Running for cover

Trouble looming, potentially, with Greece’s use of currency swaps to cover up its debt:

European Union leaders last week ordered Greece to get its deficit under control and vowed “determined” action to staunch the worst crisis in the euro’s 11-year history. Standard & Poor’s and Fitch Ratings are questioning Greece over its use of the swap agreements, said two people with direct knowledge of the situation, who declined to be identified because the talks are private.

“Greece used accounting tricks to hide its deficit and this is a huge problem,” Wolfgang Gerke, president of the Bavarian Center of Finance in Munich and Honorary Professor at the European Business School, said in an interview. “The rating agencies are doing the right thing, but it may be too little too late. The EU slept through this.”

And its not just Goldman Sachs, currently close advisors to the Greek government, that are now under scrutiny for arranging the swaps. Like kicking over a log, the Greek crisis has brought all sorts of wriggling creatures into the light of day.