...The Global Financial Crisis Introduction The global financial crisis which started in early 2007 has proven to be perhaps the great financial catastrophe in history. Although it traces its roots back to the starting of the millennia, the subsequent meltdown was most gruesome over the past 3 years. What began as a crisis of the sub-prime mortgage market in the United States quickly transcended national borders and developed into a upheaval of epic proportions. What ensued was a systematic debacle of stock exchanges, investment banking, derivatives etc. all financial markets ranging from equity, currency, real estate, futures etc. In order to fully understand the devastation caused by this dilemma, we have to take focus on the core issues and identify the stream of events as they occurred and how they subsequently collapsed global financial markets. Housing Bubble Burst The global financial crisis began through the US sub-prime mortgage market. The past two decades leading up to the year 2005 had experienced phenomenal growth in terms of increases in housing prices. There was an abundance of capital flowing into the country and this translated into excess liquidity available for banks to lend out. The Sub-Prime Mortgage Market refers to a market where people with bad credit history can obtain house loans at relatively better rates. It doesn’t imply that the interest rates are low, but rather they don’t have to go through the rigors they would face due to their poor credit...
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...world financial crisis which started with mortgage crisis is only one aspect of history. Crisis began with sub-prime lending crisis and whole financial system was engulfed. Sub-prime crisis refers to the crisis faced by the mortgage companies that were in loaning business that due to adverse situations ran in trouble. As a result the number of defaulters increased resulting in huge bad debts for the mortgagee companies. Several of world’s best managed financial institutions went bankrupt and rests are dying for bail out. The world demand cycle is heading south and its impact is visible in world petroleum prices and auto manufacturer’s recent outcry for bailout. The liquidity is engulfing the whole world and taking the shape of financial famine. In the period of strong global growth growing capital flow and prolonged stability market participant sought higher output without an adequate calculation of the risks and failed to exercise proper due diligence. Weak underwriting standards, unsound risk management practices increasingly complex and opaque financial products and consequent excessive leverage combined to create vulnerabilities in the system. At the same time what looked as brisk-effervescence is financial market ended up in becoming alarm ringer for a greater catastrophe in the coming years. This was started with a small upheaval created by the sub prime crisis in 2007 in the world’s largest and most significant financial markets U.S. later in 2008 the whole of...
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...ultimate pursuit of profit and power. The film clearly captures the systemic corruption of the United States by greedy and morally unbalanced industry leaders and their cohorts who engineered a financial catastrophe in 2008 not seen since the great depression. The film’s writer and director Charles Ferguson contends that the collapse of the financial industry could have been prevented had there been more regulation of Wall Street. He clearly establishes his line of reasoning through a series of interviews with many of the major players in government and the financial industry who indirectly and in some cases directly contributed to the financial fiasco of 2008. The financial collapse was caused by three main contributing factors; first, a toxic sub-prime mortgage market engineered by the financial industry; second, government’s failure of regulatory enforcement of the financial industry and Wall Street; and third, a collusive relationship between business leaders and government officials elected to curtail the same crisis they helped create. The financial collapse of 2008 resulted from a toxic sub-prime mortgage market engineered by an out-of-control industry that led to its inevitable implosion. In September 2008, the global financial market was rocked to its core when the sub-prime market tanked. As a result, a global recession followed and the national debt doubled, millions of people lost their life savings and were left unemployed. The film Inside Job highlights much of the...
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...China in the Debt-Deflation Trap HONG KONG – In the wake of a global stock-market sell-off triggered by economic turmoil in China, the US Federal Reserve has just decided to postpone raising interest rates. Indeed, China is facing the huge challenge of dealing with the risk of a global debt-deflation trap. In 1933, Irving Fisher was the first to identify the dangers of over-indebtedness and deflation, demonstrating their contribution to the Great Depression in the United States. Forty years later, Charles Kindleberger applied the theory in a global context, emphasizing the problems that arise in a world lacking coordinated and consistent monetary, fiscal, and regulatory policies, as well as an international lender of last resort. In 2011, Richard Koo used Japan’s experience to highlight the risks of a prolonged balance-sheet recession, when over-stretched debtors deleverage in order to rebuild their balance sheets. The debt-deflation cycle begins with an imbalance or displacement, which fuels excessive exuberance, over-borrowing, and speculative trading, and ends in bust, with procyclical liquidation of excess capacity and debt causing price deflation, unemployment, and economic stagnation. The result can be a deep depression. In 2000, the imbalance was America’s large current-account deficit: the world’s largest economy was borrowing heavily on international capital markets, rather than lending, as one might expect. According to then-Fed Chairman Ben Bernanke, the problem was...
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...On Crisis and Resolution It is my belief that the 2008 financial crisis was caused by a number of issues, most prominently subprime lending and borrowing in an over zealous pursuit of profits, a lack of preventative action, deceptive investment banking, and finally an inconvenient rise in interest rates. I am also confident that the crisis could have been averted through more stringent monitoring of the asset-backed security and consumer lending markets. Furthermore, a similar crisis can be prevented through new government regulatory measures. It can be argued that one of the initial causes of the crisis is rooted in the Federal Reserve’s decision to lower interest rates following the tech bubble burst in the early 2000s. There would have been a massive increase in the availability of capital, creating a rationale for banks to lend to subprime borrowers and reap the profits of charging higher than market interest rates. Consumers then fueled this lending through willingness to pay high interest rates in the anticipation of riding the rising real estate prices of the time. This would allow them to refinance a few years later at a lower interest rate. In hindsight, this is when strict monitoring would have been able to take the issue and “nip it the bud.” However, the Federal Reserve and the Federal Housing Administration either failed to notice these irrational, predatory lending trends or just botched and didn’t acknowledge them. Shortly after the surge in predatory...
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...Insert name Tutor Course Date Introduction American International Group, Inc. (AIG) is an American insurance company. Its business headquarters are situated in the American International Building of New York City. The British headquarters is located on the Fenchurch Street of London while the European headquarters is situated in La Défense, Paris, while the Asian main office is situated in Hong Kong. Reports from the 2008 Forbes Global 2000 listing highlighted that AIG was by then the 18th-biggest public corporation worldwide, and also appeared in the reports of the Dow Jones Industrial survey between April 8, 2004 and September 22, 2008. AIG experienced a liquidity catastrophe when its financial ratings dropped below "AA" rankings around September 2008. The U. S. Federal Reserve Bank on September 16, 2008 formed an $85 billion credit capacity to allow the company to overcome its increased collateral requirements following the credit ranking downgrade, in a swap over for the issuance assets merit to the Federal Reserve Bank for 79.9% equity of the AIG. The Federal Reserve Bank along with the U. S. treasury around May 2009 extended the potential monetary boost to the AIG, with the enhancement support in form of $70 billion investment, of which $60 billion was channeled on credit line as well as $52.5 billion to purchase mortgage-based properties belonging to or insured by AIG, raising the total sum available to around $182.5 billion. AIG later sold some of its...
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...(ostensibly) low-risk securities partly because they were often backed by credit default swaps insurance.” ( 2) A credit default swap is when the seller of the cds will protect you if your loan. Since everyone could somehow afford this american dream our housing prices went up aborally and the bubble was created.Bank were handing out loans that people couldn't afford.”The US Senate's Levin–Coburn Report concluded that the crisis was the result of "high risk, complex financial products; undisclosed conflicts of interest; the failure of regulators, the credit rating agencies, and the market itself to rein in the excesses of Wall Street.” (2). Graph ( hoe much money the banks made of this disaster They ended up deregulation of (+-sub-prime morages) might be used already ‘The FCIC placed significant blame for the crisis on deregulation, reporting: "We...
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...Paula Bent Research Paper 12/19/2010 The Global AIDS crisis and Health Care in the Developing World The global epidemic of HIV/AIDS is rapidly becoming the worst infectious-disease catastrophe in recorded history, surpassing the bubonic plague of the fourteenth century and the influenza epidemic of 1917, each of which killed some 20 million people. (1) The HIV/AIDS epidemic, first identified in 1981, remains among the greatest threats to global health. (2) AIDS has an unprecedented impact on the economy and society because it kills so many adults in the prime of their working lives; it decimates the workforce, impoverishes families, and shreds communities. To summarize, in the worst affected areas it is actually reversing the development gains made over the last four decades. In many cases the disease threatens to eliminate around twenty percent of the workforce. AIDS has an overwhelming impact on developing economies because, unlike other diseases, it kills young and middle-aged adults who are often healthy and productive members of society. In sub-Saharan Africa and many other regions in the world, more women than ever before are living with HIV/AIDS. Further research that reflects the voices of these women is essential. (5). Because of this epidemic both adds to companies' labor costs and slows growth rates in many developing economies. The disease is shared by the developing world where eighty-five percent of AIDS cases are present in the world’s poorer countries...
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...imperative to sustain and support Western Europe. At the time Western Europe was facing the encroachment of the Soviet Union and its communist ideologies. The United States saw its support for Western Europe as essential in order to preserve their alliance, and most importantly to continue strengthening and expanding democratic ideals. However, as of the past twenty years, when it comes sub-Saharan Africa, Western nations are not nearly as concerned about a states internal or external stability. For example, countries such as Rwanda, Somalia, Sudan, and many other sub-Saharan countries are in utter turmoil, but the West has turned a blind eye. The burden now falls on organizations like the United Nations, Organization of African Unity, and other non-for profits to create solutions for the growing problems in Africa. Without any intervention from the more powerful Western states, they have seemingly forsaken the belief in direct support of and instead left Africa’s problems to be dealt with by “powerless and ineffective regional organizations.” In order to fully analyze the West’s disinterest in Sub-...
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... Initially, from reading the script of Much Ado About Nothing, the reader can respond to C.L. Barber’s argument with firm disagreement as many other genres are used to heighten the effect of comedy in the play, although C.L. Barber’s argument was specifically aimed at comedies, whilst Shakespeare’s Much Ado About Nothing is classed as a dramatic comedy, where tragedy is also hung in the balance in the climactic parts of the play. The purpose of Shakespeare’s plays in general and especially Much Ado About Nothing, is to expose the foolishness of society’s customs and unwritten laws such as the disvalue of women, whilst also reminiscing an awkward, preposterous circumstances that the audience can relate to and laugh at to disguise the true sub plot of mischief and interference. Shakespeare uses insults to create a humorous and pleasurable atmosphere for the audience thoroughly throughout...
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...Global Economic Crisis The global financial crisis (GFC) or global economic crisis is commonly believed to have begun in July 2007 with the credit crunch, when a loss of confidence by US investors in the value of sub-prime mortgages caused a liquidity crisis. This, in turn, resulted in the US Federal Bank injecting a large amount of capital into financial markets. By September 2008, the crisis had worsened as stock markets around the globe crashed and became highly volatile. Consumer confidence hit rock bottom as everyone tightened their belts in fear of what could lie ahead. The current financial crisis is the worst the world has seen since the Great Depression of the 1930s. For younger generations, accustomed to mild recessions of the new phase of globalization, the misery of the Great Depression is hitherto nothing more than a distant legend. However, the collapse of two Bear Stearns Hedge funds in summer of 2007 exposed what came to be known as the subprime mortgage crisis, reintroducing the world to an era of bank failures, a credit crunch, private defaults and massive layoffs. In the new, globalized world of closely interdependent economies, the crisis affected almost every part of the world, receiving extensive coverage in the international media. “In an Interconnected World, American Homeowner Woes Can Be Felt from Beijing to Rio de Janeiro,” observed the International Herald Tribune at the onset of the crisis. “Chinese Steelmakers Shiver, Indian Miners Catch Flu,” noted...
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...The Extinction of the Woolly Mammoth Lee Rhubin English Composition II Instructor J. Kobus 10/25/2010 Abstract There have been many theories and hypotheses explaining why the woolly mammoth became extinct. In fact, there are ongoing studies and research attempting to offer more evidence for the different theories. While evidence from the remains and carcasses of woolly mammoths found frozen in the northern parts of the globe strengthen the claims of scientists and researchers, other methods of knowing the real causes are still elusive. Two main arguments aimed at explaining these mammals’ extinction continue to be debated. Climate change as the reason for their demise is countered by the theory that human hunting activities killed the species. However, there are some hypotheses that the combination of both (climate and hunting) is the cause of the woolly mammoth’s extinction. This paper provides the evidence that each theory has gathered to support its claim. The Extinction of the Woolly Mammoth The woolly mammoth (Mammuthus primigenius) is one of the kinds of mammoths that existed. This animal is actually considered an elephant but in reality it is only a distant cousin of the Asian elephant. Its body was covered with hair. Its shoulders were emphatically humped, with a sloping back. The ears were much smaller than the ordinary elephants we see today, with a shorter tail. Teeth were differently shaped and structured; the trunk was shorter and hairier with...
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...Insurance Insurance is a contract in which one party known as the insured also known as assured, insures with another party (person or organization), known as the insurer, assures or underwrites his property or life, or the life of another person in whom he has a pecuniary interest, or property in which he is interested, or against some risk or liability, by paying a sum of money as the premium. Under the contract, the insurer agrees to indemnify the insured against a loss which may accrue to the other on the happening of some event. According to Investopedia, Insurance is— “A contract (policy) in which an individual or entity receives financial protection or reimbursement against losses from an insurance company. The company pools clients' risks to make payments more affordable for the insured.” At present, insurance is being used widely and becoming more and more popular both in personal life and in the business sector as a significant risk management tool which is primarily used to hedge against the risk of a contingent, uncertain loss. Insurance contract provides financial protection to the insured by the insurer against a loss arising out of happening of an uncertain event. The insured can avail this protection by paying premium to any insurance company with whom the contract has been made. Insurance works on the basic principle and concept of risk-sharing. When a company insures an individual entity (the insured), there legal requirements to share the risks associated...
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...Analyze the main causes of cancer in the developing world. Introduction: Cancer has becoming a main reason of death throughout the world, especially for developing countries with poor conditions which do not have a complete health system. Furthermore, it also causes the highest economic loss among all diseases. It has been reported by the American Cancer Society and LiveStrong (2010) that approximately 7.6 million mortality of cancer was reckoned and an economic loss of $895 billion was taken by it universally in 2008. In addition, it is projected that the aggregate amount of cases of cancer in developing countries will rise by 73% within 2000 and 2020. (International Journal for Equity in Health, 2005) These shows cancer is a disease bringing out a huge burden to the society. This is unaffordable if this situation remains. Below are causes of cancer in economic, environmental, social and personal aspect respectively. Economic: There are mainly two economic factors leading to cancer. The first reason is the poverty problem of countries. It is reported by Marmot, M. (2005) that poverty is harmful to health since it mainly leads to the problems of having unclean water and unhealthy diet of these places. Especially for developing nations, an enormous number of children died annually due to the lack of clean water and sufficient hygiene. (INCTR, 2013) In addition, it has been reported by INCTR (2013) that governments are not willing to invest and provide funds in the health...
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...How To Feed A Billion. And Why It Pays Shoma Chaudhury | Aug. 30, 2013, 2:19 AMArticle views - 186 The Food Security Bill is not a spend; it is an investment, crucial for India’s future and growth On 26 August, after months of wasted sessions, the Lok Sabha finally passed a historic legislation: the Food Security Bill . Many Indians woke two days later to headlines that the rupee had nosedived and the Indian markets had been “food poisoned”. It was a smart phrase. It captured the horror industry and what investors feel about the Bill. But it also epitomised the damaging hysteria and misinformation around it. It captured one of India’s most harsh dividing lines. In the summer of 2012, I travelled with economists Jean Drèze and Reetika Khera through some of Uttar Pradesh ’s most impoverished districts. They were on a fact-finding mission, going door-to-door in the searing sun, asking people whether they had enough to eat and whether the government’s Public Distribution System (PDS ) reached them. It was a deeply humbling experience. In hut after hut, one was confronted by the sheer absurdity of the Indian situation. In some of the country’s most forsaken landscapes — dust and bare scrub for miles, not even the possibility of employment anywhere — destitute, bone-thin families produced their pink and white ration cards with utter bewilderment. The first, a BPL card — below poverty line — entitled them to rice, wheat, and some sugar. The second, an APL card — above poverty...
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