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Dr.N.Giannoukakis/Newsweek 06/30/11

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Dear Editor:

I surmise that Mrs. Righter's  treatment of Greece, in her article
"Greece is the way we are feeling" published this week in Newsweek was
intended to lead the reader that "to save the euro, the euro zone may
have to shrink to a small core of financially sound members".
In her verdict, she is clueless, or deliberately misrepresentative of a
few inconvenient facts and realities.

Greece's public debt crisis will not derail growth in the West. Growth
depends on private capital and accommodative markets. The data show that
growth slowdown in the west is due to a loss in confidence by consumer
spending, unemployment and the pernicious practice of outsourcing
growth-creating jobs to places like China. The US crisis of 2008 was not
created by Greek state instruments and Greek public debt but by the
unregulated and greedy practices of Wall Street bankers and hedge funds
and their friends in the UK and the EU. The lack of regulation of
untransparent commodity, equity and bond markets (crossing networks,
black pools, OTC exchanges, private markets and the ever cancerous CDS)
served and will serve the next crisis. The UK is both a source and a
potential victim of this crisis. Greece is insignificant.

Instead of condemning Greece as the cause and not as a consequence of EU
structural defects from the start, she should note that Brussels was and
continues to be a source of the problem. Greece, unready and pushed by
greed imported from Wall Street and London, entered an arena in which
the deck was stacked. One can think of Greece at the time of the
eurozone entry as an adolescent unfit for the first date, pushed by his
older brothers into hiring a prostitute.  In fact, we now know that no
European country met the Maastricht treaty at the time of the inception
of the Euro, including Germany. All used financial alchemy and
book-cooking to put on a snazzy show, while their ID cards identifying
them as minors were hidden deep inside their underwear.

Mrs. Righter states that American banks are exposed to Greek debt. In
fact, the direct exposure of US banks to Greek debt is insignificant.
What is unreported is that US banks are in fact exposed not to Greek
debt but to $32.7bn of credit guarantees (most likely CDS protection) on
Greece (reported by the BIS). And who has taken out the CDS? French,
German and UK banks and hedge funds. In other words, the same folks who
gave Greece the rope will reap the benefits from the burial.

Mrs. Righter's dream of the euro's demise will not happen. China will
ensure this as it and the other BRIC nations move to enforce a basket of
currencies to replace the US dollar as the reserve currency. In this
regard, the EU is useful to them and this alone ensures that they will,
directly or indirectly, come to its support, including Greece.

Thank you for your attention.

Nick Giannoukakis
Pittsburgh, USA

 
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