Sunday, Feb 14, 2010
Nice little earner for Goldman Sachs
Nyt: Wall Street helped to mask debts shaking Europe
Wall Street tactics akin to the ones that fostered subprime mortgages in America have worsened the financial crisis shaking Greece and undermining the euro by enabling European governments to hide their mounting debts
Posted by mken @ 05:12 PM (1024 views) Add Comment
2 Comments
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1. mken said...
"While Greece did not take advantage of Goldman’s proposal in November 2009, it had paid the bank about $300 million in fees for arranging the 2001 transaction, according to several bankers familiar with the deal."
2. icarus said...
Here's how it works. Goldman Sachs shows Greece how to cheat its way out of the hole it's in. So GS gets fees and privileged information about how bad Greece's situation is. GS then buys credit default swaps on Greek bonds so that when the bond prices go down, a decline that's aided by scare stories fed to a supine press by GS et al (maybe the 2001 story about Greece's cross-currency swaps aided by GS), GS collects on its CDS bets (as well as raking in fees from facilitating the flurry of CDS and bond trades around the Greek debt issue.