>> Greeks, Bonds & $1.2 Trillion Debt

An excellent article by Michael Lewis at Vanity Fair about the Greek debt & how it threatens the rest of Europe, highly recommended that you read the entire article.

Here are some excerpts:

But beyond a $1.2 trillion debt (roughly a quarter-million dollars for each working adult), there is a more frightening deficit.

AND

As he finishes his story the finance minister stresses that this isn’t a simple matter of the government lying about its expenditures. “This wasn’t all due to misreporting,” he says. “In 2009, tax collection disintegrated, because it was an election year.”

“What?”

He smiles.

“The first thing a government does in an election year is to pull the tax collectors off the streets.”

“You’re kidding.”

Now he’s laughing at me. I’m clearly naïve.

AND

Tax Collector No. 2—casual in manner and dress, beer-drinking, but terrified that others might discover he had spoken to me—also arrived with a binder full of papers, only his was stuffed with real-world examples not of Greek people but Greek companies that had cheated on their taxes. He then started to rattle off examples (“only the ones I personally witnessed”). The first was an Athenian construction company that had built seven giant apartment buildings and sold off nearly 1,000 condominiums in the heart of the city. Its corporate tax bill honestly computed came to 15 million euros, but the company had paid nothing at all. Zero.

AND

In came the I.M.F. to examine the Greek books more closely; out went whatever tiny shred of credibility the Greeks had left. “How in the hell is it possible for a member of the euro area to say the deficit was 3 percent of G.D.P. when it was really 15 percent?” a senior I.M.F. official asks. “How could you possibly do something like that?”

“At Salomon we used to call [the head of the Greek National Statistical Service] ‘the Magician,’ ” says Xafa, “because of his ability to magically make inflation, the deficit, and the debt disappear.”

AND

From an ancient deed to a worthless lake the two monks had spun what the Greek newspapers were claiming, depending on the newspaper, to be a fortune of anywhere from tens of millions to many billions of dollars.

Read the article here.

>> SEC Unleashes the "Pit Bull" on Goldman

SEC's Lawsuit against Goldman
From Friday's SEC Complaint: SEC Charges Goldman Sachs With Fraud in Structuring and Marketing of CDO Tied to Subprime Mortgages -

The Securities and Exchange Commission today charged Goldman, Sachs & Co. and one of its vice presidents for defrauding investors by misstating and omitting key facts about a financial product tied to subprime mortgages as the U.S. housing market was beginning to falter.

Goldman Sachs: Disappointed with SEC
Goldman says it lost more than $90 million on this transaction, from Goldman's press release:

New York, April 16, 2010 - The Goldman Sachs Group, Inc. (NYSE: GS) said today:We are disappointed that the SEC would bring this action related to a single transaction in the face of an extensive record which establishes that the accusations are unfounded in law and fact.

We want to emphasize the following four critical points which were missing from the SEC’s complaint:

1. Goldman Sachs Lost Money On The Transaction.
2. Extensive Disclosure Was Provided
3. ACA, the Largest Investor, Selected The Portfolio
4. Goldman Sachs Never Represented to ACA That Paulson Was Going To Be A Long Investor

Sam Antar Speaks
Sam Antar is the former CFO of Crazy Eddie and convicted felon who in his own words describes himself as:

I teach law enforcement, government entities, professionals, businesses, and students about white collar crime and train them to catch corporate miscreants. I do not teach ethics. Rather, I teach about the immorality and unethical behavior of white collar criminals from my own cold-blooded experience and how to deal with such menaces to society.

Sam wrote a fascinating article on his opinion on the SEC getting after Goldman. Quoting from his article:

The SEC chose top gun Richard E. Simpson as its lead counsel in its lawsuit against Goldman Sachs and Fabrice Tourre. Coincidently, Richard E. Simpson was the same lead counsel for the SEC in its successful case against Crazy Eddie and the Antar family.
...
Simpson's relentless pursuit of the Antars earned him the nickname "Pit bull" from US Attorney Michael Chertoff's office, which prosecuted the Crazy criminal case.
...
Rick is a tough adversary. I swear he works over 90 hours a week. He's focused, aggressive, and understands the way criminals operate. He knows accounting backward and forward, which is rare for an attorney. Richard Simpson is what the SEC should be today, but unfortunately is not.

Sam knows a thing or two about securities fraud, having passed the CPA examination in 1980 with a 90% and scored in the top 1% in the country; and then going on to help mastermind one of the largest securities fraud of its time.

Read Sam's opinion on the nature and timing of the complaint here.

Related reading:

• New York Times article detailing how Banks Bundled Bad Debt, Bet against It and Won
  
• The flipbook which is part of the SEC's Goldman fraud charge: here