Forum Post: Greek debt and Goldman Saks from Greg Palast's book
Posted 13 years ago on Nov. 14, 2011, 8:53 a.m. EST by demcapitalist
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In 2002, Goldman Sachs secretly bought up €2.3 billion in Greek government debt, converted it all into yen and dollars, then immediately sold it back to Greece.
Goldman took a huge loss on the trade.
Is Goldman that stupid?
Goldman is stupid—like a fox. The deal was a con, with Goldman making up a phony-baloney exchange rate for the transaction. Why?
Goldman had cut a secret deal with the Greek government in power then. Their game: to conceal a massive budget deficit. Goldman's fake loss was the Greek government's fake gain.
Goldman would get repayment of its “loss” from the government at loan-shark rates.
The point is, through this crazy and costly legerdemain, Greece's right-wing free-market government was able to pretend its deficits never exceeded 3 percent of GDP.
Cool. Fraudulent but cool.
But flim-flam isn’t cheap these days: On top of murderous interest payments, Goldman charged the Greeks over a quarter billion dollars in fees.
When the new Socialist government of George Papandreou came into office, they opened up the books and Goldman's bats flew out. Investors' went berserk, demanding monster interest rates to lend more money to roll over this debt.
Greece's panicked bondholders rushed to buy insurance against the nation going bankrupt. The price of the bond-bust insurance, called a credit default swap (or CDS), also shot through the roof. Who made a big pile selling the CDS insurance? Goldman.
And those rotting bags of CDS's sold by Goldman and others? Didn't they know they were handing their customers gold-painted turds?
That's Goldman's specialty. In 2007, at the same time banks were selling suspect CDS's and CDOs (packaged sub-prime mortgage securities), Goldman held a “net short” position against these securities. That is, Goldman was betting their financial "products" would end up in the toilet. Goldman picked up another half a billion dollars on their "net short" scam.
But, instead of cuffing Goldman's CEO Lloyd Blankfein and parading him in a cage through the streets of Athens, we have the victims of the frauds, the Greek people, blamed. Blamed and soaked for the cost of it. The "spread" on Greek bonds (the term used for the risk premium paid on Greece's corrupted debt) has now risen to — get ready for this––$14,000 per family per year.
Euro-nation, the secret Geithner memo, and the Ecuador connection
Why did the Greek government throw its nation's fate into Goldman's greasy hands? What the heck was in the "RESTRICTED" document? And why did I have to take it to Geneva, to throw it down in front of the Director-General of the WTO for authentication, a creepy French banker I otherwise wouldn't bother to spit on, and then tear off to Quito to share it with the grateful President of Ecuador?
To give you all the answers would require me to write a book. I have: Vultures' Picnic––in Pursuit of Petroleum Pigs, Power Pirates and High-Finance Fraudsters.
Yes, this economic down turn is a bit of a fiction. I have noticed this trend in other countries too,. the republicans under Bush Jr. created the largest debt the world have ever seen,. and while Georgy boy was in the house this was not a problem, largely kept under wraps and ignored. As soon as Obama and the dems got in, the global corporate bankers just stopped lending money, and the economy tanked. What better way to control the world then by manipulating money supply to governments that could possibly regulate you or expose your fraud, and endless thievery. The great part is they don't even need to bother with the political process,. .
Thanks for spelling it out. It's amazing how the media blame falls on debt, 'due to Greek irresponsibility'.
'It's the banksters, stupid!'
Well Greece did have a debt problem ---but hiding it under the rug and making it a bigger problem during a right wing administration with the help of a Goldman Saks "complex bond deal"certainly made the problem worse and made Goldman a pile of money. There's a similar story about Japanese bonds and a deal with Morgan Stanley in a great book called F.I.A.S.C.O. by Frank Partnoy published in 1999. The author said he thought his book was an expose that would change the world, but as we can see it barely made a ripple. I'd say because most of the folks who read it and understood it were making money on the street.
I think its not just about the investment money.
The Greek government will start privatizing their government agencies to offset the debt and Goldman Sachs will be there to finance it all and then profit off an entire country.
Criminal vultures. And Goldman Sachs practically runs our government through that revolving door. And they claim it's public service.
Goldman helped Greece hide its deficits from the eurozone. Goldman was a makeup artist putting lip stick on a pig. The greece deficit was fueled by out of control social entitlements that caused this mess. goldman made money in a shame FC swap transaction which is wrong.
-- Why did the Greek government throw its nation's fate into Goldman's greasy hands?
Bribery.
That was not difficult.
Google - Henry Paulson treasury -
That's the equivalent for Goldman, Sachs bribing the rating agencies to get "AAA" ratings on their junk-mortgage bonds and the tranche/slice/scam_paper deals. Paulson helped invent the bribery-scam system. Rewarded by getting appointed U.S. Secretary of the Treasury.
Bush loved ENRON. Same for GS/Paulson.
It's like a pack of Irish Travelers shoplifting a Target store, but with M.B.A.s.