Systematic Corruption

At what dollar-value would you sell your ethics?


Inside Job (2010) - the systemic corruption of the United States

Barbarians at the Gate: The leveraged buyout (LBO) of RJR Nabisco

Barbarians at the Gate: F. Ross Johnson, the CEO of RJR Nabisco decides that the time is ripe to take over his own company and enlists American Express. This kicks off a tide of other firms swarming in to tender offers. The outline of the film follows the actual takeover of the RJR Nabisco empire in a tongue in cheek way.

What Does Leveraged Buyout - LBO Mean?
The acquisition of another company using a significant amount of borrowed money (bonds or loans) to meet the cost of acquisition. Often, the assets of the company being acquired are used as collateral for the loans in addition to the assets of the acquiring company. The purpose of leveraged buyouts is to allow companies to make large acquisitions without having to commit a lot of capital.

Investopedia explains Leveraged Buyout - LBO
In an LBO, there is usually a ratio of 90% debt to 10% equity. Because of this high debt/equity ratio, the bonds usually are not investment grade and are referred to as junk bonds. Leveraged buyouts have had a notorious history, especially in the 1980s when several prominent buyouts led to the eventual bankruptcy of the acquired companies. This was mainly due to the fact that the leverage ratio was nearly 100% and the interest payments were so large that the company's operating cash flows were unable to meet the obligation.

Too Big to FAIL - Blast from the past

"Too big to fail" is a colloquial term in regulation and public policy that refers to businesses dealing with market complications related to moral hazard, macroeconomics, economic specialization, and monetary theory.

According to this theory, certain financial institutions are so large and so interconnected that their failure will be disastrous to an economy. Proponents of this theory believe that these institutions should become recipients of beneficial financial and economic policies from government central banks to keep them alive.

So, the Best Animated Business TV Show is…

South Park Season 13 Episode 3,Margaritaville

Simply a better version of Wall Street 2

Goldman Sachs Global Rage Fund

Dear Investor:
Up until now, Goldman Sachs ($GS) has been silent on the subject of the protest movement known as Occupy Wall Street. That does not mean, however, that it has not been very much on our minds. As thousands have gathered in Lower Manhattan, passionately expressing their deep discontent with the status quo, we have taken note of these protests. And we have asked ourselves this question:

How can we make money off them?

The answer is the newly launched Goldman Sachs Global Rage Fund, whose investment objective is to monetize the Occupy Wall Street protests as they spread around the world. At Goldman, we recognize that the capitalist system as we know it is circling the drain – but there’s plenty of money to be made on the way down. The Rage Fund will seek out opportunities to invest in products that are poised to benefit from the spreading protests, from police batons and barricades to stun guns and forehead bandages. Furthermore, as clashes between police and protesters turn ever more violent, we are making significant bets on companies that manufacture replacements for broken windows and overturned cars, as well as the raw materials necessary for the construction and incineration of effigies.

It would be tempting, at a time like this, to say “Let them eat cake.” But at Goldman, we are actively seeking to corner the market in cake futures. We project that through our aggressive market manipulation, the price of a piece of cake will quadruple by the end of 2011.

Please contact your Goldman representative for a full prospectus. As the world descends into a Darwinian free-for-all, the Goldman Sachs Rage Fund is a great way to tell the protesters, “Occupy this.” We haven’t felt so good about something we’ve sold since our souls.

Sincerely,
Lloyd Blankfein
Chairman, Goldman Sachs

Must Watch Business Movies

1. The Social Network

The Social Network: On a fall night in 2003, Harvard undergrad and computer programming genius Mark Zuckerberg sits down at his computer and heatedly begins working on a new idea. In a fury of blogging and programming, what begins in his dorm room soon becomes a global social network and a revolution in communication. A mere six years and 500 million friends later, Mark Zuckerberg is the youngest billionaire in history... but for this entrepreneur, success leads to both personal and legal complications.

2. Enron: The Smartest Guys in the Room Links

Enron: The Smartest Guys in the Room: A documentary about the Enron corporation, its faulty and corrupt business practices, and how they led to its fall.




3. Wall Street I & II

Wall Street: A young and impatient stockbroker is willing to do anything to get to the top, including trading on illegal inside information taken through a ruthless and greedy corporate raider whom takes the youth under his wing.

Wall Street Money Never Sleeps: As the global economy teeters on the brink of disaster, a young Wall Street trader partners with disgraced former Wall Street corporate raider Gordon Gekko on a two-tiered mission: To alert the financial community to the coming doom, and to find out who was responsible for the death of the young trader's mentor.

4. Inside Job

Inside Job: 'Inside Job' provides a comprehensive analysis of the global financial crisis of 2008, which at a cost over $20 trillion, caused millions of people to lose their jobs and homes in the worst recession since the Great Depression, and nearly resulted in a global financial collapse. Through exhaustive research and extensive interviews with key financial insiders, politicians, journalists, and academics, the film traces the rise of a rogue industry which has corrupted politics, regulation, and academia. It was made on location in the United States, Iceland, England, France, Singapore, and China.