Greece’s overwhelming national debt has set off yet another global economic crisis—and just like the last one, American banks are at the center of the story. According to the New York Times, Goldman Sachs and other U.S. banks played a key role in postponing Greece’s day of reckoning while it racked up more debt by using a variety of complicated financial tactics reminiscent of the mad science that sparked the subprime mortgage crisis. Just months before the current crisis, in November 2009, Goldman president Gary Cohn led a group of banks in offering Greece a way to refinance their health-care debt, but it was hardly the first of such efforts. In 2001, Goldman Sachs engineered multi-billion dollar loans for the government hidden behind currency trades to help it skirt the EU’s deficit rules. “Politicians want to pass the ball forward, and if a banker can show them a way to pass a problem to the future, they will fall for it,” Gikas A. Hardouvelis, an economist who’s studied Greece’s accounting, told The New York Times.
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It’s hard to find a less popular foil for the White House than bailed-out banks, and the administration is doing its best to show off its new plan to make financial firms pay for the unpopular bailout. President Obama talked up the proposal in his radio address Saturday, but also defended the initial bailout. He said that banks faced a “crisis of their own creation,” but that the “distasteful but necessary” bailout prevented an “even greater calamity for the country.” Nonetheless, he said recent news that some banks, such as Goldman Sachs, had paid back their funds was “good news” but still not enough. “We want the taxpayers’ money back, and we’re going to collect every dime,” he said. The proposed 0.15% tax on banks would collect about $90 billion over 10 years and apply to approximately 50 of the country’s largest banks.
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He takes on big hitters, and the most controversial of topics! Agree or disagree, you can’t call him a coward.