Causes And Effects Of Global Financial Crisis Economics Essay

Causes And Effects Of Global Financial Crisis Economics Essay Financial crisis is defined as a situation characterized by severe disruptions in the value of financial institutions assets, their access to funding or their clients trust, to the point of endangering the financial systems sustainability (Argandona 2009). This essay will discuss the various likely causes of Global financial crisis and the preventive measures that the UK government could take to avoid or diminish the threats of another crisis. Global economic crisis of 2008 resulted due to some fundamental and undesirable changes that took place in the efficient use of resources in America (Davis 2009, p. 1). According to Davis (2009), some changes that could be easily perceived were breakdown of information technology and the ever increasing globalization across the world. He has discussed in his article, the consequences of emergence of Post Industrial Society in US which led to an increase in unemployment as the largest employers shifted from manufacturing organizations to service industry which later contributed as a cause of credit crunch. The essay will first place the possible causes that led to the downturn in the financial position of the various economies across the world and finally it will talk about the methods that UK government can adopt to prevent itself from the hazards of next financial crisis. The essay concludes that while some countries were largely affected by the impact of crisis in 2008, there remain few countries that managed to overcome the shock and survived because of their policies and the best possible steps taken by them. The IMF remains bedeviled by philosophical disputes about the scale and scope of its lending and crisis related activities. These disputes distract the institution from its role as a global lender of final resort.(Truman 2006b, p. 532) Truman (2008) says that at the time of unfolding of economic crisis, members of International Monetary Fund failed to provide any kind of assistance to the economies that required a short term need for external liquid resources. According to him, one of the various possible causes was macroeconomic policies of several countries across the world that jointly holds the responsibility to a great extent for the crisis. He further commented that easy monetary policies and fiscal policies of countries like US, Japan and others reduced the savings rate of these countries and distorted the balance of the financial system and led to a soaring of global credit and elevated the price of houses. Collateralized debt obligations are bonds ultimately backed by bundle s of loans such as subprime mortgages.(Davis 2009, p. 103) Financial institutions had a good amount of money in the form of foreign exchange reserves so it started lending money to everyone at a very low interest rate (Truman 2008, p. 23) and also to the people who had no capacity to return it back, that is, subprime mortgages came into picture (Davis 2009). After a certain period, when the supply started exceeding demand, housing prices in US began to drop, mortgage holders found that the price or value of their house was less than what they were owing to the banks and so they started defaulting in high numbers and a rise in foreclosures was observed. Emergence of post industrial society, i.e. a shift from manufacturing to service industry in US led to large unemployment. In an effort to improve productivity, companies started cutting down on labour and ultimately small number of skilled labours were left. So the competition for skilled labour increased. With the materialization of defined contribution pension plan, the incentive to stick to a particular company came to an end. And employees started moving from one company to another. This new plan of pension fund led to the growth of mutual fund industry (Davis 2009, p. 31) which resulted in decline in employee attachment with the company and increased participation by financial institutions through mutual funds. Securitization [altered the traditional pattern of banking by] turning assets into securities traded on markets (Davis 2009, p. 35). This way of banking allows the bank to lend more amount of money. One form of securitization was mortgage backed bonds (Davis 2009, p. 35). Deboer (2008, p. 5) says that any commercial bank must have approximately 10% of the total amount of loan issued by it, in its capital assets. Many financial bodies issued mortgage-backed financial derivatives and eventually when the housing prices started falling, the value of mortgage backed securities declined too which in turn started making them bankrupt. Realizing this, banks started issuing small number and small quantity of loans. This strapped the credit situation tightly and thus housing prices started narrowing further. In Eastern Europe, the major reason behind the crisis was short term borrowings (Aslund 2009) from many European banks in large amounts because of the security and safety offered by so many countries in Europe by setting a fixed exchange rate. This led to inflation of prices because high amount of money was flowing in. Also the countries like Ukraine started importing goods on high scale and thus fell short of balance payment it owed to other countries. Lack of administration and regulation of the financial sector is another cause identified by Truman (2008, p.24). He says that the overleveraging of the financial system took place gradually in an exponential rising manner over several years, where poor supervision of the policymakers and the others responsible praised the incredible growth of the economy in its early years when the signs of inflation were not noteworthy. After a period of time, (Truman 2008, p. 24) when the financial institutions were left with no money and had no capacity to fund any further investment, the formation distorted and deleveraging began. He believes that another possible reason that might have had altered the market structure was the poorly understood risk associated with the innovations in the formation of new policies in the financial institutions. Bergsten (2008) says that countries like UK should adopt an economic expansion programme to avoid or surpass the effect of next possible financial crisis. Such programme would involve an effort to increase the domestic demand and thus causing an expansion of the trade in between countries. It also involves reducing the restrictions of trade on the border and inside the country as well. He says the most positive step the leaders of the G-20 could take would be to pledge to adopt fiscal stimulus programs amounting to at least 1 to 2 percent of most of their national economies. Leaders should try to think something creative rather than blaming each other for the crisis. Bergsten (2008) suggests that UK along with other countries must assure a support of at least $500 billion each to enhance the resources of IMF (International Monetary Fund) so that it will accumulate good amount of wealth and pledge to support UK as well as other countries at the time of crisis. He also suggests that an efficient working group needs to be formed within the countries to analyse and supervise financial regulations closely. Financial stability report from Bank of England (2009) states that banks should have sufficient amount of liquid assets to lessen its dependence on short term borrowings for funding non liquid assets. The Tripartite Committee comprising of the Bank of England, FSA (Financial Services Authority) and the treasury was held responsible for the crisis of 2008 by the staff of politics.co.uk (2009) in a report. They say that the Bank of England should be held accountable for macro-economic supervision instead of FSA and that all the three should know their exact roles and responsibilities. The report also suggests steps like developing policies to suppress fluctuations in financial conditions, assigning British authorities to constantly monitor UK branches of multinational banks so that if any new policy is formed by them which might affect the financial status of the co untry in future can be clogged at the right time, increasing the regulations about the capital assets requirement for the bank so that it properly assesses the loan borrower and grant it to him only if he can afford to pay it back. Bergsten (2008) has put forward the idea of a joint work or supervision of the FSA and the Bank. He feels that it would be effective if FSA concentrates on the conduction of the business and Bank focuses on the systemic issues. Amato (2009) expresses his views saying that assets whose value could not be determined were given triple-A ratings by the rating agencies and thus attracted more investors so UK government must ensure that banks dont over rely on the credit ratings (Bank of England 2009). Amato (2009) says protectionism should be removed so that all the companies across the world can trade easily and freely in other countries without any barriers. Recapitalization scheme has been undertaken by UK banks deliberately to raise capital to provide it w ith ample amount of insurance against future threats of crisis. (Bank of England, 2008) CONCLUSION Looking at the various causes, we can conclude that there were different reasons for crisis in different parts of the world. If a country forms strong policies and takes decisions that would be beneficial in the long run, then it might be able to protect itself from the adverse consequences of financial instability. Amato (2009) says that a country needs to form policies keeping in mind not only the benefit of its domestic market but also of the whole world. All the countries should cooperate at the international level and support IMF by all means. Countries like China, Malaysia and some Islamic countries were least affected by crisis because of their strong policies, good supervision and regulations, ability to predict or identify financial fluctuations in advance and resistance to outside worlds financial imbalance. The world has lot to learn from these countries.

Compare and contrast how the three male characters are presented to us

Compare and contrast how the three male characters are presented to us in The Millers Tale and consider their roles in the Fabliau. The three male characters in Chaucer’s ‘The Millers Tale’ present many of the classic themes in and genre ‘Fabliau’. In English literature there is only a small amount of these tales and half of those are Chaucer’s. While in French literature there are over 300 stories. Nicholas is presented at the start of the ‘tale’ as gentle (hende) shy and therefore trusted and experienced in passionate courtly love, we can tell from his appearance and description that he will be the stereotypical fabliau character who is ‘cunning’ and always ‘makes fun of’ the other more foolish characters. John the carpenter is given a short description and it is clear by the way he speaks that he is not very intelligent therefore his foolishness will be punished john represents the stereotypical character of the duped husband (old and jealous).Alison is the faithless wife (young and sexually active). Sexual and practical jokes play a large part in the Millers Tale, for example Alison tricking Absolon into kissing her ‘arse’, this idea however comes from a raucous Middle English song called ‘Old Hogan’s Adventure’. The fact that Nicholas is short and brawny in his manner and speech contrast his feminist presentation at the start of the tale. The three characters of Nicholas John and the wife Absolon fit securely into the fabliau theme of the ‘love triangle’ a plot that always lends itself to sexual jokes. One of the best jokes in the Miller’s Tale is the way the characters use the language oaf courtly love to gain their selfish lustful ends, a major theme in many Fabliau tales. Nicholas and Absolon c... ...f the fabliau. The tale is ribald in context; farce is a obvious form of humour in the Miller Tale as is irony. Chaucer plays off text against text to create ironic effect, the carpenter is a perfect ironic remedy to the Mi8ller’s advice of in the prologue, we learn that the best way for husbands to avoid being cuckolded is to; â€Å"An hoiusbonde shal nat been inqiusityf / Of Goddes pryvetee, nor of his wyf.† The three male characters in the Miller’s tale conform very well to the personalities and themes of the fabliau. But Chaucer changes his characters so they do not completely match genre, as we have seen with their different conventions and methods of acquiring their goals, Nicholas is direct and straight forward, Absolon is indirect and foolish and hence gets punished for it and John is honest and gullible and does not have Alison at the top of his list.

International business climate Essay

There are various factors which are used in measuring the business climate of a nation and also globally. Some of these factors are energy costs, business income tax levels, market size, life’s quality, infrastructure, incentives, workforce availability and others. Globally, the investors are known to monitor the share prices of most business corporations in order to make an informed business on the companies or the market to invest in. According to Guy (2009)and Katsioloudes&Hadjidakis, (2007), business climate globally has been quite harsh on the investors. Some of the business rules in most countries are not conducive for the business climate. These are rules that are quite unstable, disloyal and the corruption is completely out of hand. During crisis, investors usually sell the shares that belong to the entire business in order to avoid losses. This hence affects the entire business adversely. According to the literature review that has been conducted on the international business climate, most multinational companies enjoy relationships and hence have merged in order to ensure competition. Most countries have a vast set of regulations and laws that do affect business operations. As Kirpalani (p. 114) asserts a country like the UK has very active monopoly policies. The monopoly commission plays a very vital role as far as mergers and takeovers are concerned. The UK law does permit the mergers commission and monopolies to investigate, block and delay all the proposed mergers that are not of public interest. Social factors also have a major influence on global business climate. Communities on global business climate are very keen on the way the company does utilize their income in order to support local people as far as destination economies are concerned. Their main interest is to see the local people engage in the foreign companies. They do expect all the multinational companies to be involved in some social activities for example helping the poor people. International business climate are also involved in conserving the environment as every business is going green. There are various government policies that do affect business activities. To ensure that there are low levels of pollution, governments should also establish those policies for example emissions standards. The political environment has set various laws and has aimed at reducing the corporate taxes in order to encourage some of the foreign investments in Africa and Asia (Scaffer et al, 2008). Most of the economies in the global international climate have also invested in effective communication facilities to enable business transactions. If we have to involve the issue of Switzerland in the international business climate we acknowledge the fact that just as the international climate has incorporated economic, cultural, legal as well as political issues so has Switzerland. One of the reasons that make Switzerland cope and suit in the international business climate is the fact that its legal climate is quite transparent and has regulations that are not discriminative. It has a legal system that governs the local and international business activities and stops anti- competitive behavior. Its political climate is effective and very stable. If we are to compare the international climate with that of Switzerland, it is patent that Switzerland’s international climate is better. Therefore, with that in mind there ought to be some recommendations for the international business climate. Switzerland happens to be one of the leading countries globally when it comes to the IT infrastructure. Some of the factors that do work in its favor comprise of issues like security, telecoms competition and government support. The official currency of Switzerland has remained to be Swiss Franc (CHF). It is one of the currencies that has always been used in the country and is quite strong as well as stable over many years. It is convertible and is not controlled by the government. It also has one of the best banking sectors in Switzerland and one of the biggest commercial bank. The communication systems in Swiss are vast and quite modern. Its domestic system comprises of an extensive cable as well as a microwave network. It has the best reputation when it comes to transportation as it has the most efficient and extensive public transportation globally. Its economy is the best and all the Swiss citizens are entitled to education. For those who are financially deprived, the government is responsible for paying their meals, transportation, books and other amenities. The citizens are free from other foreign country and are only subject to the laws of their country. Since it is not part of EU and UN, the government is also free from the outside regulations. Its tri level system of politics is effective since the country and state bodies are usually granted high control levels. The collegial system of Federal council contributes highly to its political stability. Switzerland economy is so effective and has mounted to be the global leading public and medical health infrastructures. It tops the list of all European countries despite the fact it is not a member of EU. As compared to the international business climate, culturally, there main priority has been protection of the environment. Their regulation standards are quite high and efficient making the industry grow at high rates. It is one of the vast and major exporters of both goods and services and a big supplier within Europe after Japan and USA. The climate of Switzerland is definitely what can be termed as pro business. Just like the international climate, it has also adopted a legislative act that promotes economic attractiveness for all businesses. It has created a wonderful appealing economy for business. They also have an advantage of a having high standards of production. Switzerland was ranked by the World Economic Global Competitiveness Report as the global’s most competitive economy (Ina, 2010). It has a sound environment, infrastructure, efficient market and a high technological innovation. The major laws that govern the foreign investment are the Swiss Code of obligations, Securities Law, Cartel Law and Lex Friedrich. Recommendations for International Business climate The international business climate is yet to be what can be termed as perfect. It is therefore the duty of each nation to make sure that everything is running smoothly. In most third world countries, the investors are always at risk. There ought to be firm laws governing each country and protecting businesses from being affected by inflation. Just like in Switzerland, nations need to improve on their efficiency, security and laws in order to have an appealing business climate. The political climate should also be enhanced into one that can accommodate business effectively. It is the duty of the legal system to make sure all social evils are cubed for example corruption in order for businesses to survive. There should be a strong relationship with other foreign countries in order for international trade to survive. Other laws should be introduced whose measures should include tax breaks as well as investment credits for the small companies. There should be strict safety environmental regulations and the government should also offer subsidies and a wonderful climate for businesses. Conclusion Though the international business climate is so much like that of Switzerland, Switzerland has one of the best business climates that are quite appealing. The international business climate should emulate Switzerland and aim to make their climate appealing. This can be done through adoption of laws that protect businesses, unification of all those who are concerned and eradication of all social evils like corruption.

DNA Information System The Use Of The Combined DNA Index...

Imagine a world from where the second you are born, you have a sample of DNA taken, and it gets entered into a national database to ensure a safer world. For some, the thought of having something so personal and unique to you in a national system is appalling, and for others, the thought of being able to find the perpetrator of a crime easily with the help of DNA is more important to them than having private information introduced into a database. Today, while not yet universal, DNA databases are used by multiple government departments. DNA is the material in all living things that carries genetic information. It is unique for every individual, with the exception of twins, and by reading DNA, it is possible to identify someone. Human DNA†¦show more content†¦Some may claim that a universal DNA database invades privacy and basic rights, but the fear over any possible invasion of privacy is minor. In fact, former New York mayor Rudolph Giuliani declared, The opposition to DNA on the theory that this invades privacy- which comes mostly from the ACLU- is no more compelling than the opposition to fingerprinting when it first started,† (Marzilli 36).The objection to a universal DNA database is just like the objection to fingerprinting, which today is accepted in society and no one fears their privacy is invaded for fingerprinting.For those who oppose a universal DNA database because of the chance that they will be denied a job because of genetic history, do not have to worry. The Genetic Information Nondiscrimination Act (GINA), passed in 2008, prohibits any employer from denying an individual a job due to their genetic information. Everyone is allowed an equal chance at a job (EEOC). GINA protects everyone from experiencing discrimination in the workplace, and due to this act, people should not be opposed to a DNA database because they are protected from discrimination. 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