The blame for the Greek financial crisis cannot be assigned to the mismanagement of the country's economy alone; rather, this crisis, given the accumulation of financial deficits, is to a large extent similar to the crises that beleaguered the major financial and insurance groups. These had financial deficits that exceeded those of the Hellenic nation, prior to their collapse. Moreover, the course that the accumulation of deficit took in Athens is the same as that witnessed by the major financial institutions, which then lost its financial balance and buckled. Financial and economic experts are converging on the opinion that Athens was the victim of its financial advisers, not in terms of the expertise they had to offer or its lack thereof, but rather in terms of their involvement in the ‘open game of competition' with other speculators. What happened is that they exploited their thorough knowledge of the financial situation in Greece to incur lucrative profits, causing the collapse of the financial value of governmental bonds, and leading to a hike in the interest rates on these bonds which exceeded many times over the value of their counterparts in the Euro zone. The primary consultancy was the U.S investment bank Goldman Sachs, which not only advised Greece, disguised its budget deficit and marketed its bonds, but also became a speculator on the Greek bonds themselves, ‘nakedly' selling bonds that it does not own, and collecting dividends ensuing from the price difference between the illusory sales and the actual revenues. It was thus that the bank that succeeded in deceiving the entire euro area and paved the way for Greece to accede to the euro zone, turned against Greece and caused it great losses. According to the data available to the European financial and economic experts, Goldman Sachs has been the biggest player in this crisis. They unanimously agreed that it is ‘involved in all areas'. For instance, Goldman Sachs is assisting the Greek Ministry of Finance to make its treasury bonds available to international investors including Deutsche Bank and Credit Suisse, in addition to Goldman Sachs itself of course, in return for high financial bonuses. In return for these bonuses, Greece managed to issue 12 billion euro bonds in mid February, or the equivalent of a little less than 20 percent of the 55 billion dollars Greece needs this year. These bonds were viewed as a success, as other European governments could not secure more than 15 percent of their financial needs for the present year, according to the statistics of the French Bank Natixis. The German magazine Der Spiegel confirmed that Goldman Sachs received good earnings in 2000 by offering complex financial instruments that helped Greece accede to the euro zone, but also by deceiving the European Commission regarding the true fiscal position of the new member. Meanwhile, the French periodical ‘Alternatives [Economiques]' mentions that the situation became tense when Greece learned that the U.S Investment bank is also contributing to the fierce competitive demand for its treasury bonds, a reality that Greece soon became a victim of. The scenario of the fierce demand for the Greek bonds went through three stages. Since 2009, many bond traders including Goldman Sachs have been intensively and ‘nakedly' selling Greek bonds - in other words, they do not have a hold on those bonds- mostly for a fixed term (weeks, months). They were betting on a decline in their value when their term matures, at which moment they would buy them back at lower values and earn the difference in their prices as profit. However, the decline in the value of those bonds as a result of speculation forced the Greek government to increase interest rates on its bonds, in order to attract investors when the need arises to issue new bonds. This would result in all the profits going off to the investors, after Athens was compelled to increase interest on its treasury bonds to six percent, compared to two percent in France. Dealing in Greek bonds with such risks prompted the investors to become vigilant, as it was possible for the state to default on its bonds. As such, investors deal with insurance companies that issue derivatives on loans, most importantly ‘financial protection contracts' between the seller and the buyer. Investors thus insure against the issuer of the bonds, and buy insurance ‘premiums', in a process akin to credit default swap (CDS). It seems that the parties most concerned about sovereign debts are insurance companies and social welfare funds, given the fact that states cannot go bankrupt. As for which side buys the bonds, it is usually the hedge funds. The latter are ever seeking short-term returns. While they do not have a direct interest in the Greek treasury bonds, they can benefit from them when insured by specialized companies, to guarantee the conservation of their value. As doubt about Greece's ability to pay back its debt increases, so does the price of insurance premiums against default. By buying CDS contracts, it is hoped that the bonds will incur profits in tandem with increasing insurance premiums. Therefore, credit default swap levels that were at one hundred points (equivalent to one percent added to the interest rate) on the Greek debt in the end of the summer of 2009, peaked to 420 points last February, forcing Greece to pay 420,000 Euros per year to insure against each 10 million Euros of debt, compared to 100,000 Euros six months ago. It should be mentioned here that Goldman Sachs is one of the major investment banks that work as an intermediary between bond sellers and buyers in the financial markets. In the last stage, speculative funds benefit from the increase in the value of the CDS to achieve dividends equivalent to 20 percent. Thus, sovereign states fall between the claws of the financial advisors who are ultimately the most capable key players in the global financial markets, and are the parties that effectively control states and governments.
