The Number One Sign That Banks Might Be Too Powerful
As if you needed another reason to worry about the banks’ power.
Jul 31, 202022.5K Shares3.2M Views
In a long story in Der Spiegelabout how currency swaps were used by the governments of the Eurozone to balance their books rather than hedge their bets and how credit default swaps are being used to undermine governments and the euro, the authors note that even as Goldman Sachs and other banks were advising Greece and other governments, they were also making money betting on their failures. Despite this conflict of interest, the authors note the following:
“„Nevertheless, even the new Greek government, which is breaking with many of the traditions of its predecessors, cannot manage without the US investment bank. Goldman Sachs and Deutsche Bank were among the six banks that placed Greek government bonds worth €8 billion in early February. Perhaps the Greeks were trying to remain on good terms with the two powerful banks. Both were among the most active traders in CDSs, which are often traded on behalf of hedge funds.
Speculation or not, it brings up an interesting point: When the banks interested in making money off of government contracts could benefit equally by betting against a government’s solvency — especially if they don’t get those contracts — their potential influence over governments can only get out of control.
Camilo Wood
Reviewer
Camilo Wood has over two decades of experience as a writer and journalist, specializing in finance and economics. With a degree in Economics and a background in financial research and analysis, Camilo brings a wealth of knowledge and expertise to his writing.
Throughout his career, Camilo has contributed to numerous publications, covering a wide range of topics such as global economic trends, investment strategies, and market analysis. His articles are recognized for their insightful analysis and clear explanations, making complex financial concepts accessible to readers.
Camilo's experience includes working in roles related to financial reporting, analysis, and commentary, allowing him to provide readers with accurate and trustworthy information. His dedication to journalistic integrity and commitment to delivering high-quality content make him a trusted voice in the fields of finance and journalism.
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