Greece Wants Hedge Fund Shackles
Monday, March 15, 2010

The Greek government has called on the US to increase the regulation of hedge funds, which it holds jointly responsible for Greece’s recent problems on the financial markets.

Underlining the fact that Greece’s financial difficulties are a problem that the US can simply not ignore, Greek Prime Minister George Papandreou has urged the US to increase its regulation of hedge funds and currency traders. The government insists that both have served to aggravate the crisis for Greece. It believes that funds, which have bet on whether or not Greece would be able to pay off its loans, hindered the country’s ability to refinance.

Papandreou has warned that financial instability in Greece, and indeed in Europe, could also have a grave impact on the US. According to Papandreou, a weak Euro could result in a rise in the dollar, which in turn could lead to a rise in America’s trade deficit.

Greek Finance Minister George Papaconstantinou highlighted the fact that changes to the financial system had still not been implemented in order to prevent a repeat of the crisis. Papaconstantinou also made known that he has recently approached the International Monetary Fund for advice regarding tax and budget reform.

Equally determined to curb speculation against countries and large businesses, Germany and France are calling for a common guideline or legislative text to be adopted, which limits – or even prevents – the trade of certain securities.

In a joint letter addressed to the European Union’s Commissioner, José Manuel Barroso, Luxembourg's Prime Minister Jean-Claude Juncker, German Chancellor Angela Merkel, Greek Prime Minister George Papandreou and French President Nicolas Sarkozy have called for a European inquiry to be set up to examine the impact of speculation on financial derivatives.