Beware of Greeks Bearing CDOs

Question: What is the difference between Greece and Australia?

Answer: The Greek community in Australia has made a valuable contribution to society.

Not just in Australia either, everywhere around the world that Greeks have settled they have rapidly become industrious and valued members of the community. Everywhere except Greece. In Greece people are rioting in the streets and tossing firebombs at each other because it looks like they will have to accept being paid what they are worth and paying tax on even this.

Admittedly things would be pretty lean in my household if I was paid what I was worth but at least I pay tax; mostly. At the moment the principal issue in Greece seems to be whether they default on their debt now or later. Either possibility doesn't look good for the population of Greece but making the choice might determine whether the people of France and Germany crucify their politicians. Perhaps a new currency is the answer. For those nations (you know who you are) who have really screwed the pooch financially we could introduce a Euro Lite. This would be good for all transactions within the countries concerned and absolutely nowhere else. The Greeks will have to pull their socks up once the only people they can trade with are Portugal and Italy.

Meanwhile Moody's and Fitch still have Spain at a AAA credit rating thus proving that they have the judgment of a gerbil on crack. Spain hasn't deserved a triple A credit rating since the days of Charles V (and they only had it then because nobody understood the inflationary impact of American silver). The really worrying thing about Spain is that by comparison with Greece they do still look like a viable economy. I hope the Icelanders are hanging onto their cod. Its looking better and better as a legitimate means of exchange.

Across Europe as the economic storm clouds gather one question rises above all the others; "Is there any way we can blame Goldman Sachs for this?" Goldman Sachs has its own problems. Across the Atlantic the SEC, America's near comatose "regulatory" body, has taken the merchant bank to task for apparently doing something wrong. It would appear (or is alleged or whatever other phraseology won't get me sued) that a hedge fund with slightly more intelligence than most sniffed the wind on subprime mortgages and got Goldman Sachs to create a Collateralised Debt Obligation made up of dreadful loans so they could short sell it. Goldman Sachs then sold this turd basket to simple minded, unsophisticated investors like the Royal Bank of Scotland who bought it with money that was almost certainly not theirs to begin with. As the GFC unfolds it is getting increasingly difficult to separate the evil from the simply relentlessly stupid. The hedge fund made a fortune, Goldman Sachs did all right and RBS is now owned by the British government which is another way of say they're screwed. I understand their last company announcement was simply "Oh shit!" The beautiful thing about all this is so far Goldman Sachs has done nothing wrong (in a very narrow legal sense), the SEC is on their back because they (allegedly, putatively etc etc) didn't disclose the hedge funds role in creating the CDO.

Warren Buffet is on record as saying that he believes the Goldman Sachs management team haven't done anything wrong (or at least nothing illegal, or at the very least nothing that can be proved to be illegal, or at the absolute very least nothing that Warren Buffet thinks should be illegal). I must admit that I find it difficult to ignore the opinion of possibly the only billionaire in America who hasn't been hitting the taxpayer for a hand out.

But back to Greece. What on earth are the Greeks going to do? Here's my suggestion; emigrate. Its worked for them in the past and I see no reason why it shouldn't work again now. When the debt collectors kick in the door they will find nothing in Greece except some abandoned furniture and a couple of mothballs. Of course various other countries will find themselves in deep trouble because of this but they will have an influx of eager hard working migrants to help pull them out of it. And if there really are any Greeks out there too lazy, stupid or useless to find a job in another country, I understand the position of Premier of New South Wales will be vacant in a couple of weeks.