GOLDMAN DOES GREECE

BANZAI7 NEWS--National Bank of Greece SA and Hellenic Postbank SA were cut to “sell” from “neutral” at Goldman Sachs Group Inc., saying profitability won’t return to levels before the country’s budget woes in the “medium-term.”

Goldman Sachs also reduced share-price estimates for eight Greek banks, including EFG Eurobank Ergasias SA and Alpha Bank SA, by an average of 30 percent, according to a report to clients dated yesterday.

WB7--Guess which bank is advising Greece on its debt crisis. The same bank that is getting ready to AIG the Greeks...

Zero Hedge: "Yet as we look forward, we ask, who now determines the variation margin on Greek CDS (and Portugal, and Dubai, and Spain, and, pretty soon, Japan and the US), the associated recovery rate, and how much collateral should be posted by sellers of Greek protection? If Greek banks, as the rumors goes, indeed sold Greek protection, and, as the rumor also goes, Goldman was the bulk buyer, either in prop or flow capacity, it is precisely Goldman, just like in the AIG case, that can now dictate what the collateral margin that Greek counterparties, and by extension the very nation of Greece, have to post on billions of dollars of Greek insurance. Let's say Goldman thinks Greece's debt recovery is 75 cents and the CDS should be trading at 700 bps, instead of the "prevailing" consensus of a 90 recovery and 450 spread, then it will very likely get its way when demanding extra capital to cover potential shortfalls, since Goldman itself has been instrumental in covering up Greece's catastrophic financial state and continues to be a critical factor in any future refinancing efforts on behalf of Greece."