The biggest blow came from the 2008 financial crash, which was
wholly caused by Wall Street's reckless gambling spree. When the world economy nearly collapsed into
another Great Depression, the weaker economies in the EU took the biggest hit. Ireland, Portugal and Greece suffered
enormous job loss and massive declines in tax revenues. These countries became the victims of the
vast housing bubble that was pumped up by Wall Street's various financial
schemes. Yes, they had accumulated too much debt, but the problem would have
been manageable were it not for the Wall Street-created crash.
Enter the piranha hedge funds
Hedge funds are lightly regulated, privately managed, investment
funds created and designed for the super-rich, who expect to get much higher
rates of return than the rest of us. While
you and I are lucky to see a 2% increase in our 401Ks, hedge funds hope to see
gains far in excess of 10%. Pension
funds and endowments followed the super-rich into these funds in order to gain
access to these outsized returns. There
are 8,000 or so hedge funds that now manage a total of nearly $2 trillion in
investments. And those SOB hedge funds
are circling Greece right now, doing all they can to get their hands on the
money the European Union wants to lend Greece to reduce its long-term debt
problems.
Problem is, Greece does not have enough money to pay off the loans
that are coming due in the next year. So
the EU and the IMF have assembled a bailout package to help Greece make those
payments. In exchange, the Greek people
are being asked to suffer through enormous cuts in government spending -- which
means cuts in jobs, incomes, healthcare, pensions and public education. Everyday citizens are making enormous
sacrifices.
But the European Union also insists that the bond holders of Greek
debt take a hit. After all, under the
supposed rules of capitalism, if you make a bad loan, you suffer the losses. So, as already explained, the EU wants to
recall the old bonds and replace them with new ones having half the value as
well as lower interest rates more suited to Greece's poor financial condition. Imagine that! Financial elites are being asked to sacrifice
to pay for the problems they helped create.
Not surprisingly, the elites don't like it. You see, opportunist wheeler-dealer
speculators that they are, hedge funds have been buying up Greek bonds at steep
discounts, and they expect(ed) to make a killing. So they are refusing to accept the lower
interest rates the EU is offering. The
hedge funds want to capture as much of the EU bailout money as possible. They could care less how much that requires the
Greek people to suffer.
But wait -- why are the
hedge funds refusing the offer when the alternative is having Greece default on
the very bonds the hedge funds now own? -- If they continue to hold out, won't the
hedge funds risk ending up with nothing at all?
So here's where things
get especially dicey and especially alarming.
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