Recently, an ex-employee of Goldman Sachs wrote an op-ed article in the New York Times about how they are basically ripping off their clients for their own financial gain. Goldman’s clients include governments all over the world including the state of New Jersey.Obviously this should come as no surprise considering the news a few years back that Goldman was unloading worthless garbage investments on their customers by telling them that they were the highest rated. They then bet against them and made even more money as their customers lost their shirts. the funniest thing about that story is that they admitted what they did but got away with it by executing the fraud with the cooperation of other companies. That way, no one company was responsible for the entire plan and they could all simply plead ignorance.
They simply paid some fines and moved on. This is the kind of business that the United States government bailed out with our taxpayer dollars plus money borrowed on our behalf. The government claimed that we can let a company like that one fail. As a result of the bailouts, the banking system is now worse than ever. By rescuing these entities, it only encouraged people to continue with the same behavior as they had done before. This is borne out by the former Goldman employee Greg Smith’s description of the culture and atmosphere that exists at Goldman Sachs.
Near the end of his letter, he states that without clients Goldman Sachs cannot continue to exist. Sadly this isn’t true. In 2008 Goldman was about to go out of business in part from a lack of unsuspecting clients they could convince to buy their bad debt and investments. In that case, the government simply took the money from all of us and gave it to them. That’s what happens when you have former Goldman employees on the Board of the Federal Reserve.
So you may be wondering : Why would anyone give their money to Goldman to invest for them? Why did the tax dollars of New Jersey residents get handed over to Goldman Sachs to basically gamble with?
On top of all the other financial problems that New Jersey and many other states face, they may now be completely devastated if these investments turn out to be bad. The thing about investments is that they are simply numbers on paper until you need to use them. That’s when you find out what you actually have. Bernie Madoff went on for many years showing people money on paper that didn’t really exist. When the economy got worse, he couldn’t fins any new investors with money, and the investors that he had needed to take their money out. Of course the money wasn’t there and that’s when the investors found out.
Hopefully New Jersey will not suffer the same fate as previous investors. Ideally, we should get our money out of Goldman Sachs investments and put it into something better, in other words, pretty much anything else.
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