Did Goldman Help Greece Trick Its Way Into the EU?
7 comments
by: Karl Denninger
February 16, 2010 | about: GS
seekingalpha.com
This is amusing....
( bloomberg.com )
Greece turned to Goldman Sachs Group Inc. (GS) in 2002, just after adopting the euro, to get $1 billion in funding through a swap on $10 billion of debt, Christoforos Sardelis, head of Greece’s Public Debt Management Agency at the time, said in an interview last week. Eurostat, the EU’s statistics office, was aware of the plan, he said. Risk Magazine also reported on the swap in July 2003.
“Eurostat was not until recently aware of this alleged currency swap transaction made by Greece,” spokesman Johan Wullt said by e-mail yesterday.
Bloomberg goes on to opine about whether the EU's statistics office knew about the swaps and their purpose at the time of origination.
This is not the correct question, in my opinion, to be asking.
The question to be asking is what was the essential purpose of transactions in question?
It appears that:
EU regulators pressed Greece yesterday to disclose details of currency swaps after an inquiry by the country’s finance ministry uncovered a series of agreements with banks that it may have used to conceal mounting debt.
Now that is a problem.
If the essence of the transaction was to deceive Brussels, then everyone involved needs to face sanction for this.
Better yet - did Greece lie its way into the EU? If so would anyone care to tell the class for extra credit what fraud in the inducement means to a contractual agreement? (hint: odds on Greece being expelled anyone?)
Simon Johnson of MIT raises an even more provocative possibility: That the EU may ban Goldman from dealing in EU government debt markets altogether!
Instead, Goldman will probably be blacklisted from working with eurozone governments for the foreseeable future; as was the case with Salomon Brothers 20 years ago, Goldman may be on its way to be banned from some government securities markets altogether. If it is to be allowed back into this arena, it will have to address the inherent conflicts of interest between advising a government on how to put (deceptive levels of) lipstick on a pig and cajoling investors into buying livestock at inflated prices.
And the US government, at the highest levels, has to ask a fundamental question: For how long does it wish to be intimately associated with Goldman Sachs and this kind of destabilizing action? What is the priority here - a sustainable recovery and a viable financial system, or one particular set of investment bankers?
The latter question is easier to answer: For as long as our so-called "regulators" and "Congressfolk" are willing to allow pension funds and others to be royally screwed blind through hinky derivatives transactions, there will be no effective anything coming out of Washington.
The Goldman revolving door between Washington DC and Wall Street is alive and well, and until we the people demand that it be slammed closed and bricked over forever, along with those who perpetrated these games be investigated and, where appropriate, prosecuted, you will see no effective change coming from Washington DC.
As a consequence, a viable and true economic recovery is not going to happen because we lack the leadership in either major political party to utilize a few thousand pair of handcuffs and instead excuse and even reward the sort of game-playing that I have been writing about for the last three years.
Indeed, that's all "the so-called stock market" (never mind the economy as a whole and our various forms of government) is running on right now - games, concealment and outright lies.
The truth of this statement is instantly clear when one thinks back to the malignant swaps "deals" made with Jefferson County Alabama along with many other municipal governments. In these cases there were allegations of outright bribery and yet investigation, indictment and prosecution of banking industry executives for public corruption has yet to be seen. Instead "a little fine" has been negotiated and paid, where if you or I screwed some little old lady out of 1/1000th as much money, we'd be doing 20 years of hard time right now.
We are no longer a nation of laws - we're a nation of despots and, thus far, we the people are tolerating it.
It is time for every American to reflect on one simple question: Why do I sit still for this? |
