« Et Tu London: Goldman Sachs helped Britain hide debt »
Much noise this morning surrounding the news that Goldman Sachs (and a number of other banks) allegedly helped Greece to hide the full scale of its ballooning government debts through financial jiggery-pokery over the past decade or so. Eurostat has now demanded an explanation from the Greeks for $1bn of currency swaps it says it was unaware of (though Greece seems to be insisting the authorities did know).
The original story about Goldman’s involvement appeared in Der Spiegel last week (though the theme has been the subject of investigation by the excellent euro blog A Fistful of Euros for some time), and over the weekend the New York Times produced an excellent feature filling in the gaps. One of the more intriguing lines from that latter piece says: “Instruments developed by Goldman Sachs, JPMorgan Chase and a wide range of other banks enabled politicians to mask additional borrowing in Greece, Italy and possibly elsewhere.”
So, the obvious question goes, what about the UK? Did Britain hide its debts? Was Goldman Sachs involved? Should we panic?
To which the answers, respectively, are: yes, yes and no. Britain has been finding various ways to hide its debt off its balance sheet for years; Goldman Sachs was one of the prime movers in this industry, through its infrastructure arm; but the fact is we (and by extension, one presumes, investors) have known about this for quite some time. The chief modus operandi here was the private finance initiative, something which helped the Government remove just south of £50bn from the official balance sheet. Goldman was a big player in the industry. But let’s not get carried away by vampire squid criticism here – it was one of many players in a well-established industry. *
---
Monday, February 22, 2010 at 3:20PM
View Printer Friendly Version
Email Article to Friend
Reader Comments (7)
This practice of luring governments (or any large financial player) into deceptive financial dealings gives them the inside advantage to then stick it in and break it off in the inevitable collapse of their swindles. When you remove all the derivative smoke and mirrors, it's no more sophisticated than that.
And they make hundreds of millions stabbing suckers in the back, instead of spending life in prison. These banker "Bitches" Geithner, Blankfein, Dimon, Summers and Bernanke should all get their sphincter's lubed up to pull a train on each other with Madoff at the caboose position, yelling "Be my Bitch you bung fuckers, be my BITCH".
Then put that on YouTube and let the healing begin.
http://letthemfail.us/archives/3707
Ugh. Where's Eric Holder these days? Probably shopping for arugula with Timmy and Michelle.
----------
both...they still owned some of them...and they sold off a good portion as well...in the case of SocGen they created the CDOs sold them to SocGen and then bought protection for SocGen from AIG...they did this on more than 1 occasion...acting as a 3rd party to obtain hedge protection for its clients...all from AIG...
---------------
Goldman identified AIG early as being clueless...the mark....see this link...
http://www.huffingtonpost.com/david-fiderer/how-paulsons-people-collu_b_435549.html
Snip:
According to Michael Lewis's reporting in Vanity Fair, the guys at AIGFP were clueless:
Toward the end of 2005, Cassano [the head of AIGFP] promoted Al Frost, then went looking for someone to replace him as the ambassador to Wall Street's subprime-mortgage-bond desks. As a smart quant who understood abstruse securities, Gene Park was a likely candidate. That's when Park decided to examine more closely the loans that A.I.G. F.P. had insured. He suspected Joe Cassano didn't understand what he had done, but even so Park was shocked by the magnitude of the misunderstanding: these piles of consumer loans were now 95 percent U.S. subprime mortgages. Park then conducted a little survey, asking the people around A.I.G. F.P. most directly involved in insuring them how much subprime was in them. He asked Gary Gorton, a Yale professor who had helped build the model Cassano used to price the credit-default swaps. Gorton guessed that the piles were no more than 10 percent subprime. He asked a risk analyst in London, who guessed 20 percent. He asked Al Frost, who had no clue, but then, his job was to sell, not to trade. "None of them knew," says one trader. Which sounds, in retrospect, incredible. But an entire financial system was premised on their not knowing--and paying them for their talent! [Emphasis added.]
there's the VF link talking about cassano and aigfp being clueless...