Greece is a crime scene. The people are victims of a fraud, a scam, a hustle and a flim-flam. And a bank named Goldman Sachs is holding the smoking gun.
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.
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.
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