Essays on Bail-Out

Basic Facts of the Case

The Ethical Issues Involved Under utilitarianism, the GM bailout was certainly ethical because it focused on the maximization of the overall good of the company, the people, and the government. However, when one keenly scrutinizes justice and rights issues involved, there is contention with the bailout. The executives of General Motors were allowed to enjoy the organizational profits for the longest period with the taxpayers bearing the losses. Economist Joseph Stiglitz wrote the debate about whether or not to bail out car manufacturers had been mischaracterized, and that the profits were privatized, and the losses socialized. According to him, ...

The American Economy has faced one of the most destructive economic crises in 2008. The crisis started in the sub-mortgage markets has expanded to the financial markets, and the largest financial institutions have declared their bankruptcies. Subsequently, the collapse of the financial markets has spread to all the industries in the country. What the American lost in the global financial crisis and what made the recovery from the crisis tough was the loss of trust for the American Economy among the agents in the economy. Until 2008, the economic development in the US was based on the consumption economy. ...

2008 Financial Crisis 2008 Financial Crisis The Financial crisis in the year 2008 affected globally. The onset of the recession started with the huge flow of money in the American economy. During the year 2001 U.S faced  recession but for a short span of time. In order to recover the economy the Federal Reserve lowered the interest rate from 6.5% in May 2000 to 1.75 % in December 2001. Money was cheaper and investors invested more money in the economy. This was the beginning of the problem. The trigger of the crisis was the housing bubble.

As credit was easily ...

Abstract

The purpose of the above paper is to highlight the impact of the great recession that was experienced in 2007 -2009 and the bailout strategies used by governments to restore investment institutions from collapsing. The paper starts with an introduction that explains the impact of the great recession to the U.S and global economy. As a remedy to avert the adverse effects of the global recession, both short term and long term strategies were sought. The advantage of using the short-term strategies was to restore stability in the financial sector and prevent further collapsing so as to achieve economic ...

The European Union did not begin, as many seem to think, as a diplomatic coalition of European states. Instead, the formation of the European Union was a practical financial decision, born from the changing face of the world after the end of the Cold War (Majone). The European Union is home to a wide variety of different people with different cultures; the purpose of the formation of the Union was not to homogenize the continent, but to form a coalition of independent states that worked together to counterbalance American economic and financial power, as well as the rising economic power of China (Dinan).

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1. Claims of Globalism

Globalism is mesh of inter-reliance at a multi-continental level whereby, there is exchange of people, information, and capital between continents. An increase in Globalism is termed as Globalization while a decrease is De-globalization.

Globalization integrates global markets and liberalizes them

Globalism integrates global markets via the inter-reliance among the continents and liberalizes global markets through the divide between a state’s economy and the government, such that there is minimal interference from the government. The absence of government interference increases social interaction among the continents and the exchange of technology, labor, and wealth.

Globalization is unavoidable and permanent

The establishment of inter-reliance among the continents has been going on and will continue to take ...

Islamic banking performance and risks in MENA

1. Introduction Islamic finance was only a dream 50 years ago became reality now. Nevertheless, it is one of the fastest growing industries currently as well as it showed some strength at the time of Global Financial crisis (2007-2009). These features and others made Islamic banks a feasible and viable alternative for conventional banking system. Although Islamic Banking showed good signs but they faced and still facing some challenges (Risks). This paper revises the current risks faced by Islamic Banks especially in MENA region. Additionally, it’s going to measure their performance in these countries. Finally it will classify ...

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1. What are the 3 or 4 key issues raised in this case? 1.1 Sale of Client-Adverse Instruments: This violation of the firm’s fiduciary responsibility to its clients on the sale of a collateralized debt obligation (CDO), which triggered the 2010 American financial crisis after the US Securities and Exchange Commission accused it for civil fraud in April 2010, is an affront to revered historical principle of putting the clients’ interest first (INSEAD 1, 25). These mortgage-backed securities are sub-prime assets that Goldman Sach did not disclose to the buyers. Instead, it ...

Financial Markets and Institutions

Impact of Credit crisis on financial market liquidity The financial crisis which the United States economy had to face during the years of 2007 – 08 was the worst of its kind. The banking system had not faced a crisis of this magnitude since the 1930s which forced professionals who belong to this field to question the state of liquidity of the system. The central role that banking institutions, and which the financial business performs as such, is to provide the public with cash, allow them to make deposits and invest their funds in securities or provide them with term ...

American Public University

Abstract The global financial crisis started in 2008 opened a new era for the economy managers in the developing countries and the United States. Using the conventional tools and strategies to cope with the financial crisis will not create the desired results anymore. This new experience indicates us that the economy managers and the governments need to develop more complex and detailed strategies to overcome the issues in the economies. The Federal Reserve is one of the responsible institutions for the economy management. The FED has always been blamed for not developing a proper response against the economic and financial ...

The negative influences of the global financial crisis started in 2008 are still continuing in the developed countries. After 2011, the European economy and the American economy have exhibited a growth; however, the developed economies could not stable their economies yet. The demand for the investment goods was not satisfactory in 2014. An important part of the investment goods are the durable goods. Many of the investment goods are counted as durable goods. The developed economies in the European Union have implemented recovery policies. The fiscal policies have been inevitable for many countries. The governments have had to bail ...

THE AMERICAN ECONOMY IN 2014

Introduction 2 The Fiscal Policy 3 The Monetary Policy 4 Conclusion 4

References 5

The American Economy in 2014 Introduction This essay will argue whether the American Economy is live enough for a complete recovery from the global financial crisis started in 2008. The GDP growth rate after 2010 has started rising again; however, we observe that the economic growth is not following a stable path. The annual the highest level of the growth rate is around 3%, and it fluctuates over time down and up – in some quarters it becomes negative. In the first quarter of 2014, ...

The economic meltdown in the US was, as a result, of the housing bubble burst that brought about a massive economic recession in the US. The film, Inside the Melt Down, depicts a series of large American corporations going bankrupt and their shares dropping down drastically due to the economic recession. For example, Bear Stearns is a one of the multinational investment company that took an economic downturn in that its shares dropped from $171 to only $57 in a single day. Given that the media aired out their concerns regarding the economic drift of the corporation, most investors withdrew from Bear Stearns. Despite ...

Corporate fraud is a serious offense that can have huge ramifications on society, clients and the business or organization itself. There have been famous cases of corporate scam that resulted in gigantic financial losses for firms, loss of their reputation and costly legal battles. Famous ethical scandals include: Enron, Arthur Andersen, Lehman Brothers, AIG, Barings Bank, etc. Lehman Brothers was involved in a scandalous ethical scheme and was bound to file Chapter 11 bankruptcy after its loan extension request was denied. The bankruptcy of Lehman Brothers was a shock to the economy and financial markets in the US. It was the ...

During the elections of 2008, it was President Obama’s message of hope and change that mostly contributed to him being elected as the American forty fourth president and the first African-American to occupy the oval office. His agenda did not only contain promises, but it also contained specific policy proposals. One of the main issues the president talked about was the financial crisis that gripped the nation and whose effects are still felt to date. This global crisis began in 2007 and supposedly ended in 2009. Considered as the worst crisis involving the American economy since 1930 when ...

Following the American Psychological Association’s Guidelines

THE U.S. ECONOMY AFTER THE GLOBAL FINANCIAL CRISIS A great depression has started in the sub-mortgage markets in the U.S. in December, 2007. The people who got mortgage loans had difficulty to repay and the bubble in the market caused a financial crisis in the country. The financial crisis have firstly influenced the financial institutions in the country, and from them, it has spreaded to other industries. The biggest financial institutions and other industries like automobile industry have had very difficult times. A lot of workers got fired by the companies and many companies were almost to declare bankruptcy. ...

THE U.S. ECONOMY AFTER THE GLOBAL FINANCIAL CRISIS A great depression has started in the sub-mortgage markets in the U.S. in December, 2007. The people who got mortgage loans had difficulty to repay and the bubble in the market caused a financial crisis in the country. The financial crisis have firstly influenced the financial institutions in the country, and from them, it has spreaded to other industries. The biggest financial institutions and other industries like automobile industry have had very difficult times. A lot of workers got fired by the companies and many companies were almost to declare bankruptcy. ...

Inflation is one among the greatest economic worries in the United States today. Surprisingly, even the most learned economists have failed to come to a consensus over the inflation trend of the country. On the 9th day of May 2009, Krugman and Meltzer wrote two articles with conflicting predictions regarding the trend of inflation. In the New York Times articles, Meltzer (2009) predicted that the economy of the United States was to experience an inflationary trend for the coming years. On the contrary, Krugman (2009) argued that the economy of the United States was to expect a deflationary trend over the ...

The global financial crisis is one of the major challenges that our world is facing today. Since 2007, this problem has been setting off where world stock markets fell and large financial organizations have been wiped out or sold at the lowest prices. Even the richest and powerful nations have resorted to expansive bail-out packages to save their large banks and financial institutions. According to Bloomberg, the U.S had spent $9.7 trillion while UK and the rest of the European countries have spent $2 trillion on bail out packages. This global economic meltdown is influenced by various factors specifically ...

Introduction.

On the wake of the September 11th attack at the world trade centre the government of the united state through the congress found it necessary o establish a fund to cover for the pain loss and suffering for all those who were caught in the disaster. The person who was to Mann the disbursement of the fund was an experienced lawyer who had managed to price almost al kinds of disaster and thus this was not a different case for him. Kenneth Feinberg was the gentleman who was appointed to oversee the process of compensation. The following is an ...

Introduction

Arguably, the Asian Financial Crisis of 1997 was one among the worst financial crises in the history of the world. Only comparable to the Great Depression in the United States and the Lost Decade of Japan, the Asian crisis was one that saw many countries from the region, SouthKorea being the most noteworthy, crumbling down in the economical sense. The crisis saw big companies in South Korea resort to such measures and alternatives like conglomeration through significant business mergers. The organizations that were affected include the biggest and most renowned companies, most of which were either taken over or ...

General Motors, arguably, the biggest motor manufacturer in America has emerged to be the favorite giant company associated with president Barrack Obama. According to Curt Levy, in his article What the GM Bailout Really Cost American Taxpayers, describes the giant motor manufacturer as on organizations with serious connections with the white house. Apparently, the connection that GM has with the top house is enviable as they may lead to an organization’s exemption from payment of taxes. Curt Levy (1) explains that the decision to bail out GM has led to a bad situation as it has made the average ...

Introduction

Austerity is an economic term used to define fiscal policies of reduced spending achieved through cutting of deficits mainly in public service provision and benefits. These policies are in most cases used by governments in an attempt to reduce the amount of money spent on deficits; in several instances, austerity policies are used together with tax increases. This is done to increase long-term financial solvency for investors. As is the case with other economic policies, the implementation of austerity policies has both supporters and critics. Those who support austerity policies argue that by reducing the government’s expenditure, it ...

Political environment that led to Economic concerns, at first, during October 2008 was aimed at bailing out securities, which was under the tremendous repercussions of defaulting and was mortgaged backed.

Five descriptive features of bailout and stimulus bills during October 2008 to February 2009 in the USA.

The necessity of the bills for bailing out and stimulus

A record $140 billion was being withdrawn from the money market accounts. Usually money market is considered as the safest place for investments. At that time investors were shifting their funds towards US Treasuries, as a back drop, the yields were coming down to zero. On the other side, the panic was triggered ...

Europe fell in a deep recession together with the entire globalized world due to the so called subprime mortgage crisis. However, while the US is managing to recover its economy and it’s now growing at a sustainable rate, Euro Union is somehow struggling in returning at a pre-crisis level and it is actually facing a second recession (so called “double dip”) that is affecting mainly the countries of the South Europe. Since 2010 thus, Greece is having major problem in rolling over its sovereign debt and it had to obtain a bail-out from the other European countries. Similar destiny has occurred to Portugal ...

1. The relationship between free markets and the liberties promoted and protected by America’s republican form of government A free market economy is that which allows for the determination of the market prices of goods and services without the interference of the government or govern agencies. It minimizes competition for businesses as they have the liberty to set their own prices: Prices of products or services in the market to a greater extent determine the demand for the particular product or service. Producers can therefore easily channel their resources towards achieving maximum satisfaction of the consumer needs. They ...

European Debt Crisis

The so called “European debt crisis” started in the European Union right after the global subprime crisis that hit the world during the 2008. The crisis started in Greece with a widening of the spread between the Greece sovereign bonds and the German one. Greece entered in a new deep recession (after the one due to the subprime crisis) which is still persistent even today; during the 2010 Greece faced a problem in rerolling its national debt due to a lack of credibility of international investors which were fading away from the auctions of long-term government bonds. Therefore, Greece had to ask a bail-out ...

The Return of Depression Economics and the Crisis of 2008

The Return of Depression Economics and the Crisis of 2008 is an economics book that was written by Paul Krugman. The book is an analysis of the 2008 financial crisis that followed an economic downturn amid huge economic activity in the financial sector of many economies including that of the United States of America. The book further follows and traces integration of the unfavorable economic conditions into the financial crisis experienced in the year 2008. In addition, Paul Krugman considers the parameters that characterize a relationship in an economic depression context basing the argument on the depression and the economic ...