Certain Habits

Wall Street investment banks helped Greece hide billions of euros in liabilities with exotic currency swaps and other complex financial contracts, according to the New York Times.

It had worked before. In 2001, just after Greece was admitted to Europe’s monetary union, Goldman helped the government quietly borrow billions, people familiar with the transaction said. That deal, hidden from public view because it was treated as a currency trade rather than a loan, helped Athens to meet Europe’s deficit rules while continuing to spend beyond its means.

I wonder how much the deals contributed to the bonus pool? When you have two parties with such pronounced short term interests—investment bankers who stand to make (hundreds of) millions and politicians who want to be elected or pay off their (public union) supporters (or both)—you have a recipe for almost certain disaster. But then what’s a little collateral damage in the pursuit of avarice?