Wall Street tactics akin to the ones that fostered subprime mortgages in America have worsened the financial crisis shaking Greece and undermining the euro by enabling European governments to hide their mounting debts. Even as the crisis was nearing the flashpoint, banks were searching for ways to help Greece forestall the day of reckoning. In early November — three months before Athens became the epicenter of global financial anxiety — a team from Goldman Sachs arrived in the ancient city with a very modern proposition for a government struggling to pay its bills, according to two people who were briefed on the meeting.
Greed kept Wall Street going even though they knew what loomed on the horizon but it hasn't gone unnoticed in Europe. Wall Street's handiwork has been criticized overseas for quite some time now. Although Wall Street didn't create the problem, they exacerbated the problem by allowing Greece and others to borrow beyond their means.
I feel as though Wall Street will never learn the lesson that they need to regulate how they trade. If they don't, Wall Street will continue to ruthlessly give money and force countries into greater debt, then moving onto a new country and repeating the process there. It looks as though it's a never ending cycle.
Should the government regulate Wall Street more strictly or allow it to function the way it has been? Can you think of a situation where Wall Street will learn it's lesson and stop loaning sums of money the borrowing countries can't afford?
Full Article
http://www.nytimes.com/2010/02/14/business/global/14debt.html?pagewanted=1&ref=business
I was struck by your comment that Wall Street continues to "ruthlessly give money." They are not forcing money upon people, or countries. If the countries couldn't afford the loans then they should not have taken them. It's true that the lender shares some of the responsibility for the debt crisis, however I think that it is mostly the borrowers responsibility to know what they are accepting and what they are capable of paying back.
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Personally, I think Wall Street needs a big slap in the face. It's not fair for them to continue to manipulate situations just for the sake of earning a quick buck. They need to understand that there could be negative repercussions to their actions. I think the government should step in and formulate some type of regulations on Wall Street. A
ReplyDeleteI think that "Wall Street" should stop being looked at as one commpany or person. It is several big banks, companies, and people. They can act independently of each other, and can therefore be changed depending on their level of openness and flexiblility.
ReplyDeleteThe people who are causing the problems with their greed should be looked at closer. Government should have some regulations as a result of poor business choices that are causing major damage.
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I agree with Ajminch that Wall Street needs a slap. I agree that Wall Street is not a single individual or company but something should be done to give them some restrictions or penalties for their actions. I wonder what "false" proposals did they make to Greece under some other cover-up? Or did they tell the plain and entire truth this time?
ReplyDeleteAlthough a free market economy exists, the government should play a greater role in how companies like Wall Street operates. Greed is a serious and contagious disease. If these people are allowed to just do whatever they want, they will have too much power in the market (which they already do).
Wall street does need to regulate how they trade. I strongly agree that because of Wall street, the cycle of debt, is unlikely to end. I also agree with Cierra’s comment about wall-street being frequently looked at as one unit. If we isolate the problem, then perhaps a solution will be easier to find.
ReplyDeleteI think Wall Street has always been this way. They seek profit no matter where it comes from, thinking that they are "ahead of the curve" and know when to stop. However, I think some regulation is needed. I know that markets re-adjust themselves supposedly, but we stopped this theory by bailing them out. Wall Street needs to know their limits, because if we don't, they will always think that they will be bailed out by taxpayers and can do risky dealings to gain profit.
ReplyDeleteThis is a huge problem. Wall street will continue to exploit people who are dumb enough to borrow more than they should. Its a combination of wallstreets greed and the stupidity of the borrowers. I dont think there should necessarily be regulations on wall street but they should not bail them out. When they created the morgage crisis here in America instead of say well everyone involved was dumb made there mistakes and they will have to learn from them to survive instead wall street got bailed out and had no punishment for their faults. Not only that main street people got screwed. Hopefully somebody in washinton has enough sense to let a business fail when it makes too many wrong decisions.
ReplyDeleteI agree with the many people who claimed that Wall Street needs a slap. When I read the article I was impressed to see that they are still lending out money even though they see that we are in a crisis. I am uncertain if they where honest with the outcome of the deal but they shouldn’t be offering and engaging others into things that would not end up good. The government should be more involved with Wall Street so we can prevent other countries from making the same mistakes as we did. A.
ReplyDeleteWhile I agree that he actions of Goldman Sacks, while not illegal, were clearly unethical, I feel that we shouldn't rely on companies not to act in their own self interest. The focus instead should be on introducing legislation to make the kinds of actions carried out by Goldman Sachs illegal. In the absence of such legislation, we are left with a tragedy of the commons scenario. For those of you unfamiliar with this scenario, tragedy of the commons refers to medieval European towns, where the center of the town(the town commons) would be left open as public pasture. The trouble was, absent any sort of rules as to how the public pasture would be used, townspeople would do things like graze too many livestock on the pasture, ultimately decreasing the quality of the pasture for everyone. Even if most townspeople were to act altruistically and only raise as much livestock as the pasture could support, so long as there were any townspeople concerned only about their own self-interest, the pasture would be degraded, with the altruism of the other townspeople, leaving them worse off as compared with their greedy fellows while simultaneously failing to save the town commons. Thus, with any significant number of townspeople, it is quite unreasonable to expect every towns person to do the right thing, as doing the right thing provides the towns person with little or no personal benefit. This principle is, perhaps, even more true for businesses, whose goals are, ultimately, to make a profit. In this case, the commons would be the world economy, and the greedy towns person would be Goldman Sachs. But as with the greedy towns person raising too much livestock, if Goldman Sachs hadn't done it, some other company almost certainly would have. The end conclusion is that altruism on the part of companies is, from their perspective, irrational, and that rather than blaming the companies for acting in their own self-interest, we should ensure that new regulations prevent this kind of behavior from occurring in the future.
ReplyDeletePeople are acting surprised by this. Wall Street has always done this, and like others have said, I'm sick of it and agree that they should just get a slap in the face. They have made this same mistake time after time, and they need to realize this isn't the best course of action.
ReplyDeleteI agree with commentators who think that Wall Street deserves a fair beating for their overall stupidity, but I can also see a lot of validity in Caleb and Ryan's comments. These people/companies/cities weren't forced to take the money offered to them by American investors, but the offer they received was impossible to pass up because it sounded so good at the time. In the pressure to remain competitive in the global market, Wall Street has turned to less-than-ethical practices that make many Americans ashamed and embarrassed. While feelings of hostility for such brash action are totally understandable, Wall Street is built on capitalistic competition, not honesty and ethics. Not saying it's right to hand out junk loans, just trying to play devil's advocate...
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While I acknowledge that a general feeling of frustration with Wall Street is understandable, I think that speaking of slapping Wall Street in the face is ultimately unproductive. Wall Street is less like disobedient child, and much more so like, say, a river. Wall street firms, like the water in a river, are pulled by an irresistible force; profit. And as with a river, if Wall Street does something destructive, rather than get angry with it, you should redirect its flow to prevent the same thing from happening in the future. For Wall Street, this means introducing new regulations which alter the way in which Wall Street seeks profit, to prevent it from causing economic damage in the future.
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