💶 How Goldman Sachs Helped Greece Join the Eurozone
🇬🇷 Step 1: The Problem
In the early 2000s, Greece wanted to join the Eurozone. But the rules required:
- Budget deficit below 3% of GDP
- Government debt under 60% of GDP
Greece's debt and deficit were too high. The government needed a creative way to make the numbers look better — without actually reducing debt.
💼 Step 2: Goldman Sachs Arrives
Goldman Sachs offered Greece a package of currency and interest rate swaps:
📉 These swaps helped Greece make its debt appear smaller — on paper.
🔄 Step 3: Currency Swap Details
Greece had debt in USD and JPY. Goldman Sachs helped them swap that into euros — but at a non-market exchange rate that:
- Made Greece get more euros up front
- Delayed the cost of repayment into the future
✅ Result: Greece's reported euro debt looked lower in the short term.
📉 Step 4: Interest Rate Swap
Goldman also structured interest rate swaps that let Greece:
- Swap high-interest fixed payments for low-interest floating ones
- Push repayment obligations after 2004 — outside the EU reporting window
🕐 This delayed the pain and made Greece look compliant... temporarily.
💥 Step 5: What Went Wrong?
By 2009, the true debt came to light. Greece's actual obligations were far higher. The result?
- A full-blown debt crisis
- Years of austerity and recession
- Public outrage at both Greek officials and Goldman Sachs
⚠️ Using swaps to hide debt can have severe long-term consequences, even if legal at the time.
🧠 Quick Quiz: True or False