From the New York Times:
Wall Street tactics akin to the ones that fostered subprime mortgages in America have worsened the financial crisis shaking Greece and undermining the euro by enabling European governments to hide their mounting debts...
"As in the American subprime crisis and the implosion of theAmerican 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....
"For all the benefits of uniting Europe with one currency, the birth of the euro came with an original sin: countries like Italy and Greece entered the monetary union with bigger deficits than the ones permitted under the treaty that created the currency. Rather than raise taxes or reduce spending, however, these governments artificially reduced their deficits with derivatives."
via www.nytimes.com
According the The Guardian:
" France and Switzerland have more exposure to Greek debt than any other countries in the world, and more than twice as much as Germany – perhaps adding fuel to the hesitance of the Germans to help bail out the troubled country.
"France and Switzerland have $79bn (£50bn) each of exposure toGreece, according to American-sourced data from the Bank for International Settlements analysed by the Swiss bank UBS. Germany's exposure is $43bn...
"French bankers were trying to allay fears of the impact of a default by Greece on the French banking system earlier today. "It's not a particular issue at all for the French banks," Baudouin Prot, chief executive of BNP Paribas, said."
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