>** Message to any Nevadan, sitting in a home devalued by the collapse of the housing bubble inflated by the rampant speculation in securitized assets included therein: The Hedge Funds Are Not Your Friend. Just ask the Greeks. We may be seeing a repeat performance of the 1997-98 Hong Kong Double Play. [Sky] The Chicago Mercantile Exchange estimates that speculators have bet some $7.6 billion “in short positions” against the Euro. This needn’t be Greek to anyone. The ploy is almost simplicity itself.
Greece could have continued to fudge the figures concerning its level of indebtedness, but its new government chose not to do so. Therefore, in an already weakened economic situation, with a tax structure distinctly favoring the nation’s richest citizens, the Greeks were looking at an even more dire set of prospects when the “honest numbers” were revealed. Enter the Speculators, betting against the currency. Heads they win, Tails they win.
“They (the speculators) said we can’t lose because if they don’t defend the currency, we’ll make money on the currency. “If they do defend it, we’ll make money on the stock market.” [Sky] What’s eminently clear at this point is that the speculators don’t give a large rodent’s rear end if the Greeks, the Spanish, the Portuguese, or any other government, has to make ever more expensive debt payments created by rising interest rates. Nor do they care if these governments have to trim economic stimulation and infrastructure spending to defend their economies — because the Speculators will simply shift the short positions from the currency markets to the stock markets. [GuardianUK]
What responsible governments can, and probably should, do is to support the Greek’s attempts to introduce those measures that can restrain spending without hampering long term economic prospects, and “burn the speculators” by intervening before the Hong Kong Double Play is reincarnated on the Greek peninsula.
Want to get into the weeds on this topic? See Chicago Fed’s copy of “The Double Play: Simultaneous Speculative Attacks on Currency and Equity Markets.” [PDF] Congressional Research Service, “The 1997-98 Asian Financial Crisis” (FAS) “The 1997-98 Korean Financial Crisis: Causes, Policy Responses, and Lessons” IMF (PDF)
** After loudly calling for televising the Senate meetings on the reconciliation of the House and Senate versions of health care reform legislation, Rep. John Boehner (R-OH) is hedging about attending the health care talks scheduled by the White House because…they’ll be televised. The GOP stall campaign started with the call months ago to “start over” (since at least last July) and now incorporates Boehner’s rather old idea that there should be no plan under discussion — just a plain sheet of paper. [TPM]
** If you missed this, a reminder: “The OPR’s Torture Memo will be an assault on the rule of law” [Unbossed] And, yes there’s now a time line of The Brief Bomber’s interrogation [WaPo] which doesn’t beat the Bush Adminstration’s five minute record for the Shoe Bomber.