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The Chairman Of Goldman Sachs Bank, And Former FRBNY President, Says Many European Countries Used Comparable Debt-Hiding Swap Transactions
In a speech before the UK Treasury Select Committee the Chairman of Goldman Sachs Bank, Gerald Corrigan, who also happens to be a former New York Fed President (and people still wonder where Tim Geithner will end up) noted that it is not Goldman who is at fault in the whole Greek swap fiasco but Eurostat, "which was consulted on the transaction at the time it was entered into and which offered no objection." What is troubling is Corrigan's revelation that "Goldman Sachs was by no means the only bank involved with countries
in these types of transactions...These transactions were not limited to
Goldman Sachs and Greece." Just whose debt numbers will be put under the microscope next?
Corrigan is quoted as saying:
"The personnel at Goldman Sachs consulted with the appropriate authorities at Eurostat, as did, I understand, the government of Greece and there was no indication those transactions were not in line with existing practices. however, adding that "I should also say that those guidelines and standards were modified in 2007, which suggests that perhaps they were more liberal than they should have been back in 2001. "
There is certainly nothing too surprising about this statement. What is more important is that increasing revelations about other countries participations in comparable transactions will only reduce already shaky credibility in the official numbers of not just peripheral countries which may have used such gimmicks to mask their debt exposure, but potentially core eurozone nations, for missing these disclosures for so long. To wit:
"Governments go to some lengths to try to manage their budgetary deficit positions and manage their public debt positions. There is nothing terribly new about this. It is true that currency swaps entered by Goldman Sachs in Greece in the late '90s and early part of the 2000s were of the nature that they did produce a rather small, but nevertheless, not insignificant reduction in Greece's debt-to-GDP ratio at that time. However, it is very clear to me, based on the investigation that I have done over the past few days that those transactions were very much consistent with, and comparable with, the standards of behaviour and legislation used by the European Community. There was nothing inappropriate. Goldman Sachs was by no means the only bank involved with countries in these types of transactions...These transactions were not limited to Goldman Sachs and Greece."
We are fairly confident that the ECB's plan to scapegoat others for its lack of diligence (and
outright incompetence) will only backfire, as we have expected
ever since revelations about said currency swaps emerged first. And while Corrigan did not name specific countries, the Zero Hedge team is already combing through Portuguese and UK publicly filed SPV documents to see just how much uglier the actual truth is compared to official EU releases.
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so why didn't Mr. Corrigan disclose the facts of all the swaps rather than perpetuate enron part deux?
so UK is guilty too? can any type of debt be hidden like this, even mortgage debt? why assume countries do it only to fit in the Euro debt criteria, they could do it just to look less broke!
Maybe he can make a list of all these people.
Then the police can round them up.
France used to say " off with his head "
They really did it....
Don't forget to look at issuances from local governments...
Banksters are STILL selling your local school district on the magic of interest rate swaps. Desperate people doing desperate things.
That is awesome. It's like coming out and saying "Yeah we buried land mines all over the place out here. Good luck navigating the area!"
Yeah, "Lots of people were cooking the books, so why are you hassling us about cooking the books?" and "We all agreed we could cook the books this way, so don't try to mess with us."
+1
Don't spend alot of time on the UK search.
Bernanke is going to buy up every single phucking Gilt on the face of the earth.
For those of you in the CRE biz, please get ahold of Bernanke ASAP (1.800.FREE.MONEY) as he is very much in need of purchasing retail shopping malls, any strip malls in Florida, Nevada, Michigan, Arizona and will take any and all office space in every state except Alaska, where he has already purchased most igloos, snow machines, and grizzly bear dude ranches. p.s. Money is NO object, so don't be goin' cheap on yer askin' price, okey dokey?
Bernanke is wearing on the patience of most, except for the few, the corrupt, that gave him 4 more years in his current job.
Anymore Bernanke shenanigans need to be immediately reported to our representatives over and over and over again until this incompetent ideologist becomes the next Greenspan and damns my unborn kids, and everybody else's, to a future of debt servitude.
Yeah...it's like the doctors going in to remove a tumor, then finding out the cancer has metastasized, they sew you up and send you home with advice to get your affairs in order. Investment Bankers should wear green "$" badges on their sleeves with the number of "$" corresponding to the figures of their bonus so we could know who they are and congratulate them appropriately.
News is out that DB gave the Portuguese government a hand from '99 til '03.
Uh-oh...bye bye Euro.
Because it is impossible to hide JPY and USD debt? Oh wait it isn't.
Hope they got gold.
The fact that GS and other dumb blondes helped Greece, Italy, Spain to dye their hair blonde and not reveal any roots is not the issue here (call it joining the Global 90210 club, yah, hair flick, look what we can do). It is that GS and the other dumb blondes are doing this right now to get round capital adequacy requirements that would otherwise prevent them from beggaring nations. The moral question is, just because you have an axe and dont get caught being an axe murderer, because the police are not up to it, should you be an axe murderer. Substitute child rapist if you want to ramp up the ante.
meds..... quick
Old apocryphal story in the energy business: Around the time the USSR collapsed, many foreign experts were allowed in to see things. In an oilfield, the Western engineer asked his CCCP-ish counterpart: "what's your pipeline leakage rate"?
Soviet engineer replies: "A bit less than 1%."
Looking around at the pools of oil on the ground, the Western engineer asks: "How do you know the leakage rate?"
Soviet engineer, looking at him like an idiot: "It's written in the plan!"
LOL
Now coming to a Federal government near you!
The true irony is that nothing much has changed since then especially in the large "government"-owned companies like Gazprom, Rosneft, Transneft etc. I strongly reccomend to stay away from any investment in russian energy business.
oops ...bad (hair) day, sorry
Who would have imagined that Goldman would confine to the PIIGS, their special skills at creating fees by making liabilities disappear into thin air.
Who knew?
Doing God's work.
First - What's with the 'maths' question? Just sorting the indisputably imbecilic from the merely moronic?
Anyhow - setting simple financial targets, whether Basel ll ratios or GDP Debt ratios - merely invites those involved to game the system. Don't be surprised, just don't rely on simple formulaic rules. Much like using simple arithmetic tests to deter idiots I suppose.
Sham transaction with a really, really high fee. It's not illegal, its' "unregulated".
I suspect we have not scratched the surface of how bad this is. All nations have done this stuff. Count on it. I see an n-dimensional, n-helixed, latticework of hytpertexted interdependent dysfunctionality. There is nothing anyone can do.
Many of you like to make fun of us prepper types. Keep making fun of us, but please make some arrangements for MAJOR DISRUPTIONS IN OUR WAY OF LIFE.
1. Intermittent gas station service.
2. Intermittent grocery stores.
3. Intermittent power.
4. Civil unrest with lots of angry, irrational, maybe hungry, people out and about.
Take care of yourselves.
+1
In reference to your "preppers" comment (neat word), I've found many people are unable to think in such large terms. Thus, I've found a couple constructive things that people *do* tend to understand:
"It is silly and unrealistic not to expect supply chain disruptions. Remember, hurricanes are good examples of supply chain disruptions."
...and:
"It's not stupid to have a 50-lb. bag of rice at home."
Could not agree more. Hell it's even cheaper to buy in bulk. I love rice and was eating it before I discovered how cheap it was by the 50lb bag! People stand to lose nothing even if there is no problem, after all ti was food you were going to buy anyway. Might even save some money by eating out less.
But the majority will not listen, same as they mock the idea of PMs as insurance. They have been trained that a meal can be as far close as phoning the pizza man, and the money in their bank will always be there and it's as simple as swiping a card. Those that listen will keep their heads down and those without will be hungry and taking to the streets.
Remember when the Communist Party in China had all those legacy costs from state run industries? They hired GS to fix their bad debt problem.
Like I said, those who live by the sword..etc etc..these banks are using similar devices right now to hide their own regulatory requirements...check this out for a reminder...and this is just what snuck under the "chit, we shouldn't have told anyone" wire
http://www.ft.com/cms/s/0/e337b368-a322-11de-ba74-00144feabdc0.html?nclick_check=1
anyway, taking care of ourselves isn't the issue. it's others making us poor.
Hmmm.....wonder if this has anything to do with the Fed stonewalling audit/transparency and Jamie/JPM,s gazillion $ rate swap book?????????????????
see Feb 18 www.crudewire.com
Greece NOT Unique
Greece NOT Unique
The recent hidden swaps that turned up in the Greek portfolio (lol) reminded me a lot of Enron. Or was it B of A? Could of been Citi. Anyway back in the Enron days I knew that this method of hiding losses could not be unique to Enron. In fact, if Wall Street was pushing such an approach, they themselves had to be well into it just to compete. I mean why just rake in fees on such a creative solution when you could employ it to "free up" capital yourself. Not that you had to of course..
So once again the thought occurs ..Greece probably NOT UNIQUE ...... see Dubai Not Unique
(from Nov. 30). I mean why help out just one struggling nation when so many others are equally in need.
Zero Hedge published a rumor several days ago that AIG had sold CDS on Greek debt and that it well may be still in force. HMMMM wonder who bought that? We know who's gonna pay.
Sovereigns and Municipalities have been doing all sorts of Currency swaps with K/O's and Int. rate risk for well over a decade. There's more "Orange County-like" risk in cities in France, Austria, and other countries than you can imagine.
The hilarious thing about the PIIGS is that they got the blessing from the EU to essentially "dupe" the EU to be able to enter the EU and get more EU assistance/subsidies for what was it 9-10 years. Now they have to go back to the likes of GS,CS, JPM, DB and others and get re-raked. It's like going to a proctologist that has fingers like Andre the Giant. And these are countries and cities "managing" the "needs" of their people. Enron's accountants have nothing on these guys.
You gotta love this part, saying the deal with Greece did...
"..produce a rather small but nevertheless not insignificant reduction in Greece's debt to GDP ratios at that time," said Corrigan.
Whaaaaaa? I guess that is Goldman Doublespeak for...we figured out exactly how much book-cooking we needed, executed the deal and made out like bandits..until we got caught.
This, and other "Goldman moments" lately beg the question: If they are the smartest kids on the block, why are they constantly having to apologize and explain their way out of situation after situation?
The issue of sovereign debt swaps I am confident is not limited to the eurozone.
Arghhhhh..is it me or is the fact that banks are cheating their own regulators with devices like this to hide their risks MORE important than the odd 30 billion for a country that has a few too many cafes!
>> This, and other "Goldman moments" lately beg the question:
>> If they are the smartest kids on the block, why are they
>> constantly having to apologize and explain their way out
>> of situation after situation?
Nah, they don't apologize - this is a kind of ad: 'look what funny dings we can do in the financial world - you be our next customa ?'
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