Does it really surprise anyone that Greece was "assisted" by investment banks to help present finances acceptable to the Maastrict requirements? Even France and Germany had to do some fancy footwork to meet the strictures of the Euro and it took some time for Greece to do so. If you really want to dig I am sure that you will find that Goldman's Swap structure was mirroring the movement of liabilities onto Off-Balance Sheet facilities by just about everyone so why shouldn't a sovereign get in on the scam.
Put something Off-Balance Sheet and the contingent liability doesn't have to be reported- but it's okay because it's just a deferral! And yes it's legal. The question shouldn't be if it's legal or not. The question should be why would you look for a way to hide things in the first place. Making it legal doesn't make it right.
But let's not yell just at Greece and Goldman. What about the State owned entities which were owned but not guaranteed by their owners like Fannie and Freddie, or any number of European State owned entities.
But, just in case anyone thinks I might be going soft, check out the issuance of the Greek Ministry of Defense and see where those debts show up on Greece's Balance Sheet.
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