Your Questions About The Stock Market Is A Ponzi Scheme

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Michael asks…

Global Financial Crisis?

Can someone please explain to me the causes, current impacts and projected solutions to the global financial crisis? Just basically like a summary. And the GLOBAL not just like america. And if possible, could you include like a like to some articles about it?

Justin answers:


(1) Massive defaults on subprime mortgages

(2) Serial transference of credit risk via financial derivatives (e.g., over-the-counter credit default swaps).

(3) Concentration of wealth among a relatively small super-rich class via financial arrangements such as hedge funds.

(4) Concentration of power and wealth in a relatively small group of financial institutions (primarily banks and investment banks), who could be regarded by governmental officials is “too large to fail.”

(5) Circumvention of regulations (via finacial derivatives).

(7) Willingness to take huge financial risks, because of the expectation that the government (i.e., taxpayers) would bail out losers.

(8) Exploitation of underclass or lower class individuals, many of which were members of racial or ethnic minority groups, creating a real estate bubble via the subprime crisis.

Current impacts:

(1) High unemployment rates.

(2) Reduced spending, coupled with somewhat increased savings.

(3) Massive stock market losses.

(4) Exposure of many Ponzi schemes (e.g., Bernie Madoff), which collapsed when faced with economic contraction.

(5) Bankrupticies at all levels, including among large financial institutions, manufacturers, and individuals.

(6) Increased foreclosure rates, as real estate values collapse, and many buyers are unwilling or unable to make mortgage payments.

(7) Deflation, despite increased deficit spending by the federal government.

(8) Increased homelessness.

Projected solutions:

(1) Massive stimulation programs financed via deficit spending at the national level.

(2) Bailouts of large corporate entities, such as AIG, CitiCorp, and General Motors.

(3) Massive governmental infracture construction projects.

(4) Tax and/or subsidization incentives to encourage more home-purchasing and housing development.

(5) Extension of unemployment insurance programs.

Almost all of the relevant activities are occurring in the United States, and to a much greater extent than any Third World country, or even any European nation.

Richard asks…

Homework Help –White Collar Fraud Topic?

Heres the question that I have to discuss in a 2 to 3 page paper…can anyone give me some helpful suggestions. I dont know why I have to have this class, but I cant seem to get into it at all.

How does “rational choice” theory explain crime? Is it a strong theory in the study of white collar crime? Defend your answer.

—thats the question…

Justin answers:

Bernard Madoff – Wikipedia, the free encyclopedia
[3] The Madoff family has long-standing ties to SIFMA. Bernard Madoff sat on the board of directors of the Securities Industry Association, which merged … – 422k – Cached – Similar pages
Madoff Trustee
LLC to assist in the sale of the market making and proprietary trading operations of Bernard L. Madoff Investment Securities LLC. … – 8k – Cached – Similar pages
Feds say Bernard Madoff’s $50 billion Ponzi scheme was worst ever
Dec 13, 2008 … The secret life of Bernard Madoff unraveled as he stood in his upper East Side apartment in pale blue bathrobe and slippers, facing two FBI … – 50k – Cached – Similar pages
News results for bernard madoff

Wiesel says ‘psycho’ Madoff should suffer: report – Feb 27, 2009
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Laurence Leamer: Bernard Madoff and the Jews of Palm Beach
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Madoff News – Bernard (Bernie) Madoff –
Dec 11, 2008 … Wall Street Journal news coverage of the massive Ponzi scheme allegedly orchestrated by top Wall Street broker Bernard Madoff. – 93k – Cached – Similar pages
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Chris asks…

Which percentage of people who earn “Surplus income” through their job..invest it in the stock market ?and WHY?

why play a poker game..where it is a mathmatical equation..that for people to “win money”…people have to “lose money”?

is true? why play with it ?
when you get right down to it there really aint any difference as far as the investor goes

In both some will make money and others will lose money. And those that make money get it from those that lose money.

The only difference is that.the stock market promises nothing, but the ponzi scheme promises loads

To make money in a ponzi scheme, you get in early and leave before it crashes, (which is a mathematical certainty)
To lose money you dont get it out before the crash.
To make money in the stockmarket you put money in when it starts to rise and take it out when it starts to fall. (and neither direction is a certainty)
To lose money you put the money in at the top then take it out at the bottom

In both systems its a mathematical certainty that some people will lose money, ALL the money that people make from the schemes comes from people in them, nowhere else. So for somebody to make a profit. SOMEBODY has to make a loss.

The only difference is that when a ponzi scheme begi

Justin answers:

Unlike a Ponzi scheme where everything equates to everything out (at some point), the stock market is not a zero sum game. It is entirely conceivable (although highly unlikely) that everyone can make money in the stock market (at least up until the demise of the economy or the Apocalypse). Since 1930, the stock has, on average, returned 8% after inflation to investors. A well-diversified portfolio (your mathematical game) will attain this average (note that a not so well diversified portfolio runs a much higher risk for variability). Additionally, since 1930, there has not been a ten year period (10 consecutive years starting at any time) where investors have seen negative returns. Remember, stock prices (and hence returns) are based upon success of companies. In order to be listed, companies must have some baseline in terms of size, profits, etc. This weeds out the small companies – of which 4 out of 5 fail within 5 years of start. By the time a company can be traded, it is assumed (given the baselines) that the company has grown and has recorded some level of success, thus lowering the probability that the company will fail (do companies fail? Of course, hence the need for a well-diversified portfolio).

As for market timing as you suggest, studies have shown that traders who try to market time walk away with less appreciation than buy and hold traders.

And again, there is no mathematical certainty that some people will lose money in the stock market.

Mark asks…


Justin answers:

Bernard Lawrence “Bernie” Madoff (pronounced /?me?d?f/[3]; born April 29, 1938) is an American convict, who was a financier, and Chairman of the NASDAQ stock exchange. He is the admitted operator of the Ponzi scheme that may be “the largest investment fraud in Wall Street history”.[4]

In March 2009, Madoff pled guilty to 11 felonies and admitted to turning his wealth management business into a massive Ponzi scheme that defrauded thousands of investors of billions of dollars. Madoff said he began the Ponzi scheme in the early 1990s. However, federal investigators believe the fraud began as early as the 1980s, and the investment operation may never have been legitimate.[5] The amount missing from client accounts, including fabricated gains, was almost $65 billion.[6] The court appointed trustee estimated actual losses to investors of $18 billion.[5] On June 29, 2009, he was sentenced to 150 years in prison, the maximum allowed.[7][8]

Madoff founded the Wall Street firm Bernard L. Madoff Investment Securities LLC in 1960, and was its chairman until his arrest on December 11, 2008.[9][10] The firm was one of the top market maker businesses on Wall Street,[11] which bypassed “specialist” firms by directly executing orders over the counter from retail brokers.[12]

On December 10, 2008, Madoff’s sons told authorities that their father had just confessed to them that the asset management arm of his firm was a massive Ponzi scheme, and quoting him as saying it was “one big lie.”[13][14][15] The following day, Federal Bureau of Investigation agents arrested Madoff and charged him with one count of securities fraud. The U.S. Securities and Exchange Commission (SEC) had previously conducted several investigations into Madoff’s business practices since 1992, which critics contend were incompetently handled

Steven asks…

Is Business & Govt covering up more failed trickle-down economics with the stock market about to crash again?

Some say at the end of May 2010 we will start the double-dip stemming from the September 2008 world banking system crash

I know banks are NOT backing off predatory lending trying finance people to their graves etc.

I know Immigrants who do NOT have written or verbal command of our english language willing to work cheap are encourage and given preference by our treasonous employers, while several generational Americans get the run-around and sent on wild goose chases etc.

Justin answers:

Yes, the only stock market ‘recovery’ in sight is reinvigoration of the same kind of ponzi and pyramid schemes that are the essence of the market and the cause of every catastrophe. As usual, the solution to every US problem is acceleration and exaggeration of the cause of the problem.

William asks…

Why do conservative republicans always create a total economic disaster/great depression?

Both our great depressions were at the end of long-term republican control.

Jan 1920-1932 = Entire republican government = Great Depression 1
Jan 2001-2007 = Entire republican government = Great Depression 2

Between Jan 20, 2001-2009…under Bush’s policies of deregulation, lax regulation enforcement, corporate welfare and a 15% tax rate on stock profits for wealthy people:

Gasoline tripled from 1.44 to 4.11 per gallon (peaked July 2008)
Unemployment skyrocketed 80% from 4.2% to 7.6%
Dow Jones plunged 25% from 10,587 to 7,949
Budget went from a 236 billion surplus to a 1.3 TRILLION deficit (a 1.5 trillion drop)
National debt doubled from 5.7 trillion to 10.6 trillion (a 4.9 trillion increase)
Borrowed a trillion dollars for two fake wars (all hijackers were from saudi arabia)
Borrowed a trillion dollars for Medicare part D which outlawed govt bulk discounts
Borrowed two trillion for tax cuts for mostly wealthy people
Trillions of Federal reserve dollars spent to prop up wall street and assume risky loans
Economy losing 700,000 jobs monthly – unemployment growing 1% every 6 weeks
Economy in total freefall

This is called “common sense conservative limited government”

(feel free to re-post these facts and PROTECT AMERICA FROM REPUBLICANS)

Justin answers:

Because conservatives think they are economic experts when really all they know are Ponzi schemes and other financial scams. Now if you have some investment capital and need a booming market to exploit for fast profits before leaving pension funds holding the bag when every comes crashing down, Republicans are the people to call.

James asks…

what does this mean? please?

The U.S. bank industry has recovered to the point that it can boost the economic recovery by extending more loans, the top bank regulator said on Tuesday.

Justin answers:

It means they are going to borrow more money from foreign sources, post more bonds at a lower interest rate, print more money that will devalue the dollar more and increase the GDP well over 101%.
It means a Ponzi scheme. It means if a private citizen did it, they would go to jail. It means the crash of the stock market is at hand. It means chaos, food shortages and riots in the streets.

John asks…

how to merch on runescape?

in depth guilde pls and good items to merch 🙂

Justin answers:

Ok, DO NOT JOIN A MERCHANTING CLAN. They’re nothing but ponzi schemes set up by the clan owners to get money out of lower ranked clan members. The clan owners stock up on an item, tell the clan to buy it & run up the price then dump their stockpile on the clan. The clan buys it up at an overinflated price which quickly crashes leaving them stuck with it because nobody else wants the item.

To merchant properly you have to continually check the market for items that are undervalued. It helps if you can make a good guess as to upcoming updates & the supplies they’d require where you can stock up on them early. After the update &/or the price has risen you sell your stockpile.
Nobody is going to simply tell you an item. If they’re doing they’re homework to find one then they’re buying the item up themselves & you’d be cutting into their profits. If someone tells you an item it’s more than likely they’re trying to trick you into buying up one of their FAILED merchanting attempts so you take the loss instead.

You’ll have to do your own market analysis to succeed.

Ken asks…

I want details about Goldman Sachs…plsss help me….?

Justin answers:

The Goldman Sachs Group, Inc., or simply Goldman Sachs (NYSE: GS), is one of the world’s largest global investment banks. Goldman Sachs was founded in 1869, and is headquartered in the Lower Manhattan area of New York City at 85 Broad Street. Goldman Sachs has offices in leading financial centers such as New York City, London, Boston, Chicago, Miami, Los Angeles, San Francisco, Frankfurt, Zürich, Paris, São Paulo, Bangalore, Mumbai, Hong Kong, Beijing, Mexico City, Singapore, Salt Lake City, Sydney, Dubai, Madrid, Milan, Melbourne, Auckland, Seoul, Tokyo, Taipei, Moscow, Toronto, and Monaco.

Goldman Sachs acts as a financial advisor to some of the most important companies, largest governments, and wealthiest families in the world. It is a primary dealer in the U.S. Treasury securities market. Goldman Sachs offers its clients mergers & acquisitions advisory, provides underwriting services, engages in proprietary trading, invests in private equity deals, and also manages the wealth of affluent individuals and families.

Due to its secretive firm culture and revolving door relationship with the Federal government, Goldman has recently been referred to as Wall Street’s secret society, with former Goldman employees currently heading the New York Stock Exchange, the World Bank, the U.S. Treasury Department, the White House staff, and even rival firms such as CitiGroup and Merrill Lynch. Its landmark profits during the 2007 Subprime mortgage financial crisis led the New York Times to proclaim that Goldman Sachs is without peer in the world of finance.

Goldman Sachs was founded in 1869 by German Jewish immigrant Marcus Goldman. The company made a name for itself pioneering the use of commercial paper for entrepreneurs and was invited to join the New York Stock Exchange in 1896. It was during this time that Goldman’s son-in-law Samuel Sachs joined the firm which prompted the name change to Goldman Sachs.

In the early 20th Century, Goldman was a major player in establishing the Initial Public Offering market. It managed one of the largest IPO’s to date, that of Sears, Roebuck and Company in 1906. It also became one of the first companies to heavily recruit those with MBA degrees from leading Business Schools, a practice that still continues today.

In 1929, it launched the Goldman Sachs Trading Corp., a closed-end mutual fund with characteristics similar to that of a Ponzi Scheme. The fund failed as a result of the Stock Market Crash of 1929, hurting the firm’s reputation for several years afterward.

In 1930, Sidney Weinberg assumed the role of Senior Partner and shifted Goldman’s focus away from Trading and towards Investment Banking. It was Weinberg’s actions that helped to restore some of Goldman’s tarnished reputation. On the back of Weinberg, Goldman was lead advisor on the Ford Motor Company’s IPO in 1956, which at the time was a major coup on Wall Street. Under Weinberg’s reign the Firm also started an Investment Research division and a Municipal Bond department. It also was at this time that the firm became an early innovator in Risk Arbitrage.

Gus Levy joined the firm in the 1950s as a well known securities trader, which started a trend at Goldman where there would be two powers generally vie for supremacy, one from investment banking and one from securities trading. For most of the 1950s and 1960’s, this would be Weinberg and Levy. Levy was a pioneer in block trading and the firm established this trend under his guidance. Due to Weinberg’s heavy influence at the firm, it formed an Investment Banking Division in 1956 in an attempt to spread around influence and not focus it all on Weinberg.

In 1969, Levy took over as Senior Partner from Weinberg, and built Goldman’s trading franchise once again. It is Levy who is credited with Goldman’s famous philosophy of being “long term greedy,” which implies that as long as money is made over the long term, trading losses in the short term are not to be worried about. That same year, Weinberg retired from the firm.

Another financial crisis for the firm occurred in 1970, when the Penn Central Railroad Company went bankrupt with over $80 million in commercial paper outstanding, most of it issued by Goldman Sachs. The bankruptcy was large, and the resulting lawsuits threatened the partnership capital and life of the firm. It was this bankruptcy that resulted in credit ratings being created for every issuer of commercial paper today by several credit rating services.

During the 1970s, the firm also expanded in several ways. Under the direction of Senior Partner Stanley R. Miller, it opened its first international office in London in 1970, and created a Private Wealth division along with a Fixed Income division in 1972. It also pioneered the “White Knight” strategy in 1974 during its attempts to defend Electric Storage Battery against a hostile takeover bid from International Nickel and Goldman’s rival Morgan Stanley.This action would boost the firm’s reputation as an investment advisor because it pledged to no longer participate in hostile takeovers.

John Weinberg (the son of Sidney Weinberg), and John C. Whitehead assumed roles of Co-Senior Partners in 1976, once again emphasizing the co-leadership at the firm. One of their most famous initiatives was the establishment of the 14 Business Principlesthat are still used to this day.

In the 1980s, the firm made a major move by acquiring J. Aron & Company, a commodities trading firm which merged with the Fixed Income division to become known as Fixed Income, Currencies, and Commodities. J. Aron was a major player in the coffee and gold markets, and the current CEO of Goldman, Lloyd Blankfein, joined the firm as a result of this merger. In 1985 it underwrote the public offering of the Real Estate Investment Trust that owned Rockefeller Center, then the largest REIT offering in history. In accordance with the beginning of the collapse of the Soviet Union, the firm also became largely involved in facilitating the global privatization movement by advising companies that were spinning off from their parent governments.

In 1986, the firm formed Goldman Sachs Asset Management, which manages the majority of its mutual funds and hedge funds today. In the same year, the firm also underwrote the IPO of Microsoft, advised General Electric on its acquisition of RCA and joined the London and Tokyo stock exchanges. 1986 also was the year when Goldman became the first United States bank to rank in the top 10 of Mergers and Acquisitions in the United Kingdom. During the 1980s the firm became the first bank to distribute its investment research electronically and created the first public offering of original issue deep-discount bond.

Robert Rubin and Stephen Friedman assumed the Co-Senior Partnership in 1990 and pledged to focus on globalization of the firm and strengthening the Merger & Acquisition and Trading business lines. During their reign, the firm introduced paperless trading to the New York Stock exchange and lead-managed the first-ever global debt offering by a U.S. Corporation. It also launched the Goldman Sachs Commodity Index (GSCI) and opened a Beijing office in 1994. It was this same year that Jon Corzine assumed leadership of the firm following the departure of Rubin and Friedman. The firm joined David Rockefeller and partners in a 50-50 join ownership of Rockefeller Center during 1994, but later sold the shares to Tishman Speyer in 2000. In 1996, Goldman was lead underwriter of the Yahoo! IPO and in 1998 it was global coordinator of the NTT DoCoMo IPO. In 1999, Henry Paulson took over as Senior Partner.

One of the largest events in the firm’s history was its own IPO in 1999. The decision to go public was a tough one that the partners debated for decades. In the end, Goldman decided to offer only a small portion of the company to the public, with some 48% still held by the partnership pool.22% of the company is held by non-partner employees, and 18% is held by retired Goldman partners and two longtime investors, Sumitomo Bank Ltd. And Hawaii’s Kamehameha Activities Assn (the investing arm of Kamehameha Schools). This leaves approximately 12% of the company as being held by the public. Henry Paulson became Chairman and Chief Executive Officer of the firm. Hull Trading Company, one of the world’s premier market-making firms, was acquired by Goldman in 1999 for $531 million.

More recently, the firm has been busy both in Investment Banking and in Trading activities. It purchased Spear, Leeds, & Kellogg, one of the largest specialist firms on the New York Stock Exchange, for $6.3 billion in September 2000. It also advised on a landmark debt offering for the Government of China and the first electronic offering for the World Bank. It merged with JBWere, the Australian investment bank and opened a full-service broker-dealer in Brazil. It expanded its investments in companies to include Burger King, McJunkin Corporation, and in January 2007, Alliance Atlantis alongside CanWest Global Communications to own sole broadcast rights to the CSI franchise. In May 2006, Henry Paulson left the firm to serve as U.S. Treasury Secretary, and Lloyd Blankfein was promoted to Chairman and Chief Executive Officer.

On July 6th, 2007, several US newspapers received anonymous threat-letters targeting Goldman Sachs and its employees.
Corporate affairs
Goldman Sachs offices at the Fraumünsterplatz in Zürich (the light-colored building on the left)
Goldman Sachs offices at the Fraumünsterplatz in Zürich (the light-colored building on the left)

As of 2006, Goldman Sachs employed 26,467 people worldwide. It reported earnings of US$9.54 billion and record earnings per share of $19.69. It was reported that the average total compensation per employee in 2006 was US$622,000. However, this number represents the arithmetic mean of total compensation and is highly skewed upwards as several hundred of the top earners command the majority of the Bonus Pools, leaving the median that most employees earn well below this number. The current Chief Executive Officer is Lloyd C. Blankfein. The company ranks #1 in Annual Net Income when compared with 86 peers in the Investment Services sector.

Recently Goldman Sachs has been increasingly involved in both advising and brokering deals to privatize major highways by selling them off to foreign investors. In addition to advising Indiana on the Toll Road deal, Goldman Sachs has worked with Texas governor Rick Perry’s administration on privatization projects, and according to John Schmidt, the former adviser to the Chicago mayor’s office, it was a Goldman Sachs representative who first pitched the city on the idea of leasing out the Skyway. Goldman Sachs has played a major role in advising states on how to structure privatization deals—even while positioning itself to invest in the toll road market.


Goldman Sachs is divided into three core businesses.

Investment banking

Investment Banking is divided into two divisions and includes Financial Advisory (mergers and acquisitions, investitures, corporate defense activities, restructurings and spin-offs) and Underwriting (public offerings and private placements of equity, equity-related and debt instruments). Goldman Sachs is one of the leading investment banks, appearing in league tables. In mergers and acquisitions, it gained fame historically by advising clients on how to avoid hostile takeovers. Goldman Sachs, for a long time during the 1980s, was the only major investment bank with a strict policy against helping to initiate a hostile takeover, which increased Goldman’s reputation immensely. This segment accounts for around 15 percent of Goldman Sachs’ revenues.


Trading and Principal Investments is the largest of the three core segments, and is the company’s profit center. The segment is divided into three divisions and includes Fixed Income, Currency and Commodities (trading in interest rate and credit products, mortgage-backed securities and loans, currencies and commodities, structured and derivative products), Equities (trading in equities, equity-related products, equity derivatives, structured products and executing client trades in equities, options, and Futures contracts on world markets), and Principal Investments (merchant banking investments and funds). This segment consists of the revenues and profit gained from the Bank’s trading activities, both on behalf of its clients (known as flow trading) and for its own account (known as proprietary trading).

Most trading done by Goldman is not speculative, but rather an attempt to profit from bid-ask spreads in the process of acting as a market maker. Around 65 percent of Goldman’s revenues and profits are derived from this area. Upon its IPO, Goldman predicted that this segment would not grow as fast as its Investment Banking division and would be responsible for a shrinking proportion of earnings. The opposite has been true, however, and resulted in Lloyd Blankfein’s appointment to President and Chief Operating Officer after John Thain’s departure to run the NYSE and John L. Thornton’s departure for an academic position in China.

Asset management and securities services

Asset Management and Securities Services is a rapidly growing business for Goldman as it gains market share. It is separated into two divisions, and includes Asset Management, which provides large institutions and very wealthy individuals with investment advisory, financial planning services, and the management of mutual funds, as well as the so-called alternative investments (hedge funds, funds of funds, real estate funds, and private equity funds). The Securities Services division provides prime brokerage, financing services, and securities lending to mutual funds, hedge funds, pension funds, foundations, and High net worth individuals. This segment accounts for around 19 percent of Goldman’s earnings. As of 2006, the Goldman Sachs Asset Management hedge fund is the largest in the United States with $29.5 billion under management.

In August 2007, it emerged that Goldman had to spend $2 billion to rescue its own Global Equity Opportunities hedge fund from “significant market dislocation”.

GS Capital Partners

GS Capital Partners is the private equity arm of Goldman Sachs. It has invested over $17 billion in the 20 years from 1986 to 2006. One of the most prominent funds is the GS Capital Partners V fund, which comprises over $8.5 billion of equity.On April 23, 2007, Goldman closed GS Capital Partners VI with $20 billion in committed capital, $11 billion from qualified institutional and high net worth clients and $9 billion from the firm and its employees. GS Capital Partners VI is the current primary investment vehicle for Goldman Sachs to make large, privately negotiated equity investments.

Major Assets (GS Group)

* Cogentrix Energy (Energy)
* American Casino & Entertainment Properties (Casinos)
* Coffeyville Resources LLC (Refinery)
* Myers Industries, Inc. (Plastic & Rubber)
* USI Holdings Corporation (Insurance & Finance)
* East Coast Power LLC (Energy)
* Zilkha Renewable Energy (Energy)
* Queens Moat Houses (Hotels)
* Sequoia Credit Consolidation (Finance)
* Shineway Group (Meat Processing)
* Equity Inns, Inc. (Hotels)
* KarstadtQuelle property group (Retailer)
* Nursefinders Inc. (Healthcare)
* Latin Force Group, LLC (Media)


In December 2005, four years after its report on the emerging “BRIC” economies (Brazil, Russia, India, and China), Goldman Sachs named its “Next Eleven” list of countries, using macroeconomic stability, political maturity, openness of trade and investment policies and quality of education as criteria: Bangladesh, Egypt, Indonesia, Iran, South Korea, Mexico, Nigeria, Pakistan, the Philippines, Turkey and Vietnam.

Corporate citizenship

Goldman Sachs has received favorable press coverage for conducting business and implementing internal policies related to reversing global climate change. According to the company web site, the Goldman Sachs Foundation has given $94 million in grants since 1999, with the goal of promoting youth education worldwide. The company also has been on Fortune Magazine’s 100 Best Companies to Work For list since the list was launched in 1998.

In November 2007, Goldman Sachs established a donor advised fund called Goldman Sachs Gives that donates to charity funds around the world.

Hope this info is useful to u….
Good luck…!!!!!!!!!!

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