3,200 years after the end of the semi-legendary Trojan War, an infamous Wall Street firm left its own version of the Trojan Horse at the gates of Athens – and the Myceneans’ descendants took it into the city. As a result, the Greek debt crisis got a whole lot worse, while the latter-day Trojans – Goldman-Sachs – got a whole lot richer on the deal. Like similar scams the banksters perpetrated on municipalities here in the US, the deal involved “complex financial products” so convoluted that even people with advanced degrees in economics cannot understand them. The purpose of these “products” was to allow the Greek government to delay its financial liabilities, while making Goldman-Sachs a tidy little sum in the form of “fees.”
Greece’s debt crisis was a long time coming. In some ways, the Greek government brought on its own troubles. Tax enforcement in Greece has been lax, making it easier for wealthy Greeks to commit fraud and avoid paying their fair share, and historically, the bureaucracy has been rife with corruption. However, a great deal of that debt was incurred because of Greece’s membership in NATO and its strategic geopolitical location. Among NATO countries, Greece’s military spending as a percentage of its GDP is second only to that of the United States. With a population roughly equivalent to that of the Pacific Northwest, Greece has been the largest importer of military hardware in Europe. Of course, US arms manufacturers have been only too happy to supply the Greek military with weaponry, along with Germany and France. In 2010, as the financial crisis continued to grow, countries were lining up to sell arms to Greece. In fact, some European officials accused Germany and France of making these military deals a condition of financial aid to the country. At the time, Greek deputy Theodore Pangalos said that he felt “pressured to buy weapons we do not need.”
The current involvement with Goldman-Sachs dates back to the turn of the present century, when Greece applied for membership in the Eurozone. By 2000, Greece had been running large deficits for years, largely in order finance its military. European nations wishing to join the Eurozone were required to meet a number of economic conditions under the “Maastricht Criteria.” These included price stability and demonstrated control over inflation, sound public finances, limits on government borrowing with a low deficit, and a stable exchange rate.
Greece was unable to meet these conditions – and Goldman-Sachs was happy to come to the rescue. Current CEO Lloyd Blankfein, who ran the company’s trading and principal investment division at the time, got together with his associates. Together, they arranged a “secret loan” of almost € 3 billion (about $3.35 billion USD at the time) in the form of an “off-the-books” cross-currency swap (CCS). In simple terms, the money that Greece owed to foreign creditors was magically changed into a “domestic currency” debt – and the exchange rate (the difference in value between the drachma, Greece’s currency at the time, and foreign currency) was simply determined by Goldman-Sachs. As a result, the Greek government was able to conceal about 2% of its debt – and Goldman-Sachs walked away with a 20% commission (€ 600 million, or a little under $671 million USD). That commission made up 12% of company revenues that year.
The house of cards quickly started to collapse in the wake of 9/11. Within four years, Greece’s € 3 billion obligation had climbed to over € 5 billion. Of course, we are all familiar with what happened in September of 2008. A little over a year later, the vultures at Goldman-Sachs offered Greece another deal that would have delayed funding for the nation’s health care system – for a price. The Greek government refused. Today, Greeks enjoy the same wonderful health care that Americans endured for decades prior to the Affordable Care Act – pay or die.
Greece wasn’t Goldman-Sach’s only victim. Italy and other Eurozone countries took similar deals. However, Greece is the country that has suffered the most from the machinations that have made Goldman-Sachs so profitable. Today, Blankfein is a member of the billionaire class. His company and those like it, having been bailed out courtesy of the US taxpayer, are now more profitable than ever. Blankfein and his fellow banksters sit back on overstuffed chairs like Ottoman sultans aboard their gold-plated yachts and deluxe private jets, sipping $1,000-a-bottle champagne and eating truffles and imported caviar. Meanwhile, the people of Greece go without basic necessities such as food and healthcare. Educated Greeks are abandoning the country; former university professors wash dishes in restaurants and engineers sweep floors.
Ain’t capitalism grand?