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.