Owning the Parthenon 23

Ponzi schemes and finance bubbles of all kinds depend on it being in nobody’s short term interest to admit they are worthless – indeed to people having a terrible fear of the consequences once it is discovered the scheme is worthless.

Larry Elliott in the Guardian has an interesting article on how this worked in the great banking bubble. He quotes James Galbraith:

“There was a private vocabulary, well-known in the industry, covering these loans and related financial products: liars’ loans, Ninja loans (the borrowers had no income, no job or assets), neutron loans (loans that would explode, destroying the people but leaving the buildings intact), toxic waste (the residue of the securitisation process). I suggest that this tells you that those who sold these products knew or suspected that their line of work was not 100% honest. Think of the restaurant where the staff refers to the food as scum, sludge and sewage.”

At the moment, everybody knows that Greece will default and cannot effectively reform. But the consequences of admitting this are so disastrous, everybody is pretending not to know. However Northern European politicians are finding that, whatever they agree in cosy EU cabals, their voters are not stupid and are not happy to stump up for massive guarantees sure to be called, and massive loans sure not to be repaid.

Several countries, led by the Austrians, Dutch and Nokialand, now have political leaderships trying desperately to unpick the promises they have made, by demanding solid assets as collateral from the Greek government against any default.

This has caused some puzzlement in the UK Treasury, where a friend of mine is exasperatedly wondering how the Greeks are expected to find up to $100 billion of physical assets to pledge. Greece has a much larger state sector than most other European countries, but any possible assets are slated for privatisation under the vaunted economic reform programme. They can’t both be privatised and pledged for collateral. If Greece had secure reserves it could pledge, it would not be in this mess in the first place, while the tax office building in Thessaloniki or an old coastguard cutter do not carry much genuine market value.

They could, of course, pledge the Parthenon, Mount Olympus etc, I suggest to my friend. She seems to consider it for a moment.

“But think of all the fuss over just the bloody Elgin marbles” she groans.

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23 thoughts on “Owning the Parthenon

  • mary

    Another kind of scam and another disastrous legacy of Major taken over with gusto by Bliar and Brown. The state indebtedness does not even appear on the books. The amount of thia is said to be £38 billion which will be handed down to our children and grandchildren ad infinitum.

    PFI projects ‘poor value for money’ say MPs
    PFI projects will generate an estimated £2.8bn in capital spending this year [Westminster Hall: PFI debate
    MP may support PFI rebate scheme
    ‘Poor management’ failed Metronet]
    The Private Finance Initiative (PFI) used by successive governments to pay for new schools and hospitals is poor value for money, MPs have said.
    The Treasury select committee said PFI was no more efficient than other forms of borrowing and it was “illusory” that it shielded the taxpayer from risk.
    Government had become “addicted” to PFI, the committee’s Tory chair said.
    A government source said it had already acted to make PFI more transparent and rigorous and cut the cost of projects.
    Following criticism that the true costs of PFI were being hidden “off balance sheet” and excluded from government debt calculations, the coalition published details of total PFI liabilities for the first time last year alongside the national accounts.
    PFI was introduced by John Major’s Conservative government in 1992 as a way of bringing in private funding to pay for major public infrastructure projects

  • deepgreenpuddock

    It feels as if we are in the moments before the car crash, when time seems to slow down. Having experienced this strange feeling, I think it might be some protection mechanism, to allow us to take last desperate protection measures to minimise damage.
    I notice the price of gold is now at $1825. an astonishing rise of more than $200 in the last few months.
    was it just June that the Guardian noted gold breaking the $1600 ‘barrier’.


  • deepgreenpuddock

    thanks for the references to the conclusions of our wise monkeys, whose blindfolds, ear muffs and mouth stoppers go in and out and on and off as if orchestrated. I remember there was a considerable amount of comment about PFI when it was it was first suggested and it was palpably clear that it was a dodgy dossier approach to public projects.
    te enthusiasm of Nulab to adopt the PFI wheeze definitely deserves some comment as much of the analysis of the major proposal had come from the “left”. They basically got it right, but somehow it was scrubbed clea in the minds of those mighty minds of Nulab.
    It really takes the breath away.
    Curiously, having returned to blight(y) after a couple of years away, I can clearly see a distinct deterioration in our public spaces. My home town has built a ‘killer mall’ full of glass, marble, apple stores an sweat shop funded clothes stores, to keep the population agog in consumerist wonder while the once rather fine 18th C main street is looking very neglected and shabby. What would the effect of the same quantity of money applied to upgrading the city centre have yielded?
    Private money is just too expensive-in more ways than one.

  • rogerh

    I reckon Greece is the tip of an iceberg that comprises most European economies – we either never had or can no longer develop something useful for the majority of citizens to do. Cutting each other’s hair or doing house makeovers does not count. France and Germany still have something special – at least for the next 20 years or so.

    I suspect that the ‘Lump of Work’ theory needs dusting off – on a world-wide scale there is a ‘lump of work’ and we have lost it and cannot get it back. Certainly the lump’s size and value might change a little – but over a longish timescale – say 20 years. Oil shortages may mean the overall lump gets smaller.

    Which leaves Cameron in the mire – with a smaller and smaller fraction of the population producing tax revenue his options are limited indeed. As for our future – think of those sleepy, dusty Greek towns where everyone sits around sipping coffee waiting for an EU funded town hall to be built. I reckon we have to get used to being poorer while the BRICS and Africa get a bit richer – only fair really.

    As for the Parthanon, anywhere but Athens turns it into so much worthless rubble.

  • writeon

    I think we are witnessing an evolving economic crisis the like of which the world has never seen, certainly not on this scale, a truly worldwide depression that will dwarf the Great Depression.

    The main effect will be to virtually wipe out the middle class in the advanced, western, industrial nations, who have become ‘surplus’ to the needs of modern, global, capitalism. This process will have profound implications for democracy.

    Already, if one is paying attention, one can see clear signs that ‘the market’ is losing faith in the political manager class, politicians, and the democratic system itself, this is both an ‘interesting’ and frightening development.

    What will replace mass, consumer-led, capitalist democracy? Probably austerity and authoritarianism, which go hand in hand. A post-democratic society, a post, consumer society. Such an austere society will be rigidly class based and even more grotesquely unequal than our own, and it goes without saying that social mobility will grind to a virtual halt and with it the upward ladder of a good education, something the middle classes are beginning to see already.

  • Tom Welsh

    It has become quite popular to blame the people themselves for being so eager to get into debt, acquire consumer goods, live high on the hog, etc. But surely the real blame must attach to those who are in charge? If you tell someone that they are fairly well off, and have money to indulge themselves, they will usually do so. Most citizens don’t know that they are part of a huge bubble, that the currency is being debauched so that they are no better off than in 1970 although they feel much wealthier, or that the resulting inflation may wipe out the value of all their savings.

    It is the politicians and civil servants who knew the facts, considered the alternatives, and chose to keep smiling and telling the people that everything was wonderful – when they knew perfectly well that the piper would have to be paid one day. The great trick was to get yours and get out from under before the roof fell in – a trick Blair and Brown managed to perfection.

    Indeed, I think that the characteristic art of the late 20th and early 21st century has been the quiet shuffling off of responsibility. Have you noticed how no one in a position of authority ever resigns nowadays? How so many dreadful events turn out, eventually, to have been the fault of no one in particular? How it is “the system” that is to blame?

  • ingo

    Love to see Emilie Maitliss in a Bob, Mary, if it comes with a new wardrobe and shoes it would be a great improvement overall. I suppose some girls just wanna climb trees.

    The EU bubble as its called will have to adopt some practises that have been long called for. For example with rising commodity prices a subsidy for growing food is not really necessarry anymore, we could for the first time compete fairly with the likes of Australian and New Zealand farmers.

    Our subsidised dumped food that has almost destroyed African food producers and markets, will be too expensive to even bother to export it. Biofuel plants that are fuelling world poverty at present will become uneconomic as farmers will get more selling foodcrops to traditional markets.

    PFI’s have been too expensive when the Norfolk and Norwich and Durham, the first two PFI hospitals were offered up to companies like Octagon, then wihtin almosty two years, sold again to other special interests. We knew all the while and have paid fat dividends to shareholders now since 1994, nearly 20 years.

    It is to be seen what happens when our hospitals revert back into public hands after thirty years, well used and shabby, then we have to find the money to fund them, unless off course, our local GP consortium decides that they have not enough funds and sell them off to the highest bidder and/or form another PFI, again without asking us.

    Those who supported the growth of the EU at any price, even if the Greeks were not sure about it from the start are now desperately looking for a way out by selling Greece to the highest bidder. They could sell a few islands, Cyprus being the obvious option, always a pain in the side, then there are some other disputed island in front of the Turkish coast that might find the interest of pirates or rogue states in that area.

    Thing is, which economy can find the money to buy Greek assets? which have to carry on and be run inefficiently by those greeks who live there? Would it not be better to introduce a new wage structure for the public service, a new higher earners tax regime, stop tax evasion by the rich in Greece and a stop of capital flight with agreement of the international market would leave Greek money to work within the greek economy, not elsewhere.

    Globalisation and the free flow of capital has killed Greece and it is those who are in power for generations, the Papandreous and other ruling clans, who are mostly responsible for it.

    Greece Italy, Spain and Portugal,and, who knows, maybe Ireland will have to follow Island into default.
    This would crash thwe world economy and see the emergence of a new more real and hopefully sustainable financial order, how else could we live sustainable.

  • John Goss

    I remember an Andy Capp cartoon strip (all tribute to Smythe) where Andy is slouching on a couch and Flo comes in with a bill for say £50 (I’m paraphrasing). Andy says “Not to worry. I’m £50 in debt. If I was £500,000 in debt I’d be a businessman. If I was £500 billion in debt I’d be a government. I’m on my way!”
    Ah, the good old cloth-cap northern humour!

  • mary

    Tom agree. And the banks and the bankers. Remember all those unsolicited credit cards coming through the post and blank cheques which you could fill in with an amount of credit and go out and apend, spend, spend. The introduction of the Lottery added to the fever too.

  • Eddie-G

    The history of “toxic waste” is a bit more benign than you assume.

    Early mortgage securitisations – the type of product that performed just fine until the 07/08 meltdown – had an equity strip which was automatically assumed to be virtually worthless and written down to zero. It sat on the originator’s balance sheet, and that was that.

    What became clear when the banking system melted down was that toxic waste had percolated up the tranches, as ever more complex structures were put together. Toxic waste as such was not the problem, its history dates back to a time when bankers behaved somewhat honestly.

    In terms of a Greek default – which hasn’t officially happened – one thing not well understood is that the ECB, which currently holds billions of euros worth of Greek debt as collateral, under its present rules will have to return that collateral (mainly to banks) if the issuer is in default. So that’s the space to watch, the ECB like most central banks is deliberately undemocratic in design, but they will go a long way to determining the fate of Euroland.

  • Roderick Russell

    Nice to hear that the Northern European countries (excepting the UK) are sufficiently democratic that their politicians actually pay attention to their voters wishes. It also suggests that their MSM must be sufficiently free that they can bring contentious issues to the public’s attention, rather than just rubber stamp their establishment’s position.

  • Keith

    I think the bottom line is that Europeans will have to accept that the continent will drift into being another 3rd world area – people earning lttle yet working (when they have the chance) longer hours. And public services crumbling. Why?

    Because we simply do not produce enough unique or competitively priced goods to provide work and income for all. Our competitors around the world produce at lower cost. And we citizens of Europe snap it up! As things stand such an economy is simply not sustainable. Add to this problem the massive debts and the future really looks bleak.

  • mary

    Owning the Parthenon?
    Destroying a World Heritage site? Yes
    Another NATO outrage.
    August 18, 2011
    NATO aircraft have bombed the unique ancient city of Leptis Magna in Libya, the Libyan official news agency reports.
    Sprawling along the Mediterranean coast, Leptis Magna is a UNESCO World Heritage site famous for its antique Roman architecture. The city was founded around 1100 B.C. and is often dubbed Rome in Africa. Five huge color mosaics dating to the 1st and 2nd centuries A.D. have been found there recently.
    In a strong condemnation of the bombing, the Libyan government accused NATO of not distinguishing between military and civilian targets and of grossly violating all international norms and convention.

  • larry Levin

    Anyone wondered why Iceland is not mentioned by the media these days? could it be because Iceland told the international banksters to get lost and did not honour the fraudulent debts, Iceland economy is doing fine and the currency is also doing very well, why wont Greece headed by the British Establishment puppet Papanderou tell the thieves to get lost and not sacrifice Greece people to usury

  • larry Levin

    @ Keith you seem to be repeating talking points from the state broadcasters. Economics is a scam, a pseudo science created by the top 1% to blind everyone to economic truth. Civil society is in trouble because partly by tax avoidance by the very rich and corporations. There are some respected economics who say that the current credit/debt problems were created intentionally to plunder the UK treasury.

  • decora

    “They can’t both be privatised and pledged for collateral.”

    Ahhhh but are you sure?

    Bear Stearns, and numerous other banks, did essentially that with mortgages during the bubble years. This has been documented on Yves Smith’s website, nakedcapitalism.com Defenders of ‘the industry’ will say that it was just an accident, because the electronic registration systems got bungled and somehow one mortgage got pledged into several different mortgage securities.

    But a funnier story, if you go back to the Penn Square Bank scandal in the 1980s, a similar thing happened with oil and natural gas (methane) reserves in Oklahoma. One asset was pledged as collateral to multiple different parties. And the defenders claimed, for years, it was a simple paperwork mixup. When people tried to unmix the paper, they found out it was impossible. Were single assets multiply pledged on purpose? Of course not, said the bank CEO, he was ‘shocked, shocked’ that his employees had ‘let him down’. (his employees that he had coddled and trained and told what to do, and how to behave, and his employees that he had defended from all critics for years on end)

    Strangely, this Penn Square case brought down several other big banks, and caused some of the people in the government to coin a phrase in references to Continental Illinois: it was “Too big to fail”, fail being a verb here, as in the FDIC / OCC used to ‘fail’ banks when they became insolvent. (takeover, sell off assets, pay creditors, especially insured small-time depositors, and then re-open)

    So. How can Greece pledge it’s assets as collateral, and privatize them? Simple! Put them into securities, and then put those securities into other securities, and then shove it all through a questionably-legal electronic registration system (because everyone knows that computers are more efficient and accurate than people), slap a few acronyms on it, and out pops a solution to the European debt crisis. If someone claims that assets have been multiply pledged, then just sic a few access-journalists on them to ‘debunk’ and ‘pooh pooh’ them. Roger Lowenstein could probably help out on this mission.

    Then, there is just one problem. You need to find some sucker to buy the resulting alphabet soup. Unfortunately the middle class pension systems of the world have been sucked dry, maybe you should try the Mexican drug mafias or the Afghani warlords. I hear that Russia just had it’s first CDO a year or two ago.

  • Keith


    You are right that it is an amazingly easy for large corporations and the richer amongst us to avoid taxtion – sometimes possibly, in the UK, with the complicity of the taxman! But taxes are usually upon profits. My fear is that there will not be – perhaps there are not already – enough competitively priced saleable goods or services to generate those profits, and thus the income, to keep the people of Europe people in work.

  • mary

    “I felt more comfortable in the U.S.S.R.,” she said. “You always had a piece of bread. You always had work. Yes, sure, you can go overseas now, but you have to have money for that and you have to go into debt. Now, if you don’t have money you can’t do anything.”
    A recent poll by the Levada Center, a respected polling agency, found that 20 percent of Russians share her wish for a return of the Soviet Union, a number that has bobbed up and down between 16 percent and 27 percent over the past eight years.
    20 Years After Soviet Fall, Some Look Back Longingly

  • mary

    Mandelson ‘eyeing up £8m property’

    Press Association, Sunday August 21 2011

    Former Labour cabinet minister Lord Mandelson is reported to have made an offer to buy an £8 million house.
    The Mail on Sunday said the former business secretary was planning to buy the Grade II listed building in “one of London’s most exclusive districts”.
    The property is described as a four-storey Gothic revival house, featuring a wine cellar and a two-storey atrium, which once served as an almshouse.
    A previous property deal famously cost Lord Mandelson him his first cabinet post in 1998 when it was revealed he bought a house in Notting Hill with the help of an undisclosed £373,000 loan from the then paymaster general Geoffrey Robinson.
    Tory MP Richard Bacon said his proposed purchase now of such a lavish property little over a year after leaving government was “a matter of considerable public interest”.
    “As a cabinet minister Lord Mandelson earned a decent wage and more when he was at the European Commission,” he told the Mail on Sunday.
    “But it is a matter of considerable public interest how he can afford such an expensive home within barely a year of leaving government.”
    A spokesman for Lord Mandelson said in a statement: “No house purchase has been completed, but were it to take place it would be funded by a loan from a bank on normal commercial terms.”
    Copyright (c) Press Association Ltd. 2011, All Rights Reserved.


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