Acropolis Now - The Role of City Traders in the Greek Economy‏

While our fellow public service workers strike and take to the streets to defend their living standards and the fabric of the society the City traders at the bond dealing desks of the big City of London banks are betting on the outcome and making huge sums of money
http://dealbook.blogs.nytimes.com/2010/02/25/banks-bet-greece-defaults-on-debt-they-helped-hide/

Bets by some of the same banks that helped Greece shroud its mounting debts may actually now be pushing the nation closer to the brink of financial ruin. Echoing the kind of trades that nearly toppled the American International Group, the increasingly popular insurance against the risk of a Greek default is making it harder for Athens to raise the money it needs to pay its bills, according to traders and money managers. These contracts, known as credit-default swaps, effectively let banks and hedge funds wager on the financial equivalent of a four-alarm fire: a default by a company or, in the case of Greece, an entire country.

If Greece reneges on its debts, traders who own these swaps stand to profit. “It’s like buying fire insurance on your neighbour’s house — you create an incentive to burn down the house,” said Philip Gisdakis, head of credit strategy at UniCredit in Munich. As Greece’s financial condition has worsened, undermining the euro, the role of Goldman Sachs and other major banks in masking the true extent of the country’s problems has drawn criticism from European leaders. But even before that issue became apparent, a little-known company backed by Goldman, JP Morgan Chase and about a dozen other banks had created an index that enabled market players to bet on whether Greece and other European nations would go bust.

Last September, the company, the Markit Group of London, introduced the iTraxx SovX Western Europe index, which is based on such swaps and let traders gamble on Greece shortly before the crisis. Such derivatives have assumed an outsize role in Europe’s debt crisis, as traders focus on their daily gyrations.

So there we have it the bankers fooled the Greek government into buying Credit Default Swaps and hid the extent of the problems. Now they are using the same tricks to make more money, while at the same time calling for Greek workers to have their jobs, pay, pensions and public services slashed.