Financial Crisis: What Will The Collapse of Investment Banking Mean For CSR?
From Green Options’ The Inspired Economist
In view of the current financial crisis, it is hard to grasp the fact that overnight investment banks once regarded the kings of Wall Street, are teetering on the edge of stability. The bankruptcy of Lehman Brothers has threatened the survival of Morgan Stanley in spite of the fact that it has just declared great earnings. All eyes are on Morgan and Goldman Sachs, the two big I-banks left standing. Will they go next? What will this mean for corporate social responsibility in the investment banking sector?
Investment Banks have long been the entrepreneurs of Wall Street. Sure they take risk but then look at the return that they bring. In a capitalistic society, who doesn’t respect the work of an entrepreneur? Time and again they have been instrumental for fueling the economy. A high return on investment has enabled many of the investment banks to show a solid to commitment to corporate social responsibility in the last few years.
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How these investor banker’s like Lehman Brother’s may collopase? Obiviously, their wealth has changed hands. The immediate question comes to mind where it has gone? I don’t think that it is with the home loan borrower. If a borrower, becomes defaulter to pay his home loan premium, he might have spent the money somewhere else. Where it can be? May be he has bought an expensive car or taken up some luxury vacation or he has spent the same just for living .Thus the money he borrowed has been chanelised to other sector. Presumeably the money will be contained within the country. Therefore,country’s economy may not be effected much. However, these investment banker’s probably invest money all over the world. It is quite unlikely that they will make loss at all locations. So, I really don’t know, how the collapse of one or two banks shakes the stock markets all over the world. I suspect some foul play. May be these banker’s were investing a huge part of their wealth on non prductive market. May be they have been funding some wars. They might have been forced to do so. They may also invest in some expensive military research which did not became comercially viable etc etc. May be they were loosing thier money for the last one and half years but by manipulation they have been maintaing their stock price.They too might have been borrowing from other institution round the globe. Finally, one day they could not resist any more and the wall collpase into a debris.
At the time of financial crises we need to come together united and try to solve the problems which are responsible for such a hazard. We need to overcome it. It is meant to bring calm to the population and markets and display government strength and stability.