Greek savers rushing to buy gold

Worthless paper:

Greek citizens are emptying savings accounts and buying gold as they brace themselves for the possibility of a sovereign default and a run on the banks.

Pledges by socialist prime minister George Papandreou that his government would “save the country” have been widely discounted by the public. However, parliament gave him a vote of confidence late on Tuesday night. The socialists have a six-seat majority in the 300-member house.

Sales of gold coins have soared as savers seek a safer and fungible source of value.

“When the global financial crisis started, our sales of coins to investors overtook bullion for the first time,” said Harry Krinakis, at Sepheriades, a Greek precious metals trader. “Now the sales ratio has reached five to one.”

Tomas, a computer technician, has exchanged his euro savings for gold coins: “I keep them at home just like my grandmother did in the second world war.”

Andreas, a supermarket manager, transferred the family savings to Munich earlier this year: “The Swiss banks aren’t interested unless you’ve got several hundred thousand euros.”

“We can’t trust the politicians to get us out of this mess [and] have to protect our families,” Sakis, a garage owner, said at an anti-austerity protest in Athens’ Syntagma square. “A bank collapse has got to be on the cards.” He added he had withdrawn his savings and placed them in a bank safe deposit box “for security. Who cares about interest right now?”

Somehow the Greeks are not so thrilled with their government’s insistence that everything will be peachy.

Obama: It’s great that the I-Bankers received such huge bonuses

What a difference plummeting poll numbers will make:

President Barack Obama said he doesn’t “begrudge” the $17 million bonus awarded to JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon or the $9 million issued to Goldman Sachs Group Inc. CEO Lloyd Blankfein, noting that some athletes take home more pay.

The president, speaking in an interview, said in response to a question that while $17 million is “an extraordinary amount of money” for Main Street, “there are some baseball players who are making more than that and don’t get to the World Series either, so I’m shocked by that as well.”

“I know both those guys; they are very savvy businessmen,” Obama said in the interview yesterday in the Oval Office with Bloomberg BusinessWeek, which will appear on newsstands Friday. “I, like most of the American people, don’t begrudge people success or wealth. That is part of the free- market system.”

Obama sought to combat perceptions that his administration is anti-business and trumpeted the influence corporate leaders have had on his economic policies. He plans to reiterate that message when he speaks to the Business Roundtable, which represents the heads of many of the biggest U.S. companies, on Feb. 24 in Washington.

After a year of failing miserably in trying to appeal to the extremist left-wing of his party with bank taxes, demonizing Wall Street “fat-cats” and siccing his bonus czar on the financial industry, this latest bit from Obama appears to be nothing but posturing.

But posturing to who?  The progressive wing will surely have an aneurism with these comments and conservatives will see it for what it is—a desperate attempt to try and regain some of the political center.  No coincidence, of course, that the President is losing considerable ground with independent voters.  These were the keys to Republican victories in Virginia, New Jersey and Massachusetts, and the key to Obama’s victory in 2008.  My guess is that the never-ending political campaign in the White House right now realizes this.

What  I find even more interesting is the timing of this interview.  Especially in light of the “savvy” dealings of Goldman Sachs and their role in the recent market anxiety about the potential default of Greece:

Goldman Sachs helped the Greek government to mask the true extent of its deficit with the help of a derivatives deal that legally circumvented the EU Maastricht deficit rules. At some point the so-called cross currency swaps will mature, and swell the country’s already bloated deficit.

[…]

…[I]t looks like the Greek figure jugglers have been even more brazen than was previously thought. “Around 2002 in particular, various investment banks offered complex financial products with which governments could push part of their liabilities into the future,” one insider recalled, adding that Mediterranean countries had snapped up such products.

Greece’s debt managers agreed a huge deal with the savvy bankers of US investment bank Goldman Sachs at the start of 2002. The deal involved so-called cross-currency swaps in which government debt issued in dollars and yen was swapped for euro debt for a certain period — to be exchanged back into the original currencies at a later date.

That’s some “savvy” work there. 

The markets have calmed down since Monday as the EU is making noise about a rescue package for Greece.  But it’s still an issue, and if the situation there begins to deteriorate, it won’t take long for someone to connect the dots.  How pathetic will the President’s comments look then? 

Obama picked a weird time to suddenly find the virtue in investment bankers’ bonuses.