Greek Prime Minister George Papandreou claims unprincipled speculators have threatened to bring about a new global financial crisis by attacking Greek debt.  At its recent sale of 10-year bonds Greece paid a 3.0% premium over Germany to borrow for a decade.

But, according to Mr. Papandreou, it is not the Greek budget deficit of 12.7% of GDP, nor its public debt ratio of 113%, nor S&P's projection that the ratio will rise to 138%  by 2012, nor the deceit of the previous Greek administration in disguising the extent of the 2010 deficit, nor its financial chicanery before joining the euro in 2001, nor the demonstrations and protests in Greece over the pension and salary cuts forced by his austerity budget, that  have caused investors to sour on Greek sovereign debt. These items are secondary.  It is the fault of the speculators those ...who only place value on immediate returns, with utter disregard for the consequences on the larger economic system.  The Greek government is perfectly willing to sell its bonds to 'investors' in the private market but does not want to have to pay the price they demand for lending their money.

Things would certainly be easier for the Greek Prime Minister if the misdeeds of his government had not been brought so dramatically to light in the CDS market. Life would be simpler for Angela Merkel and Nicolas Sarkozy if they did not have to consider rescuing Greece over the strenuous objections of their electorates. But for these leaders to blame the speculators is a ploy worthy of the cheerfully cynical Captain Renault in Casablanca.  The immediate cause of the Greek debacle is the unfettered European welfare state and it is as obvious as the gun that killed Major Strasser.

But unlike Captain Renault whose order to 'round up the usual suspects'  is the first evidence of his political change of heart and conversion to the Free French  in World War II, do not expect any likeminded conversions by the Greek Premier, the French President or the German Chancellor, to the righteous cause of budget discipline and economic growth