September 22, 2014
Petros Christodoulou, a Greek investment banker, once quipped “most of the bad news about America’s subprime-mortgage market will be out by the end of August.” It was the beginning of August 2007, just a few weeks before the financial whirlwind that almost sucked in the global economic system unleashed. At the time, Greece was still a successful and prosperous European country, buoyed by the lowest borrowing costs in history. But its comeuppance was soon to follow, as a series of rapid revelations over faulty accounting methods wiped out more than 25% of its GDP and pushed 30% of Greeks below the poverty threshold.
In addition to “accounting errors” a number of financial deals allowed Greece to cut its deficit, in return for repayments over time. Using cross-currency swaps, Goldman Sachs channelled $1 billion of funding to Athens in 2002. On the receiving end of the deal, working at the time in […]