I dont know how to update, I just made a new post. Unit Two at Was Up with Wall
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I dont know how to update, I just made a new post.
Unit Two at Was Up with Wall Street? he Goldman Standard and Shades Humble Roots urpose of being both an Goldman Sachs was founded in 1860 with the humble p tor and a clearinghouse for commercial paper. Marcu founded the company along wit s Goldman, a c Germian immi son-in-law. Samuel Sachs. The com any's strat was to provide loans for small businesses and then create a market for the loans throu nct forattracting new talent, so the firm began a gradual drift f Goldman undertook an investment strategy that would contribute to e sale of commercial paper. But the stodgy negotiable instruments market uence and its basic roots in tangible one-on-one business loans. In the late 1920s crash. Goldman launched the investment trust, a vehicle by which anyone could in mall or large amounts of money and hold shares in the trust, which then purchased undertook an investment strategy that would contribute to the 1929 mark of stocks. The trust income then came from the returns on the stocks i portfolio. Investment Strategy The 1920s and Layering Even in its initial foray into the layered investment strategies that would still be in play a century later, Goldman was using its own customers to make money. The layering strat egy, formulated in the late 1920s, works like this: Goldman creates an investment com pany and buys 90 percent of the shares in that company with its own money. Because the shares have sold so well, the public (not realizing that Goldman itself had purchased the shares and driven the price up) wants a piece of the company. So, the shares that Goldman initially bought for, say, $100, it is able to turn around and sell to the public for $110. But Goldman would continue to buy shares on the secondary market, and the price would climb to $120 and then $150 and so on. With the money Goldman made on this initial corporation, it would create a new corporation and use the same strategy to drive up the price, moving on to another new corporation with more demand and higher share prices. However, all the layers in the chain are completely dependent upon the market continuing to grow and the solvency of Goldman because as one writer has described it: Goldman invests S1.00 and borrows $9 (through the sales to the public; Goldman then takes the S1 investment and the $9 borrowed (for a total of $10) and bor rows $90 with an investment of only $10 and from there moves onto $100 and $900. Diagrammatically, the leveraged deals are shown next page 71 resulted in the market crash of 2008. In the 1920s, the public was investing in stock port folios. Goldman nearly collapsed when the stock market crashed in 1929. Leverage extraordinaire was the theme that began in the late 1920s with this layering and continued through to the subprime mortgage secondary instrument market that 7"Matt Taibi. " The Great American Bubble Machine, Rolling Stone, July 2. 2009. p. 54Explanation / Answer
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