The financial crisis paralysed Greece. The state is nearly illiquid and threats to lower the value of the Euro – but German Banks hardly see the problem for all EU-States. They’re now betting on Greece’s bankruptcy and aggravate the crisis for Greece, the Greece people and the EU.
In the financial sector knows how to moe money: there is an index, called the “iTraxx SovX Western Europe Index”. It was introduced by the Markit Group of London in September 2009. This index represents the thread to investors and creditors that a state is unable to pay back the money to them.
Now German banks leading the way to invest in Greece bonds and they’re pushing the “iTraxx SovX” index – so the interests a rising and the situation for Greece seems to be more threating than it may be. So the interests rise more and the vicious cycle is getting deeper and deeper.
To the banks the thread is not very high, because the states of the EU and even so Germany, have to save Greece in case of an illiquidity. So banks can invest into bonds with low risks and high outcomes.
It’s about 24 000 000 000 US-Dollars: Only German banks invested over 24 Billion US-Dollars, or 17.9 Billion Euro, into Greece’s illiquidity:
- 9.1 Billion Euro / 12.33 Billion US-Dollar invested by Hypo Real Estatea bank just remained becomes taxes over 100+ Billion Euros was given from public money
- 4.6 Billion Euro / 6.23 Billion US-Dollars invested by Commerzbanka bank even just hold by public taxes
- 2.7 Billion Euro / 3.66 Billion US-Dollars invested by LBBWthe regional bank in Baden-Württemberg
- 1.5 Billion Euro / 2 Billion US-Dollars invest by BayernLBthe regional bank in Bavaria
The speculations on Greece’s illiquidity is “It is, like a fire insurance for the neighbor’s home.” said Philip Gisdakis, Chief Consulatant for credits at the bank UniCredit, to the New York Times. “You offer an enticement to burn it down.”
Now the Wall Street Journal reported that more and more Hedge Fonds are betting Euro ist getting the same, lower value the US-Dollar is at. That is one more parallel thing to 2008’s crisis. Big Hedge-Fonds are betting on a falling Euro value and so they’re encouraging others to do the same. These insider trades were exactly the same in 2008 with Lehman Brothers.
The used bonds are Credit Default Swaps (CDS): they’re betting some institute cannot pay back the money to investors and creditors. Swaps take money in currency A and invest it into currency B. After a time the change is redone and if A if fallen in value you benefit from that. The value of the Euro fall in the past about 10% and it may become a lot more. It may fall even 26% more from now.
Time will show whether these investments were clever or not. But even today we know: they are at the expense of Greece and the people living in the EU. The scenario is quiet the same like 2008 before the collapse of Lehman Brothers.
Sources:
(1) Spiegel Online
(2) New York Times
(3) Handelsblatt



