The ancient Greeks believed that tragic drama was good for the soul. The financial markets went through a Greek tragedy in the second quarter of 2010 but it was not cathartic for investors. Hidden Greek deficits and debts were taken in stride by the markets until February when it was disclosed that Goldman Sachs had structured derivative transactions to obfuscate their size. Regulators which had previously turned a blind eye to these machinations were of course outraged. The financial sector then came under pressure and regulatory pressure was stepped up on the evil doing investment banks. Financial stocks were hit again in April when it was announced that the SEC was charging Goldman with fraud over some CDO deals. This knocked the markets off their rallying trend and started a downwards move.
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Canso June 2010 Corporate Bond Newsletter
