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CORRUPT ACROSS THE GLOBE: How Goldman Sachs Helped Greece Hide It's National Debt

Flashback in light of recent events in Cyprus.



Scroll down for video

From Der Spiegel

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.

The Greeks have never managed to stick to the 60 percent debt limit, and they only adhered to the three percent deficit ceiling with the help of blatant balance sheet cosmetics. One time, gigantic military expenditures were left out, and another time billions in hospital debt. After recalculating the figures, the experts at Eurostat consistently came up with the same results: In truth, the deficit each year has been far greater than the three percent limit. In 2009, it exploded to over 12 percent.

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.

But in the Greek case the US bankers devised a special kind of swap with fictional exchange rates. That enabled Greece to receive a far higher sum than the actual euro market value of 10 billion dollars or yen. In that way Goldman Sachs secretly arranged additional credit of up to $1 billion for the Greeks.

This credit disguised as a swap didn't show up in the Greek debt statistics. Eurostat's reporting rules don't comprehensively record transactions involving financial derivatives. "The Maastricht rules can be circumvented quite legally through swaps," says a German derivatives dealer.

In previous years, Italy used a similar trick to mask its true debt with the help of a different US bank. In 2002 the Greek deficit amounted to 1.2 percent of GDP. After Eurostat reviewed the data in September 2004, the ratio had to be revised up to 3.7 percent. According to today's records, it stands at 5.2 percent.

At some point Greece will have to pay up for its swap transactions, and that will impact its deficit. The bond maturities range between 10 and 15 years.

Goldman Sachs charged a hefty commission for the deal and sold the swaps on to a Greek bank in 2005 while Henry Paulson was CEO.



Max Keiser on Goldman's role in Greece:

Good clip.  Start watching exactly at 1:25.





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Reader Comments (14)


Europe Weighs Rescue Plan for Greece
Germany Leads Talks on Backing Greek Debt; Markets Cheer Bid to Stave Off Crisis
Feb 10, 2010 at 6:11 PM | Registered CommenterDailyBail
Paulson's face has a disgusting LEER to it that makes you just want to SMASH IT IN by punching him over & over & over again with brass knuckles until he's rendered into an irrecognizable pulp of bloody meat.

Anyway, gotta run; I'm late for my Anger Management class.
Feb 10, 2010 at 8:26 PM | Unregistered CommenterRecoverylessRecovery

I want See USA Gullibles Chasing these criminals out of their Rat holes,lIke Saddam Hussain

I just Dream..LOL

Gap for Calif. retiree health care grows to $52B
Gap for providing health, dental care to Calif. state government retirees grows to $52B


sorry for repeats but a major news not covered by media shills

How to kill Wall Street Banker Terrorists:

Fellow Americans, It is the duty of every Liberty loving Citizen to close all accounts in Wall Street Too Big To Fail Criminal Terror banking enterprises to your Credit unions or community banks now.............

Starve the Wall Street Banker Terrorists by slashing Plastic Credit cards , the weapon used to terrorize USA working class now..........

Non Violent Revolt is must now........................and Dump all Mutual Funds and Crash the Wall Street Casino and only let them operate if they Bring all the Industrial Manufacturing Jobs Back to USA

Follow Gandhi Revolution now Fellow Americans.....................

Civil disobedience

Breaking News:
New Mexico House Votes 65-0 to move states money to credit unions, community banks
Source: Huffington Post

New Mexico's House of Representatives voted Monday to pass a bill that allows the state to move $2 billion - $5 billion of state funds to credit unions and small banks.

The municipal funds bill was approved 65-0, and is subject to a vote by New Mexico's Senate. Governor Bill Richardson told the bill's sponsor that he supports the legislation.

Credit Union Times spoke to one banker who believes that the bill got a boost from Huffington Post's Move Your Money campaign:

The altered view of New Mexico lawmakers in favoring local control of state funds, officials said follows national mention of the New Mexico effort in the "Move Your Money" campaign of New York pundit Arianna Huffington in her online Huffington Post columns.
Feb 10, 2010 at 8:38 PM | Unregistered CommenterKen
@ Ken

You're RIGHT. In fact THAT'S what ANGERS me the most about my fellow Americans; they had NO PROBLEM whatsoever with sending their kids HALFWAY AROUND THE WORLD in order to help GW Bush settle a PERSONAL SCORE with Saddam Hussein ..
..and NOW they all sit by complacently as Goldman Sachs, Obama et al OPENLY EMPTY THE NATIONAL COFFERS and run this country into THE GROUND!

Who the FUCK was the REAL "TERRORIST" all along, huh?

Stupid idiots.
Feb 10, 2010 at 8:53 PM | Unregistered CommenterRecoverylessRecovery
They will soon be switching from hide the debt to hide the sausage globally.

I haven't had credit cards in about 15 years... Cash is King, if only it was real...
Feb 11, 2010 at 5:05 AM | Unregistered CommenterS. Gompers
Same chicanery that allows Dimon and Blankfein to circumvent Feinstein's so called "stock only" 5-year vesting bonus restriction into ready cash - through derivative swaps of course. I can't find the article right now--but it's out there.

You'd might as well send a Nun to Vegas to try and restrict a magician's ability to pull rabbits out of his hat.

Anything with synthetic value, including a future vesting stock option - is fair game on the exchange. And with their insider advantage, they won't even take a bath on it--and you can bet they're converting those options as fast as they can with what's looming ahead.
Feb 11, 2010 at 12:34 PM | Unregistered CommenterWil Martindale
I saw on PBS last week Goldman Sachs was borrowing bail out money for 0.1% and buying govt bonds which returned them 3-4%! The worst part is there is no outcry to this blatant corruption. The world has gone mad.
Feb 23, 2010 at 11:45 PM | Unregistered CommenterPhil Toms
I've been wandering if we will see CLASS WARFARE but the RICH ELITES may destroy themselves.
The RICH need to understand they should not PISS OFF other RICH ELITES.
Is Allstate suing Countrywide???
Dec 29, 2010 at 12:03 AM | Unregistered CommenterTR
Hello my dear friend Steve.
I wish you and all readers, Merry Christmas and happy New Year.

Miguel (from Spain)
Dec 29, 2010 at 12:38 AM | Unregistered CommenterMiguel (EspaƱa)
Hey Miguel...

i am sending you an update with photos soon...merry christmas to you and your family...
Dec 29, 2010 at 10:08 AM | Registered CommenterDailyBail
Is Allstate suing Countrywide???

i've seen nothing on that so far...
Dec 29, 2010 at 10:08 AM | Registered CommenterDailyBail
The article goes to great lengths to emphasis that all of this was legal. Well, legal crime is the worst crime. I'm no lawyer, but I don't think abusing an office of trust to perpetrate fraud is legal. Maybe this point is made more clear in the case of a school board that listens to a presentation from a suited banker, who they pay to advise them on what to do. He gives bad advice and profits off giving them the advice and maybe on being on the other side of a trade as well. Has he not failed his fiduciary responsibility. If he knowing places the losses onto some unsuspecting entity, taxpayers for example, has he not defrauded them? If this isn't illegal, it need to be made illegal.

All corporations are given charters by government, and that to keep those charters they should agree to standards of conduct that don't harm the sovereign licensing entity. No corporation should be above regulation simply because it is too lawyered up, too politically connected and too damned rich to sue. Corporate power should not outstrip the power of government to protect two-legged citizens from roaming gangs of international thieves.
Dec 29, 2010 at 3:55 PM | Unregistered CommenterG Street
you have a sharp tongue g street...well said...
Dec 30, 2010 at 1:42 AM | Registered CommenterDailyBail
Henry Paulson helped the Greek government to mask the extent of the deficit.
Sounds less jewish than your headline. He, the gentile, used the machinery of Goldman-Sachs, BB
Dec 31, 2010 at 11:08 PM | Unregistered CommenterBramB

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