Bloomberg have been unsuccessful in their attempt to get the ECB to disclose information that would potentially expose the ECB’s knowledge of the Greek government’s fraudulent reporting of its finances.
Why should Greek taxpayers care?
Because they are picking up the bill in the form of massive tax increases to service the debt that was issued with fraudulent figures.
The first problem is that the Greek government more than likely joined the Euro with fraudulent figures that were in part put together by Goldman Sachs. These figures painted a picture that led investors to believe the finances of Greece were in a much better position than was the reality. The Greek central bank governor during this period was Papademos and he would subsequently go to work for the ECB when Greece joined the Euro.
These figures allowed the Greek government to increase its borrowing due to lower interest rates.
This is part one in the case that Greek should not be asked to pay back this debt.
Secondly, and this is where Bloomberg’s law suit comes in, the finances of the Greek government were manipulated from the country’s entry into the Euro until 2008 when the Greek government’s finances blew up.
Bloomberg say they have received information that leads them to believe that the ECB was aware of the fraudulent reporting of the Greek government’s finances but did nothing to expose it.
The non-reporting by the ECB further inflamed Greece’s problems by allowing the Greek government ramp up its debt from its entry into the Euro until 2008.
Had the ECB exposed any fraudulent accounting of the Greek government’s finances the Greek government would never have been able to take out so much debt.
Unfortunately for the world and especially Europeans and specifically Greek taxpayers, the EU General Court has decided that the ECB should decide what information is in the public’s interest and what is not.
In short the EU has given the ECB immunity from whatever prosecution might occur should the ECB be exposed as knowingly covering up the reality of the Greek government’s finances from the people of Europe and the rest of the world.
But it goes deeper than this.
Not only would fraudulent figures have allowed the Greek government to increase its debt massively. The ECB would also be directly involved in the increasing of the debt.
Not only would the ECB have allowed investors to get the wrong idea about the sustainability of the Greek debt, the ECB itself would have profited from the false information it allowed into the public domain.
Much of the Greek debt accumulated since Greece’s entry in to the Euro has been financed by the ECB itself through its monetization of bonds issued by the Greek government.
Here is a video which outlines the mechanism by which the Greek government issued bonds to the Greek banks which then themselves issued bonds to the Greek central bank and the ECB which the ECB then monetized. (34 mins 19 secs)
So to summarise, assuming Bloomberg is correct and that the ECB suppressed the truth about the Greek government’s finances the effects are as follows.
1. Debt load on Greek taxpayers increased massively
2. Greek government accumulates massive debts with knowingly fraudulent figures.
3. ECB profits massively through loans made to Greek government.
4. Results of all this is the massive confiscation of Greek assets, public and private to service debt to banks which made loans to the Greek government with figures they knew were fraudulent.
In short, Greece’s entry into the Euro has been a text-book example of fraudulent conveyance and it is setting a dangerous precedent for the people of Europe.
Lets outline what could have happened here according to Bloomberg.
The ECB and the major banks have lent money to the Greek government even though they know there is no way for the Greek government to service the debt or for the Greek government to repay the debt.
The consequence of this being that the banks seize the personal assets of the citizens of that country due to the unpaid taxes that the people are not able to pay.
The precedent being that banks are allowed to exploit the power of government without any transparency or accountability to the people (due to the ECB having the power of what it discloses and what it does not even though it profits from the non disclosure re Bloomberg’s unsuccessful lawsuit).
The power of government being to be able to impose liabilities onto the population against their will.
The method of exploitation being that these banks fraudulently report the finances of a government in order to indebt the population in a way that looks legal, reasonable, fair and normal.
And it is important that this indebtedness is created in a way that looks reasonable, fair and normal so as to be able to exploit the functions of the legal system which says governments can seize the assets of citizens as payment for taxes which they have no ability to pay as long as the accumulation of unpaid taxes was the fault of the citizen and not of the government due to over borrowing.
It makes me ask the question as to whether taxpayers and specifically Greek taxpayers could possibly launch a legal defence on the grounds that the taxes they are being asked to pay are disproportionate and are being used to pay debt which in itself is illegal. Would a defence on these grounds force the ECB to disclose the information that Bloomberg was unsuccessful in disclosing.?