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.