• REMEMBER THAT NUMBERS ARE PEOPLE LOOK FOR COCK-UP BEFORE CONSPIRACY • ALWAYS CITE PRIMARY SOURCES


Thursday, 4 February 2010

STOP PRESS - CONSPIRACY FAIL

Remember my little rant late January about maLOLcious forces - the general view, propounded by our own government, that speculators are largely responsible for the pummeling Greek debt has taken in the markets? Well, our Minister of Finance has, in the past been a little more specific, noting that some market pariticipants are shorting Greece and presumably making a killing out of their own self-fulfilling prophecies.

Sadly for him, such claims are testable.

FT Alphaville reports on this analysis from Dataexplorers. I don't know what to call this company, so let's go by their own strapline:

"Data Explorers (www.dataexplorers.com), based in New York and London, is the world's most complete resource for data, analysis and insight into short-selling. The company's proprietary data gives an unrivalled, comprehensive view on share lending and short-selling activity, with data representing the majority of the global securities lending market."

So they've got some inside info on short selling activity, which is notoriously hard to document except in its effects. What's interesting to me is that they've run a comparison of short-selling activity for Greek sovereign debt between late Jan 2009 and late Jan 2010, and found the following. Standby for FAIL.

Have you spotted it yet? That's right, there was more or less as much shorting of Greek debt in early 2010 (and, recall, this was before our updated SGP was approved) as in early 2009, when Karamanlis was in charge and was still maxing out the overdraft.
So the vultures our PM has been going on about are, in fact, for the most part people with previously long positions in Greek debt, who simply don't like the amount of risk associated with it anymore. A simple story, finally told well.

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