Debt Fraud: Greece Actually Owes Nothing!


The Greek debt, as such, is mostly not Greek debt. The debt which Germany and other nations are demanding that they pay for, is money that the Greeks never got! So the Greeks don’t owe that money. This was a swindle, because the Greeks didn’t incur that debt.
Lyndon LaRouche, Feb. 17, 2015

What Americans need to know about Greece and “its debt,” is that the new Greek government is asking the European Union to shut down a huge Wall Street-London bank swindle and make economic growth possible again in Europe.

If that doesn’t happen, the worsening bankruptcy of the whole trans-Atlantic banking system will continue to generate desperate confrontations with major powers Russia and China, with the threat of world war.

The rest of Europe, so far, is refusing to shut that Wall Street swindle down, and today Obama’s Treasury Secretary Jack Lew backed up that refusal, including by a threatening phone call to the Greek finance minister.

What Obama, Merkel, et al. are demanding Greece do, instead of shutting down this Europe-wide swindle by the banks, is run a budget surplus of 4.5% of its annual economy, exclusively to pay the “Greek debt.” In U.S. terms? That would mean the United States running a government tax surplus of $750 billion a year, in order to pay down debt. You won’t hear Obama or Lew volunteering to try it; it is impossible.

The “Greek debt” swindle is the same one as the TARP bailout here, and the Federal Reserve’s printing of $4 trillion in new money to cover Wall Street’s debts; and its perpetrators are the same huge banks.

In the United States, the big banks took millions of subprime, unrepayable mortgages sold by their captive mortgage companies, and made them into toxic securities which blew up the financial system and the whole economy in 2008; the government bailed them out, while our living standards plunged.

In Europe, the banks bought the mortgage securities from the U.S. banks. At the same time they made millions of unrepayable subprime loans of their own — not only to homeowners, but also to governments without the means to repay them, like those of Greece, Ireland, Portugal, Hungary, and others. Big Wall Street banks were involved, particularly Goldman Sachs, which created “magic” derivatives: Take a bank loan to Greece, make it look like a mere “currency swap” rather than a debt — but turn it into a much bigger debt ten years later.

All this European subprime debt blew up on the big banks in 2009, a year after the U.S. subprime debt blew up on them. Then the European governments all superindebted themselves, to create a $1 trillion “European TARP” called by the initials EFSF. They bailed the megabanks out, with the IMF pitching in, using “only” about $600 billion to pay the unpayable “subprime government debt” part of it. $275 billion paid “Greek debt.”

This immense bank bailout got passed through the Greek, Irish, etc. governments, which passed it immediately on to the banks which had been their “subprime lenders.”

We have to spill this thing as a leading issue in the U.S. You can sink Wall Street on this one. If you sink the Greek swindle, you’re going to start a chain-reaction explosion of the international trans-Atlantic system, like the Wall Street system and similar things, the British andothers. They are the ones who owe the debt, not the Greeks.
— Lyndon LaRouche • Feb. 17, 2015

The Greek debt swindle was classic. In 2009 Greece’s debt was $300 billion. It then “got” two huge bailouts in 2010 and 2012, of about $140 billion each. Less than 10% of that $275 billion stayed in Greece and was spent by the Greek government; more than 90% went directly and immediately to Deutsche Bank, HSBC, JPMorgan Chase, and their fellow sharks, with small amounts crumbling to the hedge funds swimming alongside. Former Greek Labor and Social Security Minister Louka Katseli has given documentation that the Greek government actually got to spend or invest just 3% of that $275 billion. The only banks which had to write off their “Greek debt” were Greek banks; all of Wall Street and the London-centered banks got their toxic debt “assets” guaranteed 100% by this European bailout swindle. This made the Greek banks so bankrupt that the Greek government then had to borrow more to bail them out with $50 billion — so Greece’s debt was increased when supposedly being reduced! A total swindle!

Then, between 2010 and today, Greece, Ireland, Portugal, etc. were ordered to pay the bill for this huge new Europe-wide bank bailout debt. They imposed a slashing domestic austerity until their people emigrated, death rates rose and birth rates fell, and clouds of wood smoke rose over modern cities whose inhabitants could no longer afford modern heat. After five years of this punishment, Greece’s $300 billion debt has become $350 billion or so — after $250 billion passed through to the banks!

And the other European countries are also on the hook for this phony debt, all of it. They guaranteed it; Greece and Ireland and the other austerity-crushed countries can’t pay it, so the rest of Europe must either agree to reorganize that debt and write it down, or their taxpayers will pay for the swindle.

This is why the new Greek government now demands that Europe shut down this global bank swindle: Write off the unpayable debt; invest in reviving economic productivity by building new economic infrastructure.



– European banks were bailed out, not the people of Greece !

– IMF’s Director Batista: Greek bailout was “to save German & French banks” (video)

Ελληνική μετάφραση – Αποκάλυψη από LaRouche: “Οι Έλληνες δε χρωστάνε τίποτα – Το χρέος είναι απάτη”

7 comments on “Debt Fraud: Greece Actually Owes Nothing!

  1. Kiriakos Tobras: The Greek Sovereign Debt Financial Scam

    Posted on June 5, 2011 by Max Keiser
    How market speculation turn into a financial fraud crime,transforming market profits in money laundering andthe national sovereignty of an EU country in a financial slavery scam !

    Dr. Kiriakos Tobras *

    On April 09, 2010, in Athens, together with the Greek Lawyer Mr. George Noulas, we filled a Criminal Fraud Charge file submitted to the Attorney General of the Supreme Court.

    The file is claiming against fraudulent Speculators who, by running an organized criminal plan, they manipulated the Greek Government Bonds Market, with the intent to perform multiple financial profits, deceiving and damaging Greek National Economy and Greek Citizens and Taxpayers wealth.

    The Greek sovereign debt crisis analysis could help the world to realize the extreme vulnerability of all our national economies.

    To understand how sovereign countries can be easily destroyed and brought to financial slavery by some few fraudsters, through the combination of both naked CDS trading and naked short selling on Government bonds, issued by the Governments in order to finance our Govt debts and the economic development of our countries.

    The most important lesson we learned from the Greek case study, is the definition of the limit between market speculation and financial crime.

    This explains how financial speculation could turn into a fraud crime, transforming fraudulent market profits in pure money laundering and changing economic sovereignty of a country in a financial slavery scam.

    The crime

    The crime is a typical financial fraud against the State, consisting in the manipulation of the Greek Government debt by a group of fraudulent Speculators and their Accomplices, Greek and foreign citizens and Government Officers.

    Those persons, by running an organized criminal plan, represented falsities on the existing Greek sovereign debt and national economy facts and figures, with the intent to manipulate the Greek Government Bonds Market, in order to perform multiple and consecutive financial profits, with the knowledge and the purpose to deceive and damage Greek National Economy and Sovereign Debt, Greek GDP and, consequently, Greek Citizens and Taxpayers wealth.

    The direct and consequent damage, only for the year 2010, was calculated at 13 billion euro, stretching Greek National Economy, Next Generations Wealth and Economic Sovereignty of the country.

    The Greek Government debt financial scam fits with all fraud elements, as required by the most EU criminal laws.

    Speculators and accomplices made representations of existing facts with the knowledge of their falsity and with the intent that it shall be acted upon by the plaintiffs ignoring the falsity, their reliance on the truth of those false representations, their right to rely upon it and the consequent damage suffered by the Greek citizens and taxpayers.

    Each of the above mentioned elements has been pled with particularity and proved with clear, cogent and convincing evidence, in order to establish the case.

    Some of the persons, corporations and institutions involved in the Greek case, have been recently charged with similar fraud crimes in the USA and EU, following to investigations of Justice and other State and International Authorities.

    The Fraudulent Actions & the Omissions to Act

    The crime consists in a double financial scam, committed under consecutive actions by the persons identified as fraudulent speculators.

    First, with Naked CDS multiple trading actions (transactions) against Greek Govt bonds, in order to manipulate CDS and spreads rates.

    This fraudulent trading pushed the lending cost of the Greek sovereign debt to unacceptable interest rate levels, higher than 15%.

    Second, with multiple Naked Short Selling actions (transactions) on Greek Govt Bonds, in order to manipulate the bonds market itself.

    This fraudulent short selling created a fake and artificial bonds offer in the international markets, with the intent to depreciate Greek Govt Bonds values by up to 30%-40%.

    In both those circumstances, some of the physical persons directly or indirectly identified as responsible persons of the crimes committed, were at the same time representing as principals, managers, officers, delegates and brokers the Prime Dealers of the Greek Govt Debt, that means the international Banks who, under agreements with the Greek Government, are placing the Greek Govt debt to the international markets.

    This is the most important of the accusations, as the same persons responsible for the placement of the Greek Govt debt in the international markets, were double dealing with CDS and Govt Bonds Short Selling, covered or naked transactions, acting against the interest of their customer, that means Greek Republic, omitting intentionally to inform any of the local Supervision and Regulation Authorities regarding their double dealing position.

    This represents the most clear and direct case of both conflict of interest, insider trading and financial scam, as the same persons and corporations were first dealing with their customer’s Govt bonds and, at the same time, were double dealing against their customer’s interest, selling the bankruptcy of that customer (Greek Republic) to other customers they had, taking advantage of the inside information and the knowledge they had on the particular circumstances and the expires of the Greek Govt debt, as a result of their first position as Prime Dealers of the Greek Govt bonds.

    This is the main reason we accused them to act under a precise and organized criminal plan.

    The persons we charged are the same fraudsters involved in the USA scandal during the years 2007-2008, speculating on the CDOs and the CDS issued on the USA subprime mortgages that brought to the Lehman and AIG collapse and to the world financial crisis.

    Same persons, same actions, same plan, same money, same scam, same damage.

    That means there were knowledge, manipulation experience, inside information and organization.

    The one and unique difference consists in the fact that the Greek case was the first financial scam where market manipulation was organized in order to destroy a sovereign country, instead of a bank or a private corporation.

    And instead of the CDOs, the crime was committed with the Greek Govt Bonds.

    All those fraudulent actions were realized by a series of multiple and consecutive transactions, consisting in buy and sell orders, covered or naked and then recycled, which were left to happen thanks to the omissions to act by the Greek supervision and regulation authorities for the domestic financial market, such as Bank of Greece, Ministry of Finance and Public Debt Management Agency in first.

    Those combined fraudulent actions, consisting mainly in both Naked CDS and Naked Short Selling transactions on Greek Govt Bonds by the Prime Dealers of the Greek Govt Debt, created a sovereign debt financial bomb exploded on Greek national economy, destroying the country.

    This is the reason we identify the scam as a financial terrorism crime.

    The persons we charged

    All physical persons identified as fraudulent speculators on the Greek Govt debt manipulation.

    That means all responsible principals, officers, managers, delegates, brokers, etc., of the major commercial and investment banks involved in the scam, hedge funds, rating agencies and, together with them, all Greek partners, representatives, brokers and other physical persons identified as accomplices, such as Greek Banks and Funds principals, officers, managers, traders and, more than them, blue chip business owners, experts and financial analysts, politicians, Govt officers, Media Owners, etc.

    The direct damage

    Following to the direct and consequent damage of 13 billion euro suffered by the Greek citizens and Taxpayers, on May 2010, Greece entered under an IMF, EU and ECB bailout scheme called «MNIMONIO».

    This is nothing the less than a tailor made Government lending program ruled by a Memorandum of Understanding (MOU) with the lenders, similar to those imposed in Argentina and other Latin America countries.

    This MOU was imposed in Greece after a real parliamentary coup organized by the Greek government, violating the primary and most essential principles of the Greek Constitution map.

    There was not any referendum, Greek citizens were never asked in any way on that and decision was made in Parliament without to respect the quorum majorities required by the Greek Constitution for the international contracts and agreements signed by any Greek Government in charge.

    And the most terrible thing was that persons, institutions and corporations identified as responsible for the speculation and the financial crimes committed against the country, through years of government debt manipulation and falsities, they have been self appointed as the ultimate country rescuers.

    That means Greek Government itself, Banks, Bank of Greece, ECB and EU Commission.

    The indirect damage – Debt Restructuring

    Through the IMF, EU and ECB M.O.U. bailout, Greek government debt real restructuring procedure started on May 2010.

    This is a very important step, we need to understand.

    MOU bailout modified both the nature and jurisdiction of the Greek sovereign debt.

    This was the first, real restructuring procedure started on the Government debt of the country.

    Greek sovereign debt issued until 2010, was under a form of a regular uncover debt, simply issued through government bonds, without any understanding securities or any other kind of collateral assets.

    That means, existing Greek sovereign debt was not collateralized.

    Going under the MOU bailout scheme, the 110 billion euro loan approved on May 2010, was the first Greek government debt issued as a collateralized debt obligation, similar to a CDO contract, and was approved only with the purpose of the down payment of the previous government bonds expires.

    That means, Greece signed a new loan agreement, in order to pay older debts expires.

    This is a typical and pure refinance operation.

    But the real truth beside is that previous debts were not collateralized and new MOU debts they are.

    Through this refinance procedure, Greece will gradually transform all the existing non collateralized sovereign debt, in a new, collateralized sovereign debt, offering as collateral securities all public properties, future revenues and all tangible and intangible assets of the country.

    This is how sovereign debt nature was modified through MOU bailout agreement.

    How that will happen ?

    After the first 110 billion MOU loan agreement, signed on May 2010, a second one will follow.

    This will happen as Greece will not be allowed to return to the markets on 2012 and 2013.

    This is the reason why speculation against the country is continuing, even after the approval and the realization of the first MOU agreement.

    Government’s financial policy agreed with the lenders of the MOU agreement, encourage international speculators to continue with manipulation against country’s national economy and sovereign debt.

    Internal market experiences a day after day continues downturn, private business are constantly closing or bankrupting, inflation and unemployment are blowing, recession is running on an average 4% year rate, poverty and criminality are growing up, and all this explosive, hard recession economic mix, introduces Greece in the vicious circle of a new and continue deficit generation that will keep creating additional, new sovereign debt, as deficits could never be financed by the future economic revenues of the country, as GDP is constantly dropping down.

    After all that, there will not be any market in the world intended to finance a country in such a financial situation, and that means on the year 2012 a second MOU bailout will follow the first one.

    And again, this one will be also issued as a collateralized debt.

    And again this will also be approved limited with the purpose to pay older government debt expires,continuing through this refinance procedure to transform the whole Greek sovereign debt into a new, collateralized debt obligation.

    When over a 50% quote of the existing sovereign debt of the country will be transformed in a collateralized debt obligation, only then default will be leaved to happen in Greece.

    In this way, all Greek national assets and resources will become ownership of the country lenders, as the new Government loans under the various MOU bailout agreements, not only will be 100% collateralized but they will also be regulated by the English Law.

    And this is how jurisdiction of Greek government debt is gradually changing, as existing debt is regulated by the Greek law.

    That means execution procedures on public properties and any kind of tangible and intangible assets will be admitted and Government debt transfer to any third parties, partially or totally, will also be free to happen.

    After all that, Greece will never allowed in the future to be a sovereign country, as Government debt could be easily transferred under a regular factoring agreement to any physical person, institution, corporation or country, such as Turkey for example.

    What is the actual status of the case

    The criminal charge case is now at the most important point.

    Preliminary investigations are recently concluded, after a very detailed exam from both Prosecutor General Office and Greek Financial Police Authorities (SDOE).

    On February 2011, we were invited by the Financial Police Dept in Athens to give additional information regarding Greek Govt bonds short selling transactions, between January – April 2010.

    On this purpose we submitted an additional file with all that information.

    On May 2011, Mr. Panos Kammenos, a deputy of the Greek Parliament, following to the Greek justice authorities investigation on the criminal fraud charge file, submitted a parliamentary interrogation to the Minister of Economy and Finance, asking from the Government to inform Greek Parliament on all the specific details regarding Govt debt Prime Dealers, CDS and Naked CDS Traders, Govt Bonds Short Sellers, Banks, Funds and physical persons indentified as buyers, sellers or short sellers and, additionally, to inform Greek Parliament on the official results of the recent EU and USA state and justice authorities investigations on Greek Govt debt speculation, CDS cartel frauds, etc.

    After that, the complete charge file is now transmitted to the Prosecutor for the Financial Crimes at the Athens Court, who is starting with the main investigation procedure and, during this phase, he will investigate on all specific physical persons and corporations, both Greek and foreign citizens.

    This is a criminal charge case and only physical persons can be indicted, that means all responsible persons indicted with the charge file, such as banks and funds principals, managers, officers, representatives, brokers, dealers, CDS traders, Short Sellers, etc., Govt Ministers and Officers, Bank of Greece principals, officers and directors, together with the others who will be indicted during the preliminary investigation process.

    All those indicted persons will be called to the Prosecutor’s Office to explain their actions or omissions to act, that means they have to explain what exactly they did, how they did it, why they did it, on behalf of whom they acted, etc., etc.

    Having a good experience on previous similar cases, I’m sure that this moment is very critical as a lot of them will start to talk.

    Some of them because they’ll get afraid, others because they didn’t share any of the profits, some others because they didn’t got the profits promised by the speculators who organized the scam, etc., etc.

    We trust in God, Justice and Common Sense, hoping that the Greek charge file will push other European citizens and taxpayers to do the same, as happened recently in Spain, where a similar criminal file was submitted to the local Justice Authorities.


  2. Saturday, February 7, 2015

    by kleingut

    Bail-Out of Greece or Bail-Out of Banks?
    The above question is flooding twitter, blogs and newpapers once again. As valid as the question is, the answer is irrelevant for Greece.

    My position on the Greek rescue loans has been clear and consistent from the beginning of this blog. I have called them ‘the prodigal sin’. I have described them as follows: “The EU used Greece’s balance sheet to bail out its banks and they called that ‘help for Greece'”. The rescue loans violated one of the most important principles in financial restructurings, namely that ‘risk takers must remain risk carriers’. To top it off, I once even called for a Nueremberg Trial of EU elites for having committed this prodigal sin.

    Having said that, I need to point out another thing, namely that the rescue loans, however ill designed they were, had no bearing on Greece’s financial strength. The rescue loans did not overburden Greece with debt, as some think they did. They did not bury an entire nation under debt which was not even asked for.

    Just suppose, for the sake of argument, that Greece’s debt was 100 BEUR before the rescue. Those 100 BEUR were owed to a multitude of private foreign creditors. Now the EU made 100 BEUR in rescue loans so that Greece could pay off its private creditors. Fine, but at the end of this exercise, Greece had the same 100 BEUR of debt, only that it was no longer owed to private creditors but to the EU instead. It was only a change of creditors which has no bearing whatsoever on the level of debt of the borrower.

    Not the Greek state should call for a Nueremberg Trial of EU elites because of this. Instead, it is the tax payers of the financing countries who ought to do that!

    Now, what would have happened if the EU had not committed this prodigal sin? The private creditors would have had to write-down a very substantial portion of their Greek loans. Again, this would have had no bearing whatsoever on the level of Greece’s debt. Suppose some major banks would have needed to be bailed out because of this. Again, no bearing whatsoever on the level of Greek debt. The tax payers’ money would have been invested in those banks and in exchange for that, the tax payers would have received equity in those banks. For the rescue loans to Greece, the tax payers received nothing.

    Finally, assume that some of the banks would have failed. Again, this would have had no bearing on the level of Greece’s debt. Instead, it could have been quite dangerous for Greece. The liquidator of a bankrupt bank liquidates its assets at firesale prices. Whoever would have purchased the Greek assets would have put the kind of pressure on Greece as the vulture funds put on Argentina.

    To summarize, from 2010-12, rescue loans totalled 247 BEUR, of which 206 BEUR went straight back to creditors via Greece’s balance sheet. It was simply a change of creditors, no more. Had these 206 BEUR not rescued banks via Greece’s balance sheet, they would have been available for direct bail-out’s of banks. Personally, I guess that only part of that would have been necessary to bail-out the banks and the tax payers would have received nice equity in exchange.

    The ‘true help for Greece’ was the 41 BEUR out of the 247 BEUR which stayed in Greece to finance the primary deficit, etc. Greece’s austerity was due to the fact that the ‘true help for Greece’ was only 41 BEUR. It is – correctly! – being argued that the adjustment required of Greece was too much frontloaded. Ok, had the ‘true help for Greece’ been 82 BEUR instead of only 41 BEUR, the adjustment would have required much less front-loading. But it would also have required someone to lend 82 BEUR instead of only 41 BEUR.

    To sum up: the myth is that the rescue loans allegedly overloaded Greece with debt. However, about 83% of the rescue loans were not fresh funds for Greece. They only replaced loans which had already been there. The overloading of Greece with debt was not done by the EU; it was done prior to 2010 by private lenders. The EU rescue loans only refinanced debt which had already been in Greece (and already spent, I might add). Those who blame the front-loading should be aware that this was not due to overloading Greece with debt but, instead, due to not providing Greece with enough debt.

    At Y/E 2009, Greece’s debt stood at 301 BEUR. At Y/E 2013, it stood at 319 BEUR. How did Greece get from 301 BEUR to 319 BEUR? I don’t have the exact details but my estimation would be as follows:

    301 BEUR + 41 BEUR (see above) + about 40 BEUR for Greek bank bail-out’s – 60 BEUR of PSI = roughly 319 BEUR. Give or take a few billion, but what’s a few billion Euro these days, anyway?

    • Παναρίτη:

      «Πήγαμε ένα βράδυ να ζητήσουμε 40 δις. Ευρώ και ξυπνήσαμε το πρωί και πήραμε 140. Η τρόικα μας φόρεσε από πάνω το σχέδιο της»!

      (πρώην βουλευτίνα επικρατείας του Γιώργου Παπανδρέου, νυν σύμβουλος του υπουργού Οικονομικών Γιάνη Βαρουφάκη.)

  3. Karen Hudes: “A Coup Has Taken Place In Athens, The Greeks Have Been Scammed!”

    Who is Karen Hudes?

    Karen Hudes studied law at Yale Law School and economics at the University of Amsterdam. She worked in the US Export Import Bank of the US from 1980-1985 and in the Legal Department of the World Bank from 1986-2007. She established the Non Governmental Organization Committee of the International Law Section of the American Bar Association and the Committee on Multilateralism and the Accountability of International Organizations of the American Branch of the International Law Association.

  4. The banks’ secret behind the Greek tragedy

    29 June by Maria Lucia Fattorelli

    Greece is facing a huge debt problem and a humanitarian crisis. The situation now is many times worst than it was in 2010, when the Troika – IMF, EU Commission and ECB – imposed its “bailout plan”, justified by the necessity to support Greece. In fact, such plan has been a complete disaster for Greece, which has had no benefit at all out of the peculiar debt agreements implemented since.

    What almost no one talks about is that another successful bailout plan effectively took place at that time in 2010, although not for Greece, but in benefit of the private banks. Behind the Greek crisis there is a huge illegal bailout plan for the private banks. And the way it is being done represents an immense risk for Europe.

    After five years, the banks got everything they wanted. Greece, instead, got into a real tragedy: the country has far deepened its debt problem, lost State assets as the privatization process was accelerated, as well as shrunk its economy drastically. Most of all, it has had an immeasurable social cost represented by the lives of thousands of desperate people who had their livelihood and their dreams impacted by the severe austerity measures enforced since 2010. Health, education, labor, assistance, pensions, salaries and all other social services have all been destructively affected.

    The distribution of the Greek National Budget shows that debt expenses prevail over all other State expenses. In fact, the loans, other debt obligations, interests and other costs cover 56% of the budget:

    In May 2010, at the same time all attentions were focused on the abundant announcements about the interference of the Troika in Greece, with its peculiar “bailout” plan, another effective bailout plan and a set of illegal measures to rescue the private banks was also being approved, but no attention was being paid on these ones.

    In one shot, justified by the necessity to “preserve financial stability in Europe”, illegal measures were taken in May 2010, in order to provide the apparatuses that would allow the private banks to get rid of the dangerous “bubble”, i.e., the great amount of toxic assets – mostly dematerialized and non marketable assets – that loaded their off-balance sheets |1| accounts. The main objective was to help the private banks to transfer such problematic assets to the European countries.

    One of the measures adopted to accelerate the exchange of assets from private banks and settle the bank crisis was the SMP program |2|, which allowed the European Central Bank (ECB) to do direct purchases of public and private debt securities on primary and secondary markets. The operation related to public debt securities is illegal under Article 123 of the EU Treaty |3|]. This program is one among several “non-standard measures” then taken by the ECB.

    The creation of a “Special Purpose Vehicle” company based in Luxembourg was another very important measure to help transfer dematerialized toxic assets from the private banks into the public sector. Believe it or not, the European countries |4| became “partners” of this private company, a “société anonyme” called European Financial Stability Facility (EFSF) |5|. The countries committed with billionaire guarantees, which was initially set on the amount of EUR 440.00 billion |6| and then, in 2011, was raised to EUR 779.78 billion |7| . The real purpose of this company has been shadowed by the announcements that it would provide “loans” to countries, based on “funding instruments”, not real money. Utterly, the creation of EFSF was an imposition from IMF |8|, which gave it a support of EUR 250 billion |9|.

    Together, the SMP and the EFSF represent a crucial complementary asset relief scheme |10| the private banks needed to conclude the public support that had been initiated in the beginning of the 2008 bank crisis in the United States and also in Europe. Since early 2009 they had been applying for more public support to discharge the excessive amount of toxic assets loading their off-balance items. The solutions could be either the direct government purchases, or the transference of assets to independent asset management companies. Both tools were provided by the SMP and the EFSF, and the losses related to the toxic assets are being shared amongst the European citizens.

    The exchange of toxic assets from private banks to a company through simple transference, without payment and a proper buy/sell operation would be illegal according to the accountability rules. EUROSTAT changed these rules |11| and allowed, “liquidity operations conducted through exchange of assets”, justifying it by the “specific circumstances of the financial turmoil”.

    The main reason the EFSF was based in Luxembourg was to escape from being submitted to international laws. Besides, the EFSF is also financed by the IMF, whose collaboration would be illegal, according to its own statutes. Although, the IMF also changed its rules in order to provide the EUR 250 billion collaboration to EFSF |12|].

    According to the Act |13| that authorized its creation, the EFSF Luxembourg company could delegate the management of all funding activities; its board of directors could delegate their functions, and its associates Member States could delegate the decision-making related to guarantors to the Eurogroup Working Group (EWG). At that time, the EWG not even had a full-time President |14|. The German Debt Management Office |15| is the one who actually operates EFSF, and, together with the European Investment Bank, provide support to the operational functioning of EFSF. Its lack of legitimacy is evident, as it is actually operated by a diverse body. EFSF is now the major Greece creditor.

    The funding instruments EFSF operates are the most risky and restricted ones, dematerialized, not marketable, such as Floating Rate Notes settled as Pass-trough, currency and hedge arrangements, and other co-financing activities that involve the British Trustee Wilmington Trust (London) Limited |16| as the instructor for issuing restricted type of not-certified bonds, which cannot be commercialized in any legitimate stock market, because they don’t obey the rules for sovereign debt bonds. This set of toxic funding instruments represent a risk to the Member States whose guarantees can be called to pay for all Luxembourg company financial products.

    A large proportion scandal would have taken place in 2010 if these illegal schemes had been revealed: the violation of the EU Treaty, the arbitrary changes in the procedural rules by the ECB, EUROSTAT and IMF, as well as the association of Member States to the Luxembourg private special purpose company. All of that just to bailout private banks, at the expense of a systemic risk for the whole Europe, due the States commitment with billionaire guarantees that would cover problematic not marketable dematerialized toxic assets.

    This scandal never took place, because the same EU Economic and Social Affairs Extraordinary Meeting |17| that discussed the creation of the “Special Purpose Vehicle” EFSF company in May 2010 gave a special importance to the “support package for Greece”, making it appear that the creation of this scheme was for Greece and that by doing so, it would ensure fiscal stability in the region. Since then, Greece has been the center of all attentions, persistently occupying the headlines of the main media vehicles all over the world, while the illegal scheme that has effectively supported and benefited the private banks remains on the shadows, and almost nobody talks about it.

    The Bank of Greece annual report shows an immense increase of the “off-balance” accounts related to securities in 2009 and 2010, on amounts much greater them the total assets of the Bank, and this pattern continues on the following years. For example, on the Bank of Greece 2010 Balance Sheet |18|, the total of assets in 31/12/2010 was EUR 138.64 billion. The off-balance accounts on that year reached EUR 204.88 billion. In 31/12/2011 |19|, as the total balance assets summed EUR 168.44 billion; the off-balance accounts hit EUR 279.58 billion.

    Thus, the transference of toxic assets from the private banks into the public sector has been a great success: for the private banks. And the Debt System |20| is being the tool to hide that.

    Greece was brought into this scenario after several months of persistent pressure from the UE Commission about allegations of inconsistencies on the statistics data and the existence of an excessive deficit |21|. Step by step a big deal was created over those issues, until May 2010, when the Economic and Financial Affairs Council stated: “in the wake of the crisis in Greece, the situation in financial markets is fragile and there was a risk of contagion” |22|. And so Greece was submitted to the package that included the interference of the Troika with its severe measures under annual adjustment plans, an odd bilateral agreement, followed by EFSF “loans” backed on risky funding instruments.

    Greek economists, political leaders, and even some IMF authorities had proposed that restructuring the Greek debt would provide much better results than that package. This was ignored.

    Critical denounces about the super estimation of the Greek deficit – which had been the justification for the creation of the big deal around Greece and the imposition of the package in 2010 – were likewise ignored.

    The serious denunciations made by Greek specialists |23| about the falsification of statistics were also disregarded. These studies showed that the amount of EUR 27.99 billion loaded the public debt statistics in 2009 |24|, because of untrue augmentation on certain categories (such as DEKO, Hospital arrears and SWAP Goldman Sachs). Previous years statistics had also being affected by EUR 21 billion of Goldman Sacks swaps distributed ad hoc in 2006, 2007, 2008 and 2009.

    Despite all this, under an atmosphere of urgency and threat of “contagion”, peculiar agreements have been implemented since 2010 in Greece; not as a Greek initiative, but as conformed by the EU authorities and the IMF, attached to the accomplishment of a complete set of prejudicial economic, social and political measures imposed by the Memorandums.

    The analysis of the mechanisms |25| inserted on those agreements show they didn’t benefit Greece at all, but served the interests of the private banks, in perfect accordance to the set of illegal bailout measures approved on May 2010.

    First, the bilateral loan used a special account in the ECB by which the loans disbursed by the countries and KfW, the lenders, would go straight to private banks that held far-below par value existing debt securities. So, that peculiar bilateral agreement was arranged to allow full payment for those bondholders while Greece didn’t get any benefit. Instead, the Greeks will have to pay back the capital, high interest rates and all costs.

    Second, the EFSF “loans” resulted in the recapitalization of Greek private banks and the exchanging and recycling of debt instruments. Greece has not received any real loan or support from EFSF. Through the mechanisms inserted on the EFSF agreements, real money never arrived in Greece, but only toxic dematerialized assets that fill the off-balance section of the Bank of Greece balance sheet. On the other hand, the country was forced to cut essential social expenses to pay back, in cash, the high interest rates and all abusive costs, and also will have to repay the capital it has never received.

    We must look for the reason why Greece has been chosen to be on the eye of the storm, submitted to illegal and illegitimate agreements and memorandums, serving as the scenery to cover the scandalous illegal bailout of the private banks since 2010.

    Maybe this humiliation is related to the fact that Greece has been historically the worldwide reference for humanity, as it is the cradle of democracy, the symbol for ethics and human rights. The Debt System cannot admit those values, as it has no scruple to damage countries and peoples to obtain their profits.

    The Greek Parliament has already installed the Truth Committee on Public Debt and gave us the chance to reveal those facts; so necessary to repudiate the Debt System that subjugates not only Greece, but also many other countries under the exploitation of the private financial sector. Only through transparency the countries will defeat those who want to put them on their knees.

    It’s time for the truth to prevail, the time to place human rights, democracy and ethics over any lower interests. This is a task for Greece to take on right now.

    |1| Off-balance means a section outside of the normal balance sheet accounts, where the problematic assets, as the dematerialized not marketable assets are informed.

    |2| Securities Markets Programme (SMP) – EUROPEAN CENTRAL BANK. Monetary policy glossary. Available from: [Accessed: 4th June 2015]

    |3| THE LISBON TREATY.Article 123. Available from: [Accessed: 4th June 2015

    |4| The euro-area Member States or EFSF Shareholders: Kingdom of Belgium, Federal Republic of Germany, Ireland, Kingdom of Spain, French Republic, Italian Republic, Republic of Cyprus, Grand Duchy of Luxembourg, Republic of Malta, Kingdom of the Netherlands, Republic of Austria, Portuguese Republic, Republic of Slovenia, Slovak Republic, Republic of Finland and Hellenic Republic

    |5| The private company EFSF was created as an instrument of the EUROPEAN FINANCIAL STABILISATION MECHANISM (EFSM), as in:

    |6| EUROPEAN COMMISSION (2010) Communication From the Commission to the European Parliament, the European Council, the Council, the European Central Bank, the Economic And Social Committee and the Committee of the Regions – Reinforcing economic policy coordination. – Page 10.

    |7| IRISH STATUTE BOOK (2011) European Financial Stability Facility and Euro Area Loan Facility (Amendment) Act 2011. Available from: [Accessed: 4th June 2015].

    |8| Statement made by Mr. Panagiotis Roumeliotis, former representative of Greece at the IMF, to the “Truth Committee on Public Debt”, at Greek Parliament, on June 15th 2015.

    |9| EUROPEAN FINANCIAL STABILITY FACILITY (2010) About EFSF [online] Available from: and – Question A9 [Accessed: 3 June 2015].

    |10| HAAN, Jacob de; OSSTERLOO, Sander; SCHOENMAKER, Dirk. Financial Markets and Institutions – A European Perspective (2012) 2nd edition. Cambridge, UK. Asset relief schemes, Van Riet (2010) Page 62.

    |11| EUROSTAT (2009) New decision of Eurostat on deficit and debt – The statistical recording of public interventions to support financial institutions and financial markets during the financial crisis. Available from: [Accessed: 4th June 2015]

    |12| “Most Directors (…) called for the Fund to collaborate with other institutions, such as the Bank for International Settlements, the Financial Stability Board, and national authorities, in meeting this goal.” In IMF (2013) Selected Decisions. Available from: – Page 72. [Accessed: 4th June 2015

    |13| EUROPEAN FINANCIAL STABILITY FACILITY ACT 2010. EFSF Framework Agreement, Article 12 (1) a, b, c, d, and (3); Article 10 (1), (2) and (3); Article 12 (4); Article 10 (8).

    |14| Only from October 2011 on, according to a Council Decision on April 26th , 2012, EWG has full-time president:
    OFFICIAL JOURNAL OF THE EUROPEAN UNION (2012) Official Decision. Available from: .
    The same person, Thomas Wieser, had been the president of the Economic and Financial Committee (EFC) from March 2009 to March 2011: COUNCIL OF THE EUROPEAN UNION. Eurogroup Working Group. Available from:

    |15| EUROPEAN FINANCIAL STABILITY FACILITY (2013) EFSF general questions. Available from: – Question A6. [Accessed: 4th June 2015].
    See also: Germany Debt Management Agency has issued EFSF securities on behalf of EFSF.
    EUROPEAN FINANCIAL STABILITY FACILITY (2010) EU and EFSF funding plans to provide financial assistance for Ireland. Available from: [Accessed: 4th June 2015]

    |16| Co-Financing Agreement, PREAMBLE (A) and Article 1 – Definitions and Interpretation “Bonds”. Available at [Accessed: 4th June 2015]
    These bonds are issued on dematerialized and not certificated form. Have many restrictions because they are issued directly for a certain purpose and not offered in market, as the Securities Laws and SEC rules determine. They are issued under an exception rule permitted only for private issuers, not for States.

    |17| ECONOMIC and FINANCIAL AFFAIRS Council Extraordinary meeting Brussels, 9/10 May 2010. COUNCIL CONCLUSIONS



    |20| Expression created by the author after verifying, trough several debt audit procedures in different instances, the misuse of the public debt instrument as a tool to take resources from the States, instead of supporting them, by functioning as a set of gears that relates the political system, the legal system, the economic model based on adjustment plans, the big media and corruption.

    |21| 24 MARCH 2009 – Commission Opinion –
    27 APRIL 2009 – Council Decision –
    10 NOVEMBER 2009 – Council conclusions –
    8 JANUARY 2010 – Commission Report –
    2 DECEMBER 2009 – Council Decision –
    11 FEBRUARY 2010 – Statement by Heads of States or Government of the European Union. –
    16 FEBRUARY 2010 – Council Decision giving –

    |22| 9/10 MAY 2010 – Council Conclusions – Extraordinary meeting – Under the justification of the “crisis in Greece”, the scheme measures to rescue banks are implemented.
    10 MAY 2010 – Council Decision –

    |23| Prof. Zoe Georganta, Professor of Applied Econometrics and Productivity, Ex member of ELSTAT board’s contribution to “The Truth Committee on Public Debt” 21 May 2015.

    |24| HF International (2011) Georgantas says 2009 deficit was purposely inflated to put us in code red. Available from:

    |25| The mechanisms are summarized on Chapter 4 of the Preliminary Report presented by the Truth Committee on Public Debt on June 17th 2015. Available from:

    To μυστικό των τραπεζών πίσω από την ελληνική τραγωδία

    29 Ιουνίου 2015 της Maria Lucia Fattorelli

    (Μετάφραση από την Ζωή Μαυρουδή)


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