Goldman belittles Greece’s billions

By Felix Salmon
February 22, 2010
€2.367 billion as being "a rather small" amount of money is not going to help.


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Memo to Lucas van Praag and the rest of the Goldman Sachs communications machine: you are broadly considered to be out of touch, living large on Planet Billions while the rest of us struggle in one of the harshest economic environments of the post-war era. You might want do something about that. Characterizing €2.367 billion as being “a rather small” amount of money is not going to help.

The fact is that €2.367 billion is a rather large amount of money — both in absolute terms and in terms of a percentage of GDP. Your adjectives just make you look out-of-touch, both in your official press release, where you describe the sum as “just 1.6%” of Greece’s GDP, and in your statement to the UK parliament that it was “a rather small but nevertheless not insignificant reduction” in official debt figures.

Translating into American, remember, 1.6% of GDP is about $227 billion — more than the cost of bailing out AIG, Bear Stearns, GM, and Chrysler combined. And depending on how you account for them, you might even be able to throw Fannie and Freddie in there as well. There’s no such thing as “just” 1.6% of GDP — especially when you’re magically making those billions disappear through clever manipulation of currency swaps.

Speaking as someone who came to your defense in this case, today’s statements make me feel much less inclined to push that case any further: they look as though you’re trying, unsubtly, to downplay the severity of what Greece did here. That’s not a good idea, not in an era when full transparency is the greatest possible good. If this is how you’re attempting to “re-burnish the image of Goldman“, you might want to start questioning the advice you’re getting.

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