What we could guess, derivatives at heart of Greece Crisis

The New York Times has a dynamite article, Wall St. Helped Greece to Mask Debt Fueling Europe’s Crisis. Not only did Goldman Sachs, JP Morgan Chase, work many deals to hide Greece's debt, another word dear to our heart, derivatives comes into play. Firstly, the hands in the cookie jar:

As worries over Greece rattle world markets, records and interviews show that with Wall Street’s help, the nation engaged in a decade-long effort to skirt European debt limits. One deal created by Goldman Sachs helped obscure billions in debt from the budget overseers in Brussels.

The overall theme and message here is the financial sector controls the world through debt and even nations now. I hate to sound conspiracy theory, but assisting in hiding sovereign debt as well as something bankers can trade, generate large fees from....well, if looks like a duck....

In 2001, just after Greece was admitted to Europe’s monetary union, Goldman helped the government quietly borrow billions, people familiar with the transaction said. That deal, hidden from public view because it was treated as a currency trade rather than a loan, helped Athens to meet Europe’s deficit rules while continuing to spend beyond its means.

Financial derivatives played a role in the run-up of Greek debt. Instruments developed by Goldman Sachs, JPMorgan Chase and a wide range of other banks enabled politicians to mask additional borrowing in Greece, Italy and possibly elsewhere.

Well, well, now we know why we cannot get any legislative reform on derivatives, looks like they are literally controlling sovereign debt.

Banks give upfront cash, but these deals are not recorded as loans, hence the debt is kept off of the books.

and here is our lovely man-made contagion:

Greece owes the world $300 billion, and major banks are on the hook for much of that debt. A default would reverberate around the globe.

It appears they are using all sorts of derivatives including interest rate swaps and currency swaps. All of these deals keep debt off of the books and countries literally can sell government public works down the river in the process.

In what amounted to a garage sale on a national scale, Greek officials essentially mortgaged the country’s airports and highways to raise much-needed money.

Now what country has sold it's highways and airports to raise capital? The United States. Read a brief history of securitization to see the same games being played around the globe, but pay particular attention to the U.S. Same as Greece. These schemes are called sales not loans.

So, how much debt is not on the books in U.S. State budgets, where many of these deals went down?

Another thing this article does....if you see yet another blaming of workers, labor out there, be highly suspect for obviously it's the banksters and their ponzi securitization and derivatives schemes which even hold large sovereign nations by the short hairs.

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Deja vu all over again!

That quote about Goldman Sachs' hiding of the loan as a currency trade is highly reminiscent of JPMorgan's hiding of $2.6 billion in loans to Enron back in the late '90s.

In that case they hid them as commodities trades.

Same old stuff....

this is why we will have another financial crisis

and it could be one is brewing right offshore....sovereign default.

But no, not a damn thing has changed from the days of corporate raiders to the dot con insider pre-IPO guaranteed profit scam to the accounting scandals of Worldcom, Enron to the clearly obvious housing bubble...

and we're not only not getting any reforms, never mind anything which targets the real problem, i.e. securitization and derivatives (along with ratings triggers) ...

they cannot get any reform!

Now, the Senate is bailing so because of public outrage plus the way politics works...we're going to get even worse reps. next election cycle than this one.

(i.e. parties put up candidates but those are chosen by corporations who fund them and then, we have the GOP truly with the most corporate driven messed up policy endorsements and they are going to win because Democrats are bought and paid for by these same corporations...lovely).

What, me worry? Citigroup with the Purfect Plan

their gambling chips

This is just unbelievable and more and more i think this is all about preserving and even expanding these fictional derivatives which are glorified casino gambling chips. By themselves they have no value, but tied to a corporation and the game at hand....they can be exchanged.

I mean what a friggin joke that Citigroup would plain on crisis derivatives. They are the crisis.

There are rumors of them being broken up and that's a good idea too because they are the last TARP fed Zombie, and instead they are going to create yet another derivative class?

I swear, frankly if we don't have another one of these financial crises in the next 5 years, I will be shocked and this time.....it's going to bring the global economy to it's knees and to the guillotine.

Here we are with Senators flying the coop, and still we have jack shit in terms of reforms, even worse, derivatives reform isn't even mentioned as of late! That's the damn problem!

SEC v. JPMorgan Chase

And here be the complaint against JPMorgan for similar stuff.