NYT is out with a major story
by Louise Story, Landon Thomas and Nelson D. Schwartz on how Goldman
Sachs, Morgan Stanley and other investment banks have helped Greece
hide the extent of its debt:

As worries over Greece
rattle world markets, records and interviews show that with Wall
Street’s help, the nation engaged in a decade-long effort to skirt
European debt limits. One deal created by Goldman Sachs helped obscure
billions in debt from the budget overseers in Brussels.

Even as
the crisis was nearing the flashpoint, banks were searching for ways to
help Greece forestall the day of reckoning. In early November — three
months before Athens became the epicenter of global financial anxiety —
a team from Goldman Sachs arrived in the ancient city with a very
modern proposition for a government struggling to pay its bills,
according to two people who were briefed on the meeting.

The
bankers, led by Goldman’s president, Gary D. Cohn, held out a financing
instrument that would have pushed debt from Greece’s health care system
far into the future, much as when strapped homeowners take out second
mortgages to pay off their credit cards.

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.

Athens
did not pursue the latest Goldman proposal, but with Greece groaning
under the weight of its debts and with its richer neighbors vowing to
come to its aid, the deals over the last decade are raising questions
about Wall Street’s role in the world’s latest financial drama.

As
in the American subprime crisis and the implosion of the American
International Group, financial derivatives played a role in the run-up
of Greek debt. Instruments developed by Goldman Sachs, JPMorgan Chase
and a wide range of other banks enabled politicians to mask additional
borrowing in Greece, Italy and possibly elsewhere.

In dozens of
deals across the Continent, banks provided cash upfront in return for
government payments in the future, with those liabilities then left off
the books. Greece, for example, traded away the rights to airport fees
and lottery proceeds in years to come.

Critics say that such
deals, because they are not recorded as loans, mislead investors and
regulators about the depth of a country’s liabilities.

Some of
the Greek deals were named after figures in Greek mythology. One of
them, for instance, was called Aeolos, after the god of the winds.

Most alarming is the hint that this goes beyond Greece:

Such
derivatives, which are not openly documented or disclosed, add to the
uncertainty over how deep the troubles go in Greece and which other
governments might have used similar off-balance sheet accounting.

Bottom
line: It appears that Goldman Sachs has turned many governments
throughout the world into Super-Enrons, with off-balance sheet
shenanigans, financial sleight of hand and convoluted accounting.
Governments generally don’t need help in this kind of maneuvering, but
Goldman with its collection of whiz kid derivative designers has taken
the entire process to a new level. A new level so unique that it could
very will collapse the financial structure of the manipulated world.