March 7th, 2012
Econintersect: European watchdog ECB Watch has reported on the unresolved issues surrounding the deal that Goldman Sachs made with Greece in 2001. A new report from Bloomberg gives a further report on what continues to look like a nefarious scheme to hide Greek sovereign debt and to enrich the investment bank. The cost of this scheme to Greece has been far greater than the amount of the transaction. Goldman appears to have profited at every stage starting with the first step in 2001. The term “sinners” is taken from a quote Bloomberg attributes to the head of Greece’s debt management agency in 2001, Christoforos Sardelis, who said, “The Goldman Sachs deal is a very sexy story between two sinners.” Click on cartoon for larger image.
Follow up:Some of the details in the Bloomberg report include:
- The 2001 loan to Greece of €2.8 billion created an instant gross profit to Goldman of €0.6 billion.
- The cost to Greece increased to 5.1 billion by 2005 because of the cost of derivatives involved in the deal.
- Goldman convinced Greece not to comparison shop the deal.
- The complexity of the deal Goldman sold to Greece created outsized fees for the bank.
- The deal was structured so that Greece could conceal about 2% of its national debt.
- Bloomberg has filed suit to get access to ECB documents on the Greek use of derivatives.
- Goldman Sachs has declined to disclose how much money it made on the derivatives.
- Goldman says that all transactions were made in accordance with guidelines provided by Eurostat, the EU’s statistical agency.
More of the historical details can be reviewed in the report published a few months ago by ECB Watch, which has an extensive list of references.
- Goldman’s Secret Greece Loan Reveals Sinners (Nicholas Dunbar and Elisa Martinuzzi, Bloomberg, 05 March 2012)
- EU Ignores Falsification of Greek Public Finance Data (ECB Watch, GEI Analysis, 18 December 2011)
Hat tip to Roger Erickson.