Greek Debt and Goldman Sachs

by Luke Skywalker in Financial Services on May 23, 2011 02:51:32 AM

Greek Demonstrations

The latest plan to help rescue Greece is not looking so good. It seems the plan has the following prescriptions:
- Raise income tax
- Raise consumption tax
- Decrease government spending
- Lower wages for goverment employees
- Lower benefits for government employees
- Sell assets like airports or parks to raise money

It seems there is every indication that Greece is merely extending the inevitable which is defaulting on the loans they owe. Worse still, with a growth rate of -6% last year, and about the same so far this year, there is very little hope that the situation can be changed anytime in the next few years. Greece will not be able to pay it's debt.

One story that does not make the news on a regular basis is the involvement of Goldman Sachs in Greek debt. There was a time when Greece wanted to enter into the European Union, but they didn't have their books in order. In comes Goldman Sachs. They talked Greece into trading away proceeds from airport fees and lotteris in exchange for Goldman moving the debt into something that would not be traceable when audited by the EU. So basically Goldman bought off the debt, but also the revenue the government had used in the past to pay for things like pensions and salaries. Read all about it at the NY Times.

It's hard to say for sure how this is going to go down, but once again we may find ourselves in a bailout situation where banks like Goldman risks their livelihood on Greece, and meanwhile received bailout funds and low interest loans from the American tax payer. When are we going to stop giving Wall Street banks preferencial treatment?

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Drew Schaefer

Sunday 22nd of May 2011 11:54:27

http://youtu.be/I5QwKEwo4Bc I trust Clarke and Dawes... heh heh

David DuVal

Sunday 10th of July 2011 03:07:29

They are funny and eye opening at the same time. Now it seems Italy might start going the way of Greece.

David DuVal

Monday 30th of May 2011 03:09:49

The Greek protests are continuing http://greece.greekreporter.com/2011/05/29/syntagma-public-protest-continues-4th-consecutive-day/ It's easy to get used to hearing this news, but I still think this is only a hint of things to come.