so it turned to US investment bank Goldman Sachs for help.Goldman Sachs designed a set of "currency swap transactions" for Greece, which concealed a public debt of up to 1 billion euros for the Greek government, so that Greece met the standards of euro zone member states on the books.

Goldman Sachs helped Greece deceive the world, so that this money did not appear in the statistics of Greece's public debt ratio at that time, because it would not be returned until 10 to 15 years later.In this way, Greece has this cash income, making the national budget deficit only 1.5% of GDP from the book view.In fact, Eurostat recalculated in 2004 and found that the Greek deficit was actually as high as 3.7%, exceeding the standard.Recently revealed news showed that Greece's real budget deficit at that time accounted for 5.2% of its GDP, far exceeding the stipulated 3%. In addition to this loan, Goldman Sachs also designed a variety of ways for Greece to raise money without increasing the debt ratio.For example, future revenues such as state lotteries and aviation taxes are pledged as collateral in exchange for cash.This mortgage-for-cash method is not a liability in the statistics, but it has become a sale, that is, bank debt securitization.Of course, these services and loans of Goldman Sachs are not provided in vain: Goldman Sachs received a total commission of up to 300 million euros. ①

Countries that have adopted the same approach include, in addition to Greece, countries such as Italy and Spain. What Goldman Sachs wants is definitely not as simple as a commission of 300 million euros, it has a more ambitious "ideal". Goldman Sachs is well aware that Greece's entry into the euro zone through this means will inevitably have foresight in its economy, and it may eventually suffer from insufficient payment capacity.Goldman Sachs purchased a 20-year 1 billion euro CDS "credit default swap"② insurance from a German bank. Next, Goldman Sachs started grabbing money.

When that currency swap deal expired, Greece's debt problems were exposed.Due to the deterioration of Greece's financial situation, the value of the CDS underwritten by Greece's payment ability has doubled - we know that Goldman Sachs has already purchased 1 billion euros of CDS "credit default swap" insurance for 20 years in anticipation of this day!This means that it is reaping the benefits of the fisherman.CDS on Greek debt rise when the Greek state's ability to pay is in doubt.This attack on Greece is to use various methods to cast doubt on Greece's ability to pay.So who holds a lot of CDS?None other than Goldman Sachs and two hedge funds that own and issue Greek debt.Goldman Sachs bought a large amount of CDS of Greek debt when Greece was not suspected of having a payment capacity problem, and then launched an attack on Greece's payment capacity credit, and sold the CDS when it rose to the highest point.

On April 27, 2010, on Capitol Hill in Washington, the capital of the United States, Goldman Sachs CEO Lloyd Blankfein attended the hearing of the Senate Permanent Committee on Homeland Security and Governmental Affairs on the Goldman Sachs incident. On the one hand, the two major hedge funds "bad-mouthed" Greece's payment capacity (including using force to lower Greece's credit rating, rumors of Greek bankruptcy, etc.), and on the other hand, they took turns selling the euro, which led to panic in the international market and followed up .The euro has fallen by 10% in 10 days and has fallen by 15% in the past two months.When the euro fell, it immediately reminded people of the instability in the euro zone, so not only Greece, but other "weak" countries in the euro zone, such as Portugal and Spain, also had financing difficulties immediately.As a result, CDS in Greece and the euro zone began to skyrocket.From July 2009 to February 2010, the Greek debt insurance rate rose by a full three times, and the CDS of Greek government bonds actually rose to 428 points, even surpassing Lebanon (255 points), which is in a semi-war state, which is unheard of.In this attack, Portugal and Spain are also in the sights of international speculators. ③

The so-called praying mantis catching cicadas and orioles were behind. When Greece tried to enter the euro zone by deception, the liar who accompanied it performed a series of deceptions, pushing it into the abyss, and thus reaping huge profits. The cruelty and bloodiness of the currency war can be seen from this.But the question is, if Greece itself is not a cracked egg, how can a fly like Goldman Sachs get close to it? Rating agencies are like "special forces" Wall Street has a variety of sharp weapons in hand, so it can achieve repeated victories in currency wars. To attack Greece, start by lowering its sovereign credit rating.The role and lethality of rating agencies are like "special forces".

Sovereign credit rating is the evaluation of a country's government's credit willingness and credit ability as a debtor to fulfill debt repayment obligations conducted by credit rating agencies. ④ The world's most authoritative rating agencies are Standard & Poor's (USA), Moody's Ratings (USA) and Fitch Ratings (France). Price bought a 20 percent stake in Fitch Ratings parent company Fitch Group from French financial holding company Fimalac SA. In 1975, the US Securities and Exchange Commission (SEC) recognized Fitch International, Standard & Poor's, and Moody's as nationally recognized rating organizations or NRSRO.

Don't underestimate this sovereign credit rating. Behind it is the transfer of trillions of wealth.For the country, it means quelling or creating a big crisis.Perhaps, only those who are in trouble can deeply understand the pain. In fact, it was Standard & Poor's and other rating agencies that continuously downgraded the long-term sovereign credit ratings of Greece, Portugal, and Spain, which detonated and magnified the debt problems of these countries (for example, Spain's credit rating was suspected of being wrongly killed), and eventually caused turmoil in the capital market.

Different judgment standards will inevitably lead to different rating results. Relevant information shows that Moody’s, Standard & Poor’s, and Fitch recently rated China’s credit ratings as A1, A+, and AA-; while the credit ratings for the United States, the United Kingdom, France, and Germany were all AAA; The credit ratings for Japan are AA2, AA and AA- respectively. What does this mean?The United States and other countries that control the right to speak about credit ratings have long had the highest credit ratings, which can help them save hundreds of billions of dollars in debt interest payments every year.However, due to the lack of right to speak in ratings in my country, the cost of overseas financing for the government and enterprises has increased significantly.

China has suffered a big loss in this regard, and, until now, this dumb loss has not ended. As early as 2003, when 13 Chinese commercial banks were seeking overseas listing, their credit ratings were all rated as "junk", which caused very large economic losses to China. In 2008, when China Development Bank, China Everbright Bank, and Agricultural Bank of China needed to introduce strategic investors before their overseas listings, rating agencies such as Standard & Poor’s began to speculate on the debt and bad debt problems of China’s large state-owned banks, and rated their credit ratings as extremely low.As a result, some international financial giants, including Citibank, bought the shares of Bank of China at a low price and made a fortune from it. First call you rubbish, then buy in a big way, and then increase your credit rating after buying.Between one low and one high, it is a huge looting of wealth. To give a simple example: In 2006, Goldman Sachs Group, Allianz Group and American Express invested USD 3.78 billion (equivalent to approximately RMB 29.5 billion) to invest in Industrial and Commercial Bank of China, acquiring about 10% of the shares of Industrial and Commercial Bank of China. Shares 1.16 yuan.After the listing, based on the intraday price of 6.77 yuan per share on January 4, 2007, the market capitalization reached 275.5 billion yuan, and the three foreign-funded companies made a net profit of 246 billion yuan. The investment income was 9.3 times in less than a year, which is rare in the world. Rating agencies can change faces very quickly.For example, on October 27, 2005, China Construction Bank, China's first state-owned bank, was successfully listed in Hong Kong, China.Before CCB went public, overseas strategic investors had already entered, and the international credit rating was immediately upgraded. On September 28, 2005, Standard & Poor's raised CCB's long-term foreign currency rating from BBB- to BBB+, its short-term rating from A-3 to A-2, and its fundamental strength rating from D+ to C. The rating outlook is Stablize. The three rating giants in the United States not only looted wealth in countries outside the United States, but also had a bad record at home, and played a very disgraceful role in the subprime mortgage crisis. In November 2009, Ohio Attorney General Richard Cordray, on behalf of five government pension funds, sued the three rating giants Moody's, Standard & Poor's and Fitch.The funds lost at least $457 million as the firms gave unreasonably high ratings on mortgage-backed securities in exchange for lucrative payouts.Therefore, from July to December 2009, Berkshire Hathaway, a subsidiary of Buffett, reduced its holdings of Moody's shares six times in a row. Of course, the reason why these rating agencies have been recognized by the market for a long time is not entirely based on interests.To be precise, while pursuing the maximization of interests, they also pay attention to the research on the rating objects, which has a certain degree of objectivity.For example, the European-funded Fitch was the first to lower Greece's sovereign debt rating, and then the US-funded Standard & Poor's -- unless there is evidence that Fitch was tricked by Wall Street. This shows that the soil for the debt crisis in Greece is already there, but it lacks a detonating fuse. Even if the fuse is not these rating agencies, it may be something else. The time may be delayed, but the crisis cannot be avoided. .Credit rating agencies only played a role in fueling the flames and amplifying the crisis in a short period of time. What I want to emphasize is that while condemning these rating agencies, we must be soberly aware of our own problems.No matter what the rating agencies say, if China can face up to its own value, how can it cause such a large loss of wealth? China's controversial issue of cheap sale of bank equity is not only related to the defects of China's banking industry itself, but also related to its own "confusion".As the saying goes, flies do not bite seamless eggs. From this point of view, we should also pay enough attention to some of the problems in China mentioned by these rating agencies to prevent problems before they happen, and should not be simply dismissed. Completely deny it. Because, in the final analysis, it is the loopholes in our system that let speculators take advantage of the loopholes.The reason why I emphasize this point is that there is a very bad tendency in China today: whenever a problem arises, it will shirk all the faults and responsibilities to the other party, without doing the slightest reflection and self-correction.Replacing rational thinking with hatred and letting emotions control thinking is a very bad form of impetuousness. This situation will only create conditions for the next round of looting, and it will be difficult to reverse the passive situation in future currency confrontations. Notes: ①George Alogoskoufis, Greece's finance minister from 2004 to early 2009, criticized the deal in parliament in 2005, saying at the time that the government's huge payment to Goldman Sachs would continue until 2019. ②CDS is originally a kind of insurance created for the possible payment problems of a sovereign country's debts, that is, when a sovereign country is suspected of having payment capacity problems, holders of the country's national debt can purchase "credit default swap" insurance, that is CDS.The insurer is responsible for paying the shortfall.Originally, CDS should be linked with national debt.But now it has been separated and become a financial product alone.At present, the amount of CDS in the world has reached astronomical figures, and up to 60% of the transactions are opaque, so it has become a hot target of speculative funds. ③ Zheng Ruolin. Goldman Sachs: The Black Hand Behind the Greek Debt Crisis. Wen Wei Po, 2010-2-24 ④Sovereign credit rating, in addition to analyzing factors that affect the country's repayment ability, such as the growth trend of a country's GDP, foreign trade, balance of payments, foreign exchange reserves, total amount and structure of foreign debt, fiscal revenue and expenditure, and policy implementation , but also analyze the financial burden caused by the reform of the financial system, the reform of state-owned enterprises, and the social security system, and finally make a rating.Sovereign credit ratings are generally divided into AAA, AA, A, BBB, BB, B, CCC, CC, and C from high to low. AA level to CCC level can use + sign and - sign to indicate the strength and weakness respectively.