...SUBSCRIBE NOW and Get CRISIS AND LEVIATHAN FREE! Subscribe to The Independent Review and receive your FREE copy of the 25th Anniversary Edition of Crisis and Leviathan: Critical Episodes in the Growth of American Government, by Founding Editor Robert Higgs. The Independent Review is the acclaimed, interdisciplinary journal by the Independent Institute, devoted to the study of political economy and the critical analysis of government policy. Provocative, lucid, and engaging, The Independent Review’s thoroughly researched and peer-reviewed articles cover timely issues in economics, law, history, political science, philosophy, sociology and related fields. Undaunted and uncompromising, The Independent Review is the journal that is pioneering future debate! Student? Educator? Journalist? Business or civic leader? Engaged citizen? This journal is for YOU! SEE MORE AT: INDEPENDENT.ORG/TIROFFER SUBSCRIBE to the The Independent Review NOW and q Receive a FREE copy of Crisis and Leviathan OR choose one of the following books: Beyond Politics The Roots of Government Failure By Randy T. Simmons The Challenge of Liberty Classical Liberalism Today Edited by Robert Higgs and Carl Close Lessons from the Poor Triumph of the Entrepreneurial Spirit Edited by Alvaro Vargas Llosa Living Economics Yesterday, Today and Tomorrow By Peter J. Boettke q q q q q YES! Please enroll me with a subscription to The Independent Review for: q Individual Subscription: $28.95 / 1-year (4 issues)...
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...Table of content I. Introduction to credit crisis and Bank CEO Incentives…………………….2 II. Other factors of credit crisis………………………………………………3-4 a) Housing bubble b) Interest rate and inflation c) Unemployment III. Conclusion…………………………………………………………………..5 IV. References……………………………………………………………………6 In my following essay, I will try to explain clearly about credit crisis and Incеntivеs оf Bаnk Chiеf Exеcutive officеrs are nоt mаjоr fаctоr in crеdit slump. At first, lets to еxplаin what are сredit сrisis and its rоle in еcоnоmy. Making a hard to obtain financing to debtors by shortening of funds in the credit market is called as credit crisis. It is because of limited assets obtainable for lending and the price for assets for borrowing are increases so fast. Creditors don’t want or can not to lend an asset again, because they meet to losses on previous loans. This is caused by non-payment by debtors and defaults on loans, which decreases their value. In this situation, banks are trying to recover expenses and to return all money that they lost by selling debt. Then, if prices fall, the bank suffers losses. They cannot borrow a huge amount of funds if capital reduces. Also, if the banks take on more risk in the market, they will increase interest rates on loans to reward for this risk. It will bring to increasing the price of borrowing, but also will bring to decreasing the borrowers. In general, reducing the liquidity of capital and reducing...
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...Introduction: The financial crises are major disruptions in financial markets characterized by sharp declines in asset prices and firm failures (11). The global melt down of 2007-08, the Great Depression of 1929 and South Asian crises of 1997 tested the efficiencies of concerned regulatory authorities across the world. Financial crises moves like cyclone and spirals down to all connected economies (13). Whether financial crises emerges in the developed countries or in the developing countries, the history witnesses that it has invariably led concerned economies into deep recession, unemployment, loss of public confidence, domestic and international trade reversal and even capital flight. The regulatory authorities engaged in watching and monitoring health of concerned economies have to proactively respond to mitigate and resolve the crises. There could be different causes for financial crises such as ongoing double digit inflation / uncontrolled monetary expansion, unsustainable internal or external public debt, excessive credit booms, large capital inflows, large current account deficits, balance sheet weaknesses due to maturity mismatches of public debts, fall out of impracticable exchange rate mechanism followed and currency crises (3). The selection of ways and means of mitigating and resolving a financial crisis and accelerating economic recovery is dependent upon root causes leading to financial crises. The policy options selected by regulatory authorities may be...
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...Rangaswamy A crisis so severe, the Indian financial system is affected. ABSTRACT The global financial crisis, brewing for a while, really started to show its effects in the middle of 2007 and into 2008. Around the world stock markets have fallen, large financial institutions have collapsed or been bought out, and governments in even the wealthiest nations have had to come up with rescue packages to bail out their financial systems. On the one hand many people are concerned that those responsible for the financial problems are the ones being bailed out, while on the other hand, a global financial meltdown will affect the livelihoods of almost everyone in an increasingly inter-connected world. The problem could have been avoided, if ideologues supporting the current economics models weren’t so vocal, influential and inconsiderate of others’ viewpoints and concerns. Following a period of economic boom, a financial bubble—global in scope—has now burst. A collapse of the US sub-prime mortgage market and the reversal of the housing boom in other industrialized economies have had a ripple effect around the world. Furthermore, other weaknesses in the global financial system have surfaced. Some financial products and instruments have become so complex and twisted, that as things start to unravel, trust in the whole system started to fail. This study is focus on financial /economic crisis and its effect on the Indian economy and government policies and Indian financial service...
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...JARAF The Journal of applied research in accounTing and finance V O L U M E 3 , i s s U E 1 , 2 0 0 8 Old Wine in New Bottles: Subprime Mortgage Crisis – Causes and Consequences Michael Mah-Hui Lim Information Lost: A Descriptive Analysis of IFRS Firms’ 20-F Reconciliations Marlene Plumlee and R. David Plumlee Negative Goodwill: Issues of Financial Reporting and Analysis Under Current and Proposed Guidelines Eugene E. Comiskey and Charles W. Mulford Electronic copy available at: http://ssrn.com/abstract=1263280 JARAF The Journal of applied research in accounTing and finance Publication Information JARAF - The Journal of Applied Research in Accounting and Finance is a scholarly peerreviewed journal jointly published by The Centre for Managerial Finance at Macquarie Graduate School of Management and the Faculty of Economics and Business at The University of Sydney. All journal articles published in JARAF are subjected to double-blind peer-reviews by qualified international experts. Months of Distribution: July – December Current Edition: Volume 3, Issue 1 (2008) ISSN 1834-2582 (Print) ISSN 1834-2590 (Online) Editors Tyrone M. Carlin Professor of Financial Reporting & Regulation Faculty of Economics and Business The University of Sydney NSW 2006 Australia Nigel Finch Director, Centre for Managerial Finance Macquarie Graduate School of Management Macquarie University NSW 2109 Australia Editorial Advisory Board Edward I. Altman Max L. Heine Professor...
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...pResented by the society of ActuARies, the cAsuAlty ActuARiAl society And the cAnAdiAn institute of ActuARies Risk Management: The Current Financial Crisis, Lessons Learned and Future Implications Copyright 2008 by the Society of Actuaries. R I s k M a n a g e M e n T: the current financial crisis, lessons learned and future implications introduction the current financial crisis presents a case study of a “financial tsunami” (as former federal Reserve chairman Alan Greenspan recently called it) on what can go wrong. its ramifications are far-reaching and the lessons learned will be embedded in risk management practices for years to come. As one of the premier enterprise risk professions in practice today, the actuarial profession is sharing its substantial insight into what went wrong and the implications for the future. on behalf of the society of Actuaries, the casualty Actuarial society and the canadian institute of Actuaries, we are pleased to provide a series of essays on Risk Management: The Current Financial Crisis, Lessons Learned and Future Implications. this e-book is the result of a call for essays on the subject coordinated by the following groups: • • • • The Joint Risk Management Section of the Society of Actuaries, Casualty Actuarial Society and Canadian institute of Actuaries The Investment Section of the Society of Actuaries International Network of Actuarial Risk Managers Enterprise Risk Management Institute International ...
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...It is reasonable to say that the recent subprime mortgage crisis happened due to a complex combination of negligent practices by many of the multiple stakeholders directly involved in the real estate industry. That being said, the accounting profession, being the critical player that it was (and still is), played a critical role in the development of this economic crisis due to the practices that they used during the auditing process of key industry players in the market at that time. As a foundation to this argument, chapter one of the text states that, accounting is the process of identifying, measuring and communicating economic information about an organization for the purpose of making decisions and informed judgments. (Marshall-McManus-Viele). It is the accountants responsibility to identify and offer the relevant financial data necessary to make appropriate business decisions. In reading about cases such as the infamous New Century “mishap”, one gets the impression that the accounting methods used, completely misrepresented the current financial situation of the company which needed to show a strong financial situation in order to maintain it’s solid market position and continue to see a steady influx in transactions. After further review combined with KPMG’s involvement, they found themselves with inconsistencies that led to a more than significant hole in their numbers ultimately leading them to bankruptcy (along with other economic factors). Referring back...
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...happens while unemployment and bankruptcies rates go up (Andrews, 2009). Recessions crops up when there is a general drop in expenditure. It follows the rising of an economic bubble or an unpredictable supply shock. Governments respond to recessions through implementing expansionary macroeconomic strategies. They tend to raise the government’s expenditure, increase money supply and lessen the amount of tax paid by the citizens (Andrews, 2009). In 2007, a global financial predicament rapidly metamorphosed from the bursting of the property bubble in the United States to the most horrible recession ever witnessed on the planet. This paper will research on the causes of the 2008-2009 economic predicament and the policies executed by various key people liable for saving the U.S. economy. It will also explain the task, constitutional authority, and the policy view of some current holders of key positions that set policies for saving the U.S. economy. In 2007, a worldwide economic predicament spread its gloom on the financial outcomes of several nations (Simon, 2001). It ended with what was often termed as the worst recession (Simon, 2001). Its source that originated from the sub-prime segment of the United State real estate field as an isolated turmoil matured into a complete recession in 2007. The old well-known fact that the whole world sneezes when the United States seizes flu seemed to be justified (Baker, 2007). This is because vital economies like Japan and nations in the European...
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...| Research Paper Prospectus | Economics Capstone | 02/12/2012 | Since the U.S. banking crisis of 2007, more than 280 banks in the United States have failed and presently continue to do so. With the closures of these banks, jobs were lost; and the economy has suffered greatly. The banking crisis of 2007 has been considered the largest since the Great Depression. Many researchers, policymakers, economists, and other individuals blame the subprime mortgage market and its collapse for triggering the U.S crisis; many also wonder how such a relatively small market as subprime could cause so much trouble around in the U.S, especially financial institutions that did not get involved with subprime lending or with investment in subprime securities. This paper analyzes financial and economic circumstances associated with the United States financial turmoil that has led to the banking crisis. Section 1 analyzes the collapse of the subprime mortgage market in the United States and outlines factors associated with it. Section 2 outlines the economic factors that led to the banking crisis in 2007. Section 3 summarizes suggestions of research about how to remedy the current crisis and possibly avoid crises in the future. Section 4 will discuss the conclusion of the research. The first signs of the subprime mortgage market collapse in the United States were very high and unusual even for subprime market delinquency and foreclosure rates for mortgages originated in 2006 and 2007. Reinhart...
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...Based on analysis the operating and competitive characteristics of the balance sheets and some key financial ratios of five different industries, we can make a conclusion that A is the electric utility, B is the discount general merchandise retailer, C is the upscale apparel retailer, D is the Japanese automobile manufacturer, and E indicates the automated test equipment/systems company. According to the column A, the data indicates a highest property and equipment percentages (74.5%) and lowest sales/net property & equipment ratios (0.43) among all industries which means this particular industry requires a relative high cost for the property and equipment purchase and the sale prices is relatively lower. However, if we look at the net profit/net sales ratio, we found that this industry has the higher value (10.3%) compared to other industries, which indicates that the demand of this industry is pretty high and the economic crisis didn’t affect the overall customer purchase. Based on this analysis, the electric utility is the best choice, which needs a highest cost for the equipment and property set-up but the electricity is still an indispensable product and demands for it is hardly to be shrunk even during the economic crisis year. From column B, the percentage of receivables is 3.8% and the days of inventory is 4, which are the lowest values among other industries. These two numbers indicate that customers have strong purchase power to buy products quickly and this industry...
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...Case Study 1: Matsushita’s Culture Changes with Japan Japan suffered one of the worst economic hit in history when the economic bubble deflated steeply in the 1990s. Stock prices and real estate slumped enormously mostly due to domestic monetary policies. As a result, companies in Japan faced financial trouble which triggered the cultural change in Japan. Before the Economic crisis, employee and the company have a particularly close relationship. The company is involved in the live of the employee. For example, a lot of companies require their employee’s manager to sign before they can rent an apartment. On the other hand employees are also very loyal and obliged to their company. With the company’s guaranteed lifetime employment policy, few employees will fancy changing jobs. Moreover they work hard in response to the generous benefit by the company. However after the economic crisis, companies cannot afford to pay that many benefits to the employees so they finally had to lay them off, which they never did. This cultural change propagates to traditional value change eventually when employees see that loyalty does not guarantee anything. Since then, younger employees started to think more about individual as opposed to group. Japan is moving towards more individualism than collectivism after the economic bubble. Nonetheless, this is a good opportunity for Japan to adapt to the globalization world and be more competitive. The cultural change will lead to greater mobility...
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...Employment Sector Employment Working Paper No. 74 2011 Global economic crisis, gender and employment: The impact and policy response Naoko Otobe Employment Sector Copyright © International Labour Organization First published 2011 Publications of the International Labour Office enjoy copyright under Protocol 2 of the Universal Copyright Convention. Nevertheless, short excerpts from them may be reproduced without authorization, on condition that the source is indicated. For rights of reproduction or translation, application should be made to ILO Publications (Rights and Permissions), International Labour Office, CH-1211 Geneva 22, Switzerland, or by email: pubdroit@ilo.org. The International Labour Office welcomes such applications. Libraries, institutions and other users registered with reproduction rights organizations may make copies in accordance with the licences issued to them for this purpose. Visit www.ifrro.org to find the reproduction rights organization in your country. Otobe, Naoko Global economic crisis, gender and employment : the impact and policy response / Naoko Otobe ; International Labour Office, Employment Sector. - Geneva: ILO, 2011 1 v. (Employment working paper) ISBN: 9789221241690; 9789221241706 (web pdf) ISSN 1999-2939 (print); ISSN 1999-2947 (web pdf) International Labour Office; Employment Sector women workers / men workers / employment / unemployment / gender equality / employment policy / social policy / economic recession / developed...
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...| Name: Abhisek Rathi Matriculation Number: 22030512 Submitted To: Prof. Dr. Frank Brand Submission Date: December 17, 2012 Contents Introduction 3 Stock Market Co-Movement 4 Causes 4 Data Analysis 6 Observations 9 Implications 10 References 12 Introduction The global financial crisis of 2008 was the biggest economic crisis faced by the world since the great depression of 1929. The crisis started to brew in the US in 2007 and many believed it would be largely limited to the shores of the US. However, the collapse of Lehman Brothers in 2008 was sufficient to trigger a worldwide stock market collapse, the effects of which are felt to this day. The worldwide collapse of stock market can be understood by considering the world as a single big marketplace. Analysing the co-movement of various financial markets has gained importance in the recent past both for policy makers, in terms of policy co-ordination, and portfolio managers, for portfolio diversification. For policy makers, high co-movement would facilitate transition in local currency areas resulting in potential efficiency gains from stock market merger activities. This, in turn, will result in greater financial stability across the regions. However, for portfolio managers, high correlation between international stock markets would reduce the benefits of portfolio diversification creating the need of searching other assets with lower correlation. The past few decades have seen a continuous increase...
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...The Great Depression of 1929 put into context of the Global Financial crisis Economic development over the last years has been very volatile, so many comparisons have been made to past economic crises. This incident puts the Great Depression into a very recent context. The aim this paper is to outline the causes and effects of the Great Depression for both the USA and Europe. The Great Depression which started in October 1929 turned into the most severe global economic slump ever. After a brief introduction to the topic more detailed background information has been provided. The initial economic downturn directly tied in with the boom years of the Golden Twenties. It was mainly caused by over leveraged speculation and a decrease in the value of gold. The effects on the population in America and Europe were especially unemployment and the vaporization of saving because of an enormous stock market crash. For the economy the Great Depression meant that international trade nearly came to a standstill and a vicious circle was created as banks failed and credit was barely available. As a reaction to the Great Depression stock market- and banking regulations were put in place and welfare systems have been introduced in America and Great Britain. A step to fight the ongoing crisis was the foundation of the Salvation Army. The entrance into World War II marked a major mile stone for America. Especially new warfare related industries gave labour to American women while...
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...i ACFI 2005 : Finance - Tutorial Solutions Tute 1: 07/09/12 Chapter 1 A modern financial system: an overview 2. (a) Discuss the role of money in a financial system. • Money is a financial asset that facilitates financial and economic transactions. • Money is a medium of exchange—swapped for goods and services. • Money is a store of value—wealth is held or measured in money terms. • Money is a standard of deferred payment—used to record indebtedness. • Money is a unit of account—transactions are priced in money terms. • Currency is generally divisible, portable and durable. (b) Does money have to be currency? If not, what are some alternatives? • Money is anything that is universally acceptable as a medium of exchange. • Further, money generally has the characteristics of being divisible and a store of value. • Examples—currency, EFTPOS and digital money. 4. The major financial institutions within the international markets fall into five classifications. Identify and briefly explain each of these classifications. Give an example of different types of institutions that operate within a classification were appropriate. • Depository financial institutions—they attract savings from depositors and investors and provide loans to borrowers. Examples: commercial banks, building societies and credit unions. • Contractual savings institutions—there liabilities (sources of funds) are contracts that generate periodic cash flows, such...
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