Two major, seemingly unrelated, financial predicaments are taking place on two continents. The first is the fraud case being brought against Goldman Sachs – a former investment bank. The second is Greece’s excessive debt, which has resulted in the bailout by the European Union (EU) and International Monetary Fund (IMF).
These two problems seem unrelated on the surface. Nonetheless, they are connected. The current financial crisis has been caused in part by investment banks, like Goldman Sachs, encouraging lenders to sell bad mortgages that they knew would default. Goldman Sachs is now under investigation for a more complex version of this problem (explained below).
In a globalized world, finance move swiftly across borders, and countries can be brought down by the policies of an investment bank. Greece’s problems though are rather complex; their debt has escalated in part because of hedge funds betting against the country and in part because of irresponsible spending.
This news analysis will address the factors affecting Greece’s economic collapse and the charges against Goldman Sachs.