Discussion Topic 1 The Reading covers several causes behind

Discussion Topic 1: The Reading covers several causes behind the financial crisis of 2008. The underlying question becomes whether this was an issue of greed or fraud. After reviewing the different causes, what is your opinion on how this should be classified, fraud or greed? Please support your opinion with specific behaviors that support your belief.

Solution

Both. It may have started as greed, but in order to keep up with the amount of greed companies (executives) started committing fraud. I think it began when banks and mortgage lenders started lending to persons who were a high risk of, well, failure. They almost had set people up to fail.

The financial crisis, the second great depression, whatever you choose to call it was, IS, a catch 22 systematic failure of good pay for skilled and/or educated workers. Wal-Mart (I have family that works for them and I still do not shop that place) stores have empty shelves. This is because they have cut back on hours and employees, they cut back because sales at the store is low. So, the shelves go unrestocked because the sales are low so they cut employee hours, the sales are low because the shelves are unstocked and no employees are there to restock them. Recently I read where Wal-Mart is planning on raising some employees salaries to a better “living” wage. It does not profit them to raise them a lot because then Wal-Mart loses money. Almost 50% of Wal-Mart employees have food stamps, they then turn around and use these benefits at Wal-Mart, so the company benefits 2 times. 1 they can keep wages low and 2 they get paid by the government to pay for food stamps.

Companies want to make a profit and in order to do that they have to keep their over head low so they consolidate 2 positions into 1 and release 1 person. The person they release no longer is able to go buy luxury items such as a new clothes since theirs are still decent. Since they are no longer buying new clothes the clothing sales are down and the store says they need 1 less employee so they let 1 employee go. That employee, already strapped for cash, can’t afford to buy the amount of food they used to so they don’t shop at Wal-mart as much. And since they are not shopping as much at Wal-Mart, Wal-mart’s stores are losing sale and the shelves are not getting restocked.

It becomes fraud when the profits have taken a slump and they are still looking to turn a profit and make themselves and shareholders more money and they are using non-legal and non0ethical practices is when it becomes fraud. To me, greed and fraud run hand in hand.