We have officially moved from a Greek tragedy to a Greek surreal comedy. After nearly a month-long scapegoating campaign in which Greek PM G-Pap said he would spit in the faces and skullf#@* all those who dared to buy Greek CDS (because as we have all been lied to by everyone who doesn't know the first thing about CDS, it is CDS buying not bond selling that drives spreads), with the stupidity reaching as far and wide as the Spanish and German secret services, which said they would spy on CDS traders in London and New York, Greek daily Kathimerini has just uncovered that the biggest speculator, holding 15%, or $1.2 billion of the total $8 billion in Greek notional CDS, has been a firm that operates about 2 blocks away from the parliament building in Athens - the state-owned Hellenic Post Bank (TT)! Luckily poetic justice is about to be served, as every single media outlet tomorrow will apply the same circus monkey treatment to G-Pap and his clownshoes henchmen, not to mention the chorus of obese idiots over at the European Commission who fell for the ruse (speaking of EU idiots, has anyone heard of Jenny Craig relapse patient Joaquin Almunia in the past 2 months, with his "Greece will never demand a bailout" arrogance). While there had been speculation that Greek banks were selling Greek CDS to hedge funds, it had never crossed anyone's mind that a Greek bank could be betting on the collapse of its own sovereign host (especially one which does not own Bernanke's printing press), and that in such size! Frankly this beats even our very own AIG fiasco by orders of magnitude in stupidity.

What an unbelievable joke the intersection of global capital markets and politics has become.

Kathimerini reports that Post Bank bought $1.2 billion of Greek CDS at 135 bps in August 2009 and sold them at 235 bps in December at 235 bps, making a profit of €35 million.

More from Kathimerini:

State-controlled Hellenic Post Bank (TT) spent nearly 1 billion euros last year to secure its positions against the possible bankruptcy of the Greek government, according to documents seen by Kathimerini.

In August, the bank bought credit default swaps (CDS) – a form of insurance on financial instruments – worth 950 million euros when the spread on the Greek five-year bond over the German Bund was at 135 basis points.

CDS products allow investors to purchase protection against the default of debt issued by governments, hedging existing positions.

TT’s management, which changed after the Socialists took power in October, sold the CDS when the spread was at 235 basis points in December, earning a profit of some 35 million euros, the documents show.

Hopefully this will finally and forever force G-Pap to shut up in discussing not just the "speculative mania" whose only purpose is the destruction of Greece, but every other thing he does not understand, unless of course, he is referring to banks based in his very own country hell bent on suiciding the country...then again that would leave him with exactly zero things to discuss.

h/t Nick