World | Greece Goldman Helped Greece Hide Catastrophic Debt Bank concocted deal with phony exchange rate By Rob Quinn Posted Feb 10, 2010 3:50 AM CST Copied A man walks past a screen showing falling stocks at the Athens Stock Exchange, in red, in Greece. (AP Photo/Petros Giannakouris) Greece's budget problems were allowed to grow to their current monstrous size with the help of a Goldman Sachs deal worthy of an Oscar for creative accounting. Greek government officials—no strangers to number-juggling themselves—used the US bank to concoct a derivatives deal that allowed the country to circumvent EU rules requiring member nations not to run deficits exceeding 3% of GDP, Der Speigel reports. The deal, agreed in early 2002, circumvented EU rules with a credit swap in which government-issued bonds in dollars and yen were traded for debt in euros. Such transactions don't need to be reported to EU authorities. The Goldman-Greece deal exploited this loophole by inventing a fictional exchange rate, allowing Greece to borrow billions more and mask the true size of its debt. Greece's deficit problem will become even greater when the Goldman bonds mature over the next 10 to 15 years. Greece's exploding debt is now threatening to bring down the euro. Read These Next Her blood isn't compatible with anyone else's. Some of the most explosive Diddy allegations are dropped. Fan who taunted Ketel Marte's mom has been banned by MLB. NJ lifeguard survives after being impaled by an umbrella. Report an error