The huge currency swap deals that Goldman Sachs arranged with the Greek government were at once completely legal and completely scandalous, says Martin Wolf, the chief economics commentator at the Financial Times.
Though Goldman Sachs has been widely criticized of late for a 2002 deal that helped Greece mask its debt, blaming the bank is something of a "red-ish herring," Wolf said. "Goldman didn't break the law. People knew what they were doing and it wasn't a big deal...it was allowed," Wolf said. "It's another indication of ways in which governments connived with the financial sector all over the world to do things they really shouldn't have allowed to happen."
Part of the problem, Wolf argued is that world governments have been allowed to move liabilities off of their balance sheets. In short, they've adopted the Enron playbook. "Enron accounting has unfortunately become a salient characteristic of sovereign balance sheets long before Enron started."
"The accounts of our governments are a scandal. They're complete scandalous and the U.S. is not an exception. It's just one of many governments whose accounts that tell us nothing about the true state of its finances and the long-term obligations association with that. We would never allow that with any private business."