...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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...Table of contents Table of contents 2 Executive Summary 3 I: Key financial trends 4 Global Financial Crisis 4 European Sovereign Debt Crisis 6 Tighter financial regulation 8 II: Impact on entrepreneurial start-ups 9 Investment and valuation decisions 9 References 15 Appendix A: Effects of recession on entrepreneurial start-ups 17 Appendix B: New trend – business incubators 23 Appendix C: Valuation methodology 25 Executive Summary The Global Financial Crisis (GFC) is widely seen as the worst financial crisis since the great depression in the 1930’s. It negatively impacted global financial markets, led to the collapse of major financial institutions, the nationalisation of banks and caused a deep global recession. From its beginnings in the United States, networked financial institutions quickly led to international contagion and the European sovereign debt crisis. In response, the G20 officially endorsed Basel III – a new global standard to reduce systemic risk through stronger capital bases designed to act as a buffer during periods of financial instability and avoid bailouts. Sustained European government efforts to reduce debt through austerity have largely failed, and focus is now shifting to growth strategies. Entrepreneurial start-ups are a key route to driving long-term sustainable growth, but have been hit hard by sluggish consumer demand, tightening credit and scarce, expensive capital. This report discussed some of the implications for both...
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...ECF5921 Introduction to International Economics Assignment Question 1 Based on the article and other related readings of your choice, discuss the economic and social factors that have caused individual behavior to shift towards the consumption of unhealthy foods and unhealthy lifestyles. Compare ‘fat taxes’ and other alternatives that can be used address the problem. Which one would you recommend? Why? Answer Based on the article “Stick and carrots”, there are certain factors from economic and social aspects that have caused the individual behavior to shift towards the consumption of unhealthy foods and unhealthy lifestyles. From the economic perspective, the article “stick and carrots” has given the theory of rational consumption theory which states that as individuals incomes grow, the range and volume of commodities each of us will consume is growing meanwhile. Thus, the expenditures on general goods increases alongside the increasing of our incomes. That is one of the reasons that nowadays general individuals may have more chances to gain fat (as food is one of the general consumption) by purchasing more food, especially cheap and tasty junk food. Moreover, the improving of technology within the food proceeding may also resulted in a fall in the price of food, as well as the availability of a wide variety of cheap foods. Other than just buying more food as the income effect itself, individuals also tend to substitute away from consuming relatively high-priced...
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...|ELECTRONIC ASSIGNMENT COVERSHEET |[pic] | |Student Number |32477916 | |Surname |Helliwell | |Given name |James Maxwell | |Email |Jhel8204@uni.sydney.edu.au | | | | |Unit Code |BUS290 | |Unit name |International Financial Markets and Institutions | |Enrolment mode |External | |Date |10/4/2014 | |Assignment number |1 ...
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... EXECUTIVE SUMMARY (TBC) I Introduction The world economy is currently experiencing the worst global financial crisis since the Great Depression. While major world economies have taken a massive hit resulting in negative growth rates in key countries or regions, including the US, EU and Japan, the contagion also spread to emerging developing countries like China, Brazil, India and South Africa, as well as to the countries of South East Asia and Latin America. The magnitude of impact seems to depend on the extent of integration with the rest of the world (or to use World Bank jargon, the extent of liberalization that has taken place). The impact on LDCs like Bangladesh has been muted in the first, and even the second round. However, there is growing evidence that third round impacts are making themselves felt, manifested in declining exports, declining migration of labour, growing number of sick industries, industrial unrest, and reduced growth. There are also fears that poverty and unemployment may be exacerbated and MDG targets could become jeopardized. Countries like Bangladesh are interested in understanding the socio-economic impact of the global financial and economic crisis as well as policy options to cope with emerging challenges. This study addresses itself to the task of assessing the unfolding impact of the GFC on Bangladesh. There is a consensus that the chief transmission...
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...P. Kapur Adviser, RITES and A. K. M. Sharma General Manager, Marketing & Client Services, RITES. Prologue RITES Journal 22.1 July 2009 Indian Infrastructure : Role of RITES Introduction Much of the industrialized world is currently in the grip of recession due to the ongoing global financial crises (GFC) – allegedly triggered by the subprime mortgage crisis of USA in 2007. According to some analysts the recession is the worst since the great depression of 1930s. The world output and trade is forecast to shrink in 2009 – the first such contraction since the end of World War II. The recession is inflicting job losses and wealth loss on an unprecedented scale. In an era of globalization, the GFC has impacted the economies of practically all countries in varying degrees and India is no exception. After a long spell of growth, the Indian economy is experiencing a downturn. Industrial growth is faltering, the current account deficit is widening, foreign exchange reserves are depleting and the Rupee is depreciating. There is gloom in the job market and stock markets have registered a sharp downward spiral. RITES - the Infrastructure People. The Company has come a long way from its inception in 1974 and, apart from India, has operated in 62 countries. The Authors, who have a wide experience in international consultancy, have forcefully brought out the present spread of its consultancy areas and as also its road map for the future. RITES’ contribution in the ...
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...1.) In the featured article “The Precautionary Principle as a Basis for Decision Making”, the author, Cass R. Sunstein provides his view on the practicality of the Precautionary Principle and the impact it could have on major policies across the world. The basic underlying principle of the Precautionary principle is that “it is better to be safe than sorry”. The principle can be adopted in many scenarios and it different aspects. An example of the strong application of the precautionary principle was at the Wingspread Declaration at 1998, which advocates the use of precautionary measures even before the cause and effect relationship is examined. The European Union has openly endorsed the principle as a basis for decision making but is yet not clear on how it would be applied to specific scenarios. The Author suggests an examination of the principle’s strengths and weakness as it has potential application in critical areas such as climate change, nuclear power and even war. Even the basic interpretation of the principle raises difficult queries. Without assigning costs to safety, one cannot quantify on how much safety is required while applying the principle. Another issue with the strong application of the principle is that it completely tries to eliminate risk without realizing that eliminating or reducing risks at one end will definitely impact and increase the risk at the other end. There exists risk in every scenario as we live in a world which is scarce in resources making...
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...analysts. The situation in Italy, for instance, is quite dramatic, with the economy stagnating. In France, high public deficits are a big worry; such a policy could not be continued for much longer. Underperforming fellow Eurozone nations could affect Germany’s own economic growth prospects, since they are the customers for most of Germany’s exports; it is expected that Germany’s gross domestic product will expand by just 1 percent in 2015. Despite the evident problems in Eurozone, Germany and France are determined to restore a confidence to the Euro.’ Discuss the statement, and use examples to justify your opinion. 1.0 Introduction The Global Financial Crisis or the ‘great recession’ as it is now known has been widely regarded as the worst global recession since the end of the Great Depression (Drezner, 2014). The events following the collapse of the US housing market and the subsequent financial meltdown has had consequences on a global scale, nowhere is this more evident than in the Eurozone (Allen & Ngai, 2012). The Eurozone, made up of 19 EU member states that have adopted a common currency and monetary policy, have faced increasing levels of public debt, economic stagnation and civil unrest (Ucler et al. 2015). Problems are further compounded by the fact that there...
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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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...Introduction BRIC is used in economics to refer to the combination of Brazil, Russia, India, and China which make up over 42% of the world's population. These nations are going to play a major role in the future of global economy. BRIC or BRICs are terms used in economics to refer to the combination of Brazil, Russia, India, and China. General consensus is that the term was first prominently used in a thesis of the Goldman Sachs investment bank. The main point of this 2003 paper was to argue that the economies of the BRICs are rapidly developing and by the year 2050 will eclipse most of the current richest countries of the world. Goldman Sachs argues that the economic potential of Brazil, Russia, India, and China is such that they may become among the four most dominant economies by the year 2050. The thesis was proposed by Jim O'Neill, global economist at Goldman Sachs. These countries are forecast to encompass over thirty-nine percent of the world's population. Goldman Sachs predicts China and India, respectively, to be the dominant global suppliers of manufactured goods and services while Brazil and Russia would become similarly dominant as suppliers of raw materials. Cooperation is thus hypothesized to be a logical next step among the BRICs because Brazil and Russia together form the logical commodity suppliers to India and China. Thus, the BRICs have the potential to form a powerful economic bloc to the exclusion of the modern-day G8 status. Brazil is dominant in...
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...INDEX INTRODUCTION …………………………………………………………....p.2 2. INTRODUCTION TO THE CRISIS .…………………………………...p.4 3. THE FINANCIAL AND CONSTRUCTIVE CAUSES. ………………...p.5 4. CONSEQUENCES 4.1. FINANCIAL MARKETS 4.1.1. 2007 ………………………………………………………….p.9 4.1.2. 2008 ………………………………………………………….p.11 4.2. CONSTRUCTIVE BUBBLE ……………………………………...p.12 5. GOVERNMENT INTERVENCION ON… 5.1. FINANCIAL INSTITUTIONS FEDERAL RESERVE AND CENTRAL BANKS ………………..p.19 5.1.2. EMERGENCY ECONOMIC STABILIZATION ACT …....p.21 5.1.3 BAYLOUTS AND FAILURES ……………………………...p.24 5.2. HOMEOWNERS 5.2.1. HOMEOWNERS ASSISTANCE ……………………….....p.26 5.2.2. THE HOMEOWNER AFFORDABILITY AND STABILITY PLAN ……………………………………………….....p.29. 6. INTERVIEW WITH RICARD FERNANDEZ…………………………..p.31 CONCLUSIONS…………………………………………………………….p.35 AUTOAVALUATION………………………………………………………..p.36 BIBLIOGRAPHY AND SOURCES INFORMATION…………………….p.37 1.INTRODUCTION My initial intentions were to elaborate a research project with the objective of comparing the financial crisis in USA and Spain that were and are going through. I was planning on finding all the similarities and differences that were most important or characteristic. When I was half way on the research, I realized how extent the information was, so I reduced to the financial and banking part, and the construction bubble. I did this because I thought they were the most important or interesting (for me) subjects. Finally, I changed...
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...Enablers of Exuberance Jennifer S. Taub Sept. 4, 2009 DISCUSSION DRAFT Enablers of Exuberance: Legal Acts and Omissions that Facilitated the Global Financial Crisis Jennifer S. Taub1 I. Introduction This paper explores certain legal acts and omissions that facilitated the over-leveraging and near collapse of the global financial system. These ―Legal Enablers‖ fostered the boom that enriched a class of financial intermediaries who followed a storied tradition of gambling away ―other people‘s money.‖2 These mechanisms also made the pain of the bust disproportionately felt by the middle class and poor while shielding the middlemen who created the problems. These legal Enablers permitted the growth of a shadow banking system, without investment limits, transparency or government oversight. In the shadows grew a variety of highly leveraged private investment pools, undercapitalized conduits of securitized loans and speculation in complex credit derivatives. The rationale for allowing this unregulated, parallel system was that it helped to create innovation and provide liquidity. The conventional wisdom was that any risks associated with a hands-off approach could be managed by the ―invisible hand‖3 of the market. In other words, instead of public police, it relied upon private gatekeepers. A legal framework including legislation, rules and court decisions supported this system. This legal structure depended upon corporate managers, counterparties, ―sophisticated investors‖ and the...
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...people fear cultural and social assimilation as they believe this would have a negative impact on the existing culture of their society. Globalization therefore has mostly narrowed down to economic integration and this mainly happens through three channels; flow of finance, trade of goods and services and capital movement. Globalization is a term that includes a wide range of social and economic variations. It encompasses topics like the cultural changes, economics, finance trends, and global market expansion. There are positive and negative effects of globalization - it all comes as a package. Globalization helps in creating new markets and wealth, at the same time it is responsible for extensive suffering, disorder, and unrest. The great financial crisis that just happened is the biggest example of how negative globalization can turn. It clearly reveals the dangers of an unstable, deregulated, global economy. At the same time, this gave rise to important global initiatives, striving towards betterment. Globalization is a factor responsible for both repression and the social boom. What happens when there is a growing integration of economies across the globe? Majorly there have been positive impacts of this global phenomenon - through liberalization, privatization and globalization (LPG). Due to globalization, there has been significant flow of inward foreign direct investment. MNC companies are getting a chance to explore various different markets across economies and explore...
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...Economic Outlook, Prospects, and Policy Challenges 01 CHAPTER This year’s Economic Survey comes at a time of unusual volatility in the international economic environment. Markets have begun to swing on fears that the global recovery may be faltering, while risks of extreme events are rising. Amidst this gloomy landscape, India stands out as a haven of stability and an outpost of opportunity. Its macro-economy is stable, founded on the government’s commitment to fiscal consolidation and low inflation. Its economic growth is amongst the highest in the world, helped by a reorientation of government spending toward needed public infrastructure. These achievements are remarkable not least because they have been accomplished in the face of global headwinds and a second successive season of poor rainfall. The task now is to sustain them in an even more difficult global environment. This will require careful economic management. As regards monetary and liquidity policy, the benign outlook for inflation, widening output gaps, the uncertainty about the growth outlook and the over-indebtedness of the corporate sector all imply that there is room for easing. Fiscal consolidation continues to be vital, and will need to maintain credibility and reduce debt, in an uncertain global environment, while sustaining growth. On the government’s “reformto-transform” agenda, a series of measures, each incremental but collectively meaningful have been enacted. There have also...
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