Goldman Rats' Bloody Footprints Leading Out of Greece


Pic credit: banksy

(h/t WC Varones)

It isn't enough to bankrupt entire municipalities with exotic debt instruments that they don't understand, the big banking boys are also happy to destroy entire countries. Oh dear, JP Morgan, Goldman is making you look bad, why didn't you think to take down Greece?! Jefferson County, Alabama? What a bunch of fucking amateurs. Oh wait! I forgot, JP Morgan is already being sued by the City of Milan for pulling this derivatives crap in Italy. Close enough.

Point is, Goldman has some more sins to atone for. Add them to the ever-growing list.

Via Spiegel (love those freaking Germans sometimes):

Goldman Sachs helped the Greek government to mask the true extent of its deficit with the help of a derivatives deal that legally circumvented the EU Maastricht deficit rules. At some point the so-called cross currency swaps will mature, and swell the country's already bloated deficit.

Greeks aren't very welcome in the Rue Alphones Weicker in Luxembourg. It's home to Eurostat, the European Union's statistical office. The number crunchers there are deeply annoyed with Athens. Investigative reports state that important data "cannot be confirmed" or has been requested but "not received."

Creative accounting took priority when it came to totting up government debt.Since 1999, the Maastricht rules threaten to slap hefty fines on euro member countries that exceed the budget deficit limit of three percent of gross domestic product. Total government debt mustn't exceed 60 percent.


That last part is hilarious because I just came off of a 32 hour binge of financial accounting class, the last part of which focused exclusively on governmental accounting. I can't claim to know the intimate details of how Greece debits its expenditures but I can guess that you've got to be in REALLY bad financial shape if you are a government agency looking to fudge the accounting rules. Fudge is implied in the term "governmental accounting", there's no need to balance or - as we already know quite well here in the US - live within one's fiscal means.

Now, though, it looks like the Greek figure jugglers have been even more brazen than was previously thought. "Around 2002 in particular, various investment banks offered complex financial products with which governments could push part of their liabilities into the future," one insider recalled, adding that Mediterranean countries had snapped up such products.

Greece's debt managers agreed a huge deal with the savvy bankers of US investment bank Goldman Sachs at the start of 2002. The deal involved so-called cross-currency swaps in which government debt issued in dollars and yen was swapped for euro debt for a certain period -- to be exchanged back into the original currencies at a later date.


Well hell, who could resist the temptation to push liabilities into the future? Can you even blame the Goldman rats for capitalizing on an opportunity when one presents itself? It's not their fault no one read the marketing materials.

Jr Deputy Accountant

Some say he’s half man half fish, others say he’s more of a seventy/thirty split. Either way he’s a fishy bastard.

17 comments:

Anonymous said...

This story's got legs.

"You wouldn't think that a country like Greece could cause the recent worldwide stampede of investors to the exits."

Well, you wouldn't think that a cigarette carelessly thrown out of a moving car window would cause a gigantic California wildfire. You wouldn't think that the assasination of Archduke Ferdinand would kick off WWI. It isn't the event in and of itself. It's the environment in which the event occurs.

beware vampire squids bearing gifts Jeff

Anonymous said...

"Spain had the mother of all housing bubbles. To put things in perspective, Spain now has as many unsold homes as the US, even though the US is about six times bigger. Spain is roughly 10% of the EU GDP, yet it accounted for 30% of all new homes built since 2000 in the EU. Most of the new homes were financed with capital from abroad, so Spain's housing crisis is closely tied in with a financing crisis."

They might be taking their eye off the ball over there by fixating upon Athens.

http://www.investorsinsight.com/blogs/john_mauldins_outside_the_box/archive/2009/08/31/spain-the-hole-in-europe-s-balance-sheet.aspx

Or the just figure they'll handle it "one crisis at a time".

Anonymous said...

Many of these places were built for people who live in the colder climates of Europe who wanted to have a vacation villa or some other type of hang out. The British are absolutely crazy about going anywhere that they can try to get a tan and get their teeth fixed on the cheap.

I guess you can't blame the pasty bastards - as a nation, it probably holds the title for having the most ugly people when viewed naked. And, they loved getting that property with borrowed money. If the going gets tough, we'll see if they keep the "stiff upper lip" that the Brits take pride in or if they fold like a house of cards (pun intended) and bail out on the vacation homes. Champagne wishes and caviar dreams. - Robin Leach

Anonymous said...

I hate it when Europeans have high unemployment and failed economic experiments because that's usually when some sort of bullshit world war breaks out.

If they break apart and start killing one another, I say we sit this one out here in the U.S., get some popcorn and watch them duke it out among themselves - a Euro cage match.

"Spain is only beaten by Latvia, whose unemployment figures stand at 22.3 per cent." Where in the hell is Latvia? I thought that was the name of part of the female anatomy - turns out...it's a backwater country.
http://www.thinkspain.com/news-spain/17514/spain-has-highest-unemployment-rate-in-the-eurozone

Anonymous said...

"The wildcard remains how the less organised, much more disparate urban youth will react to all this. The Greek government knows this too and is watching the streets, not the workplaces, for signs of discontent."

my Cousin Vinny and the urban yutes

Anonymous said...

Spanish titty meets EU Wringer It would seem that everyone over there has everyone else by the short and curlys. I wonder if any bookies in Vegas are giving odds on the survival of the Euro. Jeff

Anonymous said...

http://www.thelocal.de/

You may already be reading this but f.y.i. - this is Germany's news in English. Germany carries much of Europe's water. So goes Germany, so goes the Euro (in my humble opinion). Exporters there would probably like to see a weakened Euro. They are not throwing Greece a lifeline because they actually like them or enjoy lamb or butt fucking - many German banks have large amounts of money tied up there. They might be throwing good money after bad but you know how people are about cutting their losses and moving on when they feel as though they have made a huge investment in something. They won't readilly suck it up and admit they were wrong and take their lumps.

No persons are more frequently wrong, than those who will not admit they are wrong.
Francois De La Rochefoucauld
French author & moralist (1613 - 1680) Jeff

Anonymous said...

question good money after bad You make the call... Germany and France have suggested in recent days that rescuing Greece may be necessary to safeguard the euro zone, but both countries may have a more pressing motivation in the move—protecting their own banks - from the "no shit, Sherlock?!?" file. Jeff

Anonymous said...
Anonymous said...

more fun goldman news from Rolling Stone

"A year and a half after they were minutes away from bankruptcy, how are these assholes not only back on their feet again, but hauling in bonuses at the same rate they were during the bubble?

The answer to that question is basically twofold: They raped the taxpayer, and they raped their clients."

Front-running the clients. Again, they are a hedge fund that front runs its clients masquerading as an investment bank.

Jeff

Anonymous said...

Bond......James Bond

ka-blooomy!

I know you and TLP read these over time so I'll say it here that I "likey" the new look of the blog.

Jeff

Jeff,

Don't give TLP's lazy ass any credit for the layout, *i* was the one up until 3 in the morning setting it up and tweaking it the other night.

I guess he gets credit for cheerleading me through it but that's it ;)

Glad you approve! I really had to do it for the sake of my fanbase, most of whom are what one might call middle-aged and therefore not cut out for reading wonky layouts.

If you have any input on anything I should change email me?

I'll take credit for cheerleading. Maybe that should go in the "About Me" that JDA keeps reminding me to write.

And yes, it is all her work. The setting up, the tweaking, the obsessing, the swearing ... all her.

And wtf? Til 3 in the morning. Must be pretty important to stay up that late ...

Anonymous said...

"....most of whom are what one might call middle-aged and therefore not cut out for reading wonky layouts."

The background is much easier on my middle-aged eyeballs. The layout is cleaner and more crisp - it probably hurts a little since it goes counter to your thorny, stony black heart... but my eyes thank you none the less.

"I'll take credit for cheer leading..." ok, so is it some half assed "yay, go team.... charge..., but you know it's late, it'll get there (someday
...eventually....right?)..." type of cheerleading?

just giving you shit. I'm lazy too but it helps me focus on being efficient ('cause, you know I wouldn't want to hurt myself by trying too hard)

Actually, my dear Jeff, it hurts much less than I thought it would. Plus it's better, this way it APPEARS on the surface like your average financial blog and it isn't until you actually start READING that you realize it is anything but. That's a win in my book.

As for TLP's cheerleading, he's no hooRAH bitch. Naturally. We're talking REAL cheerleading. + some conspiring. It's really a win all around.

you're welcome to give me shit any time you like. And know damn well laziness is allowed as long as you don't get lazy with your links in comments :)

Anonymous said...

"It's really a win all around."

It shows.

JDA's Fedbashing people hating heart yes, I know... file in the "giving you shit" folder.

Anonymous said...

I want my "Freddie Freeloader Party like it's 1929" picture back up please.