Advertise On EU-Digest

Annual Advertising Rates

2/19/10

EU Trouble: US Banks Helped Hide Government Debt -by Alex Newman

American banks helped Greece and possibly other governments to run massive deficits and conceal them from European Union officials and the public, according to international news reports. Meanwhile, the consequences of the deception are echoing through world currency and debt markets while shaking the very foundations of the Eurozone. Under EU rules implemented with the Maastricht treaty, all Eurozone countries are supposed to maintain an annual budget deficit of less than three percent of Gross Domestic Product (GDP) and an overall debt of less than 60 percent of GDP. Nonconforming nations can face fines and other action. But Greece has never been able to stick to the 60 percent rule, and has now been caught lying about its deficits. Last year the government ran a deficit of over 12 percent, an enormous figure by any standard.

In an effort to raise even more money and conceal the staggering levels of debt, Greece turned to American banks — Goldman Sachs in particular, according to an explosive story published by the German magazine Der Spiegel. The report, entitled "How Goldman Sachs Helped Greece to Mask its True Debt," alleges that the Greek government used obscure derivatives provided by U.S. banks to delay payment on obligations, borrow even more money and to keep the true figures off the official.

For more: EU Trouble: US Banks Helped Hide Government Debt

No comments: