Menu

Case Studies Essay

0 Comment

Case Study: Goldman Sachs and Greece In reference to Chapter 7, did Goldman Sachs use: I) Moral management, II) Immoral management or, III) Amoral management when it assisted the federal government of Greece to secure entry into the Eurozone? Discuss and explain your answer. When Goldman Sachs assisted the federal government of Greece to secure entry into the eurozone it practiced Intentional Amoral management. Maastricht Treaty created the Euro. As per the treaty the economy deficit level of the country was already predefined for those countries who were willing to enter euro zone.

But Greece entered the European union with a budget deficit that exceeded the allowed threshold. The Greek government borrowed heavily and went on spending after the adoption of Euro as their currency. Instead of reducing the spending and borrowing heavily it adopted creative accounting practices to hide its true budget deficit. It was Goldman Sachs that helped the Greek government to borrow billions in the form of loans and assisted it to hide this huge loan amount from the public view by treating it as currency swap. Now as per the European rules it was not required for Greece to disclose this transaction.

We Will Write a Custom Essay Specifically
For You For Only $13.90/page!


order now

This favored the Greek government to remain under the European Union’s deficit spending limits and join the euro. Intentional amoral management Amoral management is not just a middle position on a continuum between immoral and moral judgment. Amoral managers of this type do not factor ethical considerations into their decisions, actions and behaviors because they believe business activity resides outside the sphere to which moral judgments apply. Such managers think that different rules apply in business than in other realms of life.

In this instance Goldman Sachs knew that Greece was having a budget deficit that was higher than the allowed threshold but still it assisted Greece by adopting unfair accounting practices. Goldman Sachs knew the loopholes that existed in the European rules and they took the undue advantage of it and assisted the Greek government to qualify in the euro zone. Goldman Sachs believed that their decisions, actions and behaviors were fair and the transaction which they did was quite structured and just a strategic move and which do not comply with any moral judgments. ) How would you apportion the blame, with respect to the ramification of Greece being allowed to enter the Eurozone “under false pretences”? Consider the following stakeholders (note: your apportionment of blame should equal 100%): a) Goldman Sachs b) The political leaders of Greece c) The electorate of Greece d) Eurozone officials Explain why you have apportioned the blame in the way that you have. After going through the case study I would apportion the blame as below, with respect to the ramification of Greece being allowed to enter the Eurozone “under false pretences”

I would apportion Goldman Sachs with 25% In this case Goldman Sachs knew that Greece was having a budget deficit that was higher than the allowed threshold but still it assisted Greece by adopting unfair accounting practices. Goldman Sachs knew the loopholes that existed in the European rules and they took the undue advantage of it and assisted the Greek government to qualify in the euro zone. Goldman Sachs believed that their decisions, actions and behaviors were fair and the transaction which they did was quite structured and just a strategic move and that do not comply with any moral judgments.

I would apportion the political leaders of Greece 20% Maastricht Treaty created the Euro. As per the treaty the economy deficit level of the country was already predefined for those countries that were willing to enter euro zone. But Greece entered the European Union with a budget deficit that exceeded the allowed threshold. The Greek government borrowed heavily and went on spending after the adoption of Euro as their currency. Instead of reducing the spending and borrowing heavily it adopted creative accounting practices to hide its true budget deficit.

Greek Government knew that their budget deficit exceeded the allowed threshold which was predetermined by Maastricht treaty. Still they entered the European Union by adopting unfair accounting practices to hide their factual budget deficit. Moreover it kept on spending and raising funds. It should have reduced the spending and must have implemented severe budget practices to control further borrowings which could have helped Greece to bring back its economy in shape. But it failed to do so. Moreover the government did not reflect the lost revenues which were considered to be liabilities.

I would apportion the electorate of Greece 5% Maastricht Treaty created the Euro. As per the treaty the economy deficit level of the country was already predetermined for those countries who were willing to enter euro zone. But Greece entered the European Union with a budget deficit that exceeded the allowed threshold. The Greek government borrowed heavily and went on spending after the adoption of Euro as their currency. Instead of reducing the spending and borrowing heavily it adopted unfair accounting practices to hide its true budget deficit.

The electorates had the right to know the actual reason for their country’s huge deficit balance. They could have stopped the public spending and could have elected a more efficient government who might have improved their economic conditions. A severe budget practice at the right moment would have avoided the debt crisis. I would apportion the Eurozone officials 50% It was Goldman Sachs that helped the Greek government to borrow billions in the form of loans and assisted it to hide this huge loan amount from the public view by treating it as currency swap.

Now as per the European rules it was not required for Greece to disclose this transaction. Goldman Sachs knew the loopholes that existed in the European rules and they took the undue advantage of it and assisted the Greek government to qualify in the euro zone. If Eurozone officials would have laid more stringent norms than it would have been difficult for banks like Goldman Sachs to take the undue advantage of the loopholes. So I would apportion the 50% blame on Eurozone officials for the failure in their system which led to Greek debt crisis. 3).

If national governments conducted their financial affairs in a more transparent and instructive (rather than political) manner, would we avoid situations like those described in this case? Explain your answer. If national governments conducted their financial affairs in a more transparent and instructive (rather than political) manner, then we would have avoid situations like those described in this case. It was Goldman Sachs that helped the Greek government to borrow billions in the form of loans and assisted it to hide this huge loan amount from the public view by treating it as currency swap.

Now as per the European rules it was not required for Greece to disclose this transaction. Greek Government knew that their budget deficit exceeded the allowed threshold which was predetermined by Maastricht treaty. Still they entered the European Union by adopting unfair accounting practices to hide their factual budget deficit. Moreover it kept on spending and raising funds. It should have reduced the spending and must have implemented severe budget practices to control further borrowings which could have helped Greece to bring back its economy in shape.

If the government had ever adopted fair practices in reflecting their accounts then it could have avoided the debt crisis and it would have had a better control on its economy. If the European rules were more stringent and well formulated then Greece would have required disclosing every transaction before entering the European Union So I believe that if national governments would have conducted their financial affairs in a more transparent and instructive manner then we would have avoided situations like Euro Debt crisis.

x

Hi!
I'm Marlon!

Would you like to get a custom essay? How about receiving a customized one?

Check it out