Baech (Switzerland)
According to the New York Times, Goldman Sachs supported the Greek government with a transaction that swapped national debts at unrealistic exchange rates into Euros already in 2001. Due to this virtual profit, Greece was able to reduce its debt position by some billions. Goldman Sachs, on the other hand, already sold these cross currency swaps in 2005 to a Greek bank. “It does not lack a certain humor that the risks of this deal, which happened way beyond real prices, have been downshifted to the source country,” comments Bernd M. Otto, CEO and founder of Investment24.
Meanwhile, the government in Athens confirmed the transaction on Tuesday but underscored the legality of the procedure and the already published national deficit problems. “The European Commission should have checked the action much earlier and more precise, these problems are known since summer 2009,” criticizes Bernd M. Otto. “The present discussion about additional help from the IMF is not really a signal of confidence to the stability of the euro zone.”
Market participants reacted to the escalation of the events and the inconsistent signs with a continued depreciation of the euro toward the dollar. “Since the beginning of December 2009, the euro lost almost ten percent compared to the dollar. This is a price drop in the foreign exchange market,” explains Bernd M. Otto from Investment24 Research. At least, this trend will play to European companies with a high export quota, especially for high-tech. European products get cheaper on the world market and, therefore, more competitive – mainly in comparison with U.S. companies.
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