Financial Crisis Essays (Examples)

Many laws have been successful in restricting such practices in order to avoid a similar situation in the future. Today, "when a mortgage borrower wins a rescission case in court, the bank loses the right to foreclose, and has to give up all profits from interest and fees on the loan" (Carter, 2012). However, just a few years after predatory lending caused so much damage, there are already movements to once again make it a possible scenario for contemporary lenders. The research posits that "under the Fed's new proposal, however, borrowers would be required to pay off the balance of the loan before the bank loses its right to foreclose -- that means borrowers could still lose their homes, even in cases where banks have broken the law" (Carter, 2012). Only time will tell whether or not law makers attempt at reining in financial predators will actually work. As…

" (2009) Yam states that over the past year the need existed to involve the government more deeply in the banking industry and especially in the area of deposit guarantees and in the supervision of the risk management of banks. Yam states that it is "…gratifying that so many of the tools that we have been able to rely on, including the apparatus and contingency arrangements for ensuring liquidity, have been developed in a pre-emptive rather than a reactive way. On the various emergency measures, I am quite sure that in the fullness of time, these will either be turned into standing arrangements or withdrawn, hopefully through smooth exit strategies. but, current sentiment is clearly demanding much closer regulation and supervision of banks over the longer term." (2009) the form that this will take is stated to be pending in the international forums however Yam states that the thinking thus…

Financial Crisis and Its Implications: Events Occurring Between 2007 and 2009
A Critical Literature Review

The Roots of the Crisis

Real Estate Valuation Bubble

Sub-Prime Mortgages

Low Interest Rates

Moral Hazard in Regard to Consumer Spending

Packaging Real Estate Loans as a Commodity (Derivatives)

Market Interrelatedness

Future Implications

The financial crisis, which seemed to be elevated to its greatest extent world-wide between the years 2007 and 2009, is difficult to unravel. The causes, interlink-ages, and effects are so intertwined that it is hard to separate them into a "first cause" or anything else that would resemble a succinct explanation. Although in retrospect, many individual underlying themes are attributed to the underpinnings of the crisis; in reality there are a plethora of variables that must be accounted for in trying to determine the crisis's root cause. Additionally, none of these factors can be considered in a vacuum. That is, none of the factors that are relevant acted independently. Instead, the variables…

These borrowers had -- knowingly or not -- been gambling on a real estate market they did not understand. Understanding the complexities of the real estate market and fiscal policy is complicated -- those who have grown up without access to the best education and who do not have experienced friends and family to help advise them in this process were the most vulnerable.
Squires, Hyra and Renner showed that subprime lenders were able to segment their market by geography. Combined with the ethnic segregation that exists in most American cities, the outcome was simple -- minorities were targeted for subprime loans. The poor and working class were targeted by predatory lenders. hen the crisis hit, it was these groups that suffered the most and foreclosure rates in these communities spiked.

Interest Rates & Bank Deregulation

To spur economic growth during the slowdown in 2000-02, the Federal Reserve lowered interest rates and…

Financial crisis that emerged in 2008 came about because of a number of different factors that all contributed something to the problem. Ostensibly, this was a credit crunch. A credit crunch occurs when lender either no longer have money to lend or they are prohibited or unwilling to do so.
Mussa (2008) notes a truth that Adam Smith recorded that while money is an essential part of an economy's capital stock, it was not directly useful but rather indirectly useful through consumption or production. So what we saw with the credit crunch was that lenders were not lending. This brought about conditions where firms did not have access to the capital that they needed in order to grow. Then, of course, this became a contagion. orries about the economy slowing down due to a lack of credit had otherwise healthy companies cancelling projects and money that otherwise could have been lent…

In other words, there are few controls in place to ensure responsible spending or, in the case of Greece, that the books are not cooked. The implication of this is that Greece makes errors and commits fraud, knowing that the eurozone will be forced to bail them out or risk grave instability. The other nations are then forced to bail Greece out, because they share a common currency and therefore a common economic fate, but also because the Germans benefited from the high current account balance in the first place.
There are a number of potential solutions. The eurozone could determine that addition by subtraction is a good strategy. Despite the short-term instability, it would allow the zone to be comprised of major exporting and otherwise fiscally responsible nations. Throwing the PIGS under the bus may be difficult politically and cause severe harm in the short-run, but could benefit the…

The partisan politics seen south of the border would be impossible, because the resulting inaction would be viewed unfavorably by Canadians.
The financial crisis has damaged Canada economically, but it has also highlighted the value of financial conservatism. Canada's handling of the crisis has improved its standing in the world. The Canadian banking system has been lauded for its conservative nature. Further esteem has been brought to the government for its role in building a strong, stable banking system. Many economic observers have taken notice of Canada's successes and prescribed some of Canada's regulations as a future path for their own banking systems.

Aside from banking, Canada is now showing some signs of economic weakness. The country's relatively strength, however, has caused the government to take relatively little action on the crisis. This has not enhanced Canada's international standing, but it has not hurt it either. Canada has not needed to…

Financial Crisis
Contemporary Social and Political Issue: The Financial Crisis

The current recession is considered among the worst in U.S. history. As it has been characterized by policy experts, public officials and members of private industries alike, the U.S. economy is experiencing a financial crisis which is surpassed at present only by the Great Depression which persisted across the 1930s. This qualifies as perhaps the most pressing political and social issue of our times. Indeed, there is not a profession or walk of American life that has not been impacted by the litany of collapsed banks, belly-up investment groups, embezzled pensions, budgetary deficits and housing/auto industry bubble bursts that have occurred across the last five years.

As public officials in Congress and the Obama Administration have enacted dramatic and controversial legislative packages in order to reverse an already cresting tide, it is clear that the very same Departments of the U.S. Government which…

In that regard, the regulatory changes that allowed banks and other mortgage lenders to sell off their obligations (and the development of complex investment techniques to do so) undermined the integrity of the U.S. housing market. Specifically, Wall Street investment firms and mortgage banks began purchasing, repackaging, and trading in all of the individual home mortgages simultaneous to the elimination of any natural incentive of lenders to ensure that their borrowers were safe risks (Bhide, 2009). The obvious solution to that problem would be to prosecute lenders, mortgage brokers, realtors, and certain borrowers who deliberately ignored their legal duties to conduct business in good faith (Bradley, 2008).
Fundamental Ethical Problems and Conflicts of Interests

Throughout the financial services and mortgage lending industry that developed after the most recent era of deregulation, the de facto elimination of any liability or risk on the part of lenders for bad loans generated fraudulent practices…

What one can determine from the current literature, however, was that today's recession was fueled, at least in part, by the misuse and misdistribution of credit. For this reason, the current culture shift is most likely a solution to the problem it itself. esponding to the recession, the American people have changed their attitude toward politics, spending, and the importance of finances in their daily lives. By spending less, relying on credit less, and saving more, the American people are bound to aid in ending the current financial crisis. Government, on the other hand, must step in to regulate what the people cannot in their own personal finances. By encouraging the Democratic plans of tax cuts and job creation, the American people can continue to advocate for the solution of the problem. Thus, finance and the economy are large contributors to a group's culture. The current recession is no…

The 2008 financial crisis is considered the worst economic disaster to ever affect the world since the occurrence of the Great Depression of 1929. The crisis led to the collapsing of the financial system in the U.S. and other countries in Europe. Millions of people lost their jobs on either side of the Atlantic because of the financial crisis. Different authorities responded differently to curb the crisis in their backyard. This paper looks at the similarities between the crisis in the U.S. and the one in the Euro Zone while also outlining the difference between the two regions. In the U.S., the financial crisis was mainly caused by deregulation in the financial industry. Banks were permitted to engage in hedge fund trading with derivatives. As a result, banks demanded more mortgages to support the business. Most of the financial institutions in the U.S. created interest-only loans that became affordable to borrowers…

Reflection Paper: Mortgage CrisisThe mortgage crisis came about because starting in the 1990s under the Clinton Administration, a push for greater home ownership was facilitated by a lowering of lending standards for home buyer borrowers. This created artificial demand in the housing market, and prices of homes soared. Over the course of the next decade, lending standards rapidly deteriorated, and home mortgages were being bundled and sold to investors as collateralized debt obligations, and derivatives were added to the mix so that an enormous financial industry focused on mortgage-backed securities had grown into a behemoth (Lewis, 2010). The Federal Reserve had kept interest rates low in response to the Dot Com bubble bursting at the turn of the 21st century, and this in turn had caused yield-starved investors to seek out financial instruments like collateralized debt obligations. Starting in 2004, the Fed Funds Rate rose from 1% to more than…

The Subprime Crisis There were a number of factors that led to the subprime crisis: Fannie Mae, Countrywide Financial, the Federal Reserve, Moody’s, Merrill Lynch, Bear Stearns, Goldman Sachs, AIG, Michael Burry, who shorted the mortgage backed securities being sold to investors that were full of subprime—and guys like him (the ones depicted in Michael Lewis’s The Big Short)—they all had a role to play in the subprime crisis of 2007-2008 (McLean, Nocera). But, truth be told, the lead-up to the crisis started well before the actual collapse of the market. It started with housing in the 1990s. But one could even go back further to the 1970s when Lewis Ranieri of Salomon Brothers invented the mortgage backed security (MBS)—a bond made up of thousands of home mortgages that were bundled together, sliced up and sold to investors who would collect the interest (Lewis). It was a way for the original…

Goldman Sachs & Co. and Fabrice Tourre were charged by the SEC in 2010 with “Fraud In Connection With the Structuring and Marketing of a Synthetic CDO” from the 2007 subprime mortgage scandal at the heart of the financial crisis of 2007-2008 (SEC, 2010). The specific charge was that the bank and Tourre made material misstatements and omissions in connection with a synthetic collateralized debt obligation that the bank had structured, marketed and sold to investors. The synthetic CDOs were linked to the performance of the subprime housing mortgage market—i.e., the subprime mortgage-backed securities identified by Lewis (2010) as triggering the wave of financial distress that led to central banking intervention (unconventional monetary policy—also known as quantitative easing) and the inflation of asset bubbles currently seen today (Huston & Spencer, 2018). Goldman Sachs settled with the SEC and agreed to pay $550 million on the condition that the bank not…

financial crisis a "crisis of capitalism?
Compare and contrast the theories of Susan Strange, Karl Polanyi and Giovanni Arrighi. Explain how three of them accessed issues of Financial crisis and its relationship with capitalism

Starting from 2008 onwards, we are currently experiencing an unremitting state of economic recession. Each of the three theorists stated in this essay have different perspectives of whether or not the recession indicates crises of capitalism. Whilst Susan Strange and Karl Polanyi have a more optimist perspective on the subject and indicate that rather than crisis, the recession may, in effect, be, in the first case, a misplaced paradigm (or different, tortured perspective) and in the second case, only a slight wrench that necessitates government intervention for amending a temporary situation, Arrighiri sees the situation as indeed manifesting something that is intrinsically, irremediably, and inherently wrong in the structure of capitalism itself. Each of these views will…

The second purpose of the $700 purchase of troubled assets is to create a market for the securitized versions of these assets. As a result of the crisis, the market for these assets became illiquid. The value of securitized debt obligations became near zero, which severely impacted the balance sheet of all banks that held these assets. By creating a secondary market for these products, the government hopes to increase their value. This will improve the balance sheets of the banks.

The second key clause in TARP is that banks selling troubled assets to the government are required to give the government warrants. This, in theory, protects the government from losses. The theory is that the banks will see an increase in value as a result of the government's efforts, allowing the government to profit from the warrants.

Ancillary to TARP was the FDIC's excusing of troubled assets in its loss-share plan.…

Financial Crisis
Past financial crises provide us with a framework for understanding the best responses to future crises. There are three types of responses, and the best response will contain some form of all three. These are monetary policy, fiscal policy and regulatory policy. The latter is more a long-term response, essentially learning from the crisis and adjusting the legal/regulatory environment to reduce the odds of a similar future crisis emerging. More important from an economic point-of-view are the monetary and fiscal policy responses, and these will be the focus of this paper. In a forward-looking examination, it will be challenging to get much useful from 1907, because the environment then was different in every meaningful way from how it is today, but the responses can still provide some insight into financial crisis response. While all of the crises are different, they all have similar conditions -- there is panic in…

Korean Financial Crisis in the Late 1990s: Lesson for Current Euro Area
The objective of this study is to examine what is unique or different about the Korean financial crisis as compared to other Asian financial crises and to determine the primary causes of the financial crisis in Korea. This work will further examine the government response to the crisis and what it is that can be learned from the Korean financial crisis and applied in Korea to the Euro Area.

The major components of the Korean financial system in the 1960s and 1970s are stated in reports to have been nationalized with "lending targeted toward favored sectors and firms including the exports and heavy industries. (Jeon and Miller, 2005) Regional banks came on in 1967 and could only operate in their own provinces, which provided encouragement for development that was regionally-based. In the early 1980s, plans were made for deregulation of…

Nevertheless, more crucial remained the truth that the dollar itself oscillated severely as against the yen that is another vital currency for carrying out business for the affected nations. The fading of the dollar within the decadal period from 1985 to 1995 made a huge boon in the trade surplus for the affected nations. Thereafter, the acute turnaround began in 1995 wiped their enormous edge in price and damaged their current account situation, which in its effect spoiled the trust in the market created an appropriate climate for the crisis. To put it differently, it was not the system of linking the dollar in its own which is responsible. The cause was the non-observance of the basic instability in the economies of the nations and the uncontrolled oscillation of the exchange rate of dollar-yen. The dilemma was the outcome of the huge quantity of unstable capital and the blind…

Causes of Financial Crisis
Ireland developed high growth rates based on rapid expansion of credit and a buildup of personal debt fueled by rising property prices (Ireland's economic crisis: how did it happen and what is being done about it?). This lead to risky bank lending practices. Banks also engaged in short-term borrowing from wholesale money markets causing increased risk appetite. Supervisors and regulators failed to identify and act on the emerging risks. Where construction was a large part of the employment and economy, it caused high unemployment rates and major bank losses in a bubble burst when household income could not afford to pay mortgage debt. Property value decreased making it harder to recover the mortgage value for banks. In turn, it created difficulty for the banks to pay back the short-term borrowing to the wholesale money markets. Where risks were not identified, no plans were put in place for…

Qantas Airlines
Strategic Management of Qantas in the Light of Global Financial Crisis

The Global Economic/Financial Crisis, also known as GFC has influenced the performance of all organizations negatively in the current business environment. Besides increasing the costs of operations, GFC threatens the use of human resources in different organizations. With such a premise, this study analyzes the influence of the crisis on the performance, sustainability, and competitiveness of most of the airline companies. In specific, it analyzes the effects of the crisis on the performance of the Qantas Airlines, an Australian carrier known globally for its high quality services. As such, adopting the stated recommendations in the analysis will help reduce the threats facing the Qantas Airlines significantly because of the Global Financial Crisis.

Background

The worldwide economic crisis has influenced the performance of all sectors of the economy negatively in the current global business environment. Among the highly affected sectors is the…

Asian Financial Crisis. This offers everyone with specific insight about those factors leading up to these events and how they transformed the economy going forward. The combination of them helps to place what happened into perspective. (Das, 1999)
The economies of Asia became interconnected from increased amounts of globalization and more trade with developed nations (i.e. The United States, Europe, Canada and Australia). This resulted in these countries experiencing above average rates of economic growth. The problem was that many of the practices of various governments led to excessive amounts of speculation. At the same time, many emerging economies were growing at above average historical rates. This led to attitudes that the region will not experience slowdowns anytime soon. (Das, 1999)

In the summer of 1997, a chain of events occurred. That caused it to go from extreme boom and bust cycles. It started with the Thai baht going through unprecedented…

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.
ibliography

aker, 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.…

Globalism Influenced 1997 Asian Financial Crisis, Effects Japan
The Asian financial crisis took place during an era of financial crisis that effected a great part of East Asia. The whole nightmare started in July 1997 and the disaster raised a lot of fears of a universal economic collapse because of financial infection. The tragedy happened in Thailand with the monetary failure of the Thai baht right after the Thai administration was enforced to drift the baht for the reason that the lack of foreign currency in order to support its secure rate of exchange (United Nations). This cut its peg to the U.S. dollar, after thorough efforts to support it in the encounter of a critical financial over-delay that was in part driven by real estate. However, globalism not only influenced the 1997 crisis, but also caused Japan to not only become asymmetrical but also caused financial instability in the…

economic and financial crisis (2008-2009), the Federal Reserve took exceptional measures in order to combat the effects of the crisis on the American economy. These measures translated into an expansionary policy that included pumping money in the economy and purchasing assets that were in trouble. Through its expansionary work, the government was able to balance some of the effects of the crisis.
The question that seems to be on everybody's mind (and lips) today is where does it all end? One thing everyone can agree on is that this type of expansionary policy cannot last forever. The United States economy functions as a free market economy where the laws of supply and demand govern the realities of the market. A continuous and permanent intervention of the Federal Reserve is neither possible, nor healthy. What nobody can agree on, however, is when the expansionary approach should stop: now, in the near…

Asian Financial Crisis of 1997
The economies of the so-called "Asian Tigers" were looked at with envy by the rest of the world in the early 1990s. These Southeast Asian countries -- South Korea, Taiwan, Singapore, Hong Kong, Malaysia, and Thailand had shown impressive (in most cases double-digit) growth rates for the preceding decade and more; thus becoming "darlings" of liberal capitalism and globalization in the post-cold war era. Other developing countries were looking to follow their example, and indeed Indonesia and Philippines were straining at the leash to join the "tiger" club. Investors, bankers, and fund managers from all over the world were queuing up to be part of the Asian "economic miracle" -- and perhaps make a quick buck or two in the process. What's more -- the "trickle down effect" was actually pulling the poverty line in the region steadily downwards giving rise to a growing and vibrant…

International Lending and Financial Crisis
One of the major global financial crises is the financial crisis of 2007-2009. The financial recession that occurred between 2007 and 2009, encompasses the housing bubble that instigated the financial crisis, federal expenditure, and foreign exchange rates. Also, referred to as the 'Great recession', this global financial crisis had adverse impacts not only on the financial markets but also on the economies of nations across the globe, being the worst financial crisis in history. The financial crisis emanating from the U.S. affected other nations owing to financial globalization and led to discussions regarding restructuring of the international financial system (Ozkan, 2012). In particular, the global financial crisis originally started in and adversely impacted the financial sector of developed nations, especially in the United States, and subsequently had a detrimental impact of the real sector of affected nations as the financial institutions in the United States allowed…

Estimation Techniques of Financial Crisis
The unquestionable ethical conducts within the corporate circle had been the major factor that led to 2008/2009 financial crisis. By studying the root causes of the crisis, it has been revealed that bad conducts among the CEOs of Bear Stearns, Lehman Brothers, Citigroup and Countrywide Financial have been the primary factors leading to 2008/2009 financial crisis.

Objective of this paper is to argue that the CEOs of Bear Stearns, Lehman Brothers, Citigroup and Countrywide Financial did not take the interest of the companies into a consideration leading to frictions between the CEO and the shareholders

In 2007, the financial markets were shaken by a serious financial crisis because of a dryness in liquidity associated with a subprime mortgage business where people with doubtful credit reports were offered mortgage loans leading to a rise of loan default. Moreover, lack of transparency, greediness and excessive desire for money have been…

Political Science
Canada: Comparative Politics

Canada, like any other nation suffered terribly from the effects of the global financial crisis. The economic impacts from Global Financial Crisis were resolved through Canada's political and provincial administration structures. The Great ecession further intensified such trends towards elements of the precarious unemployment across Canadian provinces such as British Columbia mostly with certain population groups. This paper intends to illustrate how the global fiscal crisis has affected provincial economies in Canada.

Global Financial Crisis Impact on Provincial economies

The goal was to establish suitable forms of welfare states that mediated on the effects of forces of the global market forces through the determination of levels of state intervention within the provincial economic marketplaces. The liberal welfare regime in Canada as compared to the conservative one in Germany and social democratic from Scandinavian countries focused less on welfare provision and citizen security. This translated into a greater commoditization and…

Banking System
The United States banking system has been around for quite a while. Indeed, the Bank of New York was founded in 1784, a scant eight years after the United States was created. The banking system has two major functions. First, they operate an overall payments system. Second, they facilitate and allow for financial intermediation. There was no formal financial system in the colonial states prior to the formation of the United States. The modern form of the banking system has only really been around since the early 1900's. The nascent form of the banks as they exist today was created by Alexander Hamilton. As of the inauguration of George Washington in 1789, only three banks existed in all of the colonies. Generally speaking, banks are typically financial institutions that are chartered and regulated mostly by the state in which the bank or banks operate. The banking system of the…

Financial Derivatives
This study emphasized the importance roles of financial derivatives, which has been known for the last decade and its effects on the Global financial crisis. It further analyzes the impact of financial derivatives and how it can be controlled to prevent corporations from incurring a lot of risks. It also explains the existence of financial derivatives since 1970, to the recent Global Financial Crisis which occurred in the 2006.

Risk is a feature associated with all productivity. As a result, financial markets adjust themselves to the fluctuation of exchange and interest rates. Hedging risk, these corporations highlight the importance of risk management tools known as Derivatives. Derivatives are defined as financial tools providing investors with effective solutions when avoiding risk caused from market volatility (Dodd, 2006). Financial derivatives are considered to be an effective risk management tool associated with Financial Engineering creating solutions to financial problems (Marks, 2010). In this…

If asset bubbles can be leading indicators of recession, that begs the question what assets are the most important? Several studies have shown that housing prices are critical. They were important in Japan and in 2008 in the United States. Babecky (2012) showed that housing prices consistently predict asset bubbles, minus the occasional false positive. Intuitively this makes sense since any sort of bubble will result in more investment in real estate.

There is a further question that is raised in light of the contagion of the 2008-2009 crisis. Prior to that, as Evanoff (2013) notes, several asset bubbles were effectively contained by monetary policy and did little damage. Most bubbles that cause damage do so in the developing world -- Southeast Asia and Russia in the late 1990s for example -- but in the developed world the damage is usually contained. Frankel and Saravelos (2011) examined the indicators that might…

Financial Analysis of Lehman rother
Lehman rothers

The history has been full of financial collapses and financial scandals and one of the biggest financial collapses that a company has ever seen was that of Lehman brother. The collapse of a firm as huge as Lehman rother and a firm which has such great experience of over a hundred years lead the world into a shock. It created doubts in the minds of people regarding the condition of other financial institutions. The history of Lehman rother is rich which is further discussed.

The history of Lehman rother dates back to 1844, when a boy named Henry who was a 23-year-old son of a cattle merchant who immigrated to the United States from Germany and he settled in Alabama State of the United States where he opened dry goods store. In 1847, when Henry Lehman's elder brother arrived to Alabama, the firm expanded to "H.…

Conduct a benchmarking analysis

As explained by Prasnikar, Debeljak and Ahcan (2005) benchmarking depends on comparing between two activities of an organization and another. In our case, we shall compare McDonald's activities and those of its competitors, Burger King and Wendy's.

• Best practices

McDonald's as a main player in the fast food industry is concerned with best practices with the industry. To this end, the corporation has adopted some best practices that include sustainability, nutrition and well-being, employee experience ad environmental responsibility. Accordingly, McDonald's protects the environment by going green and using methods that protect and conserve the environment. McDonald's also encourages its suppliers to uphold effective environmental. The company treats it employees well and offers them good working conditions as a way retaining them. Employees are offered training and promoted accordingly. McDonald's also adheres to ethical conduct its operations and food items are produced ethical. Similarly, the company also takes part…

These funds are now removed from the banking system. Keep in mind that banks use every dollar on deposit to create many more dollars worth of loans, the hit to the banking system and by extension, to the money supply is something approaching 25 to 30 billion dollars. This was a global phenomenon, as the crisis arises interest rates are slashed. So hence, by 2008-2009 the Federal Reserve, Bank of England to many others have pushed interest rates close to zero. He also explains how major players like Mr. Bernake and the Treasury Secretary Henry Paulson affected the crisis and how the steps and how they have left their mark on this financial crisis. He also contends that all crisis have an ebb and flow in their severity and rarely hit once and subside. He vilifies our toxic waste method of having recourse to non-recourse government loans and in…

The decision of investing or not here then depends on the personal adversity to risk of each individual investor. The general theory states that each investor should construct a diversified portfolio, which adequately balances high risk-high gain shares with medium or even low rates of risk and gains (Hagin, 2004). New Zealand could then be assimilated with a medium risk-medium gain share, and as such would be perceived as a valuable addition to one's portfolio. In this order of ideas then, the recommendation would be that of investing in the country.
eferences:

Amadeo, K., 2009, An Introduction to the Financial Markets, About, http://useconomy.about.com/od/themarkets/a/capital_markets.htm last accessed on December 17, 2009

Hagin, ., 2004, Investment Management: Portfolio Diversification, isk and Timing -- Fact and Fiction, John Wiley and Sons

Healy, J., 2001, New Zealand Capital Markets, Ministry of Economic Development, http://www.med.govt.nz/upload/18163/healy.pdf last accessed on December 17, 2009

Malkin, B., 2009, Financial Crisis: Australia and New Zealand…

Bank of America and Merrill Lynch would have to be separated and Goldman Sachs could no longer be a bank holding company. "Commercial banks would take deposits, manage the nation's payments system, make standard loans and even trade securities for their customers -- just not for themselves. The government, in return, would rescue banks that fail. On the other side of the wall, investment houses would be free to buy and sell securities for their own accounts, borrowing to leverage these trades and thus multiplying the profits, and the risks. Being separated from banks, the investment houses would no longer have access to federally insured deposits to finance this trading. If one failed, the government would supervise an orderly liquidation. None would be too big to fail -- a designation that could arise for a handful of institutions under the administration's proposal" (Uchitelle, "Volcker," 2009).
The Volcker proposal seems sensible,…

Had the organization employed the techniques of activity-based costing, they would have realized the need to change their approach and had started manufacturing small size and fuel efficient engines, as most of the customers were requiring these items. "If Ford [...] had used activity-based costing, they would have realized early on the utter futility of their competitive blitzes of the past few years, which offered new-car buyers spectacular discounts and hefty rewards" (Drucker, 2003).
Unlike absorption costing, marginal costing uses the traditional division into direct, indirect, fixed and variable costs. The accounting method sees that the final marginal cost of a product will be calculated by summing up the direct costs of labor, the direct costs of materials, the direct expenses and the variable overheads (Brown). The applications of marginal costing revealed that Ford was able to support a price advantage relative to General Motors and Chrysler due to its…

Aside the attraction of customers, the money invested in marketing have created the desired outcome of a strong and reputable brand. Another pivotal element in the financial strategies has been that of maximizing the efficiency of managing inventories. This was necessary in order to continually strengthen the brand as well as achieve the profitability goals. Alongside with operating principles, supply-chain renovation and inventory management, financial management represents the pillar of the Nike business model (Filbeck, Krueger and Preece, 2007).
7. Discussion

It is extremely difficult to generalize the approaches of multinational organizations to financial management as each individual entity will employ those courses of action which best suit its needs as well as its characteristics. Whilst Ford continued to invest its resources in the manufacturing of large and luxurious vehicles in an attempt to drive the market, McDonald's has recognized the necessity in satisfying customer needs and has as such made…

During times of extreme pressure from the supply or demand side, the central bank is prepared to go in and support the currency, to help provide stability. This is significant because traders around the world; will use the major currencies as a way to hedge themselves against different risks. Where, they will view the weakness of one country's currency as a sign that they could be facing a number of different economic challenges. (Fixed vs. Floating Exchange Rate, 2007) a good example of this can be seen with the ritish pound, where the ank of England decided to keep interest rates at .5%. This is important, because the increase in rates could be seen as a sign that economic stability could be returning to the country, which would help to reverse the downward pressure on the pound. However, the fact that they decided to keep interest rates unchanged, means…

Financial estatement
2009 was a stellar year in terms of corporate financial restatements; just 630 U.S. companies reported 674 accounting problems serious enough to warrant a restatement, a dramatic 24% decline from the number of companies with accounting problems in 2008" (Krantz, M. March 1, 2010). However, for Citizens First Bancorp Inc., 2009 was not a year in which to celebrate. In the first and second quarters Citizens was forced to restate their earnings based on two separate incidents, the first involving "an accounting error on a $7.5 million impairment of its deferred tax valuation allowance" (Barba, . October 20, 2009). Second a regulatory action by the Federal Deposit Insurance Corporation (FDIC), which involved allegations of "inappropriate behavior at the company, including removing unfavorable appraisals from the loan files, in an attempt to avoid the recognition of additional loan losses" (Barba, . October 20, 2009). The FDIC required Citizens to increase…

Indeed, risk-seeking is pervasive in the financial industry, as competition compels banks to seek higher returns. Regulation such as capital requirements can help to reduce risk-seeking behavior, although the negative affect such regulations have on value can ultimately encourage at least some degree of risk-seeking. Despite this unintended potential consequence, regulation serves to neuter overly aggressive bankers and reduces risk in the banking system. Reducing the risk in the banking system is congruent with the government's objective of making effective use of taxpayer money.
A fourth consideration is that consumers demand regulation. hile this does not constitute an economic case for regulation, it must be understood that governments are not motivated by purely economic considerations. Consumers want to know that their deposits are safe and that they can access money when needed for homes, vehicles and small businesses. Consumer demand, while irrational, is a key driver in the level of…

In 2000 legislation was presented by Ralph Klein to the legislature, demanding that provinces be permitted to allow private hospitals. That same year, more budget cuts slammed the health systems, when the "Federal udget offers 2 cents for health care for every dollar of tax cuts." (Health Coalition) in 2002 the Romanow Royal Commission on the Future of Health Care in Canada was created to investigate the health-care situation in the nation and to foster (and witness) public discussion on the subject. Their report was presented in Ottawa towards the end of the year, and in 2003 some of its suggestions regarding intelligent use of federal funding were implemented. The commission, in general, supported the continuation of universal care. However, the 2003 "Health Accord" did not include any ruling against the use of federal funding contracted out to for-profit institutions (a situation that some critics claim is part of…

In this regard, the author rightfully targets circumscription of the authority of the major agencies that are responsible for rating private credit which allowed banks to approve many mortgage situations with citizens that were tenuous, at best. The most efficacious way of doing so, particularly when one considers that most banks simply pay these agencies, which are primarily Fitch atings, Standards & Poor's, and Moody's Investor Services, oubini asserts is to issue a removal of the agencies' certification by the Securities and Exchange Commission as "nationally recognized statistical rating organizations." This publicly blessed oligopoly, intended to maintain high standards, has only inhibited competition that would bring down the price of security-rating services (Barrett, 2010).
The commission was widely vilified for not playing a more active role in limiting the unscrupulous behavior of banks that lured investors into poor mortgage situations (no author, 2012)

Ultimately, oudini proposes increasingly strident measures of accountability…

According to these analysts, "The implicit assumption underlying the price-to-earnings method is that the fair market value of the closely held business can be approximated from the market value of comparable publicly traded businesses. To implement this method, the valuator must be able to identify a set of presumed-to-be comparable publicly traded companies and obtain sufficient information on each to verify the extent of comparability from an economic, management, and financial perspective. No publicly traded company will be precisely comparable to the closely held business being valued, so informed judgment must be exercised" (p. 81). As a general rule, the smaller in size and the more limited the scope of activities of the business being valued, the less likely there will be a set of publicly traded companies that are comparable, or even a single comparable publicly traded company. Publicly traded companies are for the most part large, measured…

The article that was written by Conley (2011) discusses the impact that collateralized debt obligations (CDO's) would have upon the subprime loans. These were created in 1987, by the Wall Street firm Drexel urnham. In this product, the investment bankers would take a number of different articles and combine them together as one investment. The various assets that were used included: junk bonds, mortgages and other high yielding investments from the debt. The idea with these different products is that the investment bank could offer customers a stated return on their investment. The way it worked is the brokerage firm would distribute each investor, the stated amount of returns that they would make off of the tranche (the CDO investment). This was derived using a complex mathematical formula that would divide the total amount of interest that was received, from the various high yielding products that were inside the CDO.…

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…

financial system trials tribulations starting early 2008. Indicate major reasons contributed financial market's collapse. Please leave a space reason. -College Level paperOrder ID
Five major factors that contributed to the financial market's collapse

eason 1: Historically low interest rates

The first major contributor to the collapse of the worlds' financial markets was the housing bubble. The Federal eserve dropped interest rates to historically levels after the September 11 terrorist attacks and the dot.com bubble burst. This was to generate more spending and borrowing and propel the nation out of recession. Low interest rates encouraged people to buy on credit. Many people took out mortgages, thinking that this was a good time to buy a house, and many others took out mortgages hoping to 'flip' a house, or sell it for more than they paid for it, as they were convinced that it was impossible for housing prices to go down ("The reasons…

financial statements of Marriott Hotels and discusses measurement bases they employ. The essay also surveys the literature for current thinking on fair value measurement.
According to the International Financial Reporting Standards (IFRS), measurement "involves assigning monetary amounts at which the elements of financial statements are to be recognized and reported" (Deloitte, 2011). Accounting measurement consists of quantifying financial information in dollars or units. These measurements are then used to report information to internal and external users through the use of financial statements that accountants prepare. Financial accounting measurements may be recorded at historical cost or adjusted to reflect current market values (Conjecture Corporation, 2011).

Generally Accepted Accounting Principles (GAAP) require companies to record balance sheet information using a fair value accounting measurement. Companies must therefore use this measurement technique to value assets and equity investment at the current market rate which thee items would bring if they sold in an open…

Many subprime mortgages were made with little documentation of income or ability to repay, or other elements that typically safeguard loans of all types and mortgages especially. There have even been cases of widespread fraud, where documents were falsified in order to approve loans. The reason many lenders were so eager to make these bad loans is that they weren't ultimately going to be responsible for them -- the loans were bundled into groups and sold as "mortgage backed securities," so instead of dealing with many individual loans worth an average of a few hundred thousand dollars, banks and other institutions were dealing with bundled groups of these bad loans worth millions of dollars apiece. Companies like AIG made money in the short-term by providing insurance policies for these mortgage backed securities, as well. Eventually, however, people with loans they couldn't really afford began to default, either because they simply…

Another significant factor that affected the financial crisis of 2008 was role that Wall Street played in worsening the impact of the financial disaster that was to come. Specifically, a number of prominent Wall Street companies effectively "bought in" to the housing shortage by investing in securities that are financially supported by loans of a dubious nature. A recent report compiled by the Financial Crisis Inquiry Commission alludes to the fact that such investors were well aware of the substantial risk that these investments represented, yet pursued them anyway due to avaricious tendencies (Chan, 2011).

The involvement of banks in the financial crisis goes well beyond issuing loans that were of a suspect nature to people who required subprime loans. To that extent, this degree of culpability on the part of banks can actually be traced to the Securities and Exchange Commission, another federal government entity, that was decidedly lax about…

stock market and the Banks promote economic growth and it provides a critique of their functions in transitional economies. Every country depends on its economy for its growth. For a country to be stable it has to be stable in terms of its economy. Bank and stock market contribute to a great extent to the economy growth of every country where it provides firms with opportunity to get funds thus encouraging more investment from the firms. At the same time they give information on the ways resources should be allocated. The development of a financially sound, market-oriented banking system is always considered to be fundamental to a flourishing transition. Arguably, it is important to macroeconomic stability and to positive long-term growth prospects. As documented, bank intermediation in transition economies continues to be stunted after a decade or addition of reform, mainly where advancement in banking reforms is inadequate. The…

Financial Case Study
Company Overview

McDonald Corporation specializes in the food service globally. The company started operation in 1940, and in 1967, the MacDonald registered its trademark. The primary product of McDonald includes chicken, hamburgers, soft drink, French fries, dessert and milkshakes. Over the years, the company has expanded its menu and included wraps, fish, salads fruits and smoothies. Presently, the company operates its business through either affiliate or franchise globally and the company realizes bulk of its revenues from the fees collected from franchise. Moreover, the company derives its revenues from the royalties and rents. Since MacDonald has started operations, the company has enjoyed rapid growth. At the end of the 2012 fiscal year, the company recorded the annual revenues of more than $25.7 billion with the net profits of $5.5 billion. The company also recorded the market capitalization of $94.5 billion. The company operates in 119 countries and presently, it…

Crisis Incidents
The last decade has been riddled with crisis on the global as well as domestic scale. Crisis on many fronts have been noticed for instance natural calamities, terrorism issues, scandals, technological issues and financial disarray. Even so, most leaders aren't fully up to the task in terms of leading a company or society, in general, out of a crisis successfully. Experts at the start of this decade went hand in hand to eliminate the Y2K bug, which became the first Internet crisis. On September 11, 2001, the terrorist attacks in New York City on World Trade Center threw U.S. off balance. Next, the Katrina Hurricane struck with full vengeance in the gulf region which tore apart communities as we know it. The Tsunami of 2004 was another tragic event which rendered millions of people homeless. Last but the not the least, the recession of 2008 shutdown major corporations as…

he only observation that could be made here is that one would expect a larger proportion of the total expenses to be allocated to research and development, given the fact that this is such an important part of Microsoft's activity and essential in order to obtain a competitive advantage on the market.
Asset and Capital Structure

2008

Cash and cash equivalents

$10,339

Accounts receivable

$13,589

Inventories

$985

otal fixed assets

$29,551

he asset structure at Microsoft reflects some of the particularities in the industry, notably the fact that the inventory levels tend to be quite low, as compared to the other assets. his means that the I industry is not one supporting production on stock. At the same time, the value of the total fixed assets is significantly high, which can be partly explained by the size of the company and the investments in land, buildings and equipment.

Part III -- Ratio Analysis

he current ratio in 2008 was 1.45, as compared…

As noted, the leverage is deliberate, and probably is designed to deliver these ROEs to shareholders.
H&M pays out a large portion of its profits as dividends. Nordstrom's dividend is healthy for an American company, but far less than that of H&M. Nordstrom shareholders must rely on capital gains to a greater extent. Given that both companies are growing, H&M's ability to deliver both growth and dividends is superior for shareholders. These superior outcomes are, not surprisingly, reflected in the share prices of the two firms, with H&M having the better P/E ratio (22.2 versus 15.4).

In addition to the financials, it is important to consider what recent news might affect the viability of working in these firms in the future. There are no major news stories for either company. Essentially, both are still growing firms, with a moderate growth pace. Nordstrom is still focused on the North American market, while…

e. An amount that is about 1% of GDP) to ensure that the current PAYGO system is solvent for the next 75 years. Thus, 10 trillion dollars problem is not as large and scary if we start acting today to fix the current system).
It is totally manageable."

ut the official plan is somewhat different. ush's administration is trying to introduce private account systems where a fraction of payroll tax will be transferred to private accounts and managed by the future retirees themselves, thus, giving them chance to invest this money into stocks, which have proven to give on average higher rates of return than the Treasury ills which generate rather moderate income.

The opponents of this idea state that this is just a shell-game, where no capital is accumulated and investments are not increased. The overall national capital is not increased, but this plan will cause enormous transactions costs which are estimated…

Crisis Negotiations
Ebert (1986) believes "there is absolutely no justification for preventing mental health professionals from participating in virtually all facets of hostage negotiation," (p. 580). As Hatcher, Mohandie, Turner & Gelles (1998) point out, most mental health professionals that do participate in any aspect of hostage negotiation do so "by invitation only in police-established hostage negotiation schools," (p. 461). With this training, the mental health professional is thus theoretically prepared to engage the perpetrator directly. However, the mental health professional is only prepared when the training provided is thorough and consistent, and in accordance with the parameters and goals of each crisis situation.

The pros of employing a psychologist as a primary negotiator are clear. Most significantly, the psychologist has expertise in human behavior and cognition and can apply that knowledge to making quick decisions. The psychologist can also provide post-traumatic stress intervention services to the hostage victims and members of…

Financial managers and CEO's play important roles in ensuring that organizations meet their specific goals. The skill levels for both positions are high and require a great deal of patience and experience. The purpose of this discussion is to determine whether being a financial manager is the best preparation for later becoming a CEO.
ole of the Financial Manager

According to the Bureau of Labor, financial managers must have a bachelor's degree in a field such as business administration, accounting, economics or finance. Although, as the business world becomes more competitive, organizations are requiring financial managers to have Master's degrees and a great deal of experience before they can become financial managers. The Bureau also explains that financial managers are vital to the success of any organization and their jobs involve supervising the preparation of financial reports, direct investment activities, and implement cash management strategies. As computers are increasingly used to record…

Overall, at&T is the more profitable of the two companies. That Verizon has the stronger gross margins and at&T the stronger net margins indicates that at&T does a better job of controlling its cost structure than does Verizon.

The Industry

The telecommunications industry is highly competitive in both the landline and wireless segments. By 2006, wireless spending had match wireline spending. hile this presents significant opportunities for telecommunications, much of that spending comes in the form of cannibalizing, as wireline revenues have been decreasing steady over the past decade, matching the steady increases in wireless spending.

There are four major wireless operators in the U.S. And over 170 regional players (Megna, 2009). Competition is based on coverage area (capital investment), price and customer service. Both firms can be considered industry leaders. As of 2007, at&T had a subscriber base of 65.7 million and wireless revenues of $10.9 billion. Verizon had a subscriber base…