[0:17]Goldman Sachs is niet alleen de machtigste bank van de wereld. Volgens vele analisten is het een staat binnen de staat die door niemand wordt gecontroleerd. Goldman Sachs was direct betrokken bij de financiële ondergang van Griekenland als adviseur van de regering met een eigen agenda on the side. The Greece deal brought together the falsification of national balance sheets, the activity of the large investment banks to help this process and the EU institutions that approved the process. And this is the nexus of all of these multiple things that together have brought the Eurozone into the into its current crisis. Vanavond. Een onthutsend portret van Goldman Sachs en de vernietiging van Griekenland. Dit is wat u te wachten staat. Inside Goldman, certainly when I was there, there is no discussion about whether you're cheating people because that requires a level of sort of human connection that really doesn't occur day-to-day in banking. The reason my book is called Money and Power is because first they get the money, then they want the power. It's not so much that Goldman Sachs is ruling the world, but it is like a greater parasite that is threatening to stop the world from rebalancing itself and recovering a sense of democratic control over its future. Γιατί να λήστευε τους ανθρώπους θέλουν να χαλάσουν το κοφτούν για να πάρω τους καθάριους όλους. U kijkt naar tegenlicht. Welkom in uw toekomst.
[2:00]Ministers, MPs, general secretaries. Thank you very much. The honor is great for an organization that fights and will fight very hard in these very difficult times. This event culminates a long tradition. Every year we try to start with the best omens. We need you to confirm and reward our struggles.
[2:32]Beyond this step, I wish you from the bottom of my heart health, peace and creation in a more human, more real society. But in the end, was the society we lived in human and real? It was a beautiful political and economic fairy tale, with cunning, deliberate and excessive borrowing that put our country and its citizens in an incredibly well-meaning trap. Instead of the country being governed with vision, seriousness and perspective, it was governed for a number of years with loans, satisfaction of the electoral party clientele and opportunistic, opportunistic irresponsibility. Instead of saving the precious and scarce resources of this place, we squandered time and money. We are now experiencing daily the unprecedented and substantial impoverishment of an entire nation.
[3:28]Greece, when Greece had the Drachma, they borrowed lots of money in foreign currencies then. So they borrowed money in Yen, in dollars, Swiss francs. Trying to basically find countries where they could borrow money. And the problem was is that when you borrow in a foreign currency, and your exchange rate goes down, the debt goes up. And they had this problem where they were underwater on these foreign currency bonds they had issued, foreign currency loans, and they didn't really want to to that to go into their numbers because they were now in coming in the Euro, and they had to stick to the Maastricht Treaty.
[4:06]And they're already they're already well in excess of the limit. So they were under pressure, the Finance Ministry is putting them under pressure, the people in the debt management office. So they were looking around for some ideas, and Goldman's kind of bright idea was let's do a swap where we change these foreign currency bonds into euros, but to we do it at a fake exchange rate. And we go into into a different exchange rate to the to the current one, and that means you shrink these bonds by 2.8 billion euros. Griekenland schakelde de Amerikaanse bank Goldman Sachs in om de afspraken met de Europese Unie na te kunnen komen.
[4:56]Als geen ander kende de bank de financiële technieken om de schuldenlast 2.8 miljard euro lager te laten lijken.
[5:07]Daarvan ging vervolgens naar verluid 300 miljoen euro als commissie naar Goldman Sachs. It's a bit like going to a Bureau de Change, and the guy has his sign up with all the numbers, like the different currencies, and and you say, so let's say, so it's like one dollar per euro, and they amount to you are a special rate for you, um, two dollars per euro. Um, and he say, and you say, well, how come? Because I mean, I owe you money. And he says, yes, I you do owe me money. You will have a special agreement under the table and um, you agree to pay me back. And that's kind of like what Goldman did. So the cross currency swap was a a transaction at this fake exchange rate that shrank Greece's debt by 2.8 billion euros, and then Goldman and Greece agreed to do this special kind of a different kind of swap to repay the money. And so the two deals came together, and Greece then was locked into this transaction with Goldman that had to repay the 2.8 billion that had disappeared.
[6:24]You'd describe it a bit like a subprime mortgage. You know, you start out if you remember, you have these people in the United States who didn't have a credit rating, they were poor people. Um, they couldn't get loans, they were encouraged to lie or to to to make um, false statements on the applications, and they could get these loans. But they couldn't afford to buy these houses, so the banks come up these special mortgages where they had these very cheap introductory rates. And then the rate goes up, and it's a bit like what um this this Goldman deal with Greece was like. So it's they had this grace period for a couple of years, and Greece didn't have to pay anything. And then suddenly the rate goes up, and Greece then having to pay like 400 million euros a year, or 500 million euros a year, like a huge amount of money. So that means, and this is what happens in the subprime as well, is that you have to go back to the bank and you have to refinance, and you have to start get kind of get out of your previous deal and get into a new one. And what happens is that because you've been accumulating debt repayments, it's all added into the loan. It's called they call it negative amortization. So because Greece wasn't paying the money back and during its grace period, the missing money would be added to the loan and the loan got bigger and bigger. And um there were kind of trapped really, because you've got a very big derivative contract, and you once your once you're stuck in that contract to get out of it is very expensive. So even the a day after um the the deal was signed, it would have already cost Greece an extra, I think, 600 million euros to escape. Just because of uh the way Goldman has has structured this over the counter deal. So you're kind of like trapped. All you can do is just renegotiate, and the thing goes up.
[8:20]Greece's problems critics argue have only partially to do with speculators, more to do with false economic data, broken tax system, and runaway spending. I'm particularly concerned about the role of US financial institutions, particularly Goldman Sachs, that um as Greece got on the heroin of borrowed money, uh Goldman was the crack dealer.
[8:52]Greece wanted to solve a problem. It wanted to be able to move debt off its balance sheet and show that it was less leveraged than in fact it was as a country. So, guess what? There are people you can turn to for help like that. If you want that kind of help.
[9:22]Goldman Sachs is the you know, perfect machine ever created in the history of the world to make money. It has historically been able to get and attract the best and the brightest people there. Interestingly, when Bill Gates was the CEO of Microsoft, uh he did say at one point that he thought his biggest competitor uh was not another software company, but was Goldman Sachs because it was a war on talent. And Goldman Sachs had a way of attracting the best and the brightest people to work there. And, of course, it's not a secret why, it's because Goldman was able to pay people the most.
[10:09]More important is this this culture of communication and sharing information. Most firms where I worked, they're organized around that if you, you know, are aware that your client is involved in doing something, uh, you know, you keep that information to yourself because information is power.
[10:31]Information uh can result in a fee and that can result in a bigger bonus for you. If you start sharing that information among your colleagues, then your role in bringing in a piece of business or bringing in a fee uh can get diluted and you won't get as much quote credit for it. But at Goldman, they encourage you to share that information. Why? Number one, because that's, you know, keeping your partners informed is is good partnership and good business, but it allows people at the firm to figure out how to make money from your clients in many, many different ways. Goldman Sachs speelde een belangrijke rol in de huizencrisis van 2008. De bank verkocht massaal zelfontworpen producten, waarbij ze hypotheekschulden verpakte in zogeheten CDO's, Collateral Debt Obligations. A CDO is like a package of financial instruments. But if you take finance out of it, it's sort of like if you think of of a pie, and you think of the crust of the pie and then the top crust also made up of the same kind of dough. And inside the pie, you could have cherries, you could have blueberries, you could have apples, you could have sugar, or you could just have sort of blueberry juice with a few blueberries stuffed in. So if you think of a CDO as a pie, inside there's there's some elements that have sort of a true nature to them, like real blueberries, but you might only have a few and everything else is just watered down and juice. Because Goldman is so damn clever, so darn smart. They saw a crisis in the mortgage market coming. And made a huge bet against the mortgage market. They they bet that there would be a crisis. They bet that the mortgage market would collapse. So, at the same time that they continued to package up these mortgages and sell them as mortgage-backed securities at 100 cents on the dollar to investors all around the world, Goldman had had made this huge proprietary bet using its own money to bet against the mortgage market, and what better way to do it than to buy credit default swaps, buy insurance against these mortgage products. Als een van de weinige die de crisis in de huizenmarkt aan zagen komen, kocht Goldman Sachs op grote schaal verzekeringen op hun eigen CDO's bij verzekeraar AIG. Maar omdat ze wisten dat de kwaliteit van die CDO's hoogst twijfelachtig was, kwam dat in feite neer op het verzekeren van een huis waarvan je zeker weet dat het in brand zal vliegen. What unfortunately happened to AIG is they decided to ensure all the risk in the mortgage market, all those mortgage-backed securities, they had agreed to ensure. And as the value of these securities fell in 2007 and 2008, Goldman demanded more and more collateral from AIG. But as this got out into the market, other firms tried to make these collateral calls on AIG as well and AIG just sort of ran out of cash, and that's why in September of 2008, they had to be bailed out. And Goldman was the only one who knew that they would benefit from this. They knew John Paulson would benefit, but on Wall Street, they knew they were the only ones that would benefit on it and it would really, really hurt their competitors as well as AIG. And that's exactly what happened. So, did Goldman cause the crisis? No, but they exacerbated the crisis, and they were the only one to benefit from the crisis. Inside Goldman, certainly when I was there, there is no discussion about whether you're cheating people because that requires a level of sort of human connection that really doesn't occur day-to-day in banking. It doesn't it doesn't even come into play. It's not even part of a conversation. The conversation goes something like, hey, there's a bunch of assets on your books, we need to move them. Okay, well, we're creating this CDO, we can stuff these assets into the CDO. Great. Who's going to buy the CDO? Well, I have these 10 customers who are lined up. Great. Can we get five more? Great. And it's it's all about moving whatever it is along the line and making as much money as possible along the line. It's not, well, you know, if we sell part of the CDO to some pension fund in the middle of Europe, they might not understand it, and if it goes bad, they might that that conversation never happens. If we sell something to a client, a customer, let's just say we've owned it and we sell it to them at 20 cents on the dollar, they buy it at 20 cents. It doesn't mean we think it's a terrific piece of paper. But they think it's worth more than 20 cents. Um, clearly, we think it. If your employees it thinks that it's crap, that it's a shitty deal. Do you think that Goldman Sachs ought to be selling that to customers, and when you are on the short side betting against it, I think it's a very clear conflict of interest. I do not I do not necessarily think that's the case. An email, so please don't take that out. How about feeling that way? I think it's very unfortunate for anyone to have said that in any form.
[15:52]How about to believe that, and sell it. I think that's unfortunate as well. Now, that's what you should have started with. I you're correct. It is. I personally think it's insider trading and it's fraud. Um the investigations that came out of looking into those deals and the timing with which Goldman shorted securities, the specifics of them discussing securities that they knew were bad, possibly that influencing the price of the CDO. So they would pretend they were better than they were, and that would influence the price of the CDO. All of that when you start to add it up, is fraudulent. The Department of Justice and the Securities Exchange Commission here have not determined that to be the case. There was a settlement with Goldman regarding that Abacus deal, one of their worst performing CDOs, for which Goldman paid 550 million dollars to the SEC and did not say they did anything wrong. The the part of the settlement was we say nothing. Unfortunately, it is legal. It was legal. It remains legal. And it and it's legal because Goldman and other Wall Street firms have a big hand in writing the securities laws by which they live. While while we're sitting here today, Goldman and other Wall Street lobbyists are down in Washington helping to write the new regulations that are required by the Dodd-Frank law, that the SEC and the Commodities Futures Trading Commission and the Fed and other people are writing the new regulations for. Goldman is sitting there lobbying away and helping them write these regulations. This has been going on for generations. This is nothing new. I mean, Henry Goldman, one of the founding partners of Goldman Sachs helped create the Federal Reserve system. But unfortunately, we saw the consequences were extraordinary and on a worldwide basis this time.
[17:57]So let's come inside to see. Here is the space that could host the whole company. Here is the heart of the systems. This is our IT room. This, you can see here, we are also with a contribution of European Union.
[18:22]And we were very proud to be, uh, inside the European Union because we were a part of a of the family. Here, uh, was supposed to be my secretary, there's nobody anymore. We are supporting the heart of our finances is still operational because the account department must be must survive. Yes, it's here. These two ladies to keep on the taxes. Here we have it was the area manager, the orders department. Now it's just a small warehouse.
[19:15]So here you can see three stores, more than a year closed. Nobody comes to rent. You see. And now we have these signs that say rent for sale. Now, they're selling also the property. I have counted in Piraeus 450 shops closed. This happened in October. If I count today, I'm sure it will be over 500, 500 stores, over 500 stores closed.
[19:55]This shop it's was really one of the most competitive shops we have in the center of the city, 18 meters facade and uh three levels. And uh it was really, really a very, very profitable store. But now we have to see what to do. You know, maybe I'm thinking if if if this store cannot do it or cannot find a solution with the suppliers, maybe I should think to make something different. Like totally different, maybe to, we are thinking about some kind of food store or some kind of, uh, how can I say, sweet or catering stores, you know, it's it's more profitable every day, turning around the, the, the capital. Of course, with cooperation with some other brand here locally, more local products. Like, you know, Greece was a poor country. But although with the Drachma, it was evolution every year. We have every year something better going and growing a little bit. Now we have to go from the top to bottom. They told us we are together, one market. But suddenly we are different economies now and not one market. The Germans, I think that for for the German companies, especially, we were extremely, extremely good customers, not only in fashion business, but in cars, in, uh, technology products.
[21:42]We had several FX losses, and the year 2001, it was three years before the Olympics. We had a fiscal strain ahead of us, and we thought it would be better to absorb and spread out, smoothing out the the total liabilities of the Greek debt over a longer period. This is not unusual. Many countries, I mean, if you want to have a prudent debt liability management or debt management, then you have to smooth it out. If you are allowed to to use derivatives, the problem is not the instrument as such. It's how to you record it in in in in your accounting books, and uh how you report it. Well, if you ask them at the time, they would simply give you the official story, which is we're minimizing uh risks, and we are managing the portfolio of Greek uh the Greek holdings of foreign currencies, as well as the the Greek state's future income stream. In reality, what you need to do here is to apply the method of a sociologist or an anthropologist. These were people that had worked abroad, outside of Greece, in those investment banks. This is what they knew how to do. This is what they had grown up to do. It was what they were educated to do. So, um, uh, when they came here, they had some bright ideas that they would present to the Minister of Finance saying, uh, well, look, Minister, if we utilize these swaps here, there and everywhere, then I know that your great problem is how to make the budget look better when you present it in Parliament this month. I can help you do that. The minister usually didn't wouldn't understand precisely what was going on, because there were very complex instruments that these golden boys and girls had trained to understand and to utilize in a way that maximize their monopoly of power through ensuring that others wouldn't understand what was in them. And and the ministers were very easy to convince. Simply because the arguments seemed quite uh powerful. The argument was, you are reducing your risk. Secondly, use that doesn't mind because it's legal. Thirdly, everybody else is doing it. It would take a very superior intellect on the part of the minister, or somebody with a very strong ethical objection to what was going on, combined with knowledge. To say, no, I'm not doing it. What Goldman was doing was making a loan to Greece. Goldman didn't want to make the loan, so it hedged itself. So it went out and on the other side and it bought a CDS, current default swap to hedge Greece. So it then it charged the money to Greece. To basically, uh, so it Greece had to pay to protect Goldman from its own default, and that was charged to Greece. And then there was all this interest rate and currency hedging, that was also charged to Greece, too. And then there were these bets that um Greece was making, and if they went wrong, Greece had to pay Goldman um the market market change of those. So all of those things together, it it's very hard to say how much Goldman actually made, and they and they're not probably don't want to tell us either. With the hand the benefit of hindsight, they will say that uh, you don't do swaps for such long periods because you have, you put a lot of risk in your book. But back in 2001, this looked very, uh, a good way to uh, help Greece to absorb certain problems they had accumulated over the past.
[25:45]At the time the swaps were done, they beautified in a way the fiscal picture of Greece, but they're not the real cause for the problem we're facing now. The issue, the problem with the swaps of the the much publicized swap of Goldman Sachs, etcetera, was a five billion euro issue. The problem of Greece is that we have debt of 360 billion and a GDP of about 200, 210. So it's not the five billion that's actually is the straw that breaks the camel's back. It's that they just that's why it's important to put it into perspective. Otherwise, people think that the the beginning and the end of the problem is the swaps, which is far from it. We're talking about relatively a relatively small amount, uh, which in the greater scheme of things is not significant. What is significant, as far as I'm concerned, is the way that uh, these transactions, tell a story about the ethos of that period, not just in Greece, but throughout.
