Goldman Sachs had a bright idea for its clients: buy credit-default swaps — those controversial instruments that helped trip up the American International Group — in case certain nations ran into financial trouble.
That advice, contained in a confidential report prepared by the bank last August, turned out to be prescient. It arrived months before Greece and its staggering debts became the big story in the financial markets. The report, a copy of which was obtained by The New York Times, warned that the risks posed by spiraling government debts might be graver than people realized.
Now, some European leaders are pointing fingers at the very financial instruments that Goldman was recommending. They insist that credit-default swaps — and the traders who wield them — have worsened the problems in Greece and elsewhere. Calls are growing for the United States and Europe to crack down on speculative trading in general and on such swaps in particular.
On Tuesday, as the Greek prime minister, George A. Papandreou, met with President Obama in Washington, the German chancellor, Angela Merkel, added her voice to the chorus calling for closer scrutiny of derivatives. The president of the European Commission, José Manuel Barroso, also weighed in, saying his office would closely examine certain types of swaps trades that he called “purely speculative.”
http://www.nytimes.com/2010/03/10/business/global/10swaps.html?th&emc=th
Printer-friendly format
Email this thread to a friend
Bookmark this thread
(1000+ posts)
Send PM |
Profile |
Ignore
