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Friday, 15 June 2012

The ECB, Greece's vulture fund?

Interestingly this week the Greeks received a $4.2 billion bailout from the European Financial Stability Fund (EFSF) and promptly used the money to purchase Greek bonds purchased by the European Central Bank (ECB) last year.

The Greek Government, no longer a sovereign nation but under the control of the European Banking Troika, paid back the bonds at their full face value, giving the European Central Bank (who had originally purchased the bonds at a 20 to 30% discount) a profit of some 480 million Euros.

So let's examine that transaction closely...

The Greek people have accepted another $4.2 billion of debt obligations which will require further 'austerity' to pay for and the money has not been used for anything but to pay off other debts which has allowed the lender (the ECB) to recognise a profit, which will not be used for anything but to award themselves huge sums for the administration of the scheme to rob the Greek people.

You may recall that all other lenders were forced to accept a loss on those same bonds... so why did the ECB not have to?

The Greek people go to the polls on the 17th June and have another chance to vote for the only possible resolution to their woes... a full default on all outstanding debt and a declaration of bankruptcy.

Look at how the system has been working in Spain... the ECB has been lending to banks at 1% interest and these banks have in turn been lending the money to Spain at 6% interest, but they have been lending the money to Spain who have been using the money to shore up the banks, who are bankrupt.

At that rate the debt simply cannot do anything but increase... Spain too is in the same Sovereign Debt death spiral. The next countries to fall will be Slovenia and Italy.

So what is the ultimate purpose for Germany? The aim is to remove all the Gold from the other nations of the European Union, the Gold which is the collateral on these EFSF loans to these nations... not only that but to take control of all the income generating assets (such as solar power generation in Greece).

At the end of the day it all comes down to GOLD.

What does it mean for US in Jersey?

Well we have no debt, it is true. We do however have a vastly over inflated civil service which spends £600 million per year and relies on £300 million per year in income from these bankrupt banks.

In this regard we are very similar to the United Kingdom (which is the relatively unregulated offshore centre for the US financial system), the problem that will ultimately kill the United Kingdom is not just the high level of Sovereign Debt (which in truth is worse than most of these struggling Euro countries but as they have their own currency it doesn't matter so much) but the level of private debt which is 450% of the total GDP of the United Kingdom.

In Jersey no figures are produced to show the level of Private Debt, but given that we have been in a continuous housing bubble for the past thirty years and given that we could borrow seven or eight times our earnings for mortgages and that most people have maxed out credit cards, car loans etc. I would be surprised if the level of Private Debt in Jersey did not exceed that of the United Kingdom.

What that means is that if the government tries to squeeze the people of Jersey to make up for any reduction in income from the finance industry then there is no more blood to be drawn and people will be en desastre in no time.

The thinking is that the UK will be hardest hit, well that is only because most people do not consider Jersey.