Goldman and Greece

… and I ain’t talkin’ about the musical.

There was an interesting article by the BBC’s Robert Peston on what financial services Goldman offered the Greek government. The services themselves are pretty dubious, giving the Greek government little real benefit aside from reducing its on-book debt. Even Goldman do not seem to pretend that it was anything other than, ahem, financial engineering.

Peston’s question was: is it ethical.

The answer is: probably not. But ethics are troublesome, and I don’t mean troublesome in that “oh dear that stops us making lots of money” way, but in that “oh dear ethics is inherently based upon a point of view and therefore is difficult to capture in an abstract sense which can be applied equally to all parties and all cases” way. Typically, clients’ transactions are judged in terms of “but would their or our government think this a bit dodgy” kind of way (a test the Greek trades would have failed). But when there is no government it becomes a bit of a tougher test to apply.

“Efficiency” is a key selling point of any financial product; typically that means the product is easier to manage, has lower risk, has lower transaction costs and, sometimes, less tax. In a Daily Mail sort of way this must  seem unethical – but this is no different to a retail bank saying “you can have an ISA (which is tax free) or a savings account (which isn’t)”. Is it wrong for that bank to help its customers minimise their tax bill?

Goldman, presumably, felt the emphasis was on the Greek government. Interestingly, their ethics don’t seem to be under debate.

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