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FX comment: Beware Greeks bearing debts

Judgment day will come – and not just for Greece.

While a mountain of debt threatens to wreak havoc with Athens, it seems the Greek government – or at least part of its machinery – has been using some Bond-style (that’s Bond, James Bond) tactics to find out who’s got them by the short and curlies.

Last Friday, Athens newspaper To Vima quoted a report from the Greek National Intelligence Service purportedly identifying hedge funds Brevan Howard and Moore Capital, as well as Fidelity International and Paulson & Co, as the main players shorting Greek debt.

Brevan and Moore could have ignored the report. Or they could have turned Greek reasoning around and pointed out that, however they were positioned, such speculation is in fact legal. Instead, they both took the curious course of writing letters to clients denying the NIS assertion.

Those letters were leaked to the newswires. Reuters reported: “Brevan Howard said it had had no short exposure to Greek debt since mid-December.” A little later, according to Bloomberg, Moore’s letter stated that the hedge fund expected “the European authorities to move beyond uninformed blame-casting and begin bailing out Greece” and that Moore was in fact net long duration in Greek bonds.