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According to the Collins English Dictionary 10th Edition fraud can be defined as: "deceit, trickery, sharp practice, or breach of confidence, perpetrated for profit or to gain some unfair or dishonest advantage".[1] In the broadest sense, a fraud is an intentional deception made for personal gain or to damage another individual; the related adjective is fraudulent. The specific legal definition varies by legal jurisdiction. Fraud is a crime, and also a civil law violation. Defrauding people or entities of money or valuables is a common purpose of fraud, but there have also been fraudulent "discoveries", e.g. in science, to gain prestige rather than immediate monetary gain
*As defined in Wikipedia

Sunday, January 16, 2011

When Goldman Sachs Continues to Make Huge Bonuses

When we see, yet again, Goldman Sachs ready to distribute mammoth bonuses and huge paychecks, it only affirms the belief that there is something intrinsically wrong with the banking and financial system. Those gigantic bonuses mean many things: they manifest the growing inequality of wealth in the US; they show that the primary sector of the economy that is booming is the financial one; they illustrate that the economic advisers to the government may have got it all wrong by bailing out the banks rather than winding them down; they reveal that Wall Street advisers focus on the banks to the detriment of the larger society; they display the way legality trumps ethics and morality because when one sector gains a large amount of wealth then another sector loses its wealth; they amplify the lack of progress in reducing unemployment (except, of course, in the financial sector where Goldman Sachs is hiring); they point out the stagnation of salary and wages in the middle class; they bestow reward through moral hazard and taking on excessive risk; they demonstrate that the rules for banks seem to change so that bankers need not answer to unethical trading through derivatives made of sub-prime mortgages; and finally those bonuses demonstrate how little self-regulation works in finance and, when things go wrong or when fraud occurs, a small fine is levied and no one has to go to jail.

Bill George of the has suggested how banks can begin to assume social responsiblity:

Revisiting the rights and responsibilities of business

A new generation of leaders seeks to align corporate missions with society's broader interests.

"Businessmen that take seriously their responsibilities for providing employment, eliminating discrimination, avoiding pollution . . . are preaching pure and unadulterated socialism."


Nobel prize-winning economist Milton Friedman penned those fiery words back in 1970 in his influential article "The Social Responsibility of Business Is to Increase its Profits." He continued to defend them until his death in 2006.

Friedman has had a monumental influence on economists and CEOs who have followed his philosophy. Although we cannot attribute the global economic meltdown of 2008 to him, his ideas certainly influenced its root causes.

A short-term focus on shareholder gains has substantially increased the velocity of stock market trading. In the past 25 years, holding periods for stocks have fallen from eight years to six months. CEOs focusing on meeting the demands of short-term investors have led to the destruction of many once-great companies, including General Motors, Sears and Enron. This culminated in the 2008 global financial meltdown, when over-leveraged financial institutions collapsed as they tried to maximize short-term value.

The havoc caused by the short-term shareholder value ideology has led to a narrow focus on shareholders, the loss of America's innovative edge and the hollowing of communities. As a result, employees have lost their jobs, customers lost their suppliers, communities lost valued supporters and, ironically, shareholders lost a fortune. Collectively these factors have contributed to the loss of trust in free enterprise companies.

Read all of the article here


Anonymous said...

If every American read this book they wouldn't be so naive when they tallied the bankster's scorecards...and how politician's are part of their score!

Inflated: How Money and Debt Built the American Dream
In each of these instances, Mr. Whalen bemoans Americans’ reliance on paper money and debt financing — a reliance, he contends, that is often fostered to expand political, business and financial leaders’ power and wealth.

Anonymous said...

Friedman was a fraud....avoiding pollution?...yet he would then be ok with society paying those costs? in effect that is a wealth transfer...the costs associated with that pollution would go to the many so the few would reap gains....he's a friggin fascist.

Anonymous said...

The revolving door between Wall Street and Washington motivates our leadership to preserve the status quo, which is corrosive to markets because smaller investors are waking up to the fact that the rules are stacked in favor of the big players. Investing as we have historically thought of it is dead.

Anonymous said...

Finnish lesson on principles for Goldman

By Lucy Kellaway

"at least the first principle is pithy and memorable. “Our clients always come first,” it says. There is only one problem with this: it isn’t true. Not only is it not true in specific cases (like when Goldman sold “shitty deals” to clients and bragged about them), it isn’t true generally. Any bank really interested in its clients would shut down most of its M&A department on the grounds that buying other companies almost always works out badly. The second principle is a long screed about Goldman’s “unswerving adherence” to being legal and ethical, with the result that the bank’s speciality – generating profit – gets shunted into third place. “Our goal is to provide superior returns to our shareholders,” the principle starts, making it sound almost altruistic. There is no mention of anything as vulgar as money; the word “superior” is pleasingly ungreedy. “Profitability is critical to achieving superior returns,” it explains, passing off a tautology as if it were an insight"

Joyce said...

The Lucy Kellaway article looks inviting but I don't have a membership to and can't read it.

Anonymous said...

Do a search on article should come up or try this:,dwp_uuid=68b1bd78-33fa-11da-adae-00000e2511c8,print=yes.html


RobertM said...

re:"they manifest the growing inequality of wealth in the US".

Concentrated wealth destroys democracies. That's the path we're headed down. Maybe this is what they want?

Joyce said...

Thank you, Anonymous, for the link to the Lucy Kellaway article. It was well worth the read and Goldman Sachs could profit from her suggestions:

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