...President Bush’s administration. General Motors and Chrysler were burning through their cash reserves and heading quickly towards insolvency and potential bankruptcy, endangering not only themselves and their workers, but also the large domestic auto parts supplier industry as well. Insolvency had the potential to permanently alter and possibly destroy a large segment of the U.S. industrial economy. In an effort to avoid this, the federal government stepped in with highly controversial assistance in what is now generally referred to as the Detroit Bailout. The question then, as continues to be debated to today, is should the federal government have stepped in and provided help, or should they have left the free trade market alone? There are many opinions and multiple ideologies in the U.S., but which ideas are going to work? These were very difficult decisions that needed to be thoroughly analyzed and debated, however, the urgency of the situation, along with a general collapse in world financial markets led to events quickly overtaking prudence. In the United States, the country is roughly divided into too ideologies, free-market liberalism (conservatives), and social liberalism (liberals). This led to both free-market liberals and social liberals having opinions and making decisions that did not necessarily fit neatly within the general platforms of the Democratic and Republican parties. After dominating the world for much of the 20th century, General Motors, Chrysler and Ford...
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...and critically analyse both the shareholder and stakeholder models of corporate social responsibility. Can the US government’s actions be justified from either (or both) of these models? Consider both short and long-term consequences of this government intervention. Conclude whether the action taken by the US government is best for society?’ The Global Financial Crisis of the last few years has caused widespread problems for the US government, who were forced to spend billions of (taxpayer) dollars bailing out many of the world’s largest top banks. While a controversial decision, the US government acted on the belief that these institutions were ‘too big to fail’ and their collapse would have far reaching consequences that could have lead to a much dire situation. Throughout this essay, the causes and effects that lead to the GFC and the need for a bank bailout, along with what exactly it entailed will be presented. Then, the US governments’ response in bailing out the banks will be analysed using both a Stakeholder and Shareholder model of Corporate Social Responsibility. Their decision will attempt to be justified against these models by examining both the long and short term effects of the government intervention and conclude whether or not the action taken by the US government was in the best interests of society at large. The global financial crisis of the 21st century was a phenomenon that deeply affected the world and in particular the...
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...Lehman Brothers and the Impact to the Great Recession The question before me is if Lehman Brothers had been bailed out and not allowed to fail and declare bankruptcy, would it have prevented the Great Recession. My answer based upon my reading and research would lead me to the conclusion of no it would not have prevented the Great Recession. However, their failure did have an impact on the Great Recession. Lehman Brothers filed bankruptcy in September of 2008. It was the largest bankruptcy in the history of the United States (MacEwan and Miller, p.110). They were the fourth largest investment bank in the nation and had been in existence since 1850. Their collapse was the result of being heavily invested in the subprime mortgage market that was a major factor in the US housing bubble. Prior to Lehman Brothers failure, there had already been a bailout by the US government of another large financial institution, Bear Stearns. The bailout involved the Federal Reserve insuring J.P. Morgan Chase against loses of up to $29 billion on the “ill liquid” assets it was obtaining in the purchase of Bear Stearns. This was the beginning of the bailout of the financial sector by the federal government and would reach unprecedented levels by the end of 2008. Ben Bernanke, the chairman of the Federal Reserve, justified these actions to Congress with an argument that had Bear Stearns been allowed to fail, the result would have been chaos and would not have been limited to...
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...Table of Contents Introduction ............................................................................................................................... ................... 1 Overview of the Financial Crisis and the Automotive Industry in 2008 ....................................................... 2 Impact of the Financial Crisis on GM ............................................................................................................ 3 North American Demand .......................................................................................................................... 3 Crude Oil ...............................................................................................................................................3 Product Segment................................................................................................................................... 3 Internal/External Competition .............................................................................................................. 3 North American Supply ............................................................................................................................. 3 Labor Costs............................................................................................................................................ 3 Raw Material (Steel) Costs .......................................................................................................................
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...George Brown College School of Business Bailout or Bust? Case Study Noelle Nurse Tran Monica Molina BUS 1038 Professor Joyce Manu April 5, 2013 A perfect combination of unfavourable factors contributed to a major automobile manufacturing industry crisis in North America in 2009. The auto manufacturing industry had taken such a dramatic turn from being large and successful to becoming an industry full of debt and bad reputation; especially for three big and important companies: General Motors, Ford Motor and Chrysler. The “big three”, as they call it, had faced a major turndown leaving thousands and thousands of employees without jobs as a result of a series of bad long term “strategic “decisions. To aid these large industries, the government offered to help, by bailing them out with billions of dollars. This was a very risky decision from the government because of the size of the bailout; hence they needed to keep an open eye on these companies to make sure that this large amount of money was being used wisely. One of the ways the government was taking cautions was by examining the actions being taken by Japanese companies (Toyota Motor, Honda Motor and Nissan Motor) facing the same situation without requiring any government bailout. Their response had been the implementation of a more intelligent strategy, for example, Honda Motor reacted by closing down its plants for 13 days to reduce the production of even more cars they were aware they could not sell....
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...Week #1 Checkpoint: Financial Management Goals Erica Brock Due Sunday Nov. 25, 2012 Nic Lane Financial Management refers to a rulebook which a business must follow to be accountable to their shareholders, stakeholders and the general public. See financial management is the essential because a big amount people can be affected by the unethical behaviors and the actions on a business. The employees deserves to know what’s going on in the upper management and with the company as a whole just in case in advance of potential but yet serious problems. The shareholders and the general public have to know to because the shareholders got to know what are going on with company and what they’re investing. Their money depends on its financial strength of the company. The general public has to know for the fact of the transactions of a public traded company, just in case if there is catastrophe, which they could be responsible for it bailing out of the company including with the taxpayers money. Economic status in company’s market place could include price earning ratios, the earnings per share, the price and cash ratios, book value per share, dividends yielding, market value per share and the marker and book ratios. The market value gives the management an ideal of what the company or firm investors thinks of their performance and future prospects. If a company’s ratios are good then the market value ratios can or should reflect on that and stock prices may go high. The increasing...
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...Ford and GM serious issues pre, during and post TARP period Keller Graduate School of Management Ford and GM serious issues pre, during and post TARP period Annotated Bibliography Burrows, Dan (2014) Stock Showdown: Ford vs. GM stock. Retrieved September 9, 2014 http://investorplace.com/2014/07/ford-stock-gm-stock-earnings-recall/ Ford and General Motors earnings show strong businesses but stocks are not equal as investments. The two companies have different risk profiles and prospects. Flint, Jerry. Forbes. 3/1/2010, Could Ford overtake GM? Vol. 185 Issue 3, p34-34. 1p. Written to show the comparisons of the two companies. These two companies are extremely different yet have many similarities that are detailed. Ford vs. GM: Who’s the Best in Detroit? (2010). Market Beat Retrieved from http://blogs.wsj.com/marketbeat/2010/12/22/ford-vs-gm-whos-the-best-in-detroit-analyst-asks/ Compares Ford and GM across eight different categories.GM is given the advantage in the market share in developing markets. Hoffman, Bryce G. (2013). American Icon: Alan Mulally and the Fight to Save Ford Motor Company. Ford was under the leadership of CEO Alan Mulally and they had an epic turnaround. Congress offered all three Detroit automakers a bailout. Ingrassia, Paul (2012) Engines of Change: A History of the American Dream in Fifteen Cars. Simon & Schuster. Provides details on how cars have...
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...to welcome you to our Annual Meeting of Stockholders. The script of our Annual Meeting will be available following the meeting through our website at www.cabotcmp.com. I would like to remind all of you that our conversation today may include statements that constitute forward looking statements. Such statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially from these forward looking statements, and we assume no obligation to update them. Mikasa Ackerman, the General Counsel and Secretary of our Company, will act as Secretary of the Meeting. First, I would like to emphasize our appreciation for our Board of Directors and the advice and guidance provided to our company. I would like to acknowledge the members of our Board of Directors, the following of whom are with us today in person: Bob Birgeneau, Jack Frazee, Larry Fuller, Rick Hill, Barb Klein, Ted Mooney, Steve Wilkinson, and Bailing Xia. The first order of business for our annual meeting is to organize the meeting and determine the presence of a quorum. Will all stockholders present and wishing to vote in person by ballot, and all persons holding proxies not previously filed, please report to the Secretary and deliver their ballots and proxies to her. On or about January 17, 2014, our Board of Directors sent notice of...
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...Some of us will remember brothers lost generations ago. Others among us will remember losses far more recent. Some of us will silently remember. Many of us will talk about them, and wonder why it wasn’t us. Some will say we were just that good. Most will say we were lucky. Others will concede it was simply God bailing us out. Whatever the reason, however, we will remember. We will reflect. We will mourn. Often, when soldiers go about the business of soldiering, the rest of the world goes on and barely notices us. Monday will be no different. As we stand in salute, grills will be fired up. Pools will be splashed into. Beaches will be visited, and beers will be popped open. The people of this country will enjoy their day off, but how many will realize what it is for? How many people will consider what it means? While many will know there is a parade, how many will know why there is a parade? Please understand, I have nothing against bar-be-ques. I have nothing against beaches, pools, or beer. These are all great things. But I think most Americans take them for granted. I don’t know if it was always this way, or if this is the result of the general apathy associated with my generation. I suspect there has always been a difference between us and civilians. I also suspect there was a time when civilians appreciated us more. This country, our way of life, is not a birthright. What we have, we achieved at a great price. And do you want to know something;...
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...HRM-587: Managing Organization Change Project Proposal Overview of Organizations Shataun Hailey September 14, 2015 In late 2008, Chrysler and General Motors announced to the world they were in danger of folding. At the time, our president, George W. Bush, agreed to a temporary bailout, but handed the auto companies' long-term future over to his successor, President-Elect Barack Obama. President Obama then lead a comprehensive bailout of the two companies that allowed them to stay in business but imposed numerous conditions that, it was intended, would secure their viability and allow the companies to eventually return to profitability. In an interview in the Detroit News (Shepard 2015), President Obama explained his decision this way: “There was clear-eyed recognition that we couldn't sustain business as usual. That's what made this successful. If it had been just about putting more money in without restructuring these companies, we would have seen perhaps some of the bleeding slowed but we wouldn't have cured the patient. The automobile industry was one of the most effected sectors during that recession. Chrysler and General Motors were pushed into bankruptcy and 276,000 jobs in the automobile and parts industry were destroyed. That equates to a whopping 36 percent of the total employment in the sector (CHU. T.H. & YINGZI, 2010). Not only were the jobs of all of GM and Chrysler's employees, but the jobs of people who worked for hundreds of suppliers, from stereo...
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...decided to reinvest their capital and rebuild the US economy. I believe by maintaining the Fed funds rate between 0% and 0.25%, will foster the US economy to maximum growth. Most interest rates are directly influenced by the federal funds rate. Banks, in general, lend capital by setting interest rates similar to federal funds rate plus certain premium. On the other hand, other lenders set interest rates by following bank rates plus premium. Thus, the federal funds rate is directly or indirectly tied to all US interest rates. When the Fed decreased interest rates by lowering federal funds rate, its intention was for the people to consume and spend more, instead of keeping their money in banks. When spending is greater than savings, the economy will grow. The Fed had noticed the economy growth was slowing down in 2007, it decided to lower the federal funds rate for the first time in almost a decade. Although the economy kept expanding, the impact of lowering the federal funds rate was not as effective as it was supposed to be. The economy growth kept decreasing and the worst-case scenario eventually popped up. In September 2008, the financial crisis started. The Fed knew they needed to do an immediate monetary action by bailing out 700 billion US dollars to the market. As a result, in Q1 2009, the...
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...collapsing and being bought out, governments all over the world, including some of the wealthiest had to come up with bail outs for their finances. There are several major reasons for the fallout. The first one that comes to mind are the mortgage supplemented products, such as risky mortgages that were being packaged with more secure mortgages and sold to investors and banks as secure investment products. When in actuality it was a cover up of the risks that were linked with this product which grew into a lending criteria. Which leads us to the bankers. There is no doubt that some of the blame for the global economic crisis has to lie with them, for the way in which they packaged and sold mortgage products. Next came the selling of mortgages all over the world with buyers that could not afford to repay the borrowing. More people were defaulting on loans and housing prices went down. Inflation has to be another factor that needs to be looked at. The bailing out of banks by the Federal Reserve made it easy to print out huge amounts of money to grant financial assistance. The American dollar is now going down the tube due to the influx of new money circulating around the country. In 2008 the Lehman Brothers were turned down for support from the Federal Reserve and were forced to file bankruptcy. On the same day Merrill Lynch announced the purchase of Bank of America and on the 16th AIG got a whopping $85 billion form the Federal Reserve to help bail them out of trouble. Freddy Mac...
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...Government Bailouts Economist believe that allowing financial institutions and international corporations to go bankrupt could have a far reaching effect on the government and in particular on the citizens who depend on these organizations Companies such as AIG, Chrysler, Ford, General Motors, Fannie Mae and Freddie Mac should receive bailouts because they provide essential products and services for their consumers as well as provide numerous job opportunities to the citizens of the state. According to the supporters of the bailout plan, the economy needs rescue and helping out banks and other institutions in financial crisis will go far in reviving the economy as well. Take for example the case of AIG which received $85 billion bailout loan from the government in 2008. Why would the government not let the company close up? AIG can be described as 'too big to fail'. This logic is that if financial firms or corporations go under it can drag others with them (Fernholz, 2009). AIG the insurance giant provides insurance cover for major companies and individuals in the U.S and other countries. If the company went bankrupt then a lot of losses could be felt in the economy as millions of covers and policies go unpaid. While we may not be able to fully blame bankers and other corporate heads for the economic meltdown that followed a market-wide failure in 2008, but it does seem that bankers want to take advantage of profits when the economy is good and then pass the...
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...recession. The government bailout of GM was absolutely necessary in preventing a stock market collapse, massive national layoffs, and quite possibly the financial ruin of United States. Manufacturing cannot survive without lean thinking. Analysis What is DIP financing and is it responsible? According to WikiInvest.com, Debtor in Possession, or DIP Financing is a kind of debt that is more senior than all other debt - meaning if the lender doesn't have the funds to pay everyone back, the DIP loan is paid back first. DIP financing is used by companies that are entering bankruptcy to continue operations (ie, to pay employees, cover legal costs, etc.) as they complete the bankruptcy process. DIP is only responsible if it is for the general good of the public. Bailing out K-Mart with DIP financing would likely have not been an approved method, however GM is a major figure in our stock market index and a backbone company dating halfway back to our inception. Letting GM go by the wayside would have not only lost automotive jobs, but a chain reaction involving Wall Street, other U.S. companies, and have solidified foreign dominance in the Auto industry. Why was a 363 sale used and was it logical? According to Sable, Roeschenthaler, and Blanks a 363 sale has several advantages: 1. Free and clear of liens and claims. 2. Liability. 3. Ability to bind...
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...Business--It's Role in Today's Society Bus 100 In today's fast paced and technology driven society business is changing by the minute; as well as how we conduct and do business on foreign and a domestic level. A business is defined as any activity that provides goods and services in an effort to earn a profit. The role of business in the economy is huge especially when analyzing its impact when there is a lack of job availibity and household revenue. Lets take the economic breakdown in 2008 when we were in a recession as an example. During the economic downfall of 2008, the economy took a huge hit and from that came a rise in the loss of homes, jobs, and income. A decline in each of these critical areas resulted in a loss for the nation because if people are unable to find work then in turn they are reluctant to spend money; decreasing the flow of revenue into the economy. This all ties into business. If businesses are successful then there is a positive trend in the economy and the same can be said of the opposite. All was not lost though, in 2008 with the economy in a downward spiral we still had 19% of american adults who were involved in entreprenur activity by managing or starting their own company. Alot can be learned about entrepreneurs by studying the entrepreneurship era, one the four eras of business. During this time individuals were "self-starters", working and promoting themselves. The production era which was in the...
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