4 ms·

> I hope that money will never be paid back, just to teach the people who accommodated this a lesson. Let's assume the money is never repaid; at this point it

> I hope that money will never be paid back, just to teach the people who accommodated this a lesson. Let's assume the money is never repaid; at this point it seems likely that at least most of it never will be especially given the enormous haircut private lenders already took. How does that teach GS a lesson? The article even quotes a German noting that CCSs are legal (not that following the law has done much for bankers over the last 10 years). More importantly, what makes you think GS has any net exposure to Greece at this time? The swap was sold on. There is very little Greek debt left in private hands and I doubt that GS would be so foolish as to have any material exposure to it, whether in the form of CCS or anything else. And the buyer of the swap, supposedly a Greek bank per the article, is already a total zombie regardless of this particular asset. Whether Greece defaults on it or not will not be material to its fate.

sampo 11y ago
> There is very little Greek debt left in private hands 34 billion, or 12%, seems to be private: http://graphics.wsj.com/greece-debt-timeline/ http://graphics.wsj.com/greece-debt-timeline/
- fredkbloggs 11y ago
  I consider that very little. For comparison, Argentina defaulted on over twice that amount in 2002 (see https://en.wikipedia.org/wiki/Argentine_debt_restructuring https://en.wikipedia.org/wiki/Argentine_debt_restructuring). It also seems fairly likely at this point that many of the remaining private holders are non-banks that purchased the debt at a considerable discount to par, but that's speculation on my part. It seems safe to say that the impact of the Greek default, at least as far as direct financial/economic matters are concerned, is going to be very limited. As far as the private sector is concerned, the damage has already been done.
  - sampo 11y ago
    > Argentina defaulted on over twice that amount Argentina has 4 times larger population, though.
Maarten88 11y ago
That's exactly my problem: they screwed their customers, who stand to loose a lot of money (good for them, although this might include my own pension fund, who knows). And they screwed the other EU countries (so I'm already paying for this). And they screwed the Greek people with an expensive financing scheme that was only designed to obfuscate/hide things. And yet there are no consequences to GS, they are not exposed at all.
- fredkbloggs 11y ago
  I would be more sympathetic to this argument except that: 1. The Greek government that engaged in this transaction was formed following a free and fair election. The CCS was not some dictator's scam. 2. GS didn't screw their customers. If they screwed anyone, it was the buyer of the CCS, a Greek bank, who certainly should have known better. The net result of this trade was that the Greeks screwed themselves; if you think of the trade as a chemical reaction, GS was just a catalyst. 3. The other EU countries also have democratically elected governments that chose to participate in bailing out Greece rather than cutting it loose in the first place. Those same governments also deliberately overlooked not only sketchy off-balance-sheet stuff like this but also rampant overspending and excessive on-balance-sheet indebtedness by EU members both large and small over a period of many years. The only real sympathy I have is for the anti-EU minority across Europe who keep voting against these scams and keep getting stuck with the bill anyway. But that's the universal failure of democracy for you; it's not only the EU that suffers it.
  - Maarten88 11y ago
    I did not know the buyer of the CSS was a Greek bank, but that only makes it worse: so GS exploited the weakness of politicians and used some interconnectedness towards this bank to make then take this deal? Democratically elected or not, this is just wrong anyway you look at it.
ForEnglandJames 11y ago
>How does that teach GS a lesson? My earnest hope is that everyone learns not to trust GS at their word, or at all. And then GS can't find buyers. Hey, I can dream, right?
- Zuider 11y ago
  People will continue to deal with GS, despite (maybe even because of) their ever worsening reputation, as long as they can convince themselves that they are the ones who are going to get rich while the other idiots are going to get ripped off. The incentive scheme is similar to that of a slot machine.

sampo 11y ago

> There is very little Greek debt left in private hands 34 billion, or 12%, seems to be private: http://graphics.wsj.com/greece-debt-timeline/ http://graphics.wsj.com/greece-debt-timeline/

fredkbloggs 11y ago
I consider that very little. For comparison, Argentina defaulted on over twice that amount in 2002 (see https://en.wikipedia.org/wiki/Argentine_debt_restructuring https://en.wikipedia.org/wiki/Argentine_debt_restructuring). It also seems fairly likely at this point that many of the remaining private holders are non-banks that purchased the debt at a considerable discount to par, but that's speculation on my part. It seems safe to say that the impact of the Greek default, at least as far as direct financial/economic matters are concerned, is going to be very limited. As far as the private sector is concerned, the damage has already been done.
- sampo 11y ago
  > Argentina defaulted on over twice that amount Argentina has 4 times larger population, though.

Maarten88 11y ago

That's exactly my problem: they screwed their customers, who stand to loose a lot of money (good for them, although this might include my own pension fund, who knows). And they screwed the other EU countries (so I'm already paying for this). And they screwed the Greek people with an expensive financing scheme that was only designed to obfuscate/hide things. And yet there are no consequences to GS, they are not exposed at all.

fredkbloggs 11y ago
I would be more sympathetic to this argument except that: 1. The Greek government that engaged in this transaction was formed following a free and fair election. The CCS was not some dictator's scam. 2. GS didn't screw their customers. If they screwed anyone, it was the buyer of the CCS, a Greek bank, who certainly should have known better. The net result of this trade was that the Greeks screwed themselves; if you think of the trade as a chemical reaction, GS was just a catalyst. 3. The other EU countries also have democratically elected governments that chose to participate in bailing out Greece rather than cutting it loose in the first place. Those same governments also deliberately overlooked not only sketchy off-balance-sheet stuff like this but also rampant overspending and excessive on-balance-sheet indebtedness by EU members both large and small over a period of many years. The only real sympathy I have is for the anti-EU minority across Europe who keep voting against these scams and keep getting stuck with the bill anyway. But that's the universal failure of democracy for you; it's not only the EU that suffers it.
- Maarten88 11y ago
  I did not know the buyer of the CSS was a Greek bank, but that only makes it worse: so GS exploited the weakness of politicians and used some interconnectedness towards this bank to make then take this deal? Democratically elected or not, this is just wrong anyway you look at it.

ForEnglandJames 11y ago

>How does that teach GS a lesson? My earnest hope is that everyone learns not to trust GS at their word, or at all. And then GS can't find buyers. Hey, I can dream, right?

Zuider 11y ago
People will continue to deal with GS, despite (maybe even because of) their ever worsening reputation, as long as they can convince themselves that they are the ones who are going to get rich while the other idiots are going to get ripped off. The incentive scheme is similar to that of a slot machine.