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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 20, 2013

Goldman Sachs Should Recognize What It Really Is

We would really like to think that the bad economic times will see the proper punishment of those executives that brought us the investment banks' frauds which gave us The Great Recession.  Do we feel any sympathy for investment bankers losing their jobs?  Will the banks change their devious ways? In London and in Europe the financial system may be changing as shown by the huge number of layoffs of bankers as described in today's article. 

Economic hard times and cuts to local services because of austerity makes suicide more probable (see here and here and here). 

In the article entitled Snakes and Ladders:  Investment Banking on the Brink excerpted below, Goldman Sachs should readily recognize itself:
 "investment banking activities...provided tens of thousands with sometimes exorbitant incomes."

"An era seems to be coming to an end, the era of an industry that led us to believe that what it did was useful. In reality, though, it was lining its pockets by conducting more and more reckless transactions and involving itself in increasingly insane deals and products."

". . . arrogance is being replaced with humility."

". . . the industry had become more and more powerful since the 1990s, and how it gradually disconnected itself from the rest of the world in the belief that it could use formulas and financial models to calculate away all risk."

"But hardly anyone would admit to having made mistakes. Indeed, all of their actions were informed by the logic of a culture that has developed such perverse incentive systems that it will probably take more than a few years to regulate it back to health."

" There is more money at stake in London. . .and the people who work there see themselves as lying at the center of the universe."

"Now that it had been unfettered in this manner, the financial market grew at a tremendous pace, and investment banks became giants with branches all across the world. Goldman Sachs alone increased its total assets in a decade, from $152 billion (€114 billion) to more than $1 trillion. In 2006, the average Goldman Sachs employee was making $622,000." (All excerpts above from page 1 of Snakes and Ladders...)
Snakes and Ladders:  Investment Banking on the Brink
By Martin Hesse, Thomas Schulz, Christoph Scheuermann and Anne Seith - Spiegal International

Many investment bankers who are losing their jobs are also moving to hedge funds, where they now place their bets in the hidden world of the shadow banks. Others are looking for loopholes and new areas in which to ply their trade. Investment bank Goldman Sachs, for example, is engaging in risky deals for its own account, despite its insistences to the contrary. The bank's financial jugglers are circumventing a ban on such transactions in the United States by simply making bets for longer terms, which are not covered by the law. 

Please read the whole article here


Michael Schilliger said...

Have you seen that Goldman Sachs is nominated as the worst company of the year. They are second right now, but the race is close and you can help them “win” the award by voting “for” them!

Joyce R said...

Thank you, Michael, for the comment and the link.  V-e-e-r-r-r-y Interesting!

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