The 2007-2008 Financial Crisis Causes, Impacts and the Need for New Regulations Essay Example

The 2007-2008 Financial Crisis: Causes, Impacts and the Need for New Regulations Paper THE 2007-2008 FINANCIAL CRISIS: CAUSES, IMPACTS AND THE NEED FOR NEW REGULATIONS The initial cause of the financial turbulence is attributed to the U. S. sub-prime residential mortgage market. The sustained rise in asset prices, particularly house prices, on the back of excessively accommodative monetary policy and lax lending standards during 2002-2006, increased innovation in the new financial instruments, unusual low interest rates resulted in a large rise in mortgage credit to households; particularly low credit quality households, the greed of investors’ for ever higher returns coupled with very minimal down payments, along with the dependence on major global rating agencies, allowed complex investments products to be sold to an extremely wide range of investors. The repacking of credits with some other financial instruments, the rising complexity of the products, emerging â€Å"monoline’ guarantors in the marketplace – that are not being regulated, and the governments came into rescue, sometimes even difficult who’s the one to be blamed for the crisis. These would address the issue of transparency, conflict of interests among the market participants, regulatory and supervisory system, in particular their cooperation. Development of the Crisis In order to keep recession away, the Federal Reserve lowered the Federal funds rate 11 times from May 2000 (6. %) to December 2001(1. 75%), and this creating a flood of liquidity in the economy. Cheap money, created a favorable breeding ground for reckless risk taking. It found easy prey in restless financial institutions, and even more restless borrowers who had no income, no job and no assets. These subprime borrowers wanted to realize their lifes dream of acquiring a home. For t hem, holding the hands of a willing banker was a new way of hope. There were more home loans, more home buyers, more appreciation in home prices. We will write a custom essay sample on The 2007-2008 Financial Crisis: Causes, Impacts and the Need for New Regulations specifically for you for only $16.38 $13.9/page Order now We will write a custom essay sample on The 2007-2008 Financial Crisis: Causes, Impacts and the Need for New Regulations specifically for you FOR ONLY $16.38 $13.9/page Hire Writer We will write a custom essay sample on The 2007-2008 Financial Crisis: Causes, Impacts and the Need for New Regulations specifically for you FOR ONLY $16.38 $13.9/page Hire Writer The Federal continued slashing interest rates, perhaps, by continued low inflation despite lower interest rates. In June 2003, the Fed lowered interest rates to 1%, the lowest rate in 45 years. The whole financial market started turn just like a candy shop where everything was selling at a huge discount and with a very minimal down payment. Unfortunately, no one was there to warn about the tummy aches that would follow. The financial institutions thought that it just was not enough to lend out the loans with just minimal interest rates. They decided to repackage the mortgage loans with other financial instruments such as collateralized debt obligations (CDOs) or asset-backed commercial paper (ABC paper), or structured investment vehicles (SIVs) and pass on the debt to another candy shop. As appeared by the Central Banks Governors, these risk-based instruments was an aid for the investors in the marketplace since enabled them to purchase the precise degree of risk they willing to tolerate with, at given alternate returns. And also the mortgage market would become more liquid as sales were facilitated. The new financial instruments gave options to the banks to hold the loans they made as an off-balance sheet vehicle, or sell to others, or pay another institution to accept the risk of default. This was coupled with the belief one can sell or get ride off the risk via synthetic CDOs which was impossible to the system as a whole. One of the investment vehicles of the new instruments is the hedge funds. Investors of the hedge funds included financial institutions for example pension funds and non-for-profit institutions. Many of these hedge funds just ignore the warning signals of their insolvency early in the financial crisis. Most of the hedge fund industry required no public reporting since was located in offshore tax havens and that experienced no supervision. Nevertheless, it was unclear on what level this industry to get negatively impacted by the financial crisis. Apart from these, it was a need in improving transparency. There were also dramatic rises where corporations offered guaranteed debts, with promising to the investors to pay debt if there were default, and the issuer would pay a premium for this guaranteed. These corporations are known as the â€Å"monoline† insurers or â€Å"monoline† guarantors, and it became another casualty of the financial crisis. Globally, many financial institutions had purchased these new promising guaranteed of debts. But, every good item has a bad side, and several of these factors started to emerge alongside one another. Insolvency on one of these institutions could threaten the solvency of many others. When the â€Å"monoline† insurers started to fall into insolvency problem, the market was illiquid. Suddenly, emerging financial institutions were short of cash, as well as become insolvent. Some of the affected are such Goldman Sachs, Merrill Lynch, and Bear Stearns. But, at the end of the day, the worst effected from this financial crisis were the mortgage borrowers. Most of these â€Å"monoline† insurers did not have adequate capital to fulfill their guarantee promises. Investors’ dependence lied mostly on the high ratings placed by major global rating agencies for these institutions put the investors in a position where they could experience enormous losses. In order to survive, many banks turned to sovereign wealth funds to obtain new capital. Bad news continued to pour in from all sides. In August 2007 that the financial market could not solve the subprime crisis on its own and the problems spread beyond the U. S borders. Lehman Brothers filed for bankruptcy, Bear Stearns was acquired by JP Morgan Chase, Merrill Lynch was sold to Bank of America, and the Federal National Mortgage Association (â€Å"Fannie Mae†) and the Federal Home Mortgage Corporation (â€Å"Freddie Mac†) were put under the control of the U. S. federal government. Governments started took over banks as done by the UK government on a bank named Northern Rock (a British bank) after a loan pumped nearly reached $50 billion. The idea was to enhance liquidity, to put the interbank market back on its feet and to restore confidence in financial system. Injections of liquidity by central banks include lending government’s paper, accepting high-quality assets owned by banks as collateral, and increased the loans maturity. On the other hand, central bank’s intervention indirectly would be a trigger to a global inflation. The action would increase the prices of products based on oil, increase the price of food, increased in demand for agriculture products in manufacturing ethanol to substitute the gasoline. Few recommendations regarding central bank’s intervention for instance base any future government interventions on a clearly stated diagnosis of the problem and a rationale for the interventions, and keep policy interest rates on track in a globalized economy because it would help to introduce the notion of a global inflation target. This would help prevent rapid cuts in interest rates in one country if they perversely affect decisions in other countries. This is because in monetary policy of different central banks will looking at each other. Number of debates arose whether the central banks should create new regulations instead of using monetary policy and interest rates when it comes to inflation in asset prices to recurrent. One of the ideas is new regulations to control the new financial instruments imposed by the government of Germany. Others such government intervention in reduction in the face value of the mortgage, and a need to regulate the very used of financial instruments (of CDOs, for instance) so that the transparency of the market be restored and investors be adequately informed. Other than that, to enhance the monitoring process of non-transparent off-balance sheet financing, coordinating supervision and regulating activities in the short run and remodeled the Federal Reserve in the longer run. In terms of bank’s capital adequacy, the ratio should be raised above the eight percent as under the Basel Accord 1988. Conclusion As to conclude, cutting interest rates below their natural level distorts time preferences and investment decisions, causing individuals and companies to take on more risk, the risk that they will later regret having taken. In effect, the central bank is leading people into miscalculating the riskiness of the decisions they are making by keeping interest rates artificially low. A perfect example is the previous housing bubble. If interest rates should be 5% but they are 1%, then home builders are going to increase their indebtedness to take on more projects with longer and longer completion time frames. A project that comes online 5 years out looks much less risky when you can borrow money for 4 or 5% less. It is, therefore, very important that to identify the causes of the current crisis accurately so that can then find, first, appropriate immediate crisis resolution measures and mechanisms; second, understand the differences among countries on how they are being impacted; and, finally, think of the longer term implications for monetary policy and financial regulatory mechanisms. It was also possibility the government actions and interventions caused, prolonged, and worsened the financial crisis. They caused it by deviating from historical precedents and principles for setting interest rates, which had worked well for 20 years. They prolonged it by misdiagnosing the problems in the bank credit markets and thereby responding inappropriately by focusing on liquidity rather than risk. Central banks should adopt a broader macro-prudential view, taking into account in their decisions asset price movements, credit booms, leverage, and the buildup of systemic risk. The timing and nature of pre-emptive policy responses to large imbalances and large capital flows needs to be re-examined† (IMF, 2009b).

journal article summaries Essay Example

journal article summaries Essay Example journal article summaries Essay journal article summaries Essay Journal Article Summaries The Importance of Human Resources Management in HealthCare: A Global Context is an article that gives a comparative evidence of varied views concerning the performance of human resource management in healthcare. The article evaluates diverse literature work and derives implications for health care professions, policy makers and managers in the sector of healthcare. It examines the recent views about human resource management in healthcare and their performance. In addition, it includes the previous views about human resource in healthcare. The article uses various methodologies, findings and recommendations and the focus of human resource management in healthcare. The findings of the article reveal that there is a relationship between the various practices of human resource, guiding principles and the performance. A little research finding explores the link between human resource and healthcare even though it is an essential for human resource professions. The article gives an insight of implications of research in the health sector (Kabene, Orchard, Howard, Soriano and Leduc, 2006).Recent research findings that were done indicate that the practices of human resource associated with the outcomes of patients yielded little information through which human resources affect the performance of health workers and that of the patients. The article reveals different methodologies that were used to obtain the information about the understanding of health professions and their experience in the health sector. For instance, the procedures through which human resources affected the performance were examined. It was found that human resource plays essential roles in the performance of healthcare. The article indicates some increasing sovereignty for healthcare associations in the United Kingdom. In addition, the article gives alternative methods of research and practices in light of present research methodologies that can lead to a better performance in the health sector. The article, Human Resource Management and Performance in Healthcare Organizations addresses the importance of human resource management in the global perspectives. It addresses their roles in the healthcare organization especially their contribution to the better outcomes and delivery of services in healthcare. The article reveals how human resource management is crucial to any healthcare organization and how it can lead to a better performance in the healthcare system. It provides various methodologies such as the use of secondary data to develop new strategies effective for improving healthcare services. The article examines the case studies from different countries such as Canada, Ghana, the United States and many others with suggestions on how to overcome the problems that face healthcare sectors globally. It gives proper implementation techniques that human resource managers should practice to promote efficiency management in healthcare. The article examines human resource issues globally and raises questions on them (Harris, Cortvriend and Hyde, 2007). In addition, it analyzes the impact of human resource as well as identifying the trends followed to transform the health sector. The article concludes that proper human resource management in the health sector is essential because they contribute to a high quality of services in healthcare. The article reveals that human resources are the key to the success of the organizations. This is because they help the organizations to meet their objectives and it is easy to identify goals through them. Therefore, resource managers should be involved at all levels of planning. They ensure that issues that affect health workers are raised and well addressed through active engagement in policy planning at all levels. The authors of this article reveal that there should be a strong understanding between health workers and human resource managers for the success of healthcare programs. The authors recommend that more research and involvement of human resource managers on policy formulation lead to a better performance in healthcare organizations. References Harris, C., Cortvriend, P., Hyde, P. (January 01, 2007). Human resource management and performance in healthcare organizations. Journal of Health Organization and Management, 21, 448-459. Retrieved from emeraldinsight.com/journals.htm?articleid=1621867show=pdf Kabene, S. M., Orchard, C., Howard, J. M., Soriano, M. A., Leduc, R. (January 01, 2006). The importance of human resources management in health care: a global context. Human Resources for Health, 4. Retrieved from human-resources-health.com/content/4/1/20

Imperialism in the nineteenth century Essay Example | Topics and Well Written Essays - 750 words

Imperialism in the nineteenth century - Essay Example Some countries and corporations within this system accumulate a lot of power and wealth. However some states recorded failure both politically and also economically. The European nations which had become industrialized gained dominance in the world systems. This was contrary to the fact that these nations were weak and marginalized on the few centuries before. The rapid industrialization gave these European countries a rapid growth and they also acquired great military power. Discussion Competition control in the nineteenth century There are different methods that different people used to gain success in business in the nineteenth century. Andrew Carnegie for instance employed the use of the vertical integration. This method involved the use of control on every step in the manufacturing process of the product. This method dominated the market in that century. The vertical integration method had the advantage of saving cost as a result of the integration. This allowed the business to sell products at a cheaper cost compared to those that had not been integrated. An example to this was that the horse company could be the owner of the food farm, Saddle Company and other related group of companies (Hobson 30). Other groups of people such as John D. Rockefeller employed the use of horizontal method of integration. This method involved the control of the entire market in the process. An example was to buy every steel producing company in the region. The idea behind the purchase of all the producing companies was to create a monopoly in the market (Hobson 32).

Identifying Rhetorical Devices Essay Example | Topics and Well Written Essays - 250 words

Identifying Rhetorical Devices - Essay Example In another instance, cities are described as being ‘welcoming and humane’. Personification enables readers to understand the significance of introducing these identity cards, which is to make all city residents feel they belong. The article also uses allusion when it refers to immigrants who use their cards as ‘Scarlet letter’. This is in reference to the 1850 work of fiction where a woman was made to wear a scarlet with the letter ‘A’ to mean adultery. Allusion here elaborates the lack of status that immigrants suffer in foreign cities. Poetry Magazine Issue 14 has an article titled ‘Is that you, Walt Whitman?’ This article, written by Therese Stanton uses numerous rhetoric devices. It talks about a devastated Whitman who has tried every career but has not found a suitable one. It also describes a detailed series of events that lead Whitman to the identification of poetry as his passion (Stanton, 2011). Amplification is the repetitive use words or phrases to emphasize. This article applies amplification in the words ‘Tuesday’ and ‘mad’ to emphasize Walt’s frustrated state of mind. Stanton also uses alliteration in this article when she writes ‘fiddle footed, flighty, fluttery†¦hyperactive, hyperkinetic†¦Ã¢â‚¬â„¢ This device provides a rhythm in the article making it interesting to the readers. The Editorial Board (February 12, 2014) Mr. de Blasio’s Welcoming Gesture. The New York Times Retrieved February 15, 2014 from

The Great Gatsby and the American Dream Essay Example for Free

The Great Gatsby and the American Dream Essay The luxury cars, ritzy parties every week that never seem to be unattended, and breezers’ (a convertible car) that always turns heads as it drives by. What more could a man want? Well the one thing he so desperately desires to have is the most unobtainable request. Gatsby’s American dream is Daisy, Daisy is a fluttery individual and sometimes isn’t the brightest bulb in the box not to mention she is married to Tom. Gatsby knew Daisy before she was married to Tom but back then things were different much, much different. Gatsby back then was a poor individual and Daisy came from money. Gatsby being a young boy fell head over heals in love with Daisy but daisy coming from money knew she would never marry the man because â€Å"rich girls don’t marry poor boys† as stated in the movie. Gatsby was completely oblivious to this fact and then left to go the military, upon returning from duty he expected to find daisy waiting for him but instead daisy was a newlywed. Gatsby’s heart was broken, but he did not stop perusing his dream. Tom and Daisy lived a life of luxury in east egg; after Gatsby went off to collage he became rather rich and moved into the house right across the lake from them. Small world wouldn’t you say?! I think not! Gatsby then tried to do everything in his power to make daisy see that he is well fit for her to come back. The parties every week, the gigantic mansion he lived in, and not to mention he kept creepy memories of Daisy and her successes. Much to Gatsby’s prevail Daisy’s cousin Nick moves in to the little house next door to him. Of course Gatsby is going to take this opportunity to get close to nick so he can finally see Daisy again. Nick finally sees a light in Gatsby and the light is hope. â€Å"Delivered suddenly from the womb of his purposeless splendor† This quote explains Nick’s previous view on Gatsby upon trying to get to know him. Nick had previously thought that Gatsby’s life was purposeless and wasteful much like Tom’s but then he realizes that everything he has done has been aimed at achieving a single goal, winning Daisy’s love. As the story progresses Gatsby gets closer and closer to finally reaching his goal of having daisy back in his life, or as it is portrayed to him. Daisy and Gatsby finally came into contact and the tea gathering Nick had at his house. There the very socially awkward Gatsby sees Daisy for the very first time and he blurts out as Daisy is trying to remember the last time she saw him, â€Å"Five years next November†. Most would think that’s extremely creepy but Gatsby truly meant it in a sentimental way showing that it has been playing on his mind ever since the day he left. When Gatsby least expects it he loses daisy for good. The green light at the end of her dock finally faded into oblivion. â€Å"So he gave that up and only the dead dream fought on† Even though Gatsby was so close to obtaining the infamous American dream the idea that the dream has a will of its own and also the suggestion that maybe what makes Gatsby special isn’t his dream but the fact he held on to it for so long while everyone else got on excepting how the world really was. It’s tragic that all his success in life and making sure he lived a life of glitz a glam was for this one girl, the girl, Daisy but never accomplished what he set out to do. All in all Gatsby didn’t get the girl and in the end he didn’t even make it out with his life but all is fair in love and war. It just goes to show that if a dream is big enough and worth wild enough a person will go to any lengths to make sure they reach it even if it mean the lost of your own life. â€Å"The American Dream† as you can see is truly unobtainable.

Folklore, Womens Issues, and Morals in Toni Morrisons Sula Essay

The Themes of Folklore, Women's Issues, and Morals in Sula    Toni Morrison has asserted that she likes to write the kind of books that she would like to read (Harris 52). By this we can assume she favors black folklore, women's issues, and discussions of accepted moral standards. These are some major themes in Sula. Folktales are a type of oral prose that is passed from one person to another. Listeners may chose to add or subtract from the main story lines, embellishing with experiences and wisdom from their own lives. It then takes on the collective morals, or conscienceness, of that culture. From those individuals who we normally would not consider cultured, great gems of knowledge and wisdom are passed down through folktales. This is done without the traditional use of written language or use of proper organizational style. Yet these oral traditions are not without power; they reach into the very heart of what it is to be human. Typically, folktales are set in believable surroundings with extraordinary people. We see the same in Sula. The setting is in a common Negro village called the "Bottom" where it is said that it is "the bottom of heaven" (Morrison 6). The wider historical settings are kept intact in the novel as the events of World War I swirl around and capture some of the residents of Bottom. It is people, however, that makes up the surreal in Sula. Eva is a tireless grandmother who controls her domain of a large boarding house; Shadrach is a war-shocked veteran who invents an amnesty day for people to kill each other; Hanna and her daughter Sula are shameless adulteresses. In this tale, Toni Morrison takes liberty to change the style of folklore (Harris 53). Instead of happy endings, violent ... ...net.10 September 2001. <<http://www.viconet.com/~ejb/bio.htm>> Harris, Trudier Fiction and Folklore: The Novels of Toni Morrison. Knoxville: The University of Tennessee Press, 1991. Hedge, Holly.   "Toni Morrison."   Empire Zine <http://www.empirezine.com/spotlight/toni-morrison/toni-morrison.htm>   (accessed on September 6, 2001) Morrison, Toni Sula. New York: Alfred A. Knopf, Inc. 1973. "Morrison, Toni." Microsoft Encarta Online Encyclopedia 2000.   <http://encarta.msn.com> 1997-2000 Microsoft Corporation. (accessed on September 26, 2001) O'Neill, Cynthia.   Goddesses, Heroes and Shamans.   New York: Larousse Kingfisher Chambers Inc., 1994. "Toni Morrison."   Contemporary Authors, Gale Research, 1993; abstracted at <http://www.cwrl.utexas.edu/~mmaynard/morrison/biograph.htm>   (accessed on September 26, 2001)   

Elimination of Waste in a Lean Manufacturing Environment

Many things can be done in a manufacturing enterprise in order to increase its performance. Special consideration should be given to the activities where the most benefit can be attained. The elimination of waste is the most important contributor to improvement in a lean manufacturing environment. The efforts for the elimination of waste begin on the manufacturing floor and include all areas of the enterprise all the way up to management. The whole organization plays a part in the continuous efforts to eliminate waste. It is the responsibility of management to provide the proper training and tools so that all personnel can properly participate in these activities. Once the personnel is actively searching for and eliminating waste, proper care must be taken in order to not introduce new sources of waste into the system. One important aspect to consider in the elimination of waste is that waste must not be transferred to vendors, customers or another area within the enterprise. Vendors cannot be expected to bear the burden of improper methods of waste elimination without undesirable consequences and likely introduction of new wastes. The transfer of waste to the customer is a dangerous and undesirable proposition since they are the reason the manufacturing enterprise exists in the first place. Working closely with the customer leads to a better understanding of their requirements and improved mutually beneficial processes or methods can be implemented. This allows the elimination of additional waste where the original demands of the customer may have forced areas within the manufacturing enterprise to contain waste. In order to truly remove waste it must be eliminated from the system entirely and not simply transferred within the system (Goldratt, 2004). Waste exists in all areas of an organization. This is an important reason why successful efforts to eliminate it can have such a huge impact on the organization’s performance. Tools such as 5S programs, Standard Operating Procedures, total productive maintenance, or visual management tools and techniques can be implemented to aid in such efforts (NWLEAN, Inc. , 2013). According to Lean principles there are eight major areas of waste. They are referred to as the Eight Deadly Wastes: 1. Overproduction – Making or doing more than is required or earlier than needed. This waste can tie up significant working capital that could be sed for other purposes. 2. Waiting – For information, materials, people, maintenance, etc. An organization must look to eliminate or minimize any wait-times by ensuring that items arrive only when they are truly needed. 3. Transport – Moving people or goods around or between sites. Although some is necessary, this is potentially a huge waste with poorly planned distances or number of moves. 4. Poor process design – Too many/few steps, non-standardization, inspection rather than prevention, etc. An organization should strive to eliminate any non-value adding activities within the process. 5. Inventory – Work-in-progress, papers, electronic files, etc. An understanding is needed of how long it takes to replenish each item in order to truly reflect the real customer demand and not mask waste such as excessive queue times, unbalanced workloads, unreliable suppliers, or misunderstood customer needs. 6. Motion – Inefficient layouts, unplanned downtime, poor ergonomics in offices, etc. If there is any type of unnecessary movement of people or machines then there is motion waste. 7. Defects – Errors, scrap, rework, non-conformance; poor quality controls, process documentation or machine capabilities, etc. Strive to eliminate all causes of defects through mistake proofing and statistical methods of process control. 8. Personnel resources and creativity – This is the waste of not using people’s mental, creative, and physical abilities. Everyone can be a successful contributor toward the organization's goal and elimination of waste. Availability of appropriate resource levels at all times can be achieved through good communications, teamwork, proper training, and by avoiding over-skilled personnel to be used for mundane tasks (Juran Institute, Inc. 2013). In-line with Mr. Pareto’s famous rule, 80% of the benefits during the implementation of lean principles exist in the elimination of waste. Many tools exist in order to achieve and maintain meaningful results. It is with the proper implementation of these tools that successful elimination of waste can be achieved. Some tools will have more impact than others depending on the organization so careful planning and imple mentation is needed in order to achieve real improvements with the best possible benefits.Works CitedGoldratt, E. M. (2004). The Goal: A Process of Ongoing Improvement. GreatBarrington, MA: The North River Press Publishing Corp. Juran Institute, Inc. (2013). Retrieved Jul. 11, 2013, from Juran: http://www.juran.com/ NWLEAN, Inc. (2013). Retrieved Jul. 10, 2013, from The Northwest Lean Networks: http://nwlean.net/