Essays on Bailout

Introduction

The financial crisis of 2007/9 was the worst in the U.S. since the Great Depression of the 1930s. It was the cause of the failure of some of the biggest financial institutions including Washington Mutual which was closed in 2008, and its assets transferred to JP Morgan. In 2008, the crisis reached its peak with loans dropping dramatically to the lowest levels to be witnessed in a half a century. For example, new loans to large borrowers fell by 47 percent in the fourth quarter of 2008 as compared to the previous quarter and by 79 percent relative to ...

In his “ on the political economy of the financial crisis and bailout of 2008-2009”, Roger Congleton argued that the decision of the United States government to provide financial aid to the financial institutions stricken by the 2008-2009 global mortgage crisis was rather an ill-conceived move, in the both political and economic contexts. His ideas were further explored by the Alan Montague, who emphasized that the very idea government aid to the large financial institutions was hardly compatible with the ideas of welfare state (Montague, 11). During the global recession, twenty millions of the Americans were not capable of finding ...

QUESTION A

A Credit Default Swap is a swap that protects the lender from the risk of loss resulting from the default by the borrower. The protection buyer of the CDS (the lender) makes periodic income payments (CDS premiums) to the protection seller who in return guarantees to pay the lender the principal in case the borrower defaults.

Cash flows when there is no default

Notional amount = $1 million Annual CDS premium = 4% × 1,000,000 = $40,000 Quarterly CDS premium = $10,000 If the borrower does not default, the protection seller will make a profit of $120,000 at the end of the third year ($10,000 ...

The journey towards the European Union (EU) integration has experienced several turnings. This section of the essay will detail some of the core turning points in the EU integration. Establishment of a Common Agricultural Policy (CAP) was a major turning point in EU integration. The Treaty of Rome defined the specific objectives of the CAP. The CAP was introduced in 1962 (Folmern.p). The establishment of the CAP was enshrined to the state of food shortages after World War II. The aim of the CAP was to build a common European Community market and to cut off tariffs on agricultural ...

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, ...

Introduction

Banking is a major part of most modern nations. This is because they form as the point for an organized financial sector and allow for regulations to be applied and carried out. In spite of this, banks have been used as a tool for capitalism and the pursuit of personal interests and this has led to serious consequences for the economy. However, Parramore indicates that the idea of bailing out banks during financial crisis is a fraud on the taxpayers and this is akin to robbery. The purpose of this paper is to critically analyze the position of Parramore ...

The Ford Motor Company has been a powerful automotive company since its foundation in 1903. Founded by Henry Ford, the company quickly became a leader in innovation, notably inventing the assembly line process which allowed for cheaper production of cars for Americans to enjoy. Ford Motors survived the Great Depression and every recession since then, but the International Financial Crisis of 2008 affect it differently. US automakers heavily influenced by the crisis, as GM, Chrysler, and Ford were folding under due to many reasons, namely international competition, healthcare coverage, and the tightening of the American wallet due to the ...

Openness and free trade are one of the vital economic practices because nations can import and export products and services without the government restrictions. These limitations include tariffs, restrictions, and bans associated with exports and imports. In developing countries there stand to befit a lot from the free trade because of their low levels in the standard of living and availability of resources. Developing nations have room for expansion in their economies through agreements involving strategic free trades. These are some of the benefits of free trade. Improved living standards: as a result of free trade, the citizens of ...

Question 1.

The European Integration has undergone several changes to be what it is now. Several incidents and treaties marked the turning points for the EU in its infancy years to create a more stable and unified European cooperation. The Marshall Plan formed in 1948 consolidated democracy in Europe after the German defeat in the WW2 (Dinan 1122). The United States proposed the plan to speed up economic development in the transatlantic region. The plan saw the creation of the OEEC (Organization for European Economic Cooperation) liberalize trade and the Coal and Steel Community to oversee the extraction of coal in ...

The institutional affiliation

1. An effective threat is cheaper that an effective promise. Explain why this is true. Provide a specific example. Threats and promises are regarded as two main strategic moves used to impact the behavior and actions of others in a bargaining relationship. That type of relationship is considered as a situation where an individual is trying to influence another person’s option of action (McClintock, Stech, & Beggan, 1987). Both threats and promises can be employed within a game-like situation to message a plan of cooperation or to operate other ("Threats, Promises, and Commitments", 2016). For instance, when a parent ...

What position should Jason Sterling take on European sovereign debt? Why? What are the advantages/disadvantages of using credit default swaps to profit from this crisis? What are the potential risks? Are there any lessons for Jason that can be gleaned from previous crises? The aim of Jason Sterling is to assess novel information so that he has the ability to trade on prior to the trading close for the week period. This was because the growing debt crisis in the sovereignty of the Europe would be the hot topic or the primary notion that the leaders and representatives from ...

On first January 1999, eleven European countries decided to denominate their currencies into a single currency. The 1991 Maastricht Treaty had established a convergence criterion for countries wishing to join the European Monetary Union (EMU). The criterion was designed to be a foundation for qualifying for the EMU and related to the size of national debts, interest rates, inflation and budget deficits. The Euro system consisted of the European Central Bank with eleven central banks of the participating states presuming the roles in monetary policy (Mody et al. 2012). In 2002, the Euro took the form of coins and ...

Business Plan

Executive Summary 3 1.0 Introduction 4 2.0 Operations plan 5 2.1 Location and facilities 5 2.2 Business processes 6 2.3 Distribution and outsourcing 9 3.0 Organizational plan 10 3.1 Management 11 3.2 Mission 12 3.3 Purpose 13 3.4 Vision 13 3.5 Legal structure 13 3.6 Organizational chart 14 4.0 Marketing plan 16 4.1 Price 16 4.2 Product 17 4.3 Place 19 4.4 Promotion 20 5.0 Financial plan 21 6.0 Growth plan 22 7.0 Contingency and harvest strategy 23 8.0 Timeline to launch the plan 25 9.0 References 28 10.0 Appendices 29

Executive summary

Don’t we all enjoy the experience of ...

Airlines, no matter now big or small, experiences failures in airline business planning. The failures have resulted from the inability to acquire a sustainable, and competitive advantage. The situation has prompted most airlines to adopt the bigger is better philosophy. For airlines to remain afloat, airlines are expected to come up with innovative strategies unlike the ones implemented in the past. Recently, airlines have been affected by the decrease in government bailout packages, and therefore, they should start focusing on market dominance instead of a generation of capital. Most airlines have failed to validate the growth of revenue and ...

Thesis statement

The IMF plays a critical role in ensuring financial stability globally. It has been instrumental in resolving various economic crises such as the 2008 financial crisis and the debt crises in Greece and Portugal.

The role of IMF

The fund plays a crucial role in providing advice and technical assistance to member countries to foster good governance. It promotes public sector accountability and transparency (O'Brien and Williams). Its technical assistance helps member states in enhancing the management of their economies by correcting macroeconomic imbalances, implementing economic reforms relating to international trade, exchange rate policies, among other reforms. The IMF also offer loans to ...

Inside Job: Story of the Crisis

The Oscar winning movie “Inside Job” is a documentary on the financial crisis of 2008, showing a chain of events leading up to the final crisis and the aftermath following. Inside Job takes its cue from the Reagan administrations move to relax rules on banks and other business during the 1980’s, leading to a huge boom in the financial sector. Over the next 30 years, the gradual removal of rules continued such as the dropping of the Glass-Steagall barrier between deposit and investment banking. The growth of the securitization market at the same time lead to a boom ...