MercoPress. South Atlantic News Agency

Wall Street helped Greece to hide mounting debts, claims The New York Times

Gary Cohn from Goldman Sachs in named in the report

Wall Street tactics have worsened the financial crisis shaking Greece and undermining the Euro by enabling European governments to hide their mounting debts, The New York Times reported Sunday.

The news was disclosed on the eve of Monday’s meeting of Euro zone Finance ministers to address the Greek crisis. They will be joined the following day by the Finance ministers from the rest of Europe.

The newspaper said that records and interviews show that with Wall Street's help, Greece had engaged in a decade-long effort to skirt European debt limits. One deal created by Goldman Sachs helped obscure billions in debt from the budget overseers in Brussels, the report said.

Even as the crisis was nearing the flashpoint, banks were searching for ways to help Greece forestall the day of reckoning, the paper noted.

In early November — three months before Athens became the epicentre of global financial anxiety — a team from Goldman Sachs arrived in Athens with a very modern proposition for a government struggling to pay its bills, The Times said citing two unnamed people who were briefed on the meeting.

The bankers, led by Goldman's president, Gary Cohn, held out a financing instrument that would have pushed debt from Greece's health care system far into the future, much as when strapped homeowners take out second mortgages to pay off their credit cards, the report said.

Meanwhile, in 2001, just after Greece was admitted to Europe's monetary union, Goldman Sachs helped the government quietly borrow billions, the paper reported, citing people familiar with the transaction.

That deal, hidden from public view because it was treated as a currency trade rather than a loan, helped Athens to meet Europe’s deficit rules while continuing to spend beyond its means, The Times noted.

Greece's financing problems have focused investors' attention on the growing mountain of public debt as cash-strapped governments around the world spend their way out of recession. The fear is Greece's problems could spread, hurting financial markets.