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Over Your Euro Debt Limit, Just Call Goldman

Tuesday Feb 9 2010

It seems the number crunchers at Brussels, the EU center, cannot get their arms around what Greece really owes. Yep when in trouble call the Go To For Creative Financing Guys, Goldman. Goldman configured an exotic derivative currency swap allowing Greece to move some of its debt maturities to the future. In the future means not on our books today when the debt cannot exceed sixty percent of the GDP rule is applied.

Picture 1  Gee does this sound a bit like Enron?  Hmm, Goldman stock as we noted recently is down $40 from its recent highs. We will distribute our Must Read Handouts to classes this Wednesday. Plan on snuggling up with them over the weekend, this stuff reads like a fiction thriller.  It must be tough to write the screenplay for Money Never Sleeps when Goldman is playing it out for real every day.  

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3 responses to “Over Your Euro Debt Limit, Just Call Goldman”

  1. LeAnna M Nesbitt Avatar
    LeAnna M Nesbitt

    I was reading an article in the WSJ on Wednesday night about this very topic. Goldman has placed the trading unit in a vulnerable position by not covering the exposure with adequate collateral/capital resources. If the debt structure of Greece continues to deteriorate, Goldman will experience a substantial loss on the swaps. Goldman in a sense is betting on a pot of gold at the end of the rainbow, but it may not even rain…. The Goldman strategies that have worked in the past is starting to create new bonfires in their global debt operations.

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  2. Joy Avatar
    Joy

    How can you move debt securities to the future. Sounds like it is only a matter of time before Goldman ends up behind bars.

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  3. Dennis Elam Avatar
    Dennis Elam

    Good question, I am familiar with creating a ‘synthetic’ bond for example buy using a long dated call option but claiming to move debt off the balance sheet is accounting sorcery. And note that this was NOT an accounting firm involved in the transaction. But then handily, the books of a nation are not audited are they?

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