EU Financial Crisis: Is It Time For A Crack Down On Goldman Sachs?

On Sunday, The New York Times revealed that Wall Street’s elaborate financial schemes made Greece escalating debt reach today’s breaking point by allowing the Greek government to borrow above its means since 2001. One deal created by Goldman Sachs helped hide billions in debts contracted by Greece from the EU budget authorities in Brussels.

According to The New York Times report, a team from Goldman Sachs, led by Gary Cohn, came to Athens in November 2009 to propose to the Greek government a new financial scheme which would have pushed debt from Greece’s health care system far into the future.

The News York Times reports that as early as 2001, shortly after Greece was admitted into the European monetary system, Goldman Sachs help the government borrow billions. The deal was hidden from European regulators because Goldman Sachs made the transactions appear as a currency trade not a loan. The secret deal helped Greece meet Europe’s strict deficit rules while continuing to spend more than what they had.

French President Sarkozy and German Chancellor Merkel have being conjointly pushing for the adoption of strict international regulations on banks and major financial institutions since the global economic crisis almost took the world financial market to ruin. This push from Sarkozy and Merkel has so far encountered some resistance from London, but even stronger resistance from Washington.

The looming financial crisis facing not only Greece, but also Portugal, Spain and Ireland will give some very good reasons and strong ammunition to Sarkozy and Merkel to do what needs to be done. If  The New York Times’ report is confirmed, firms such as Goldman Sachs, which has offices in London, will be in the cross air of the EU for running financial practices which amount to nothing less than a global elaborate Ponzi scheme, not very different in nature from the one which got Bernard  Madoff  behind bars.

If the paper’s report is corroborated by other sources, it is likely that international prosecutions will follow soon against Goldman Sachs’ top executives. It would probably be wise for Wall Street’s “golden boys” to save the fat bonuses they have collected last year to pay what will surely be some serious legal fees. It is one thing to bankrupt individuals and small companies, yet another to bankrupt a country. It would not be surprising at all if Goldman Sachs’ stocks take a massive dive on the  financial markets worldwide  in the very near future.


4 Responses to EU Financial Crisis: Is It Time For A Crack Down On Goldman Sachs?

  1. Antifo February 15, 2010 at 2:42 pm

    Actually the interesting thing is, that already accepting Greece as EU member was motivated by the need to transfer money from healty economies in western europe down to Greece in order to pacify this country.

    This “social peace for money deal” was reasonable during the times of the cold war. Before it’s EU membership military coups were necessary to prevent communist takeover in Greece. That means the west did imitate communist mismanagement as to defeat communism.

  2. Peter February 16, 2010 at 3:38 pm

    gee, what a surprise comment from a lawyer. go back to law school, learn the difference bwteen right and wrong then put a bullet in your head…

    • Gilbert Mercier
      Gilbert Mercier February 16, 2010 at 8:30 pm

      So violent, but so right !

  3. jennybernard February 18, 2010 at 12:00 am

    Seen from Europe, Excellent post !
    Travelling frequently in Greece, i am not surprised at all, oldest democracy
    in the world (worst system, but only one working) , no rules in this nice country with nice people!

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