We like independent reports….

As long as they confirm our prejudices of course. If they don\’t say what we want them to say, well, they tend not to see the light of day:

The European Commission has been accused of covering up a report that concluded that hedge fund trading did not exacerbate the Greek sovereign debt crisis, as some politicians had maintained.

The report, seen by The Daily Telegraph, found \”no conclusive evidence\” that traders of Credit Default Swaps [CDS] were causing further problems for the indebted European countries. But rather that \”the CDS market seems to facilitate risk sharing\”.

The document, which was expected to be published months ago, was withheld until a Dutch newspaper demanded its release as a request under Freedom of Information rules.

As everyone with more than a little bear\’s brain knows, what derivatives trading can do is move prices around in time: but it\’s not going to create price movements in and of itself.

It concludes: \”All in all, the analysis… shows that the differences in bond and CDS spreads across countries are justified. Government deficits, debt levels and current account deficits give a consistent picture of vulnerabilities.\”

Quite: Greece, Ireland etc. were and are not suffering liquidity crises as a result of high CDS spreads or high interest rates. They\’re on the verge of insolvency and any rational system of pricing, whether it included derivatives or not, would reflect that.

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