Goldman Sachs Helped Greece Hide Its Treaty-Violating Deficit

[girl gone mad]

Goldman Sachs Helped Greece Hide Its Treaty-Violating Deficit
http://www.nakedcapitalism.com/2010/02/goldman-helped-greece-disguise-deficit.html">Naked Capitalism

Readers may know that one point of contention in the worries about Greece’s deficits is that it had hidden the fact that it violated Maastricht rule that fine eurozone countries whose fiscal deficits exceed 3% of GDP.

How was this subterfuge achieved? While the Greek government engaged in some bogus accounting on its own, it also got some help from Goldman. Der Spiegel explains how:

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.

http://www.nakedcapitalism.com/2010/02/goldman-helped-greece-disguise-deficit.html">more...

[ProgressiveProfessor]

1. No bureaucrat or pol of any nation, party, or leaning is going to voluntarily face up to that kind

of national issue. They will find a way to kick it down the road to their successor. However, there is a limit to how much of that can be done. Iceland will not be the only nation with serious financial issues soon.

[Lasher]

2. Derivatives.

After awhile you have to start wondering if it would be a good idea to ban them.

Edit: It's interesting to note that the 2010 US deficit is 10.64% of GDP. Debt is 94.27% of GDP.

http://www.usgovernmentspending.com/downchart_gs.php?year=1792_2010&view=1&expand=&units=p&fy=fy11&chart=H0-fed&bar=0&stack=1&size=l&title=US Federal Debt As Percent Of GDP&state=US&color=c&local=s

[damyank913]

3. This is why I don't believe the Euro will work...

One blanket monetary policy for several different nations with different cultures, industries, climates, resources, and needs. Don't see it. Especially when so many of these economies are dealing with the same profit mongering, double dealing banks that have no moral compass whatsoever (other than profit at all costs).