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According to the Collins English Dictionary 10th Edition fraud can be defined as: "deceit, trickery, sharp practice, or breach of confidence, perpetrated for profit or to gain some unfair or dishonest advantage".[1] In the broadest sense, a fraud is an intentional deception made for personal gain or to damage another individual; the related adjective is fraudulent. The specific legal definition varies by legal jurisdiction. Fraud is a crime, and also a civil law violation. Defrauding people or entities of money or valuables is a common purpose of fraud, but there have also been fraudulent "discoveries", e.g. in science, to gain prestige rather than immediate monetary gain
*As defined in Wikipedia

Monday, June 7, 2010

Goldman Sachs in Greece

Let's throw another log on the fire:

The Greek Debt Crisis popped up near April as news mentioned of a potential default by the European country. I remember the first news about the problem linked Greece to Goldman Sachs. For years Greece has been masking up its true amount of debt holdings. Since the European Central Bank strictly requires its member states to hold a deficit under 3% of their GDP, big spenders like Greece finds itself in a troubled situation.

To get sneaky and make something smelly smell tasty, Greece struck a deal with Goldman Sachs. The deal used the derivative instrument called Cross-Currency Swaps (CCS). In a nutshell, these CCS are used between two parties that hope to switch currencies that involve both the principal loan and the interest payment associated with it. The swap simply exchanges a loan’s principle payment and its interest for another one of the same value but in different currency. In the case of Greece, Goldman Sachs fabricated a highly specialized swap that instead of exchanging for a same valued loan in a different currency, it exchanged Greeks debt for a higher valued one which means additional funding for the country. With this transaction between Greece and Goldman Sachs, the resulting CCS did not show up on the balance sheet of Greece. For the country, it was like borrowing without having to report to shareholdings.


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Anonymous said...

"A nation can survive its fools, and even the ambitious. But it cannot survive treason from within. An enemy at the gates is less formidable, for he is known and he carries his banners openly against the city. But the traitor moves amonth those within the gates freely, his sly whispers rustling through all alleys, heard in the very halls of government itself."
-Marcus Tullius Cicero 106-43 BC

RobertM said...

Well said! This fight over who creates money has been going on for centuries. I recently read the voluminous "Lost Science of Money" and I highly recommend it to anyone interested in the history of money. Ellen Brown's Web of Debt is much easier to read, though and cuts to the chase much quicker.

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