Short answer questions about an economic article - Essay Example

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Eventually, the funds lost value and it led to the crash of the Wall Street market crash because Goldman was not able to repay its…
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Short answer questions about an economic article
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Macro & Micro economics Bubbles that occurred and Goldman Sachs role in each In the great depression bubble, Goldman investment bank played a role when it tricked its investors by borrowing money using a chain of Trusts. Eventually, the funds lost value and it led to the crash of the Wall Street market crash because Goldman was not able to repay its investors.
Goldman’s role in the Tech stocks bubble is evident in the internet era where it took advantage of the investors not knowing about the changes in regulations regarding control of quality standards. It did not observe the new underwriting guidelines and often manipulated share prices for their own benefit.
Housing craze bubble occurred due to Goldman’s by reducing the standards of underwriting mortgages rates. They were able to trick pension schemes funds and insurance into buying into their idea. The mortgage package they offered had hidden irregularities meant to exploit the investors. Many rushed into investing thus creating a large real estate whose investment were being speculated by Goldman. Eventually, the housing bubble crumbled and investors were fleeced of their investment (Higgins 89).
$4 a Gallon bubble came into being when Goldman influenced large investment companies to invest in the speculative oil market. When the world market prices declined, Goldman’s investors lost billions of investment. However, it was instrumental in manipulating pump prices rise to $4 a gallon thus continually robbing from the public.
In the Rigging the Bailout bubble, Goldman’s caused the collapse of insurance and investment giants like AIG who remained deeply indebted to them. When the government chipped into bailout them, Goldman had to be paid fully despite them being behind the investment and insurer downfall.
Global warming bubble occurred when Goldman covered up their bad deeds in the name of environmental conservation plan advocating for a bill that will limit carbon emission. Thus, they will trick companies into managing finances meant to reduce these emotions (Higgins 112).
2. Goldman illegal activities during the Internet IPO craze and subprime housing boom were
Goldman used its political influence to win over lucrative initial public offer deals. Its activities included bribery of executives of other investment institutions in order to be awarded future underwriting deals. Their top executives participated in a long-term greedy behaviour. They also manipulated the prices of shares to gain bonuses at the expense of its investors. Goldman’s behaviour led to shareholders and investors launching several lawsuits and it walked scot-free after manipulating the prosecution by paying a $60 million which is a small amount compared to what it was earning from the booming housing investment.
3. Goldman’s tax rate pays in comparison with its CEOs pay and another employee
Goldman paid out $10 billion in taxes pay and advantages that same year and made a benefit of more than $2 billion, yet it paid the Treasury not as much as 33% of what it split over to its CEO, who made $42.9 million that year. It was at a very high rate compared to the compensation other employees got (Higgins 122).
Works Cited
Higgins, Karen L. Financial Whirlpools a Systems Story of the Great Global Recession. Kidlington, Oxford, UK: Academic, 2013. Print. Read More
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