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hen such biases enter into the decision-making process, they eliminate some potential courses of action.
Related to bias is the illusion of validity. The biased parties envision an outcome that they would like to see and work backwards to justify their chosen course of action. That course of action may not lead to the outcome at all, but biases leave to the view that it does. Therefore, bias guides us to actions that do not result in the outcomes we have imagined. Alongside bias, the illusion of validity reduces objectivity. The parties making the decision cannot be truly objective if they have biases; nor can they be truly objective if they already believe they will have success. hat this does is eliminate the possibility of the worst-case scenario. By mentally eliminating some of the possible outcomes from consideration, the analysis of the situation becomes distorted.
As a result of these…
NPR Interview with Nancy Pelosi retrieved December 13, 2008 at http://www.npr.org/templates/story/story.php?storyId=96670508
The current recession was precipitated in large part by all Street, which fuelled an asset bubble in the housing market and repackaged bad loans as good ones. One of the initial consequences of the bursting of that bubble was that the banking system became unstable. This situation led to the first all Street bailout in September, 2008. This bailout was priced at $700 billion and was intended to stabilize the financial system, in effect stabilizing the economy (Stout, 2008). hile the bailout has ultimately proven to cost less than $700 billion as the result of strong returns (Onaran & Leondis, 2010; Faler, 2010), the plan did not have the desired impact on the American economy at large. hile the banking system was more or less stabilized, the GDP shrank and unemployment soared. These are the primary impacts on Main Street and they were not impacted by the all Street…
BLS. (2010). Unemployment rate edges up in November; payroll employment changes little. Bureau of Labor Statistics. Retrieved December 5, 2010 from http://www.bls.gov/ news.release/empsit.nr0.htm
Bureau of Economic Analysis. (2010). Gross Domestic Product: Third quarter 2010 results. BEA. Retrieved December 5, 2010 from http://www.bea.gov/newsreleases/national/gdp/2010/pdf/gdp3q10_2nd.pdf
Dash, E. (2009). Banking industry: Showing signs of a recovery. New York Times. Retrieved December 5, 2010 from http://www.nytimes.com/2009/04/17/business/17bank.html
Faler, B. (2010). Wall Street bailout to cost taxpayers $25 billion, CBO says. Bloomberg. Retrieved December 5, 2010 from http://www.bloomberg.com/news/2010-11-30/wall-street-bailout-to-cost-taxpayers-25-billion-cbo-says.html
In some ways, the AIG bailout is viewed more favorably -- bonuses not withstanding -- in part because of the ownership stake. ith a substantial, profitable business the taxpayers may yet break even on AIG. ith the automakers, taxpayer ire is higher because there is little chance that this will happen. The government has less control over the automakers, and as a result there is less likelihood that the industry will reform itself sufficiently. Even if it did, the taxpayers would not see any benefit since they have no stake.
In light of this, the government treatment of the auto industry compared to financial institutions seems reasonable. Both have received bailouts, in proportion to the amount of damage that would be wrought on the U.S. economy if they failed. The lack of ownership stake in automakers makes for more public application of leverage than with AIG, were the 80% ownership…
Langfitt, Frank. (2008). Automakers Lobby Pelosi for Bailout Cash. NPR. Retrieved April 30, 2009 from http://www.npr.org/templates/story/story.php?storyId=96713932
Karnitschnig, Matthew; Solomon, Deborah; Pleven, Liam & Hilsenrath, Jon E. (2008). U.S. To take over AIG in $85 Billion Bailout. Wall Street Journal. Retrieved April 30, 2009 from http://online.wsj.com /article/SB122156561931242905.html' target='_blank' REL='NOFOLLOW'>
GM Chrysler Bailouts
Government Bailouts of Chrysler and General Motors
An Examinations of the Factors that Led to the Bailouts, the Terms of the Bailouts, as well as a Discussion of the Current State of the Arrangement
The global financial crisis of 2008 worked to decimate many sectors of the economy. The government responded with quick action and intervened as they saw fit. However, from the beginning, there has been a debate over whether it was the right course of action for the Treasury and the Bush and Obama administrations to use the 2008 Troubled Asset Relief Program (TARP) money to support the struggling auto manufacturers. The financial support to General Motors and Chrysler, which was actually made in part by both administrations, represented a large financial investment on behalf of the United States tax payers. Although the results of this intervention are heavily contested, it was found that there…
Bury, C. (2012, March 5). Federal Bankruptcy Judge: Bailout Was Only Way to Save Chrysler. Retrieved from ABC News: http://abcnews.go.com/blogs/business/2012/03/federal-bankruptcy-judge-bailout-was-only-way-to-save-chrysler/
Herbert, B. (2008, November 28). Putting a Face on Big Auto. Retrieved from The New York Times: http://www.nytimes.com/2008/11/29/opinion/29herbert.html
Isidore, C. (2012, February 16). Still fighting over GM's bailout. Retrieved from CNN Money: http://money.cnn.com/2012/02/16/news/companies/gm_bailout/index.htm
Marr, K. (2009, January 22). Toyota Passes GM as World's Largest Automaker. Retrieved from The Washington Post: http://www.washingtonpost.com/wp-dyn/content/article/2009/01/21/AR2009012101216.html
Bailing out American capitalism in the present depression was far more expensive than most of the public will ever realize, especially since many of the costs were deliberately hidden. This Great Bailout was much larger than the Troubled Assets Relief Program (TARP), which went to the large banks, insurance and automobile companies. All but $50 billion of this has been paid back, but that was only one small part of the bailout. Governments concentrated on bailing out the banks and corporate elites rather than creating public works and jobs programs as Keynes would have recommended, and the costs in low wages and high unemployment for the working class and middle class was at least $5 trillion. Wall Street is profitable and the bankers are getting their bonuses, but ordinary workers and consumers at the lower and middle levels of the economy are suffering the worst conditions since the…
" This German form of mercantilism has been labeled as called "predatory" by other European economists and officials. Thus Germany bears some of the burden for the decimation of Greece's economy, and that of other European states, to begin with.
During its bailout of Greece, Germans banks do not have to incur any costs. In fact, German banks are buying high-interest bonds that are effectively guaranteed by the euro-zone governments. The best part of this plan for the banks is that German taxpayers are guaranteeing the interest and the amortization. While only time will tell if this plan works in the long run, it is appears successful enough to implement in a second country, if necessary. Thus a continued bailout is not only in the best interest of the EU, it is also in Germany.
Finally, providing funds for others states to get out of debt is the only way…
hat is less certain is the benefits of the bailout -- those can only flow from taking advantage of the bailout to restore credit markets and prevent a repeat of this financial crisis in the future.
Baker, Dean. "Subprime Rescue Plans: Backdoor Bank Bailouts." (2008): 9 pages. EconLit. EBSCO. 10 May 2009
Mishkin, Frederic S. "How Big a Problem is Too Big to Fail?" (2006). 18 pages. Journal of Economic Literature. Vol. XLIV (December 2006) pp.988-1004.
Glasberg, Davita Silfen, and Dan Skidmore.. "The Dialectics of hite-Collar Crime: The Anatomy of the Savings and Loan Crisis and the Case of Silverado Banking, Savings and Loan Association." American Journal of Economics and Sociology 57.4 (Oct. 1998): 423-449. EconLit. EBSCO. [Library name], [City], [State abbreviation]. 10 May 2009 .
Manchester, Joyce, and arwick J. McKibbin.. "The Macroeconomic Consequences of the Savings and Loan Debacle." Review of Economics and Statistics 76.3 (Aug.…
Baker, Dean. "Subprime Rescue Plans: Backdoor Bank Bailouts." (2008): 9 pages. EconLit. EBSCO. 10 May 2009
Mishkin, Frederic S. "How Big a Problem is Too Big to Fail?" (2006). 18 pages. Journal of Economic Literature. Vol. XLIV (December 2006) pp.988-1004.
Glasberg, Davita Silfen, and Dan Skidmore.. "The Dialectics of White-Collar Crime: The Anatomy of the Savings and Loan Crisis and the Case of Silverado Banking, Savings and Loan Association." American Journal of Economics and Sociology 57.4 (Oct. 1998): 423-449. EconLit. EBSCO. [Library name], [City], [State abbreviation]. 10 May 2009 .
Manchester, Joyce, and Warwick J. McKibbin.. "The Macroeconomic Consequences of the Savings and Loan Debacle." Review of Economics and Statistics 76.3 (Aug. 1994): 579-584. EconLit. EBSCO. [Library name], [City], [State abbreviation]. 10 May 2009 .
Ethics, Values, Social esponsibility
Bailout of Banking Industry in United States
Ethical Compliance by Banking Industry
It is quite common in American history that government comes for the rescue of companies and organization in the time of financial crisis. General motors' acquisition was one such example where saving GM meant saving the nation. When Government takes measure for the welfare of any segment of the economy, it then becomes responsibility of the organizations that they comply with social responsibility and ethical standards so that it should respond to its social character and use the benefits provided by the government in the honest fashion. The recent bailout of banking sector by U.S. government, and the misappropriation and misuse of these funds, have raised a big question mark on the compliance to ethical standards by the bank.
United States government has a long history of bailing out its financial institutions. Some of…
Amadeo, K. (2012). What Exactly Was the Bank Bailout Bill? retrieved from http://useconomy.about.com/od/criticalssues/a/govt_bailout.htm
Applebaum, B. (2009). Financial Rescue I.G. Says Banks Funneled TARP Aid to Various Expenses, The Washington Post, Retrieved from http://www.washingtonpost.com/wp-dyn/content/article/2009/07/19/AR2009071901770.html?nav=hcmodule
Congressional Budget Office. (2010), Report on the Troubled Asset Relief Program -- November 2010, Retrieved from http://www.cbo.gov/publication/21942
Davis, M. (2009). Top 6 U.S. Government Financial Bailouts, Retrieved from http://www.investopedia.com/articles/economics/08/government-financial-bailout.asp#axzz1ujUlc2ZS
In the years leading up to the auto industry bailout, all of the so-called Big Three automakers were struggling. They had been losing market share for many years as more import companies had entered the American market. Some of these companies, notably Honda and Toyota, were able to deliver better cars at lower prices, putting the Big Three at a significant competitive disadvantage. hile the automakers had some good years, by the last 2000s they were losing money. They did not have competitive products, and were saddled with substantial retirement costs. These companies had tens of thousands of employees at one point and need to pay retirement benefits to those workers; the problem is that there are fewer workers today because of automation to cover those benefits. The automakers headed for bankruptcy, and successive contract restructurings with the unions had failed to reverse the trend. The federal government…
BLS. (2012). Automotive industry: Employment, earnings and hours. Bureau of Labor Statistics.
Cauchon, D. (2012). In Ohio: Voters choose Obama as auto bailout resonates. USA Today. Retrieved November 30, 2012 from http://www.usatoday.com/story/news/politics/2012/11/06/ohio-election-results/1658389/
CNN. (2009). Obama defends auto bailout, touts new fuel rules. CNN. Retrieved November 30, 2012 from http://articles.cnn.com/2009-09-15/politics/obama.autos_1_auto-industry-auto-bailout-tighter-auto?_s=PM:POLITICS
Reuters. (2009). Obama to announce auto bailout plan Monday. USA Today. Retrieved November 30, 2012 from http://usatoday30.usatoday.com/money/autos/2009-03-27-new-autobailout_N.htm
S. lawmakers have passed a $700 bailout bill to buy troubled assets from banks in hopes that they will start lending again. it's almost ironic that the government is encouraging more of the very same thing that caused the problem in the first place. It seems that the government will do anything it can to continue to fuel the consumption-based economy even though Americans are awash in debt. Further, there's no guarantee that banks will respond in the way lawmakers intend them to given that they will no doubt be held more accountable for their lending decisions and the precarious condition of the economy that makes lending more risky. For all these reasons, the bailout is a misguided policy effort that will not address the fundamental causes of our current economic downturn.
aker, D. (2008, February 14). Own to rent? Yes we can. Center for Economic and Policy Research.…
Baker, D. (2008, February 14). Own to rent? Yes we can. Center for Economic and Policy Research. http://www.cepr.net/index.php/op-eds-columns/op-eds-columns/own-to-rent-yes-we-can/
Crotty, J. (2008, September 24). The great switch: Banks rob people. Dept. Of Economics, UMass, Amherst and Center for Popular Economics. http://18.104.22.168/search?q=cache:l_kBTAczCMkJ:www.populareconomics.org/Bailout%2520-%2520Crotty.doc+%22housing+prices+would+keep+rising%22&hl=en&ct=clnk&cd=7&gl=us
The financial mess: How we got here. (2008, October 3). http://messageboards.aol.com/aol/en_us/articles.php?boardId=455943&articleId=694828&func=6&channel=News&filterRead=false&filterHidden=true&filterUnhidden=false
At the core of the economic argument is Schumpeter's theory of creative destruction. In his seminal economic work, Capitalism, Socialism and Democracy, Schumpeter (1942) argued that innovation is the process by which economic growth occurs. At times, this means that old, established technologies and companies must be destroyed, but that the net effect will be beneficial. This sentiment runs counter to the theory that the economy would be better off if GM were saved. The economic costs might be high today -- the $150 billion or more figure is not disputed -- but that in the long-run the benefits would outweigh these costs.
In a later elaboration, it was demonstrated that big business turnover specifically resulted in smaller government, stronger rule of law, less bank dependence, stronger shareholder rights and greater transparency (Fogel et al., 2008). Bailing out General Motors therefore harms the economy because it stifles growth and innovation,…
Krisher, Tom & Thomas, Ken. (2008). Advocates: Automaker bailout essential. Associated Press. Retrieved April 30, 2009 from http://www.azcentral.com/business/articles/2008/11/12/20081112biz-automakers1113-ON.html
Langfitt, Frank. (2008). Automakers Lobby Pelosi for Bailout Cash. NPR. Retrieved April 30, 2009 from http://www.npr.org/templates/story/story.php?storyId=96713932
Ross, Brian & Rhee, Joseph. (2008). Big Three CEOs Flew Private Jets to Plead for Public Funds. ABC News. Retrieved April 30, 2009 from http://abcnews.go.com/Blotter/WallStreet/story?id=6285739&page=1
Karnitschnig, Matthew; Solomon, Deborah; Pleven, Liam & Hilsenrath, Jon E. (2008). U.S. To take over AIG in $85 Billion Bailout. Wall Street Journal. Retrieved April 30, 2009 from http://online.wsj.com /article/SB122156561931242905.html' target='_blank' REL='NOFOLLOW'>
The Greek government has faced an ongoing fiscal crisis for the past several years. ecently, for the third time, its Eurozone partners have been compelled to offer a bailout to the country. This is done to stabilize Greece's finances and to impose further measures on the Greek government to remedy the nation's budget and to ensure that there are no similar issues in future. The first part of the paper is a brief overview of the situation. The second part will outline some of the key issues that lead both to favor the bailout and to oppose it, and finally there will be analysis and a conclusion about whether or not bailing out Greece is the right thing to do. It will be argued that it is not, at least in the current form.
There are several key issues at work with the Greek bailout. Greece…
BBC. (2013). IMF admits mistakes on Greece bailout. BBC. Retrieved April 17, 2014 from http://www.bbc.com/news/business-22791248
Bloomberg. (2012). Greek crisis timeline from Maastricht Treaty to ECB bond buying. Bloomberg. Retrieved April 17, 2014 from http://www.bloomberg.com/news/2012-09-05/greek-crisis-timeline-from-maastricht-treaty-to-ecb-bond-buying.html
Chu, B. (2012). Interview with economist Paul Krugman: Greece will leave Eurozone within 12 months. The Independent. Retrieved April 17, 2014 from http://www.independent.co.uk/news/world/politics/interview-with-economist-paul-krugman-greece-will-leave-eurozone-within-12-months-7804753.html
Esparza, A. (2013). Chinese investment in Greek port the biggest FDI after the crisis. Marketpulse. Retrieved April 17, 2014 from http://www.marketpulse.com/20131127/chinese-investment-greek-port-biggest-fdi-crisis/
Political leaders in charge of this decision will not take into consideration only the effects that a possible bailout might have on the automakers. They will take into consideration the macroeconomic effects and challenges that are expected to emerge in case the bailout is approved.
The symbolic frame probably has the least importance regarding this subject. In case the bailout will not be approved, the cultural or symbolic aspects related to the big automakers affected by this situation will not have the strength to clarify the situation.
2. The important lesson provided by the organizational behavior consists in improving organizational effectiveness. This lesson should be important for all the managers or aspiring managers and it should always be taken into consideration when deciding upon important aspects that affect the organization in case.
Effectiveness and efficiency must characterize all types of organizations, private, profits oriented ones, but non-profit and governmental organizations…
1. U.S. Automakers Bailout - a Bridge to Bankruptcy or a Road to Salvation. Saving to Invest. Retrieved December 12, 2008 at http://www.savingtoinvest.com/2008/11/us-automakers-bailout-bridge-to.html .
If AIG would not have been helped by the Federal eserve, it is more
than obvious that the financial group would have declared bankruptcy.
Although the bailout reached an enormous sum, the action was justified.
Given the current market conditions, an eventual collapse of AIG would
contribute even more to the fragility of the financial market. Also, it
would have led to a reduction of public wealth, and it would have reduced
The opinion of U.S. taxpayers is that the AIG bailout was not
justified. For them, it did not seem fair that they should pay for the
mistakes made by financial corporations' CEOs and by the defective policies
and strategies practiced by financial groups.
There are two sides to this issue, one opposing the other. U.S.
citizens have strongly declared themselves against the bailout. Their
pressure determined the country's officials to reject financial saving
1. Chronology: Financial Crisis Spreads from U.S. to World
Markets (2008). Deutsche Welle. Retrieved November 7, 2008
2. Subprime mortgage crisis (2008). Wikipedia, the free
encyclopedia. Retrieved November 7, 2008 from
3. DiMartino, D. & Duca, J. V. (2007). The Rise and Fall of
It was irresponsible for banks to operate from a position of absentee management, and the careless ownership enabled reckless conduct from their "agents" who ran the day-to-day operation. While some blame must be placed on the public for continuing to spend at outrageous rates, the bank itself promoted and enabled such activity. Blankfein's argument that no one had been arrested is irrelevant since the issue at hand is whether the financial industry was responsible, not whether bank officials should be arrested. Banks made profound miscalculations concerning interest rates and loans, and should have been aware that their business practices were not feasible toward long-term success (Murphy).
Issue 7 places the theories of authors oger Lowenstein and obert Samuelson against one another. Lowenstein contends that government should bail out economic institutions; however, he does not argue that bailouts are necessary in order to assist the careless companies, but instead asserts that…
Newton, L., Englehardt, E., & Pritchard, M. (2012). Taking Side: Clashing Issues on Business Ethics and Society. New York: McGray Hill.
Murphy, a. (Nov. 4, 2008). An analysis of the financial crisis of 2008: Causes and solutions. SSRN. Retrieved from http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1295344 .
Andrews, E.L. (2008, Oct. 23). Greenspan 'shocked' that free markets are flawed. International Herald Tribune.
Social evolution to rapid revolutionary change and contemporary globalization dynamics: Emphasizing the an Analysis of Global Economics.
An article that recently appeared in The Korea Herald, "U.S. And Germany stress cooperation" details a visit to Germany by U.S. Treasury Secretary Tim Geithner, who met with his German counterpart to discuss the financial crisis that has enveloped Europe as of late. The context for this meeting was important, as the European Union's currency, the Euro, has consistently been devalued in the past few years and several countries that are part of this alliance (17 altogether) are contemplating various measures in which the currency and the economic solidarity of the EU could be saved.
The crux of this article, which directly correlates to Hans-Werner Sinn's opinion editorial, "Why Berlin is Balking on Bailout" actually has less to do with the meeting between the two financial heads of the U.S. And Germany and…
all Street Bailout -- Part II
all Street Bailout
The government-orchestrated bailout of the banks has been hailed and yet also condemned due to its perceived efficacy or lack thereof. Jeffrey Fuhrer suggested a path that was a lot cheaper and perhaps a lot less encouraging and propagating of the bad habits of banks and government entities that led to the crisis. This alternative, of course, was the individual homeowner bailout. Indeed, bailing out homeowners directly would have cost a mere fraction of what it did indeed cost to bail out Citibank, ells Fargo and the other banks. However, neither solution alone has a clear advantage over the other when looking at all relevant circumstances. hile doing a homeowner bailout would have had its merits, doing just the bank or homeowner bailouts individually probably would not have been as effective as doing them both in concert.
This report will…
While some may view the bank bailouts as encouraging bad behavior, the money had to be and was paid back. Further, letting the banks fail would have imperiled a lot more bank deposits and assets that belonged to homeowners than would have been savable for a scant fifty billion. Indeed, the same bad consumer behavior that helped feed the mortgage monster would similarly feed runs on banks based on perceptions and hysteria. While the economic conditions of 2007 and 2008 were quite bad, they never approach Great Depression levels. On the same note, while unemployment reached roughly ten percent during the Great Recession, it was 2.5 times that during the Great Depression in the 1930's and the United States economy was quite dismal until the ramp-up during World War II (Perry, and Vernengo). However, when one inserts widespread panic into the equation, the Great Recession could have been a lot, lot worse. If the banking system had not been shored up at all in favor of bailing out only the consumers, it could have been quite cataclysmic because just bailing out the homeowners when the banks are failing due to their own or created problems would have negated much of what a homeowner bailout would have accomplished (Peicuti).
With that said, the housing bubble was not just the fault of the banks and the homeowners who procured the foolish loans had their part as well. A similarity regarding all of the bailouts is that everyone in the chain misbehaved and that includes the federal government, the homeowners and the banks. Indeed, part of the problem that created the housing bubble was improper oversight by the federal government. This oftentimes manifested with near-direct or entirely direct participation and complicity of the federal government. For example, Fannie Mae and Freddie Mac were not technically part of the government prior to the Great Recession but only in the sense that the United States Postal Service is not part of the federal government either. Referred to as government-serviced enterprises (or GSE's for short), those two entities had to be bailed out to the tune $66 billion had to be paid back to the federal government as those two groups had to be bailed out as well. Just as with AIG and the broader TARP program, all of that money was paid back and with a tidy profit on top of it to boot. The government really has no excuses about Fannie Mae and Freddie Mac going forward as the two groups became part of the federal government via conservatorship in 2008 and they are now federalized agency. There is some talk of those groups being wound down and done away with but that has not happened as of yet (Phillips).
While it may be more attractive to some to help homeowners directly and leave the larger banks hanging, proof of why that is an exceedingly bad idea was easy to spot during the Great Recession when banks were folding left and
Such problems are not overcome easily, but in time and with sustained efforts. To better understand my standpoint of defending the bailouts, consider what would have happened had the TAP never been implemented. All of the companies would have commenced bankruptcy procedures and the millions of workers they were employing would have been fired. At a first level, the state would have had to offer those former employees social aid. Then, the national purchasing power would have decreased even more, to impact the national demand and the national production. Also, the country's competitive position within the global market would have decreased dramatically. Overall then, while the bailouts may not have been fairly and efficiently allocated and while they did not revive the economy immediately, they did prevent it from taking an even more damaging turn.
Haugen, D., 2010, Bailout Money Should Not Be Used to Pay Executive Bonuses, Detroit:…
Haugen, D., 2010, Bailout Money Should Not Be Used to Pay Executive Bonuses, Detroit: Greenhaven Press
Haugen, D., 2010, the Government Bank Bailout Plan Is a Fraud, Detroit: Greenhaven Press
Haugen, D., 2010, the Government Bank Bailout Will Not Jump Start the American Economy, Detroit: Greenhaven Press
September 2008, Government Bailouts Must Put Americans First, U.S. Newswire
Yet, today, they sell only about 47% and this market share loss has accelerated over the past decade (Sullivan, 2008). The major issue, according to Sullivan, is the inability of the ig Three to effectively compete with their more efficient and market savvy Japanese rivals, even on their home turf. Opponents of the auto industry bailout feel that placing more money into a failed business strategy makes no sense and that everyone is better off if the free market, not the federal government, choose the winners and the losers in the economy (Moran, 2008). The end result of the auto bailout could well result in a return to protectionism which could unfairly impact other American industries' ability to compete in a global market. A policy analyst at the German-Marshall Fund voices a common concern that a bailout of the auto industry has the potential "to be the torch that lights…
Abouhalkah, Yael T. "The Big Three Bailout vs. Big Bank Handouts for AIG, CitiGroup." Kansas City Star 4 Dec. 2008. http://voices.kansascity.com/node/2983
"1979 Chrysler Bailout Holds Lessons" The Washington Times 24 Nov. 2008. http://www.washingtontimes.com/news/2008/nov/24/1979-chrysler-bailout-holds-lessons/
Grossman, Andrew M. And Gattuso, James L. "TARP: Now a Slush Fund for Detroit?" 12 Dec. 2008. http://www.heritage.org/Research/Economy/wm2170.cfm#_ftn2
Kiley, David. "Auto Bailout Hung Up in the Senate." BusinessWeek 10 Dec. 2008. http://www.businessweek.com/bwdaily/dnflash/content/dec2008/db20081210_152585.htm
Conclusions -- Was TAP Necessary -- A five member Congressional committee echoed a number of criticisms regarding TAP that many consumers, academics, and fiscal analysts were considering. What exactly was the Treasury's strategy with the $700 billion dollars for the supposed bail out? How can Treasury explain the significant gaps in their ability to find hundreds of billions of taxpayer money? In a nutshell, it appears that the departments that control the money given by the Congress (from the American people) have no ability to ensure that the bailed out banks will do what was needed and lend money; have no real standards of measuring success of failure of the program; and for ignoring pointed and specific questions from Congress about their performance (M. Crittenden).
The fact that many of the institutions bailed out with TAP funds, funds from the American taxpayer, did not distribute these funds back into the…
REFERENCES and WORKS CONSULTED
"2007 Public Company Bankruptcies Surpassed, According to BankruptcyData.com." 17 September 2008. AllBusiness.Com. 11 April 2010 http://www.allbusiness.com/company-activities-management/financial-performance/11564300-1.html
Andrews, E., et.al. "Fed's $85 Billion Loan Rescues Insurer." The New York Times 16 September 2008: http://www.nytimes.com/2008/09/17/business/17insure.html?_r=1&hp .
Bardeesy, Karim. "Bailout Baloney." 2 October 2008. The Big Money from Slate. 11 April 2010 http://www.thebigmoney.com/articles/juicy-bits/2008/10/02/bailout-baloney
Bucznski, Richard. "Economic Crisis: When Will It End?" 2010. IBIS World. 9 April 2010 http://www.ibisworld.com/recession2009/
Big to Fail
The phrase "too big to fail" is a term used to describe certain institutions that are so large, interconnected and significant to the American economy that their failure would be disastrous. Because of this perception American public policy has evolved into government support for these institutions when their frequently poor management, greed, and risk-taking behaviors put them in jeopardy.
A partial list includes: Fannie Mae, Freddie Mac, AIG, General Motors, Bank of America, Citigroup, JPMorgan Chase, Wells Fargo, GMAC, Chrysler, Goldman Sachs, Morgan Stanley, Bank of America subsidiaries (Countrywide), U.S. Bancorp, Capital One, Regions and SunTrust.
The issue of taxpayer funded bailouts for institutions deemed too big to fail is one of the most controversial subjects that can be brought up. Bailouts for U.S. automakers like GM and Chrysler can at least be credited with saving jobs of U.S. employees. By preventing massive layoffs, bailing out these…
Bailing out the American economy: Banks vs. mortgage-Holders
In 2008, the United States teetered on the brink of an economic crisis. If the United States were to suffer a financial meltdown, the global economy could spiral downward in a manner unprecedented since the Great Depression. The crisis had begun in the U.S. subprime mortgage market but had rapidly spread to other sectors of the economy. The remedy of the U.S. government was the creation of the TARP (Troubled Asset Relief Fund) ("Troubled Asset Relief," Investopedia, 2012). Almost every major banking institution, deemed in the infamous phrase 'too big to fail' was given some form of relief. However, homeowners who were behind on their mortgages were angry that they received relatively little support from the government even though they perceived themselves as far less culpable than the banks. Even the plan proposed by Jeffrey Fuhrer (Foote et al. 2009) on the…
Calmes, Jackie. "Audit finds TARP program effective." New York Times. 20 Dec 2009.
[17 Oct 2012].
Carter, Adrienne. "Big Banks Pay Back TARP Funds -- But Still Get Government Aid."
To examine the causes the independent variables will be the costs associated with the production and sale of the cars, looking a both the direct and the overhead costs in the years prior to the bailouts, to assess the degree to which the firms appeared to have control over their costs. If there was a lack of control over the costs, the level of costs may be a predictor of future problems.
Definition of Terms
Before undertaking the research it is necessary to define some of the terms which will be used. The failure of a firm relates to whether a firm entered into bankruptcy. Bailout funding was the funding that was received from the government as part of an official bailout package in order to help the firm survive.
The costs will be assessed in terms of the overall costs incurred to manufacture cars; this may be the cost…
Isidore, C. (2008, November 17). Auto Bailout: Showdown. CNNMoney.com. Retrieved from http://money.cnn.com/2008/11/17/news/companies/gm_showdown
Hiraide Norikatsu; Chakraborty, Kalyan, (2012) Surviving the Global Recession and the Demand for Auto Industry in the U.S. -- a Case for Ford Motor Company, International Journal of Economics and Finance, 4(5), 85-94
Ooghe, Hubert; De Prijcker Sofie, (2008), Failure Processes and Causes of Company Bankruptcy: a typology, Management Decisions, 46 (1-2), 223-242
Watson, Thomas, (2009), Automotive Trouble, Journal of Domestic Car Production, 82(7), 11-12.
Big Fail" title a recent book a movie HBO. It refers bailout major financial institutions began 2008, time concern,, United States fall a depression aid. For purpose discussion I include bailout General Motors Chrysler.
Too big to fail
In the second half of 2007, the real estate sector in the United States of America showed the first signs of weakness. Devaluations were gradually observed and the investments made in the field came to lose value. The problem was mainly represented by the fact that the population did not afford the properties, but the financial institutions had traded in money as it had already been reimbursed. The bubble eventually burst and the financial institutions were the first to suffer the major hit.
In Too big to fail, the focus falls on the bankruptcy of Lehman Brothers, based on the recurrent assumption that it was this bankruptcy which onset the unfolding of…
Maggs, J., 2010, Criticism of TARP persists, Politico, http://www.politico.com/news/stories/1010/42995.html last accessed on November 14, 2011
Weiner, M., 2009, Biggest mistake of the financial crisis: Lehman Bros. Bankruptcy, Politics Daily, http://www.politicsdaily.com/2009/09/15/biggest-mistake-of-the-financial-crisis-lehman-bros-bankruptcy / last accessed on November 14, 2011
2011, Troubled Asset Relief Program, Investopedia, http://www.investopedia.com/terms/t/troubled-asset-relief-program-tarp.asp last accessed on November 14, 2011
Too big to fail, HBO Movie, Directed by Curtis Hanson, based on a book by Peter Gould and Andrew Ross Sorkin
Mayor Nutter's budget speech contained several effective elements. The mayor is delivering a challenging budget. IN order to deliver this news, he begins with two effective devices. The first is that he rallies the support of the people by pointing out that he is a leader they can trust (had an open house at City Hall) and that the people of Philadelphia had rallied to meet challenges before (picking up trash, etc.). The second effective device was that he wanted to create a sense of urgency about the situation. In order to deliver bad news, it is important that a sense of urgency is created because it compels the listener to want to act right away, as opposed to delaying action. Thus, the mayor effectively recounts how bad the recession is, and the ways that it has already had a negative effect on the national economy and on the…
Peterson, J. (2012). 12 effective speech tips and checks. Speech Topics Help. Retrieved February 15, 2012 from http://www.speech-topics-help.com/effective-speech.html
Video: $14B auto bailout dies in Senate. Retrieved February 15, 2012 from http://www.youtube.com/watch?v=L7PMnKUcL1U
Video: Nutter paints bleaker picture on budget crisis. Retrieved February 15, 2012 from http://abclocal.go.com/wpvi/video?id=6492270
Economic crash can be viewed from a number of perspectives ranging from causes and effects to the 2008 Crash's resemblance to the Crash of 1929, which began the Great Depression. This paper will consider the 2008 recession from the standpoint of the financial banking industry, which, according to economic journalists like Matt Taibbi (2010), played a major and significant role in the crumbling of the nation's economy -- just like it did in the Lawless Decade also known as the oaring Twenties.
Big Banking Meets Big Government
What has now become known as the Era of De-egulation actually had its beginnings in the 80s decade known just as much for its rampant excess as the early 20s were known for their unbridled lawlessness. Yet, while the latter enjoyed the snubs-to-the-law bootlegging speakeasies, the former enjoyed the merging of the financial sector with the political -- which began during eagan's tenure…
AP/HuffPost. (2011). Charles Ferguson's Oscar Speech Rips Wall Street: 'Inside Job'
Director Levels Criticism During Acceptance. HuffPost Business. Retrieved from http://www.huffingtonpost.com /2011/02/28/charles-ferguson-oscar-speech-inside-job_n_828963.html
Sann, P. (n.d.). The Lawless Decade: A Pictorial History of the Roaring Twenties.
Retrieved from http://lawlessdecade.net/
Fiat / Chrysler -- Leadership - Teambuilding
The Chrysler merger with Fiat was met with skepticism and doubts when it was first proposed. Chrysler had just recently emerged from near bankruptcy -- saved by a U.S. government bailout -- and Fiat is a strong internationally respected corporation building cars, earth-moving machines, and more. The merging of Chrysler and Fiat was seen as having a greater opportunity for success than did the merger between Chrysler and Daimler-Benz, but still there were doubters in the industry. However, as of May, 2012, the blending together of the two companies (Fiat and Chrysler) has produced a profitable situation. This paper examines the cultures -- and leadership -- shown within the two companies, a strong combination that has allowed success to be achieved. The paper also critiques the leadership styles in the dynamics of this merger, and delves into the concept of teambuilding when two…
Associated Press. (2012). Fiat Gets Another 5% State In Chrysler Thanks to Dodge Dart.
HuffPost Detroit. Retrieved May 11, 2012, from http://www.huffingtonpost.com .
Buss, Dale. (2012). "Gordian Knott" Sliced Through Chrysler Woes with Suppliers. Forbes.
Retrieved May 11, 2012, from http://www.forbes.com .
Boom in Busts: Good or Bad?
There are several pros and cons in the bankruptcy legislation issues. In the current European systems, entrepreneurs forced to file for bankruptcy protection carry business failures and associated debts for years, may be liable to criminal charges and may even be driven to suicide by crushing failure and ongoing debt (Peng, 2014, p. 145). Those consequences and the "fear of failure" rampant in Europe causes some entrepreneurs to abandon their ideas without ever trying to develop them. The "advantage" of the current system, however, favors the creditors because creditors are still supposed to get paid; the money owed to them does have to be simply written off as losses (Peng, 2014, p. 145). The American system, which gives bankrupt entrepreneurs two options -- either complete liquidation and walking away from debt or restructuring to renegotiate with/pay creditors according to court-approved schedules -- also has…
Carroll, L., & Youngman, C. (2015, September 21). Fact-checking claims about Donald Trump's four bankruptcies. Retrieved March 20, 2016 from www.Politifact.com: http://www.politifact.com/truth-o-meter/statements/2015/sep/21/carly-fiorina/trumps-four-bankruptcies/
Crum, B. (2013). Saving the Euro at the Cost of Democracy? . Journal of common market studies, 51(4), 614-630.
Peng, M. W. (2014). Global strategic management, 3rd edition. England: South-Western Cengage Learning.
nature project, sources information plan, important concepts techniques applied. You receive feedback proposal Instructor Week 6, give time make adjustments.
Proposal for new strategic endeavors of production, pricing and resource utilization at Ford Motor Company
In the context of the global economic recession, the American automobile industry faces demise. Out of the three main players in the United States, Ford Motor Company has rejected the bailout from the government and has focused its strategy on internal restructuring. As part of this effort, the future project would set out to provide some recommendations of how the company can reshape its production, pricing and resource utilisation strategies in an effort to create more value for the organisation.
With the commencement of the 2007 economic crisis, the American automobile industry has been facing endless challenges. The number of customers has decreased, as has their purchase power and the subsequent demand for the…
Pride, W.M., Hughes, R.J., Kapoor, J.R., 2011, Business, Cengage Learning
Rosenfeld, H., 2009, The North American auto industry in crisis, Monthly Review, Vol. 61, No. 2
Soy, S., 1997, The case study as a research method, Texas University at Austin, http://www.gslis.utexas.edu/~ssoy/usesusers/l391d1b.htm last accessed on May 24, 2012
Vasudev, P.M., Watson, S., 2012, Corporate governance after the financial crisis, Edward Elgar Publishing
fiscal and monetary policy.
On the most basic level, the primary difference between fiscal and monetary policy is that fiscal policy pertains to the actions of the federal government designed to influence the national economy through government spending and taxation while monetary policy refers to the actions of the central bank to govern the money supply. Tight or restrictive monetary and fiscal policy is used to curb inflation; a liberal monetary and fiscal policy is used as an economic stimulus (What is the difference between fiscal and monetary policy, 2002, As Dr. Econ).
2-Compare and contrast Keynes and Hayek
According to Keynes, it was sometimes necessary for the federal government to take a role in managing the economy, to correct the ebbs and flows of the business cycle. During severe recessions consumers became wary about losing their jobs, stopped spending money, and this further curtailed economic growth. Eventually, more and…
Koehn, Nancy. (2011). Tale of the dueling economists. The New York Times. Retrieved:
Nasar, Sylvia. (2011). Hayek, Keynes and How to Prevent Economic Crises. Bloomberg.
Economically, recession is described as a significant drop in economic activity over a short period of time usually a few months (bbc news, 2008). Gross Domestic Product (GDP), household income and other macro-economic indicators drop while others such as unemployment and bankruptcy rises. ecession can be caused by many factors e.g an external trade shock or the burst of an economic bubble such as the United States housing bubble. Most governments deal with recession by applying expansionary macroeconomic policies like reducing interest rates and increasing government spending. By lowering interest rates, governments hope to entice business into expanding.
Fiscal policy refers to the use of the government taxation (revenue collection) and expenditure (spending) to influence the economy of a country. The changes in the two key pillars, revenue collection and expenditure influence macro-economic variables such as aggregate demand, resource allocation pattern within the government and the distribution of…
Bernanke, Ben (13 January 2009). "The Crisis and the Policy Response." Federal Reserve. http://www.federalreserve.gov/newsevents/speech/bernanke20090113a.htm
BBC news, (8th July 2008). "Q&A: What is a recession?"
Marc L., (2013). Federal Reserve: Unconventional Monetary Policy Options. http://www.fas.org/sgp/crs/misc/R42962.pdf
Mill and U.S. Constitution
None of the issues being raised today by the Occupy all Street (OS) movement are new, but rather they date back to the very beginning of the United States. At the time the Constitution was written in 1787, human rights and civil liberties were far more constrained than they are in the 21st Century. Only white men with property had voting rights for example, while most states still had slavery and women and children were still the property of fathers and husbands. Only very gradually was the Constitution amended to grant equal citizenship and voting rights to all, and even the original Bill of Rights was added only because the Antifederalists threatened to block ratification. In comparison, the libertarianism of John Stuart Mill in his famous book On Liberty was very radical indeed, even in 1859 much less 1789. He insisted that individuals should be left…
Dahl, Robert Alan. How Democratic is the American Constitution? Yale University Press, 2003.
Kaplan, Lawrence. S. Alexander Hamilton: Ambivalent Anglophile. Scholarly Resources, Inc., 2002.
Main, Jackson Turner. The Antifederalists: Critics of the Constitution, 1781-1788. University of North Carolina Press, 1989, 2004.
Mill, John Stuart. On Liberty. London, 1859.
fall 2007, the United States economy was rolling along in a healthy fashion having enjoyed 24 consecutive quarters of positive Gross Domestic Product growth. The Standard and Poors Index was over 1,500 and unemployment was below 5%. There was essentially no inflation. These were all good numbers and normally indicative of a health economy (Bloomberg Business eek).
Roughly 12 months later everything had changed. Treasury Secretary Henry Paulson surprised everyone by announcing that the Government was intending to intervene in the U.S. economy by holding reverse auctions where the troubled assets of several domestic financial institutions would be bought (Landler). As matters worsened quickly, the proposed auction concept was expanded to the point that the Government would actually purchase equity positions in some of the country's largest banks. The argument offered by Paulson was that such measures were needed to stabilize the troubled financial markets, avoid bank failures, and prevent…
Ashcraft, Adam B. "Are Banks Really Special? New Evidence from the FDIC-Induced Failure of Healthy Banks." The American Economic Review (2005): 1712-1730.
Bloomberg Business Week. "The Economy on the Edge." 19 November 2007. Bloomberg Business Week. 12 December 2011 .
Carliner, Michael S. "Development of federal homeownership "policy." Housing Policy Debate (1998): 299-321.
Case, Karl E. "Is There a Bubble in the Housing Market?" Brookings Papers on Economic Activity (2003): 299-362.
2007 Economic Crisis on American Car market
Effect of the 2008 global economic crisis on automotive industries
Crisis in the United States
Crisis in Canada
Crisis in ussia
Crisis in European markets
Crisis in Asian markets
Effects by other related crisis events
In this paper, we will review the effects of 2008 global automotive crisis. Our main focus will be on the American car manufacturers and the negative impact they suffered due to the crisis. We will also have a look at how this crisis had affected car manufacturers in other major markets around the world notably Europe, Canada and the prominent Asian markets such as China and India. Finally, we will look at some of the other factors which were important to this event namely the energy crisis since the cost of fuel is directly related to the car industry.
The automobile industry is a very important part…
Lee, C. (2003). Financial Liberalization and Economic Crisis in Asia. New York: Routledge.
Pempel, T.J. (1999). The Politics of Asian Economic Crisis. New York: Cornell University Press.
Arestis, P. (2001). What Global Economic Crisis? New York: Palgrave.
Liou, K.T. (2002). Managing Economic Development in Asia. Westport, CT: Praeger.
" To that end, the Treasury Department would limit executive compensation for institutions receiving "exceptional assistance" (Geithner and Summers, 2009).
Troubles continued in the financial sector -- both Citigroup and the Bank of America needed second rounds of capital infusions, and federal guarantees against losses totaling tens of billions more -- while Ben S. Bernanke, the Federal Reserve chairman, warned that more capital injections might be needed to further stabilize the financial system. On Jan. 16, the Senate voted 52-42 to release the second round of funds (Gerth, 2009).
THE GEITHNER PLANS -on Feb. 10, Mr. Geither presented the rough outlines of the Obama administration's plan. A central piece of the proposal would create one or more so-called bad banks that would rely on taxpayer and private money to purchase and hold banks' bad assets. Another centerpiece of the plan would stretch the last $350 billion that the Treasury has…
Overall the automobile industry must make a more concerted effort o behave in ways that are consistent with accepted business ethics. From a utilitarian standpoint the automakers must begins to consider the consequences of their actions in the decision making process. At the current time Toyota is fighting to rebuild its brand image because the company6 did not thoroughly take into consideration the consequences of their actions. From a deontological standpoint the automobile companies have failed to act in ways that are just as it relates to the bailout and the recall of defective vehicles by Toyota. Going forward the companies that make up the industry must learn from the issues they have been confronted with in recent years. It is only through such a process that the entire industry will reflect a more ethical business model. An increase in ethical responsibility will likely prove effective attracting customers back…
Brady F.N., Dunn C. P 1995. Business Meta-Ethics: An Analysis of Two Theories. Business Ethics Quarterly, Vol. 5 (3) pp. 385-398
Finch, J. 2010. Toyota Sudden Acceleration: A Case Study of the National Highway Traffic Safety Administration. Retrieved from: http://www.luc.edu/law/activities/publications/clr_vol22_issue4/pdfs/finch_toyota.pdf
Fuhrmans, V., Catan, T. (2010) Daimler to Settle With U.S. On Bribes. Wall Street Journal. 255 (68), pB1-B2
Newman, a. Auto Bailout: Lemon or Lemonade. New American 25 (1), p21-24
The economic environment of Greece is that of a capitalist economy, but with significant public sector contribution – about 40% of total GDP is from government activity. This speaks more to the relatively small size of the Greek private sector than to excessive government ownership of industry. Tourism is one of the major drivers of the Greek economy, accounting for 18% of GDP (CIA World Factbook, 2017). Thus Greece would be characterized as a mixed economy with some government-owned entities. Greece is a member of the EU, but has also received several bailouts in recent years, and struggles with tax collection, and overall economic development. Tax evasion ranges between 6-9% of total GDP in Greece, which makes it a significant economic problem (Georgakopoulos, 2016).
Recent Macroeconomic Data
In recent years, Greece\'s economy has flatlined. The country has received several infusions of capital from other EU countries, but there…
The U.S. is a property owning civilization and a number of the people wanted land and housing. Americans however scarcely ever create savings. "The country itself lives on other countries' savings by issuing bonds to finance its excessive consumption. The current crisis began with cheap housing loans offered by banks. Banks provided loans but instead of holding the loan in their books, they packaged them into collateralized debt obligations (CDOs) and sold them to other agencies. These agencies passed them on to others and spread them globally as assets" (the Current Economic Crisis, its causes, its impact and possible alternatives, 2009).
Interest rates were lowered and housing loans went up with construction activities leading to land prices increasing. The real estate was booming, generating employment and incomes. But as the rate of interest on housing loans came down, banks started to compete to get more business. Because of low interest…
Avizius, R. 2009. Financial Crisis Big Picture: What has the Government Response Been? [ONLINE] Available at: http://www.marketoracle.co.uk/Article9229.html . [Accessed 22 May 2012].
Centeno, M.A. & Cohen, J.N. 2012. The Arc of Neoliberalism. [ONLINE] Available at: http://www.yale.edu/macmillan/transitionstomodernity/papers/CentenoCohen.pdf . [Accessed 22 May 2012].
Crotty, J. 2009. Structural causes of the global financial crisis: a critical assessment of the 'new financial architecture' . [ONLINE] Available at: http://cje.oxfordjournals.org/content/33/4/563.full . [Accessed 22 May 2012].
Esteva, G. (n.d.). The Meaning of the Global Crisis and "Recovery" for Study Abroad: What are we Preparing Students for? [ONLINE] Available at: http://digitalcollections.sit.edu/cgi/viewcontent.cgi?article=1110&context=faculty_symposium . [Accessed 22 May 2012].
In IBM's case, the Department of Justice found that their efforts were mired in failure. Unfortunately, IBM was so central to the economic operations of Germany and occupied Europe that it was necessary to preserve IBM's role in the economy of Europe so as not to jeopardize the postwar occupation.
Part II-Present Corporatist America and Comparisons with Fascist Italy-
When the Wall Street Journal, the United States' newspaper of record for financial affairs makes an explanatory note, it gives us all pause. Gerald F. Driscoll in "An Economy of Liars" takes aim at both the Obama and George W. Bush administrations when he speaks about the present economic reality and asserts "We call that system not the free-market, but crony capitalism. It owes more to Benito Mussolini than to Adam Smith ("An Economy of Liars" 2010)."
If a communist agitator on the proverbial soapbox spouted this statement, it could be…
Alter, J. 2006, the Defining Moment: FDR's Hundred Days and the Triumph of Hope,
New York, Simon and Schuster.
Black, E. 2001, IBM and the Holocaust, Crown Publishers, New York.
(1965) "The Economy: We Are All Keynesians Now," Time, Available from http://www.time.com/time/magazine/article/0,9171,842353-1,00.html
Business: International Business
International Business: Business
The IMF often provides financial assistance to ailing economies after a crisis to enable them return to their pre-crisis levels of income. However, whether or not these bailout programs are able to achieve this objective is dependent on a number of factors. This text reviews the recovery processes of four European countries to obtain a view of what these factors are.
dollar = 102.28 Japanese Yen (¥); 0.75 Euros (€); and 0.6 British pounds (£)
Converting $1,500 into:
=$1,500 X 102.28
= $1,500 X
= € 1,125
= $1,500 X
What is the price in U.S. Dollars of purchasing:
A computer costing ¥167,000
= ¥ 167, 000/¥102.28
= $1, 632
Euro desks/chairs costing €1, 125
iii) Printer costing 575 Pounds
Part Two: Effects of the Global…
Dapontas, D. (2011). Currency Crises: The Case of Hungary (2008-2009) Using Two Stage Least Squares. The Bank of Greece. Retrieved January 4, 2016 from http://www.bankofgreece.gr/BogEkdoseis/SCP201113.pdf
Hammar, K. (2015). Iceland Makes Strong Recovery from 2008 Financial Crisis. The International Monetary Fund. Retrieved January 4, 2016 from http://www.imf.org/external/pubs/ft/survey/so/2015/car031315a.htm
IMF. (2015). IMF Executive Board Concludes Article IV Consultation with Hungary. The International Monetary Fund. Retrieved January 4, 2016 from https://www.imf.org/external/np/sec/pr/2015/pr15156.htm
Lipton, D. (2015). The Case for Supporting Ukrainian Economic Reforms. The International Monetary Fund. Retrieved January 4, 2016 from https://www.imf.org/external/np/speeches/2015/040715.htm
They will only respond to outcomes that they feel directly. Thus, the government's actions are not having the desired impact on consumer behavior.
A disagree with the government's approach. The interest rate cuts are particularly worrisome. The massive cuts in the early 00s helped to spur the crisis because they had a profound impact on the money supply and helped to restore consumer confidence. Cuts of the same magnitude have been implemented now, but without the same results that were seen in the early to mid 00s. orse yet, if those results were seen, we could find ourselves in a repeat of the housing bubble. If something spurs a surge in consumer confidence, for example a strong holiday retail season, this could help convince banks to loosen their credit. ith the low rates, the market would once again be flooded with capital. This would spur a resurgence in the housing…
Boeri, Tito & Guiso, Luigi. (2007) Subprime Crisis: Greenspan's Legacy. Vox. Retrieved November 19, 2008 at http://www.voxeu.org/index.php?q=node/488#fn2
Brown, Jeff (2008) Subprime Crisis: A Bouquet of Opportunity Masked a Reek of Risk. Knowledge @ Wharton. Retrieved November 19, 2008 at http://knowledge.wharton.upenn.edu/article.cfm?articleid=1995
Bagley, Nicholas. (2008). The Federal Role in the Subprime Mortgage Mess. Sacramento Bee. Retrieved November 19, 2008 at http://www.treasurer.ca.gov/beyondthehorizon/20080128.pdf
Thoma, Mark. (2008). The Fed's View of the Sub-Prime Mortgage Market. Economist's View. Retrieved November 19, 2008 at http://economistsview.typepad.com/economistsview/2007/03/the_feds_view_o.html
Sorkin, however, posits no argument per se. ather, his book offers insight into how the financial crisis manifested from a far more personal perspective of those involved than anything else. The book is informative in nature, and give insight into some of the thought processes and activities those on the outside may not otherwise be exposed to or privy to. The title of the book sums it up best, and the book outlines how the banks and the primary players and stakeholders have become too big to fail. The book highlights the self-interest of those in charge of some of the biggest financial institutions in the world and their blatant disregard for Main Street.
The book has a place in the larger academic debates raised within public knowledge because it adds to the public's real knowledge of those involved in the nation's financial industry and government offices. Instead of speculating…
Cassidy, J. (2008). Anatomy of a meltdown, New Yorker, 84(39), 1-756.
Cherry, C. (1998). God's new Israel: Religious interpretations of American destiny.
UNC Press Books.
Cohan, W. (2010, Nov. 27). The power of failure. New York Times. Retrieves from www.thenewyorktimes.com.
What the Occupy Wall Street movement is doing, is questioning the entire system itself.
A good example of this can be seen with the Occupy Wall Street Oakland chapter. What happened was the city had removed their camp near City Hall Plaza. This is in response to reports of: deaths, drug use and unsanitary conditions. At the same time, the resources of the police department were stressed to the point that they were unable to deal with possible issues affecting the safety of the community. This is when the police raided the encampment and dispersed the protestors from the area. In response to what was happening, the Oakland chapter decided to begin occupying foreclosed homes and privately owned vacant lots near City Hall Plaza. As, they are trying to illustrate how: the risky activities of bankers contributed to the financial crisis by staying in these locations. This is significant, because…
About. (2011). Occupy Wall Street. Retrieved from: http://occupywallst.org/about/
Bailout Statistics. (2009). Capt Karl. Retrieved from: http://captkarl.blogivists.com/2009/01/22/bank-bailout-statistics-the-score-board/
Just 21% Favor GM Bailout Plan. (2009). Rasmussen Reports. Retrieved from: http://www.rasmussenreports.com/public_content/business/auto_industry/may_2009/just_21_favor_gm_bailout_plan_67_oppose
Organizational Symbols and Culture. (n.d.).
In Marx's view, equality extends in terms of distribution, where there is no private ownership, but where the government manages all goods for the supposed good of all citizens. Hence, equality extends not in terms of power, but in terms of material goods, which is managed by a centralized government. Hence, the bailout plan is ideal, with the government taking possession of the company and allowing its former owners to manage it in a way that is beneficial for its survival and the employees who depend on it for their survival.
I believe that the bailout should have been done. Like many other companies, GM was in financial trouble. Since the government was in a position to provide assistance, it is right that they should have done so. However, I tend to be in agreement with Locke and Smith that the government should not have taken permanent ownership of any…
Has the 2008 financial meltdown in the U.S. And the ongoing economic crisis in Europe have practically ended the era of economic globalization?
Following the financial crisis that marred the U.S. economy along with other global economies as well as the ongoing Eurozone debt crisis, there have been projected concerns that this predicament would end economic globalization. The purpose of this paper is to assess this claim. Going by Immanuel Wallenstein's World Systems Theory, the political economy of Third World economies and developed economies of the West are mutually dependent. Wallenstein's conjecture is that the growth and expansion of Third World economies relies on constant interaction with Western developed economies seeing as the world is characterized by a structural division of labor where the developing nations of the Third World provide cheap labor and raw materials while the developed economies are the holders of capital and controllers of…
Ebrahimi, H, 2012, "John Lewis warns Amazon's tax avoidance 'will drive UK companies out of business" The Telegraph
Held, David; The Open University, eds. (2004). A Globalizing World?: Culture, Economics, Politics (2nd ed.). London; New York: Routledge, in association with the Open University. p. 84.
Katz, I & Christie, R (2011) "Geithner Called Housing Giants Biggest 'Moral Hazard'" Bloomberg
Lynch, Katherine (2003). The Forces of Economic Globalization. Kluwer Law International
The world's largest economy has seen much since the financial crisis of 2008 began the role toward the precipice in terms of the all Street corruption. Transparency president Nancy Boswell maintains that it is an "integrity gap "(Graham, 2010).
However, this author will identify a different issue. Indeed, this author's view is very long and will take a historical approach in order to prevent another Great Depression, the Congress under President Franklin Delano Roosevelt separated all Street investment banks and regular depository banks. This took away the potential to make incredible profits from trading mortgage-backed securities whose ratings were artificially high. These encouraged banks to take what otherwise would have been intolerable risks in the form of bad loans that were later termed "toxic debt." Under this regime, people were obtaining home loans too easily (known derisively as "liars loans") and that exacerbated the decline once it started (Krugman).
Gettleman, J. (2010, March 16). Somalia's president assails u.n. report on corruption.
Retrieved from http://www.nytimes.com/2010/03/17/world/africa/17somalia.html .
Graham, D. (2010, October 26). U.s. slips to historic low in global corruption index.
Retrieved from http://www.reuters.com/article/2010/10/26/us-corruption-transparency-idUSTRE69P0X620101026 .
Economic Crisis Policies
US current economic crisis is considered to be started from real estate sector. The real sector started to decline in 2006 and it accelerated in 2007 and 2008. Housing prices have fallen from the peak from about 25% so far. The decline in prices left homeowners with no option and they were unable to refinance their mortgages and causes default of mortgages. This default of mortgages and loans swallowed the banks and financial markets such as falling of Lehman's brothers and other anks and blow to rest of economy happened as the whole economy was relying on banks and ultimately it slows down investment in the country and capital flows to other parts of the world like China and India. ank losses cause reduction of bank capital which in turn requires capital reduction thus saving bank from lending. It is estimated that every $100 loss and reduction…
ISR international socialist review. (2009, april). Retrieved from The U.S. economic crisis:causes and solutions: http://www.isreview.org/issues/64/feat-moseley.shtml
Journal of accountancy. (2009, october). Retrieved from The U.S. economic crisis: root causes and road to recovery: www.journalofaccountancy.com/Issues/2009/Oct/20091781
Eyes on wall street. (2011, april). Retrieved from Levin coburn investigates casues of financial crisis: http://www.eyesonwallstreet.com/2011/04/articles/financial-crisis/levincoburn-report-investigates-causes-of-the-financial-crisis/
Rude, C. (2009). World Economic Crisis and Fed Reserve Response to it. Studies in Political Economy.
Business Ethics Decision Making using Kidder' Ethics Check Points
Identification of the relevant facts
Identification of the moral issue 2
Potential for harm
Determination of the moral agents
The "trilemma" options
Test for right-versus-wrong issues
Application of resolution principles
eflection of the decision
Identification of the relevant facts
In this case examination, we consider the case of the bailout of General Motors by the U.S. government in 2014. This is based on a report published by news agency euters on April 30, 2014, titled "U.S. government says it lost $11.2 billion on GM bailout." It is revealed in the news report that U.S. government lost $11.2 billion when it bailed out General Motors Co through its selling of the government shares in GM in December the earlier year. More than $50 billion was used to bail out GM from the brink of the company's 2009 bankruptcy ("U.S. government…
Liszka, J. (1999). Moral competence. Upper Saddle River, NJ: Prentice Hall.
Shafer-Landau, R. (2007). Ethical theory. Malden, MA: Blackwell Pub.
U.S. government says it lost $11.2 billion on GM bailout. (2016). Reuters. Retrieved 15 May 2016, from http://www.reuters.com/article/us-autos-gm-treasury-idUSBREA3T0MR20140430
West, H. (2006). The Blackwell guide to Mill's Utilitarianism. Malden, MA: Blackwell Pub.
While they still mention the financial artifice used by the company to repay the loan with other TAP money, they look at the issue from an accounting standpoint and explain the logics of the move.
Each of the three authors inserts himself in the story line and concludes his work with his own interpretation. Ed Morrissey for instance argues that the massive usage of governmental funds forces GM to increase the transparency of its dealings, which is in fact a positive aspect. Gillespie on the other hand is more sarcastic and, for consumer safety, states his hope that the engineers and technicians are better trained in mathematics than the CEO. The editors at Consumerism Commentary state that the severity of the solution found by General Motors is not that dramatic as argued by others. "It does look bad if a company appears to use TAP funds to pay off a…
Gillespie, N., 2010, Reason tv: how did GM payback its TARP loans so fast? Well, it didn't…Big Government, http://biggovernment.com/ngillespie/2010/05/02/reason-tv-how-did-gm-pay-back-its-tarp-loans-so-fast-well-it-didnt / last accessed on August 13, 2010
Morrissey, E., 2010, How did GM pay off its bailout loans? Hot Air, http://hotair.com/archives/2010/04/23/how-did-gm-pay-off-its-bailout-loans / last accessed on August 13, 2010
2010, GM used bailout funds to repay loan: mostly irrelevant, Consumerist Commentary, http://www.consumerismcommentary.com/gm-used-bailout-funds-repay-loan / last accessed on August 13, 2010
Still, the future stated goal of GM is to develop an electric or hybrid version in all of its existing brands lines -- Chevrolet, Cadillac, Buick and GMC.
Outcome of changes
GM's most notable success has been overseas, where it is currently ahead of all of its competitors in the rapidly expanding Chinese market. "While GM is outpacing Ford in overseas competition, GM cannot solely depend on China for growth. While the emerging market contributed to GM's global recovery last year with 2.3 million in sales, it may not experience the same momentum this year  because the Chinese government has ended incentives on small cars and rural purchases" (Benedicto 2011). Still, evidence of GM's health is seen in the fact that it recently announced that it will issue profit-sharing checks this month for hourly workers, the largest in a decade (Vlasic & Bunkley 2011:1). Talks with the UAW will…
Benedicto, Tanya. (2011, February 26). Should the new GM thank Waggoner? The Wall Street
Journal. Retrieved March 1, 2011 at http://blogs.forbes.com/tanyabenedicto/2011/02/26/should-the-new-gm-thank-wagoner/
Bunkley, Nick. (2011, January 11). GM plans 2 plug-in hybrids. The New York Times.
Retrieved March 1, 2011 at http://www.nytimes.com/2011/01/12/business/12volt.html?ref=generalmotorscorporation
Despite the fact that it also required heroic efforts on the part of Congress and the President, Time even gives credit to Bernanke for the $700 billion Troubled Asset elief Program (TAP) (Grunwald 2009, p.4).
Many, if not most of these decisions were profoundly unpopular and cost both the Obama and Bush Administration as well as Congress a great deal of political collateral. The relatively isolated Bernanke did not have to suffer such a risk in the court of public opinion, and even today critics of these policies ask: what of moral hazard? Supporters of the TAP and other aggressive government measures would counter that worshipping at the altar of moral hazard, caused the fall of Lehman Brothers and the freezing up of the microcredit market in the first place. But once the expectation of bailouts are created, one bailout tends to lead to another -- the bailout of Bear…
Grunwald, M. (2010, January). Ben Bernanke: Person of the year. Time Magazine.
Retrieved January 3, 2010.
Thoma, Mark. (2009, December 21). Is criticism of Bernanke justified? Moneywatch.
Current PAC-10 Consulting Management
REF.: The AIG Rescue
As the global financial crisis began to unveil, all of the financial institutions with positions on the market that exposed them to the crash began to feel under pressure. AIG was one such company, where a combination of credit swaps and other esoteric financial instruments weakened its position and its capacity to remain competitive on the market in the face of the financial losses such instruments generated. As of the that point, the U.S. Administration, usually in the form of the Federal Reserve or the Treasury Department, intervened with significant bailouts for many of these companies, including AIG, which received $85 billion in exchange for a 79.9% stake in the company
This memo will aim to briefly analyze the pros and cons of the governmental intervention, briefly analyze the future implications of this intervention and determine whether or not this…
1. Luhby, Tami. Fed in AIG rescue - $85B loan. CNN Money. September 2008. On the Internet at http://money.cnn.com/2008/09/16/news/companies/AIG/index.htm . Last retrieved on November 26, 2009
2. AIG Bailout. On the Internet at http://www.homebiz.bukiki.com/aig-bailout/. Last retrieved on November 26, 2009
3. Solomon, Deborah. AIG's Rescue Bedevils U.S. The Wall Street Journal. November 2009. On the Internet at http://online.wsj.com /article/SB10001424052748703819904574554241356640428.html?mod=WSJ_hpp_LEFTWhatsNewsCollection' target='_blank' REL='NOFOLLOW'>
The second recommendation I would make with respect to external communications is that Liddy adopt more stringent measures than the government has insisted upon with respect to spending controls. The government has set out some measures, but AIG should be tougher than that. This would demonstrate a sense of culpability on the part of the company for the fact that the situation it is in is of its own making. A major component of the public's offense is that it feels cheated in the deal. Taxpayers, many of whom are feeling the sting of economic hardship themselves, are insulted that they have been called upon to bailout a company that then pays six and seven-figure bonuses to its executives. Most of the people contributing tax dollars to those bonuses will never see money like that in their lives. Liddy has the luxurious advantage of not being directly responsible for the…
Karnitschnig, Matthew; Solomon, Deborah; Pleven, Liam & Hilsenrath, Jon E. (2008). U.S. To Take over AIG in $85 Billion Bailout. Wall Street Journal. Retrieved April 25, 2009 from http://online.wsj.com /article/SB122156561931242905.html' target='_blank' REL='NOFOLLOW'>
History of the euro can be traced back as far as World War II when European leaders agreed that economic ties could promote growth in Europe (Martel). As a result of the Bretton Woods (New Hampshire, USA) agreement of 1944, the International Monetary Fund (IMF) opened for business in 1947 and a fixed rate of exchange was set between the U.S. dollar and other world currencies, based on the gold standard ("Euro Timeline"). Between 1951-1952 on the initiative of obert Schuman and Jean Monnet of France, the European Coal and Steel Community (ECSC) was founded by six countries: Belgium, France, Italy, Luxemburg, the Netherlands and West Germany ("Euro Timeline"). The ECSC would become the basis for the future "Common Market" (EEC, EC) and European Union (EU) ("Euro Timeline"). On March 25, 1957 the same six countries signed the Treaty of ome, thereby creating the European Economic Community (EEC) and the…
"A Short History of the Euro." Guradian.uk.com. Guadian News and Media Limited. 9 June 2003. Web. 15 Dec. 2010.
Boskin, Michael. "Pros and Cons of the Euro at 10." The Japan Times Online. The Japan Times Limited. 1 February 2009. Web. 15 December 2010.
"Euro Timeline." The German Way & More. Hyde Flippo. n.d. Web. 15 Dec. 2010.
Evans, Stephen. "Eurocrisis: Germans Yearn for their Lost Deutschmark." BBC News. 7 December 2010. Web. 15 Dec. 2010.
Using a timeline from the peak of new housing construction to the present day, the following occurred. GDP growth slowed, followed by a three-quarter recession and slow growth has resumed on the other side of that recession. The unemployment rate skyrocketed, more than doubling in a short period of time, and has lingered at high levels for over a year. The rate of inflation fell well below the Fed's target rate, this despite aggressive expansionary monetary policy. The federal government, whose budget had previously oscillated between monthly surpluses and deficits, has been in deficit every single month -- and deeper deficits than every before -- as it has taken several fiscal policy measures to contain the economic damage. This evidence makes the clear case that steps should be taken to avoid a repeat of this housing crisis in the future, since the economic impacts are uniformly negative and in many…
US Census Bureau: New housing starts. Retrieved March 8, 2011 from http://www.census.gov/const/startssa.pdf
Bureau of Economic Analysis: Gross Domestic Product. Retrieved March 8, 2011 from http://www.bea.gov/national/index.htm#gdp
Bureau of Labor Statistics: Unemployment. Retrieved March 8, 2011 from http://data.bls.gov/pdq/SurveyOutputServlet-data_tool=latest_numbers&series_id=LNS14
Bureau of Labor Statistics: Consumer Price Index -- all Urban Consumers (all items less food and energy). Retrieved March 8, 2011 from http://data.bls.gov/cgi-bin/surveymost
From a project management standpoint, delegating these funds is a
significant concern. The recent history of government financial
mismanagement, has caused the public some rightful wariness as these
massive bailout plans come to fruition. The Obama Administration must
devise a strategy which ensures that these bailout funds are designed to
protect American homes, stimulate job creation and help to improve the
infrastructural stability of the nation. The administration has the
unenviable task of prioritizing the countless areas of civil life in which
the U.S. is currently struggling with debt and the erosion of resource.
This requires a management approach that is informed by crisis planning and
Another way to successfully plan the delegation of funds and resources
as yielded by the bailout is through information systems management.
Modern IT Systems such as the Enterprise Resource Planning (ERP) system
allow users to enter in a complex…
Barton, P. (2001). Enterprise resource planning: Factors affecting
success and failure. University of Missouri - St. Louis. Online at
Brewer, P. (2009). Root Causes of the Financial Crisis. WiseBread.
Online at http://www.wisebread.com/root-cause-of-the-financial-crisis
There is little indication in Ford's financial statements that things are going to improve any time soon. The company actually hailed the 14.2% market share in North America as "the lowest market share decline in the past ten years" (Ford Motor Company, 2009).
Ford's financial position is nothing short of awful. The company's condition has deteriorated steadily over the past five years, and its performance relative to industry peers is generally poor.
Ford Motor Company
Avg Collection Period
Fixed Asset Turn
Total Asset Turn
MSN Moneycentral. (2009). Accessed April 8, 2009 from http://moneycentral.msn.com/detail/stock_quote?Symbol=f&getquote=Get+Quote
No author. (2009). Henry Ford's $5-a-Day Revolution. Ford Motor Company. Retrieved April 8, 2009 from http://www.ford.com/about-ford/heritage/milestones/5dollaraday/677-5-dollar-a-day
No author. (2009). Ford Executive: Automaker doesn't need Bailout. NPR. Retrieved April 8, 2009 from http://www.npr.org/templates/story/story.php?storyId=102665356
No author. (2009). New Fiesta Boosts Ford of Europe Market Share. Ford Motor Company. Retrieved April 8, 2009 from http://media.ford.com/news/fordofeuropefebruary2009salesrelease.htm
"Management believes that the accounting estimates employed are appropriate and the resulting balances are reasonable; however, due to the inherent uncertainties in making estimates actual results could differ from the original estimates, requiring adjustments to these balances in future periods."
ased on the data retrieved and the projections made, the accounting division will proceed to the development of the consolidated statements for all of GM subsidies and the overall group. There are 24 consolidated statements, as follows: Discounted Operations; Asset Impairment; Investment in Nonconsolidated Affiliates; Marketable Securities; Variable Interest Entities; Finance Receivables and Securitization; Inventories; Equipment on Operating Leases; Income Taxes; Property - Net; Goodwill and Intangible Assets; Other Assets; Accrued Expenses, Other Liabilities and Deferred Income Taxes; Long-Term Debt and Loans Payable; Pensions and Other Postretirement enefits; Commitments and Contingent Matters, Stockholders' Equity; Earnings per Share Attributable to Common Stocks; Derivative Financial Instruments and Risk Management; Fair Value of…
1. 2007 General Motors Annual Report. Page 9. On the Internet at http://www.gm.com/corporate/investor_information/docs/fin_data/gm07ar/download/gm07ar_full.pdf.Last retrieved on February 15, 2009
2. General Motors Mission Statement, 2009, on the internet at http://www.samples-help.org.uk/mission-statements/general-motors-mission-statement.html . Ast retrieved on February 16, 2009
3. Supplier Diversity, Website of General Motors, 2009, on the internet at http://www.gm.com/corporate/dealers/diversity/index.jsplast retrieved on February 16, 2009
4. Management's Discussion and Analysis, Website of General Motors, 2009, on the internet at http://www.gm.com/corporate/investor_information/docs/fin_data/gm07ar/content/financials/mda/mda_10.htmllast retrieved on February 16, 2009
As of late 2010, rumors in the financial community persist that Spain is going to be the next Eurozone nation to suffer an economic crisis. Spain's high unemployment rate, coupled with a lack of economic recovery and being unable to adjust interest rates due to its participation in the euro, has resulted in a rapid appreciation of interest rates in Spanish sovereign debt in recent weeks amid speculation in the bond markets that Spain will be unable to meet its obligations (Krugman, 2010; Krause, 2010). The Spanish economy, it would seem, has been suffering in recent years and that suffering is not expected to end any time soon.
For a company looking to do business in Spain, the current situation is certainly cause for alarm. The economic fundamentals of the country look troubling, and there are significant structural reasons why Spain will not be a good place in which…
CIA World Factbook: Spain. (2010). Central Intelligence Agency. Retrieved December 1, 2010 from https://www.cia.gov/library/publications/the-world-factbook/geos/sp.html
Dimireva, I. (2009). Spain investment climate 2009. EU Business. Retrieved December 1, 2010 from http://www.eubusiness.com/europe/spain/invest
Dowsett, S. (2010). Spain austerity plan scrapes through parliament. Reuters. Retrieved December 1, 2010 from http://www.reuters.com/article/idUSTRE64Q54T20100527
Dowsett, D. (2010, 2). Key party attacks draft Spanish labor reform. Reuters. Retrieved December 1, 2010 from http://www.reuters.com/article/idUSTRE65B0ZT20100613
Effect of the recession on upon financial market, the real economy and over everyday lives
ecession is defined as the economic slowdown or decline characterized by slowing down of trade, a magnitude decline in the GDP, and a decrease in employment usually lasting between 6 months to a year. This was the situation in the U.S.A. The hardest times being from 2008 through 2009 and the early months of 2010. America is still recovering from the effects of the recession that the country experienced from 2007 to 2009.
The slow down in economy triggered a massive job loss and unemployment rates that shot through the roof, the prices went up and a great deal of uncertainty rippled through the country. This situation has now seen a reverse trend albeit at a slower rate than was expected by many. The unemployment rate in November 2011 fell by 0.4% to 8.6%…
Amitabh Shukia, (2009). Top 5 major Economic Effects of Recession on Economy.
Retrieved May 13, 2012 from http://www.paggu.com/business/world-economy/top-5-major-economic-effects-of-recession-on-economy/
Browder, Laura, (1998). Rousing the Nation: Radical Culture in Depression America.
Amherst, MA: University of Massachusetts Press.