Matt Taibbi, a financial journalist for Rolling Stone Magazine, wrote two articles scorning the fraudulent practices of Goldman Sachs, a global investment banking firm. His articles rely on the use of both extensive economic research and fanciful, if violent, metaphor to expose the crooked behind-the-scene’s deals of the banking powerhouse and translate the goings on into layman’s terms. His analysis of Goldman Sachs and the power it holds over markets, taxpayers, and the government not only provides a counterexample to Adam Smith’s theory of a free market, but also reinforces Max Weber’s ideas of economic power. Taibbi’s first article, The Great American Bubble Machine, describes Goldman Sachs’ method of taking advantage of America’s democracy …show more content…
Robert Rubin, the Treasury Secretary under the Clinton administration who served as member of Goldman Sachs for 26 years, began a period of deregulation of the American economy, specifically the financial markets. Rather than resulting in the “general good,” the already corrupt financial market, and Goldman Sachs in particular, exploited the lack of management and milked the newly unregulated markets. For instance, when guidelines in place since the Great Depression governing the whether or not a company could be made public were lifted, Goldman and other investment firms made public “companies [not] much more than potfueled ideas scrawled on napkins by uptoolate bongsmokers…[which were] hyped in the media and sold to the public for mega-millions.” (Taibbi 2010). The deregulation of the financial market resulted in great economic loss rather than gain due to the fact that the market did not satisfy the conditions required for Smith’s ideal economy to work; for a free market economy, there must be a competitive market, perfect information, and extremely low if any transaction costs (Lecture 09-Capitalism). In reality, the market had an imbalanced competitive market due to the sheer magnitude of firms such as Goldman Sachs, false information circulated by the firms in order to trick clients into making dicey investments, and high transaction costs due to banks forcibly driving up prices (Taibbi 2010). Therefore, rather than an increase in efficiency, the economy experienced a sharp decline as a result of the corrupt, greedy enterprises of Goldman Sachs and other Wall Street
The novel Liars Poker by Michael Lewis is very interesting firsthand account of an inside look into the investment banking world, in particular bond trading at the firm Solomon Brothers in the 1980s. Lewis took an interesting and roundabout way to end up on Wall Street, studying art history at Yale and bombing his interview with Lehman Brothers but he eventually found himself at Solomon Brothers through a lucky encounter with two managing directors wives. Through his book Michael Lewis conveys the inner workings of investment banks in the 1980s to the average person using his own experience at Solomon Brothers. The book goes into Lewis’s own rise in the firm as well as the rise and fall of the entire Solomon Brothers Mortgage department.
Michael Moore’s film of Capitalism: A Love Story is an examination on how much of a financial impact that corporation has on the lives of Americans. Capitalism seems to emulate a love affair gone wrong, with lies, abuse and betrayal towards the American people. Moore moves the film from Middle America, to the halls of power in Washington, to the global financial epicenter in Manhattan in order to answer the question of what price do Americans pay for the affection of capitalism. There is irony in the title of this film because there is certainly nothing to love about capitalism when families have to pay the price with losing their jobs, their homes and their savings as a result of the risky investments that the rich and powerful have at their disposal. With more than 14,000 jobs being lost, residents being evicted from their homes and banks stealing away families’ savings, one must wonder if there is an upside to capitalism at all. True democracy is the biggest threat to corporate America because of the one person one vote system. In order for this to take place, the growing number of people would have to come together and expose capitalism for what it truly is, a corrupt and greedy system for the wealthy.
To achieve this, “banking firms provide [them] with a way to maintain [their] elite status in society by providing avenues to wealth and power that other professions do not” (179). They leave them unconsciously with an ultimatum, to either continue living their prestigious lifestyle and be the in the top with the elites, or settle for lower than what they’ve worked for, which is any other career path. Students who attend Princeton and Harvard who aspire to become teachers or writers are told they are settling for less than what they deserve and will be “more happy” with an investment banking career. There is a subtle form of manipulation being acted upon prospective students from investment bankers which is hidden by all of the positive, glamorous stigmas of Wall Street. To fully understand Wall Street as a whole, someone must know the small components that make it come together as a whole. This is shown through Karen Ho’s observations such as learning that students at Princeton and Harvard do not need to hold a finance degree to obtain a job on Wall Street. Whereas, Yale and Brown students must have a finance degree and are forced to show their abilities at a higher level than Princeton and Harvard students. Underneath all the dashing appearances and smart conversations on Wall Street, there is a hidden bias and a constant manipulation system in order for them to get what they want. The small components of Wall Street consist of their “small” priorities,
Wilson, James C. “ ‘Bartleby’: The Walls of Wall Street.” Arizona Quarterly 37.4 (1981): 335-346. Print.
Preston, A. (2012). You eat what you kill: from scandal to catastrophe, the rise and fall of the investment bank. New Statesman, 141, 22
Jordan Belfort is the notorious 1990’s stockbroker who saw himself earning fifty million dollars a year operating a penny stock boiler room from his Stratton Oakmont, Inc. brokerage firm. Corrupted by drugs, money, and sex he went from being an innocent twenty – two year old on the fringe of a new life to manipulating the system in his infamous “pump and dump” scheme. As a stock swindler, he would motivate his young brokers through insane presentations to rile them up as they defrauded investors with duplicitous stock sales. Toward the end of this debauchery tale he was convicted for securities fraud and money laundering for which he was sentenced to twenty – two months in prison as well as recompensing two – hundred million in restitution to any swindled stock buyers of his brokerage firm (A&E Networks Television). Though his lavish spending and berserk party lifestyle was consumed by excessive greed, he displayed both positive and negative aspects of business communications.
Michael Lewis is the author of “The Big Short: Inside the Doomsday Machine” and Lewis’ main theme, or the main point, that he is trying to get across is how the 2008 financial crisis came to be, who saw it coming, and how people reacted. Lewis has experience with Wall Street and has worked for Salomon Brothers when he was younger. Today, Lewis is an American non-fiction author and financial journalist. There were three things I highly enjoyed “The Big Short”: the character development, themes, and personalization.
Jordan Belfort is famous for his crooked way of earning his millions as a stockbroker on Wall Street. Even Belfort started at the bottom, on his first day in Wall Street he was told he was “lower than pond scum”(Belfort 1). After writing a book about his happenings on Wall Street, we’ve seen the
Michael Lewis’s The Big Short tells the tale of the 2008 financial crisis from the perspective of a few idiosyncratic characters that saw it coming. Unlike big financial institutions that underestimated the risk of increasingly extending subprime mortgage loans to uncreditworthy customers, Lewis’ characters gauged such risk accurately and anticipated the eventual burst of the housing bubble. Not only did they foresee the inevitable, but they also made a fortune by betting on its happening. Had they conformed to the public sentiment of extreme optimism and confidence in the stability of the real estate market, they would not have reaped immense monetary rewards. Between the lines of The Big Short, there lurks, albeit not too covertly, a message about the benefits of nonconformity. While conformity is often times socially encouraged and applauded, it is important to wonder at times whether going against the flow would be of greater benefit to us or our community. In Michael Lewis’s narrative, defiance of the status quo as a result of skepticism toward financial markets has yielded big payoff, whereas conformity to the widespread denial of the housing market’s unpredictability has incurred massive losses.
In his book The Ascent of money: a financial history of the world, Ferguson argues that the ascent of money is the main driving force to build the history of human, ranging from ancient Mesopotamia, Roman Empire, gold and silver of the Incas to many powerful financial families such as House of Medicis, Rothchilds, Rising of Amsterdam bank and London Bank to the hedge funds of twenty-first century. In six chapters of the book, Ferguson examined the process of forming the milestones contributing to the modern financial world: the origin of the currency, bonds, stock, insurance and real estate, and the ending of the book is the relationship between the debtor-creditor mutually beneficial relationship between the US and China through the global
Mackay, Tim. "The Ethics Of The Wolf Of Wall Street." Charter 85.2 (2014): 67.Web. 23 Mar. 2014.
Eight years ago, the world economy crashed. Jobs were lost, families misplaced, hundreds of thousands of people left shocked and confused as they watched the security of their world fall to pieces around them. In, “The Big Short,” a film directed by Adam McKay and based on the book written by Michael Lewis, viewers get an inside perspective on how the financial crisis of 2008 really happened. Viewers learn the truth about the unethical actions and irrational justifications made by those who unwittingly set the world up for failure. Two main ethically tied decisions are brought into question when watching the film: how could anyone conscionably make the decision to mislead investors by misrepresenting mortgage backed securities (MBS), and why
While investors give lip-service to the idea of the markets as the “engines of capitalism”, their true working definition is entirely different, constituting instead a reckless source of profit. By recategorizing the financial markets as they should be and instituting the appropriate reforms, we can begin to change our society and broaden the scope of our collective understanding. Public control over capital and business administration would represent a substantive increase in the openness and fairness of our way of life. It is this potential benefit which clinches our need to come to terms with the true and meaningful definition of the markets.
Batra, Ravi. Greenspan's Fraud: How Two Decades of His Policies Have Undermined the Global Economy. New York, NY: Palgrave Macmillan, 2005.
The “Inside job” movie proves how neo- liberalism system has turned this world into a chaos. I find this movie very informative, hard to believe but it shows the reality of the world in which we live. The movie is structured into five parts which are: how we get here, the bubble, the crisis, accountability, and where we are now. The movie denounces how academic economic experts, politicians, and board of directors use their political influences on financial industry. Those experts are extremely corrupt and above all very selfish. They have no feelings for the majority and totally ignore inequality. They all work together based on the same ideas, use the same techniques and strategies to make money. They come up with policies and complicated laws that are hard for people to understand, and they are the only one who benefit from those laws.