“EUROPE IS RUNNING A GIANT PONZI SCHEME”: ASTONISHING REPORT IN FINANCIAL TIMES ADMITS EUROZONE BAILOUTS ARE A “PUBLIC-SECTOR PONZI SCHEME”


Mario Blejer, a former governor of Argentina’s central bank, has said that the eurozone bailouts are being running as a giant Ponzi scheme and that  EU taxpayers are going to end up picking up the bill in an astonishing report in the Financial Time.

The report was pinted on May 5th and even carries the headline: “Europe is running a giant Ponzi scheme.” Could it be stated any clearer?

The implications of a leading figure in the world of finance stating that the eurozone is being run as a “public sector” Ponzi scheme looting the tax payers are staggering, and should surely lead to a criminal probe.

If Bernie Maddoff went to jail for running a private Ponzi scheme, why aren’t  ECB chief Jean- Claude Trichet, ESMF chief Klaus Regling,  and Deutsche Bank chief Josef Ackermann not in jail since they are playing such a key role in the much bigger, criminal, public sector eurozone Ponzi scheme?

Readers of this blog will be familiar with the reasons for considering the eurozone bailout to be part of a gigantic ponzi scheme, but when a major mainstream newspaper prints a report like this by a former central bank governor it represents a turning point. It also strongly suggests that the inevitable collapse  of the euro Ponzi scheme is approaching very fast.

Blejer points out that the eurozone bailouts violate the EU constitution and a central principle of the euro. In effect, the no bail-out clause acts as an insolvency mechanism that limits the damage to other eurozone country’s of any one member going into unsustainable debt.

The eurozone bailouts, on the other hand, allow country’s to build up unstainable debt burdens and to pass the financing of these debt burdens to other eurozone tax payers. The profiteers of this public sector Ponzi scheme  are the bondholders and the banks as Franz Hörmann explains in his report “How banks create money out of air”.

Blejer points out that this “public sector Ponzi scheme” is more “flexible” than a private sector Ponzi scheme such as Bernie Madoff’s because complicit governments can find more ways to collect eurozone tax payer money and expropriate assets to feed into this Ponzi scheme.

“One of the pillars upon which the euro was established was the principle of “no bail-out”. When the sovereign debt crisis hit the eurozone this principle was ditched. As Greece, Ireland and Portugal were unable to service their unsustainable levels of debt, a mechanism was instituted to supply them with the financing necessary to service their obligations,” Blejer writes.

Blejer points out that the EU and IMF have imposed crushing conditions on servicing the souvereign debt,  sending countries like Greece, Ireland and Portugal into a so-called debt death spiral.

“This financing was provided, supposedly, in exchange for their implementing measures that would make their, now higher, debt burdens sustainable in the future. Yet the mode adopted to resolve the debt problems of countries in peripheral Europe is, apparently, to increase their level of debt. A case in point is the €78bn ($116bn) loan to Portugal. It is equivalent to more than 47 per cent of its gross domestic product in 2010, possibly increasing Portugal’s public debt to about 120 per cent of GDP,” Blejer writes in the FT.

Blejer notes that the “countries’ debts will increase (as a percentage of GDP the debts of Greece, Ireland, Portugal and Spain are expected to be higher by the end of 2012 than at the start of the crisis).”

Blejer observes that the bondholders are picking up the assets of Greece while transferring the growing portion of unserviceable debt onto the tax payer’s of Europe.

“The share of debt owed to the official sector will also increase (in addition to the bond purchases by the European Central Bank, which reportedly owns 17 per cent of these countries’ bonds with a much higher percentage held as collateral),” Blejer writes.

He notes that Greece, Ireland and Portugal are insolvent and that the narrative that they are illiquid is a “fiction” allowing banks and bondholders to hoodwink taxpayers as they carry on looting.

Tha bailout is “based on the fiction that this is just a temporary liquidity problem and that the official financing helps the countries involved to make the reforms that will allow them to return to the voluntary market in normal conditions. In other words, the narrative is that the recipient countries could and would outgrow their debt,” he writes.

Debt figures are manipulated, he says, but “the fact is that this situation is only sustainable as long as additional amounts of money are available to continue the pretence.

Blejer could not be more explicit:

“Here is where this situation resembles a pyramid or a Ponzi scheme,” he says in the FT. “Some of the original bondholders are being paid with the official loans that also finance the remaining primary deficits. When it turns out that countries cannot meet the austerity and structural conditions imposed on them, and therefore cannot return to the voluntary market, these loans will eventually be rolled over and enhanced by eurozone members and international organisations. ”

“Moreover, this “public sector Ponzi scheme” is more flexible than a private one. In a private scheme, the pyramid collapses when you cannot find enough new investors willing to hand over their money so old investors can be paid. But in a public scheme such as this, the Ponzi scheme could, in theory, go on for ever. As long as it is financed with public money, the peripheral countries’ debt could continue to grow without a hypothetical limit.”

Blejer notes that political opposition is growing to this criminal activity.

“We are starting to observe public opposition to financing this Ponzi scheme in its current form, but it could still have quite a way to go. It is apparent that, if not forced sooner by politics, the inevitable default will only be allowed to take place when the vast part of the European distressed debt is transferred from the private to the official sector. As in a pyramid scheme, it will be the last holder of the “asset” that takes the full loss. In this case, it will be the taxpayer that foots the bill, rather than the original bondholders that made the wrong investment decisions,” he says.

7 Responses to “EUROPE IS RUNNING A GIANT PONZI SCHEME”: ASTONISHING REPORT IN FINANCIAL TIMES ADMITS EUROZONE BAILOUTS ARE A “PUBLIC-SECTOR PONZI SCHEME”

  1. […] “EUROPE IS RUNNING A GIANT PONZI SCHEME”: ASTONISHING REPORT IN FINANCIAL TIMES ADMITS E… Jane Burgermeister | May 7, 2011 at 11:25 am | Categories: Uncategorized | URL: http://wp.me/puNtl-1dz […]

  2. […] Readers of this blog will be familiar with the reasons for considering the eurozone bailout to be part of a gigantic ponzi scheme, but when a major mainstream newspaper prints a report like this by a former central bank governor it represents a turning point. It also strongly suggests that the inevitable collapse  of the euro Ponzi scheme is approaching very fast. Read more of this post […]

  3. True... says:

    “EUROPE IS RUNNING A GIANT PONZI SCHEME”…
    The global financial Elite is running…

    PYRAMID POWER –
    Financial Ponzi schemes… ‘BAIL OUTS’ killing one country after the other
    Who are the winners ? There are some… Who are they ?
    Many more loosers than winners
    and the last in the line bears the brunt of the attack/s
    The last in the line has to bear the main brunt of the costs…
    It’s all about destroying national sovereignty and nation states
    by financial and economic warfare, isn’t it ?

    By w h o ?
    W h o’s the opponent ? W h o’s the enemy ?

    Very important not to fall into the same old traps again…
    ‘divide et conquere’ as the old Romans said…
    that’s the enemy’s method of causing havoc and division
    among people and nation states
    in order to defeat and conquer them all in the end…

    Financial terrorists are causing a global financial and economic crisis
    all over a g a i n – a total meltdown
    completely robbing the common people a g a i n
    and playing one country off against the others

    The time comes when the same financial terrorists pose as ‘saviors’
    offering their false ‘solutions’ to the problems caused by them in the first place…
    aiming at even more centralization of power in t h e i r hands…
    and a rigged casino all over again.
    Now on a global scale…
    The same with the CARBON CON…
    globalists are greedy for a global carbon tax…
    ‘to save the climate’ – Yes, of course…

    The kind of ‘vision’ globalists have…
    meaning totalitarianism… global fascism…
    total enslavery of the common people…

    DO YOU WANT THE TOTAL LIE ?
    DO YOU WANT TOTAL and endless WARS ?
    Against fabled enemies such as
    – ‘Osama bin Laden & Al Qaida’ (a western ally in Libya… – well, of course if it’s Al CIAda etc etc alright)
    while the real terrorists are choking and torturing us to death…
    slowly…gradually…
    most people not even aware of what is being done to them…

    If sensible people won’t get their say and sort things out very soon…
    we are in a BIG MESS again…
    the war mongerers s h o u l d n o t get their way (WWIII)
    WE THE PEOPLE –
    THE COMMON PEOPLE ACROSS BORDERS
    should s t a y t o g e t h e r in a common cause…

  4. True...continued says:

    WHAT HAVE FROGS AND ELITISTS IN COMMON ?

    EUROPEANS – ENEMIES TO THE ENVIRONMENT?
    For the last ten years Europeans are said to have consumed up to a thousand million (US one billion) frogs. During that time the EU has imported more than 46.000 tons of frog products –
    mainly from wild life stocks in Indonesia. (…)
    Source: EU-Info

    Mostly, if not exclusively destined for French gourmet restaurants ?
    France – the cradle of the French Revolution…
    harboring ‘frog eaters’ ‘frog killers’ ?

    Surely, the most horrifying
    environmental terrorists of all !
    How about attacking France
    for that reason ?
    Harboring environmental criminals
    and terrorists ….the new ‘Osama bin Ladens’!!
    Pro Wildlife says that humans (here: the French?)
    are causing the death of amphibians worldwide.

    Those French frog gourmets…
    Surely, they should be put onto the list
    of the most wanted environmental terrorists,
    shouldn’t they ?
    No mercy for environmental terrorists !
    Down with the frog killers!
    Frogs must be protected
    by international law !

    Way off the top ?
    Not at all. Frogs have TOP PRIORITY’ – See here: http://www.guardian.co.uk/environment/video/2009/may/06/prince-charles-frog

    Highly secretive Bilderberg conference, St Moritz, June 9-12, 2011
    The global cabal meeting in privacy for ‘having a chat among equals’… They have to be protected by international law and high security measures…. at the taxpayers’ expense, of course…
    Way off the top ? Not at all. It’s the kind of r e a l i t y created by the so called Elites.
    Everything is topsy-turfy and upside down. Any questions ? You are a terrorist ? A conspiracy theorist ? You don’t like frogs ?
    Watch out…

  5. oram says:

    why are the global ponzi scheme players not in jail you ask ? Because they are : “to big to jail !” its as simple as that

  6. greenberry says:

    Steal a little and they throw you in jail. Steal a lot and they make you king.

  7. ...continued says:

    A massive dumbing down of our youth- brain damage by vaccines
    http://www.youtube.com/user/TheAlexJonesChannel#p/a/u/1/tVYuitk-jhY
    We are being soft killed. This is eugenics.Aluminium is an enormous toxin damaging the brain just as mercury. It’s an absolute insanity what they are doing to these kids.

    Massive chemtrail spraying – nano sized aluminumdioxide causing enormous neurological damage
    Dr Russell Blaylock: Either there is a conspiracy or these people are so stupid they should be institutionalized…

    It’s done for „saving the climate“ – oh yeah…

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