WIFTY IS AS WIFTY DOES

There's an old saying that where one smells smoke there's something funny going on.

That brings us the the current EU situation in general and the Greek situation in particular. We've said before and it's a known fact that Greece lied to meet its requirements to get into the EU and that those Brussels' bureaucrats turned the other cheek.

And most likely in the investment world when you find something funny going on you'll find Goldman Sachs.

As a recent Barron's article noted "Using methods pioneered by its neighbors, Greece slipped into the euro zone in 2001. One of the ways it masked its true state of financial affairs was with a set of wifty currency swaps engineered by Goldman Sachs."

If you're not familiar with the term wifty, it means impractical, flighty or unfocused. 

There was a reason they didn't want to focus on Greece's true financial situation at the time, France and Germany. Both had some blemishes on their balance sheets. Both were spending beyond their means. It's one thing to be a spendthrift, another to be called out for hypocrisy.

Goldman Sachs has its tentacles everywhere. A good number of central bankers running centrals banks around the globe have Goldman ties.

"Registering short-term profits allowed Greece to pretend it had  a small deficit, although unwinding the swaps would produce large deficits. (Goldman laid off its bet on other suckers and eventually sold its position to a private bank....in Greece.)"

In 2009 the rooster came home to roost as Greece politicians paid a trip to the confessional and admitted "...to a national debt of more than 130% of GDP and spending that exceeded revenue by more than 12%."

Much of the hand wringing over the possibility of Greece leaving the EU is just that, hand wringing. The scaremongers will, as is their stock in trade, spread their fears about a possible domino effect. 

But the truth is the Greek economy is one great big nothing burger. It'll be an international yawn should they exit the euro.

The market's reaction to all this was to catch the fast train toward Exitville as the term contagion started rolling off investor lips and MSM lackeys spread the news.

The real take always in all this is that pipe dreams are not always the province of the Pied Piper. Bureaucrats and politicians often puff from the same pipe.

And whenever you smell something funny, look for the tracks of a big Wall Street investment banker. Chances will be better than good it'll be Goldman Sachs.