Lehman Brothers Failure Questions Essay

Having taken part to the events occurring in this scenario only in a few occasions, and as the ultimate guarantee of rescue, the FED,in conjunction with FDIC and the Office of the Comptroller of the Currency, made decisions aimed to save those institutions, for instance AIG, Fannie Mae and Freddie Mac, whose failure would have had a greater impact on financial system’s wealth and perspectives of recovering from the crisis were reliable. This was the main reason for declining any proposal of action in favor of Lehman. Some argued that the company’s bankruptcy was an intentional choice rather than a â€Å"genuine error†, aimed to induce the restoration of higher degrees of financial discipline. However, had the government disposed a plan in favor of Lehman Brothers, this would have prevented investors from losing faith towards financial institutions, the financial system from freezing and economy from carrying the weight of the crisis Notwithstanding, further attempts to save Lehman Brothers did not came to completion for several reasons, not only due to Government stillness, but the giving out of other financial actors i. . Bank of America and Barclays. In an ultimate analysis is thus important to consider that the â€Å"unfair† practices were not carried on by the sole Government, but by all financial institutions acting in the system as a whole: every actor placed a risky bet, whose consequences seem difficult to be addressed to just one responsible. Do you think that the U. S. government should have allowed Lehman Brothers to fail? Although Lehman Brothers was the fourth-largest U. S. investment bank, it was seen by many analysts as the weakest of Wall Street’s biggest firms. It is plausible therefore to think that the government willfully took the decision to let it go bankruptcy, in the purpose to restore a certain degree of indipendence from the market, and serving as threat for other institutions preventing them from adopting hazardous behaviours. The government decision of non-intervention had immense costs both in terms of financial losses inflicted to the credit market operators and institutions, and of lost in confidence in the market itself, that eventually turned into terror and paralyzed the credit market worldwide. Indeed investors’ confidence in th market and general concerns about the security of the banks continued to plumb during Lehman Brothers’ stock value erosion and afterwards. Nonetheless, consequences from Lehman Brothers’ bankruptcy had spread in a broader sense affecting all clusters of stakeholders: for instance, it could be mentioned the forced lay off of up to 1,500 people, which amounted to about 6 percent of Lehman’s work force. With hindsight, the decision of the US Government to allow such a giant as Lehman to fail is difficult to support, especially considering the devastating negative impact it had in a long-term perspective. Almost no objection that it should have been a critical decision to take at that time. It indeed brought the evidence that the financial market needed a shock, which unveiled some crucial problems and send a clear message to the banking system, proving that â€Å"too big to fail† companies were likely to face collapse as well, though no one would have believed this before. Many experts argue that when the government bails out a private financial institution it creates a problem called â€Å"moral hazard,† meaning that if the institution knows it will be saved, it actually has an incentive to take on more risk, not less. What do you think? Moral hazard, or, in other words, the willing of companies to act recklessly, bearing large risk exposure, has the consequential effect of distorting competition, thus mitigating risk perception and allowing excessive risk-taking, which is ultimately transferred from financial institutions to the society as a whole. This had been a controversial argument , largely discussed in the light of the financial crisis of 2008. The core of the debate was to what extent did moral hazard caused the crisis, and to what extent did government’s guarantees of rescuing perpetuated an hazardous behavior among market players. The moral-hazard argument is not only due to eventual interventions from governments, but is increasingly being considered by expertise as an inner element of a company’s strategic policy, drawing the shape of the decision making process in the interest of the company itself. However, corporate decisions are rather made in the interests of individuals than for the company as a whole, which causes a loose the connection between those interests and the company’s long-term health assumption. The possibility to gain short term benefits, at a relatively low cost, leads to reckless behavior regardless of eventual bails out from governments, with long term costs that hardly find responsibles to pay them back. One key factor is indeed limited liability, which allows investors and executives, ultimately liable for companies’ decisions, to enjoy the benefits of their risk-taking, while eventually limiting their exposure. The Government is responsible for contrasting moral hazard practices and maintaining investors’ confidence in the stability of both financial and economic activity, ensuring that the system don’t suddenly shut down in a panic. It can happen that, indeed, the expectation of further intervention from regulators and politicians may be an incentive for hazardous practices itself. However, moral hazard is an intrinsic disease of corporate strategies, thus of the financial market, whose antidote only relatively depends on government rescuing hand upon financial institutions. References James K Glassman ,The Hazard Of Moral Hazard. Commentary. New York: Sep 2009. Vol. 128, Iss. 2; Pg. 28, 5 Pgs James Surowiecki ,Hazardous Materials; The Financial Page. The New Yorker. New York: Feb 9, 2009. Vol. 85, Iss. 1; Pg. 40 John M. Berry, When Too Big To Fail Gets Too Chaotic To Manage,The Fiscal Times, May 10, 2010

Scandinavian Airlines System 1998 Case Study Example | Topics and Well Written Essays - 3000 words

Scandinavian Airlines System 1998 - Case Study Example Jan Carlzon has undoubtedly initialized changes, which caused a dramatic turnaround in the overall business operation of the airline system. These changes were carried out in response to the problems that beset SAS and the entire airline industry as a whole. These changes were also geared to adapt to the rapidly changing external environment and trends in the transportation sector. Among the new strategies implemented by SAS during the presidency of Jan Carlzon was focusing on the business traveler. The airline has evolved as the "businessman's airline, " offering an excellent service to full-paying business traveler through the introduction of "EuroClass" that provides more amenities than the other business class airlines at the level of the old economy fare. This was further strengthened by the improvement of flight schedules and punctuality. To provide a more attractive schedule, Eurolink was also created for short distance routes. Scanorama which feature lounges for the exclusive use of full-paying class were also introduced by the company in order to further different and highlight the luxury offered to the business traveler. In order to completely execute the new strategies, SAS has undergone a corporate cultural revolution, which was a deviation from the company's focus on resources and technology. There had been a restructuring which involved decentralization, education, and empowerment. A second wave of strategies were c... SAS has banked on its aim of being "a full service, door-to-door, travel service company," and "offer a unique product which we could control from A-Z." These have lead to the introduction of SAS International Hotels, SAS Reservation System, Credit Cards, SAS Service Partner, other related activities such as publishing and advertising, and a new group structure. We can see that in SAS major reforms, Jan Carlzon made use of both prescriptive and emergent strategies. According to Richard Lynch (2000), prescriptive strategies are those whose objectives have been defined in advance while emergent strategies refer to those strategies which has unclear objectives and whose components are developed during its course of life. As the case presented, the company has tailored its strategies to suit the changing needs of its market (Lynch, 2000). Prescriptive strategy was used in order to take into account the rapidly altering socio-cultural trends in the airline industry, thus the utilization of the socio-cultural theories of strategy. According to the case, the focus on business travelers was due to the fact that full-paying business travelers comprise the largest chunk of the airline's revenue yet the total number of passengers serviced was declining. This was prompted by the change in preferences of travelers as they seek more value for their money and change in lifestyle, which necessitated them avail service when their need arises. We can trace these changes to the transformation in the socio-cultural aspect of the European community. As the economy was facing a recession, maximization of customer's purchasing power was a priority. Also, the demands of being an executive left a busier

God does not Play Dice but Science does Research Paper

God does not Play Dice but Science does - Research Paper Example Before the Big Bang our cosmos was no bigger than the size of an atomic nucleus. Science explains that since then the universe has been expanding at a steady rate (John, 1997). It was Edwin Hubble in 1929 whose observations confirmed this assumption. Although the cosmos is expanding, no one knows what it is expanding into. The laws of science could explain the initial conditions of the universe but would fail to clarify the reason because of which the universe began. Before the Eighteenth century, it was believed that such questions belonged to the realm of metaphysics or religion. Today such an approach is widely considered preposterous as science in the 21st century could unravel the most astounding mysteries. Our perceptions of space and time have been greatly influenced by theories including Einstein’s general theory of Relativity, Newton's theory of gravity and largely by the Quantum theory. Einstein's special theory of relativity, which was later modified as the general theory of relativity and Newton's theory are classical theories. Their implications proposed that space and time were a fixed background. Time was like a long track stretching in only two directions. Einstein found innumerable difficulties when he tried to reconcile his special theory with Newton's theory of Gravity. He eventually resorted to the conclusion that space itself was curved and it was not separate from time. He highlighted the fact that gravity had distorted everything in space. Objects in space would try to move in a straight direction but their paths would appear to be bent. It was thus evaluated that due to sun's mass space-time would curve which bends the path of the planets. Space-time could be defined as the four dimensional space whose each point is an event. Einstein's General theory of relativity which further stated that the laws of science should be same for all observers was confirmed in 1915, approximately ten years after the acceptance of the special theory of relativity. Now one might wonder that reality could be stranger than fiction because the laws which govern cosmos can shape reality in the most unusual fashion. It is inevitable to ignore these complex notions if we are to develop an understanding of space and time from a scientific angle. The discovery of Quantum mechanics in 1926 was one of the greatest achievements ever for science. Einstein was partly responsible for its discovery but Max Planck played the major role. The word 'Quantum' has been derived from 'Quanta' which means packets. Quantum physics deals with the study of sub-atomic particles and according to many scientists this theory has brought an element of uncertainty in modern physics (Michel, 2006). An important concept which forms the basis of Quantum theory is the Heisenberg's uncertainty principle. It states that one cannot accurately determine the velocity and position of a particle simultaneously. If you would try to measure a particle's location accurately , then you will not be able to determine its actual velocity. Einstein had earlier suggested that light consisted of particles known as 'photons'. He thus explained how electrons in a solid body would be dislodged if light fell on it. It should be noted that Quantum mechanics function on a very small scale but it remains a significant part of Science. However Richard Feynman's theory without which the Quantum theory is incomplete can be applied on a larger scale. According to its principles every event or

ASEAN Free Trade Area Essay Example | Topics and Well Written Essays - 500 words

ASEAN Free Trade Area - Essay Example The AFTA agreement aims at promoting free trade in the region by bringing down the tax barriers and making the trade related policy framework to be more encouraging. The agreement can be understood as a kind of regional liberalization of trade policies that are favorable for boosting regional trade. Further the article focuses to find out whether if formation of this agreement has created trade creation or trade diversion. Trade creation can be considered as a development whereas trade diversion from the non member nations to the member nations can not be considered as a positive development. An important instrument for applying the trade agreement in the total region is the Common Effective Preferential Tariff scheme that requires the tariff of certain commodity to fall below zero to five percent. These commodities include capital and non capital as well as manufactured goods. This process of liberalization and eliminating the identified commodities from taxable commodities has been phased out in for phases. This has been done in order to prevent any instantaneous impact over the respective national economies of the member countries. A gradual tariff reduction would assure that the change shall be absorbed over a period of years and thus promote trade. After fifteen years of the agreement, it can be observed that the countries have largely succeeded in achieving the goals.

COMPARE THE UNITED STATES BILL OF RIGHTS TO THE ENGLISH MAGNA CARTA OF Term Paper

COMPARE THE UNITED STATES BILL OF RIGHTS TO THE ENGLISH MAGNA CARTA OF 1215 - Term Paper Example The second amendment is the right to keep and bear arms. This amendment guarantees citizens the freedom to protect their life against oppression of the government by keeping arms (Burgan 38). The third amendment states the conditions for quarters of soldiers. These conditions state that citizens cannot be forced to have soldiers enter their houses whether during war or during peace (Burgan 39). The fourth amendment is the right of regulated search and seizure. This amendment guarantees citizens the right to have their places and possessions searched or seized only against a warrant issued under due cause (Burgan 39). The Fifth Amendment concerns provisions concerning prosecution. This means that the citizens cannot be prosecuted unless a Grand Jury finds it legitimate to do so. Citizens should also not be compelled to testify against themselves (Burgan 39). The sixth amendment secures citizens the right to a speedy public trial by a jury that is unbiased. The citizen should have the opportunity to see the witness of the prosecution and to present his own witnesses (Burgan 40). The seventh amendment guarantees citizens involved in suits where the value exceeds twenty dollars a trial by a jury (Burgan 41). The eighth amendment protects US citizens against unnecessarily large amounts for bail, expensive fines or cruel punishment (Burgan 41). The ninth amendment protects citizens’ rights against other rights specified in the Constitution (Burgan 41). The tenth amendment protects citizens against the federal government by only giving it rights specifically mentioned in the Constitution (Burgan 41). 2. The Magna Carta of 1215 was an important charter signed by King John of England on 15 June 1215 after barons who had become dissatisfied with the king’s exploitative form of governance and exorbitant taxes had besieged him in his palace at Windsor (Drew 139). The Magna Charter is important because it restricted the absolute powers of the king and helped t o make the parliament more powerful. Primarily, the charter was intended to modify the feudal relationships between the king and the barons in the kingdom but down the centuries the terms of the charter and the freedoms granted to citizens under it have become a cornerstone for citizens’ rights and freedoms around the world. The document became the basis of the constitutional form of government (Drew 139). Originally, the Magna Carta contained 37 laws but most of these have been lost over the centuries. The most important of the laws that is in existence today is the freedom of citizens to be protected against forcible imprisonment or possession of property by the government. Among other freedoms guaranteed by the Magna Carta were the independence of the Church and its protection against interference of any kind from the king. The Magna Carta also transferred the right to impose taxes to the parliament. Citizens were also given the right to due process and protection from arb itrary punishment and seizure (Drew 139). 3. The Magna Carta of 1215 was written by Archbishop Stephen Langton of Canterbury and was signed by King John. It was originally called Articles of the Barons. The document was signed under pressure from the feudal barons who had united against the oppressive governance of the king (Drew 139). The Bill of

Up To Interpretation Research Paper Example | Topics and Well Written Essays - 250 words

Up To Interpretation - Research Paper Example The modern era of artwork has seen a fundamental shift in the means by which the public interacts with art. Whereas before, the artwork was somewhat straight forward and readily discerned, the artwork of the modern period has left a great deal more up to personal interpretation; choosing to exploit the constructivism that has defined so much of our modern era. As a means of fully appreciating such a reality, one has to question the true nature of art: whether its subjectivity is an overall strength or an overall weakness. According to Janoaro and Altshuler, â€Å"The treasure of art, however, is that its reality lives on after its subjects die. The final product is an addition to reality, not simply a way of reproducing it†. As such, it is the strong belief of this observer that Janoaro and Altshuler have perfectly encapsulated the heart of the matter regarding art and its appreciation. Rather than confining art to a type of fantasy in which one must only appreciate within the garb of tired convention and conformity, the availability of modern art to allow for a type of constructivism and subjectivity is one of the greatest developments that art has seen come to fruition over the past 100 years. Due to the introduction of this level of subjectivity, art has been able to mean more to individuals who may otherwise have never had an interest in the convention. Moreover, it has provided for a type of open mindedness that has allowed the arts to grow and develop in ways and at a rate.

Enlightenment And Religion Essay Example | Topics and Well Written Essays - 500 words

Enlightenment And Religion - Essay Example Holy Bible was the last word and everything about a man was God-centric, God-decided, and God-given. KANTIAN CONCEPT: Enlightenment was an effort to break through this stagnant cultural context into the freedom of reason and knowledge. That’s why the German philosopher Immanuel Kant called enlightenment as the great leap forward for the humanity. â€Å"For Kant, Enlightenment was mankind’s final coming of age, the emancipation of human consciousness from an immature state of ignorance and error†¦Ã¢â‚¬ ¦.. Sapere Aude (dare to know) was Kant’s watchword taken from the Greek poet Horace† (Roy Porter, The Enlightenment, PP1). For Kant Enlightenment was an intellectual liberation; a release from man’s self-imposed tutelage. Because of this tutelage man was not able to understand the realities around him without the guidance of a super intellectual guardian. The situation is self-imposed not because the man had no intelligence but because he was not able to use the intelligence. Getting out of the intellectual dependence of the other was what Kant professed. Enlightenment was an intellectual movement. It was mostly a middle-class movement against the hereditary aristocracy and religion; a movement for the humanity in general and for the common man in particular. Though this movement is often associated with the 18th century, the roots of it go back further. Thinkers and writers who thought about the betterment of human life and society, who wanted to place ‘Reason† in the center of all human intellectual activity, who wanted to fight the tyrannical political system, and combat superstition and ignorance were trying to enlighten the people around them. Putting reason in the center of human inquiry opened the door to scientific curiosity and inquiries. Though the church could stop Galileo, they couldn’t stop the development of scientific ideas.