Goldman Sachs: a bit like a monopoly supplier of unreliable cars which owns all the car repair workshops...

I commented as follows on a post at HPC about the Greek hair cut/bail out nonsense, which is "all paid into the mouths of the very same bankers who cooked Greece's books to get them into the Eurozone. It is one fraud after another with these folk.":

Yup.

1. I see it thusly - car manufacturers and car repair workshops are, let's assume, owned and operated by two completely separate groups. Car manufacturers want to make the most reliable cars so that people buy them, and workshops like unreliable cars because that's how they make money. As long as ownership of the two branches is completely separate, and there are competing car manufacturers and repair workshops, we get reliable cars and reasonably priced repairs.

2. But if the all car manufacturers consolidated into one corporation and owned all the workshops as well, then they have an interest in making cars which break down all the time, because that way they can build unreliable cars and earn money from repairing them. (The manufacturers do this in practice by wildly overcharging for spare parts, separate issue.)

3. So Goldman Sachs is like the monopoly car manufacturer who owns the repair shops. It has cornered every end of the market
- GS stampeded the EU into this single currency nonsense (earning massive great fees for itself during the set up) which was a pure vanity project;
- GS charged Greece a load of money to cook its books so that it would qualify for entry;
- GS made a shedload more money by then speculating against the Euro-zone;
- GS then charged the EU a load more money for sorting out the bail outs, the EFSF and so on;
- GS even appointed several of its own people (Monti, Draghi, Papademos) to run things (it's even worse in the USA - Tim Geithner springs to mind);
- GS, having made a shedload by selling 'credit default swaps' or 'credit default insurance', is now hoping to add insult to injury by getting Greece and its creditors to agree a voluntary debt reduction (see original article), which, according to their small print, is not a 'credit default event' and hence GS will not have to pay out to investors who paid the big premiums and suffer the big losses.

4. So GS had every interest in the launch of an inherently unstable monopoly currency, in the same way as a monopoly car manufacturer who owns all the repair workshops would have an interest in making unreliable cars. And GS' efforts have paid off handsomely, for them at least.

Here endeth.

Another faceless bureaucrat