Is Goldman Sachs the Scapegoat for the Financial Crisis?
As the SEC files a civil law suit against Goldman Sachs, we need to know: Are we playing a game of witch-hunt against a revered institution, which just made a $3 Billion profit in the last financial quarter? Is it wrong to bet against a horse whose legs were broken, before taking part in the race? So what, if we were directly involved in that act of incapacitating the horse? Could that be termed illegal? Could it be illegal, if the other betters were told that this horse was top notch and would win?
Consumer protection laws have overcome the traps of the “buyer beware” clauses, and we have come a long way from the dark days of paying and fretting for duds bought at the corner store. But we still seem to be lost in the dark ages, where the wheeling and dealing at the “well” of the stock exchange, with the promise of unending wealth and freedom enshrined in the US Constitution, blinds us to the risks at hand.
Many banks and financial institutions around the world clamoured for help, with the threat that their very demise would be catastrophic to nations. It was a “too big to fail” that brought us cowering in fear at the thought of the unseemly exit of these institutions. Leaving aside the very short-sightedness in hurriedly rewarding those for having been responsible for the mess we are in and resuscitating these behemoths, we wonder why they can be so ungrateful, going back to their old ways. Though they never were asked to atone for their deeds, we are perplexed. When organizations, irrespective of whether they are governmental or not amass a powerful force that can no longer be controlled, it is time to wake up. The strength and power of these institutions comes close to the political clout that unions such as the Service Employees International Union (SEIU) have attained. Unions that are supposed to provide for an equitable and fair share get out of control and appear to be only interested in their own welfare. Does this not remind us of the insatiable greed of some of our financial managers?
The financial sector has now taken a 20% share of the US economy, a share that cannot be ignored. When financial institutions have liabilities that come close to or even exceed the GDP of nations, as has been the case with Germany and the United Kingdom recently, we must be worried. The problem, in part, lies in our unstoppable faith in higher growth rates, ignoring the need to improve productivity commensurate with wage increase. Living on borrowed money without real economic growth is not a long term solution.
In Greek mythology Homer’s Odysseus had himself tied to the ship’s mast to prevent him from being misled by the beguiling sounds of the sirens and running aground. Will we have the temerity to do the same, in recognizing our own follies and limitations?
Tags: Goldman Sachs , SEC , Financial Crisis , SEIU , Financial Industry , Profit , Law Suit
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