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How Goldman Sachs wins no matter what
The steady stream of revelations regarding the role Goldman Sachs has played in the fleecing of Europe should reinvigorate efforts in Congress to rein in the reckless trading that could send the global economy into another tailspin.
To recap, Greece and a number of other European Union countries are dangerously in debt. EU rules say member countries cannot have budget deficits that exceed 3 percent of their gross domestic product. The Greek government recently revealed that its debt is closer to 12 percent of GDP. Other countries including Spain, Ireland, Italy and Portugal are also in trouble. Like our behemoth banks, these countries are "too big to fail." A default by any one of them would put an end to talks of "green shoots" and could lead to a double dip recession.
In early February, Der Spiegel (a German magazine) broke the story that Greece has been hiding the extent of its debt for years with the aid of U.S. investment banks. In 2001, Goldman was paid $300 million to structure a complex derivative deal that allowed Greece to borrow billions while hiding the true extent of its debt. Without this creative assist, Greece may not have been accepted into the common currency "Eurozone."