Internal and External Business Stakeholders Essay

In 1963 an internal memorandum issued at the Stanford Research Institute used the term â€Å"stakeholders† for the first time and defined the word as â€Å"those groups without whose support the organization would cease to exist†(Boundless, paragraph1). Now it generally includes anyone who has an interest or â€Å"stake† in a business or entity. There are two types of stakeholders: internal stakeholders, those within an organization that have an interest in the business, and external stakeholders, those with an interest in the business outside of an organization. Internal stakeholders include owners, employees, managers, and stockholders, those who are directly affected by the success or failure of a business’ decisions. The owners and stockholders are the ones who have the most to gain or lose depending on how the business fares in the market. They’re the ones who put their money into an idea to create the business and should it fail, they’d lose that investment. The managers and employees, similarly, would lose benefits, rewards, or even their jobs completely should it fail. Since these have the most to lose, they’re the one who work the hardest to make sure the business succeeds. External stakeholders, customers, creditors, suppliers, the government, etc., are also affected by the success of a business. If the business is doing well, the customer is able to get good quality products and/or services at sensible prices, creditors get paid back the loan they gave the business, and suppliers keep selling their products to the business, thus keeping them in business as well. When the business is up and running, stakeholders need to collaborate and each plays their own part with each other to keep the business successful. The owners and creditors need to supply the financial backing, the employees need to sell the products or services to the consumers with excellent customer service, the suppliers need to distribute and deliver their products promptly and professionally, and the customers need to continue to buy the products or services while providing constructive feedback. When these stakeholders interact without confusion or miscommunication, the business runs smoothly and they all gain something from working together. No matter what the business sells or provides, if there’s contact with any human being, and there always is, then there are by definition â€Å"stakeholders† in the company.  Without them, there would be no products or services offered to the consumer and there wouldn’t be a business in the first place. Source: Boundless. â€Å"Business Stakeholders: Internal and External.† Boundless Accounting. Boundless, 14 Nov. 2014. Retrieved 19 Jan. 2015 from https://www.boundless.com/accounting/textbooks/boundless-accounting-textbook/introduction-to-accounting-1/overview-of-key-elements-of-the-business-19/business-stakeholders-internal-and-external-117-6595/

Biblical Allusions Throughout of Mice and Men Essay

â€Å"He calls Of Mice and Men a parable that illustrates the biblical conflict between the brothers Cain and Abel† (Goldhurst 48). Therefore the people who have read the story Of Mice and Men can automatically see the resemblance between the two stories. Of Mice and Men is a novelette by John Steinbeck, it is about two men who are migratory workers that works on farms. Of Mice and Men contains many Biblical allusions including the Story of Cain and Abel, the longing for Eden, and facing temptation. In Of Mice and Men and the Old Testament the themes are similar. It is stated in the â€Å"A Parable Curse of Cain.† â€Å"Of Mice and Men is a story about the nature of man’s fate in a fallen world, with particular emphasis upon the question: is man destined to live alone, a solitary wanderer on the face of the earth, or is it the fate of man to care for man, to go his way in companionship with another? This is the same theme that occurs in The Old Testament† (Goldhurst 49). This proves that Of Mice and Men and The Old Testament have a similar theme. One reoccurring theme in Of Mice and Men and The Old Testament is loneliness will always follow man and innocence keeps ideas alive. The curse that the Lord placed upon Cain was that agricultural labor was going to be difficult, and he will be lonely while being a fugitive (Genesis 4:12). In Of Mice and Men George and Lennie are fugitives that are migratory workers but George at times feels lonely even though he has Lennie because he doesn’t have a romantic partner. This shows how these two stories are similar within their themes. Worked Cited Goldhurst, William. â€Å"A Parable of the Curse of Cain.† Readings on John Steinbeck- Of Mice and Men. Ed. Jill Karson, Bruno Leone, Brenda Salcup, and Brenda Szumski. San Diego, CA: Greenhaven Press, 1998. 48-58. Print The New Oxford Annotated Bible. Ed. Bruce M. Metzger, Roland E. Murphy, and Bernhard W. Anderson. New York: Oxford University Press, 1994. 2-7. Print. Owens, Luis. â€Å"Of Mice and Men: The Dream of Commitment.† Modern Critical View John Steinbeck. Ed. Harold Bloom. New York: Chelsea House, 1987. 145-149. Print.

Applying psychological perpective to a case study

Applying psychological perpective to a case study The aim of this report is to apply psychological perspectives of human growth and development to a specific case study. To demonstrate an understanding of psychological theories of human behaviour with regards to a specific stage in life and to identify ways in which these theories underpin the social work profession. This report will analyse the case of Tina with primarily giving the history and evidence of the case. The report will then explain the possible psychological explanations for Tina’s behaviour, followed by a conclusion and the recommendations the social worker may advise in order to assist Tina. Case history/sequence of events It would appear from Tina’s background she had a difficult upbringing and this appears to have stemmed from her mother leaving when she was three years old. She was left in the care of an abusive alcoholic father and there appears to be significant amount of neglect from her father and issues with poor standards of hygiene. Although, this evidence is from a former friend, both Tina and her brother John were placed on the Child Protection register. Tina was sexually active in early adolescence which then lead to her having a baby at fourteen years old but the baby was taken into emergency foster care as there was evidence of neglect and physical abuse. When Tina was eight months pregnant her GP referred her and her boyfriend Tom to social services due to concerns about their ability to cope with the unborn child because of her previous history. When the social worker visited the family home she reported the conditions of the flat, which is on the fourteenth floor, were unacceptable due to poor standards of hygiene and no signs of preparation for the unborn child. Tom was extremely unreceptive towards the social worker. The social worker received a call from the hospital two days after Tina and Tom had their baby as Tina was seen by staff at the hospital to smack the baby. Psychodynamic explanations of human beha viour Freud’s psychodynamic theory is widely used in the social work profession and is extremely valuable when attempting to understand the relationship between feelings, emotions and behaviour. From a Freudian perspective there appears to be significant evidence surrounding Tina’s childhood experiences and the difficulties she experienced could relate to how her behaviour is affecting her capabilities in looking after her baby. According to Freud (1938) disturbances in the five stages of psychosexual development in childhood could result in abnormal behaviour in adulthood. Perhaps the most important crisis point in these stages is the phallic stage which occurs around the age of three and therefore, does relate to the age when Tina’s mother abandoned her. Freud (1923) would suggest this may cause the child to repress the sexual and aggressive urges into the unconscious causing problems later in life. He suggests children will internalise aspects of their parent ’s standards and would follow what their parents do with regards to aggression and other forms of anti-social behaviour. From a Freudian point of view, it could be argued Tina is exhibiting the same behaviour as her father with being over sexualised and her aggressive behaviour is being displaced unto her newborn baby. Therefore, it would appear the social worker could use the Freudian view of Tina’s behaviour, as it could relate to the disturbances she encountered in her childhood and more specifically the abuse and neglect from her father.

Can We Prove the Existence of God Essay Example | Topics and Well Written Essays - 750 words

Can We Prove the Existence of God - Essay Example Someone properly planned our bodies and then did his best in order to realize this plan. This someone is God. I am Christian and believe in Jesus Christ as my Savior. However, it is not the only reason why I am sure that everything on the Planet is created by God. I am not the only person who has this point of view. There are also numerous arguments that will prove the existence of God. For instance, cosmos is a magnificent result of someone’s thorough work. It is not just a theory; this point of view was proved by one of the medieval philosophers – Saint Thomas Aquinas. This philosopher gave birth to cosmological arguments that prove the existence of God. It turns out that people only need to look deeper at the world around them, especially at cosmos. This will help them to see themselves the arguments that prove the existence of God. Aquinas managed to prove that reason and faith are closely connected with each other. Thus, he suggested several arguments to prove that everything was created by God. All of them are based on one major idea. It is the one form contingency. Saint Thomas Aquinas applied this argument to demonstrate that everything in the world is dependent upon something. Nothing can exist separately. The world looks like some properly planned interdependent system of various elements that need each other. Moreover, the universe that is the major field of all those elements lacks some ultimate reality for its existence. This reality can be only God. There are three different variants of the above-mentioned argument (causality, motion, contingency), but the meaning is the same – the structure of the universe proves the existence of God. Another medieval thinker – Saint Anselm – suggested the ontological argument for God’s existence. It also proves the existence of God. The major thought given by the thinker concerning the above-mentioned argument is that in general the existence is not â€Å"necessary† but â€Å"contingent†. According to Saint Anselm’s point of view the whole universe is â€Å"contingent†; it is not necessary to exist. The only one who is necessary is God. Although, this point of view is highly debatable; it still is a good way to prove that God is an essential part of human life. He exists, He created people and He is necessary for normal life. From my perspective, this explanation included by Chaffee in his book is one of the best ways to explain that God exists (Chaffee, 335). There are three more arguments proving that God exists. They are the following ones: 1) the argument from design, 2) the first cause argument and 3) the moral argument. The first one is frequently called â€Å"the teleological argument†. The major point of this argument is based on the thought that universe is ordered. Everything in the universe is done so that the earth has life. If at least something was changed, there would be no life in the whole world. So, God kept in mind a proper order for the universe when he was creating people, planets and all other things that are around us. The first cause argument is closely connected with the existence of the universe. The latter began to exist much time ago. However, nothing can appear from nothing. Someone created the universe. Moreover, nobody except God is able to do that. Only He can create such huge and serious things as the universe as he has neither end nor beginning and it is not difficult for him

Research Essay Example | Topics and Well Written Essays - 750 words - 1

Research - Essay Example In this paper, I use the characteristics of my five favorite journals to determine how suitable and relevant they are to my nursing profession. My five most favorite journals are The Australian nursing journal, Nephrology nursing journal, Association of operating room nurses AORN journal, American journal of public health, and British medical journal (International edition). All these journals contain information derived from the most current research. They all have several articles that cover a variety of topics. Different publisher has published the journals so in my selection I was not publisher bias. Moreover, they have different editor, which compares with their varying content. Most of these journals have nursing professions as their target audience. However, there are those whose target audience is the medical profession in general. As clearly understood, nursing profession is a medical profession and hence if a journal has medical profession as its target audience then it tar gets the nurses. According to Oermann & Hays (2010), the target audience of a journal can show whether the journal is relevant to a certain profession. Thus using this concept, I can say with confidence that these journals are very important in my training as a nursing student and in my profession as a practicing nurse. Another thing that shows the relevance in these journals as far as nursing profession is concerned is the type of articles they contain. Most of them contain knowledge about evidence based nursing practices and finding of various research undertaken on the medical care field. Nursing profession requires knowledge on evidence based practice and a lot of research for one to be proficient (Webb, 2011). Since all these journals provide this knowledge, they would be very relevant to my profession as a practicing nurse. The Relevance of My Journals To My Future Job   I have read several article in these journal and the knowledge I obtain from them have been very substant ial in my training as a nurse. From these journals, I managed to obtain knowledge on the most recent research undertaken on the health care field one of them being a research taken on Transitioning from peritoneal dialysis to renal transplant that found on the Nephrology nursing journal. From my reading of the journal, I have also come across various articles with very good information and health care. Since the nursing profession is based, on health care, such articles will be very relevant to this profession and thus I expect them to be very important to me as a nurse. According to Webb (2011), the role that research plays in nursing profession cannot be under-estimated. It is known that for a person to be proficient in this profession he should be undertaking research as frequently as possible. These journals contain information about most recent research undertaken by other nursing and medical profession as well as health care practice information. This can be very important to a nursing profession in his process of undertaking research. Since it will be my objective to become as much proficient as possible in nursing, I will be undertaking frequent research and hence these journals will be very relevant to my profession. The Journal I Would Choose and Why All these journals will be very relevant to my profession as a practicing nurse due to the content of the articles they contain. However, the degree of relevance to my profession differs from one journal to the other. This is indicated

The Impact of Roman Catholic Church on Capitalism Essay

The Impact of Roman Catholic Church on Capitalism - Essay Example The church helped the society to counter the vices by making moral values prevalent in their course of life. This indicates that the democratic society that has no accountability to god will finally degenerates. Thus Roman Catholic Church helped in the growth of capitalism and democracy by inculcating moral values in the Christian societies. The church and capitalism did not support the common property administered by state that is against the democracy. According to church and capitalism the socialism is against the natural justice and threatens the family life. Pius XI explained the above mentioned ideas in Quadragesimo Anno published in 1931. The personal responsibility, institutional changes are considered by Roman Catholic Church and capitalism against the socialism. Church helped in developing the institutions that constituted the society. This made the people to understand the reality in the capitalism according to catholic ideas. The Church supported the creative subjectivity of the human person in supporting the capitalism. This can be seen from two perspectives; philosophically and theologically. 1 The impact of Church on capitalism is due to its support to the free market economy that supports capitalism. In Centesimus Annus #32 John Paul wrote that the decisive factor has changed from land to man and knowledge. According to him this came from understanding the needs of others and ability to satisfy them. As a result the freedom will be a means of harmony between personal and societal interests. Capitalism enabled the greatest opportunity to engage creatively in economic sphere. This creativity in the capitalism is due to the church and it is the one of the ways the Church affected the capitalism. The diligence, industriousness, prudence, reliability and fidelity are the values that had shown impact on capitalism by Roman Catholic Church. The catholic ethic supports the capitalism as the human imperative that is creative and endeavor of the society to encourage the public virtue. The Roman Catholic Church as a supporter of free enterprise rejected the government's too much intervention. This is the 2nd aspect that has shown impact on capitalism from the side of Church. Catholicism contained the afore mentioned opposition for government intervention when it is extreme. Thus Catholicism rejected too much personalism in the economy. This thought has begun with Leo XIII's Rerum Novarum in 1891. The catholic society supported capitalism in the form of having right to private property with the presence of trade unions and wages. This resulted in distributist economic system. The Roman Catholic Church defended this economic system. This resulted in widespread owner ship of land. As small scale craft production obeys natural law and catholic tradition, there is some sort of opposition from the church for large scale craft production. As the economy has grown though effected by Catholicism, the large scale production

Topic Proposal on Should Testimonies of Lay Witnesses be Allowed in Coursework

Topic Proposal on Should Testimonies of Lay Witnesses be Allowed in Court - Coursework Example The law in some cases permits the witnesses to give their opinion evidence that can be categorized into expert opinion and lay opinion. â€Å"While the courts have made concessions in certain recurring situations, necessity as a standard for permitting opinions and conclusions has proved too elusive and too unadaptable to particular situations for purposes of satisfactory judicial administration† (Legal Information Institute, 2011). Lay witnesses give their opinions when they are based rationally on their perceptions, prove helpful in determining facts in the issue, and when they are not based on technical, scientific, and other kinds of knowledge in the expert testimony scope. Lay witnesses are permitted to give their opinion to help determine the weight, height, dimensions, quantity and such other features of things despite the lack of precision of their testimony. By definition, lay witnesses cannot be considered as experts on a specific matter. Even lay witnesses themselve s are not willing to appear as witnesses when they are given subpoena from the court. â€Å"For most inexperienced witnesses, the prospect of testifying in a deposition or courtroom fills them with dread† (Heaney and Koonan, 2007, p. 1). When lay witnesses meet other witnesses before appearing in the court, it reduces the chances of collusion and fabrication (Slovenko, 2004). This imparts the need to study to what extent the parties involved in the judicial cases are optimistic about the reliance of lay witnesses for evidence. Research in this field is very limited. By studying whether testimonies of the lay witnesses should or should not be allowed in court, this research would fill gap in the literature. This research would identify the response to the question; whether testimonies of lay witnesses should be allowed in court or not. Answer to this question would be obtained from different categories of people

Project management in creative industries Essay

Project management in creative industries - Essay Example The organization selected for analysis and evaluation belongs to an advertising industry. The Creative Advertising Agency London is a leading organization in the industry located in UK. For successful performance, the Creative Advertising Agency London needs effective project management system which consists of control activities and effective resource allocation in order to achieve overall objectives of the company. The Creative Advertising Agency has a centralized structure. Centralization leads to greater rigidity and more formalized central control. Specialization of task by units results in fragmentation and creates problems in communication and coordination. The greater the degree of specialization, the greater the tendency to concentrate on individual functions while losing sight of overall corporate objectives. Thus, in large advertising agencies conflicts may arise among product group, functional, and territorial managers, even though all are preoccupied with marketing. Despite protesting cries that marketing specialists are "organization men," organizations require routines, programs and procedures, and conformity. Among the factors taken into consideration in answering it are the product line, customers, and processors. Traditionally the Creative Advertising Agency has been hierarchical, with functional groupings based on authority and responsibility. Recently these structural arrange ments have changed. Marketing organizations now include more than sales. Moreover, technology, including computer usage, has led to organizations that have developed along horizontal lines (Burkun 32). Departmental structure helps advertising agencies to deal with complex environment and solve daily problems. Much advertising agencies thought dwell on such concepts as the centralization of business management (Surmanek 88). Customer orientation, in contrast, stresses consumer sovereignty, environmental forces, and

How the US corperate tax effects international business Essay

How the US corperate tax effects international business - Essay Example The United Kingdom corporations can export its products to the United States marketplace. German corporations can sell products and services to the Saudi Arabian marketplace. The Canada corporations can sell products to the current and future customers in California or New York. The United States corporations may import raw materials from China. The United States corporations can convert the imported raw materials into a new saleable product. The United States corporations can sell the new saleable products to two markets. The first market is the local United States marketplace, and the second market is the international marketplace. All countries form part of the United States companies’ international business environment. Consequently, importing countries pay tariffs and duties for the imported goods. In the United States, Section 482 of the United States Tax Code shows the different importing liabilities (Paul 239). Further, the United States corporate tax affects internati onal business. With higher tax rates, there is lesser cash inflow percentages applied to selling the United States companies’ products in the global marketplace. ... With the tax rate at 15 percent, the United States corporations can only allocate 85 percent of the total annual taxable income to producing and selling the companies’ products and services in the global marketplace (Whittenburg and Altus (2010) 35). Higher United States taxes discourage imports into the United States market With the high tax rates, companies located in other countries may be discouraged from selling their products in the United States market. Some corporations located in United Kingdom will prefer to sell their products locally because the local corporate tax rate (30 percent) is lower than the United States corporate tax rate (39 percent), reducing United States imports. Likewise, several corporations located in Canada will prefer to sell their goods within Canada because the local corporate tax rate (36 percent) is lower than the United States corporate tax rate (39 percent), lessening United States imports. Some corporations located in Ireland are persuade d to sell their products within Ireland because exporting their products into the United States marketplace with unfavorably higher 39 percent corporate tax profits is less profitable (Whittenburg and Altus (2010) 35). With higher tax rates, the exporting countries will receive lesser after tax cash inflows from selling their products current to future customers in the United States (Whittenburg and Altus (2010) 453). Tax rate adjustments will increase United States imports To increase the United States imports, the United States government must institute better tax rates. The United States government must lower the United States tax rates to more allowable levels. The United States government can lower the tax rates to a figure that will be near to the 30 tax rate level. This

Philosophical Methodologies to the Self Term Paper

Philosophical Methodologies to the Self - Term Paper Example In comparison with the nominal self, the narrative of self implicates endurance over time and is distinctly pertinent to discourses of memory and individual personality. This is an advancing agreement amid philosophers and cognitive scientist about the significance of narrative and connection to discontinuous memory. There are, nevertheless, two dissimilar perceptions of how narrative self is regulated. On a more protracted standpoint, the self is a rich fusion of narratives that permits for the ambiguities, self-deception and contradictions of individual life. There are several ways of understanding the perception of a nominal sense of self. For this case, it is relevant to understand how we utilize the first person pronoun when we are referring to ourselves in a manner that never allows errors (Neisser 1998). In a real sense, the mind is an amalgamated being. Rather, it is a natural model that consists of numerous segments. As we know, the human mind has many diverse feelings, inst incts, and desires. The self, in reality, is essentially a creation of the mind and society. The min to utilizes the notion of the self so that it can operate in a consolidated manner. By abstracting itself as a more compacted and singular object, the mind is then able to comprehend its feelings and desires far much easier. Further, the mind creates the self to amalgamate all the diverse feelings, desires and instincts into one rational set. Thus, the mind utilizes these notions to make decisions and vindicate past decisions (Bermudez 2006). Next, the community and other people also utilize the perception of the self to comprehend and associate with a human. In reality, it is improbable and impractical to know all the diverse desires, instincts and feelings that affect the humans thereby causing them to act in certain manners and to reach particular decisions. For this case, to comprehend the nature of humans, we perceive them as singular individuals with singular selves. Elementary wisdom also affects our notion of the self.     Ã‚  

A glimpse of Big Data Essay Example for Free

A glimpse of Big Data Essay â€Å"Big data is not a precise term; rather its a characterization of the never ending accumulation of all kinds of data, most of it unstructured. It describes data sets that are growing exponentially and that are too large, too raw or too unstructured for analysis using relational database techniques. Whether terabytes or petabytes, the precise amount is less the issue than where the data ends up and how it is used.†Cite from EMC’s report â€Å"Big data: Big opportunity to create business value†. When explosion happened in mobile network, cloud computing and internet technology, more and more different information appeared. In the past, the numerous terabyte data could be a disaster for any company, because it means high cost of storage and high performance CPU. However, in nowadays, companies discovered many facts they haven’t thought about these data before. Companies started to use data analytics technology to find business values from these terabyte or petabyte data. It seems to be a big opportunity instead of disaster for companies now. Data is not only defined as structured data. When we talking about big data, it could be categorized into three types of data: structured data, unstructured data, and semistructured data (Please see Chart I). Especially when internet and mobile internet developed rapidly, the unstructured data and semistructured data exploded. For example, a bank could draw a conclusion by analyze unstructured data to find out why number of churn increased. Most definitions of big data all talk about the size of data. However, size, or volume, is not the only characteristic of big data. There are other two characteristics, variety and velocity. Variety means big data generates from several of sources. Data type was no longer connected to structured data. According to the EMC’s report, most of big data related to unstructured data. Velocity means the speed of data production. Data was no long structured data which was stored in the structured database. Data could come from anywhere and anytime: mobile, censors, devices, manufacturing machine etc. The stream of data generates in real time. This means company’s action should be taken with this speed. Structured data| Structured data is organized in structure. These data can be read and stored by computer. The form of structured data is structured data base that store specific data by methodology of columns and rows. | Unstructured data| Unstructured data refers to the data without identified structure. For example, video, audio, picture, text and so on. These data also called loosely structured data. | Semistructured data| Semistructured data organized in semantic entities. The data’s size and type in one group could be different. For example, XML and RSS feeds. This data try to reconcile the real world with computer based database.| Chart I. Three types of data. Big data analytics Big data analytics is not a technique. It is a terms that contains a lot of technologies (See EXHIBITION I). Based on enterprise’s different requirement, each program will use different technology to analyze data. However, with the big data’s development, some of these techniques become popular and useful. On the basis of the exhibition II, advanced analytics, visualization, real time, in-memory databases and unstructured data have strong-to-moderate commitment and strong potential growth. The traditional techniques, for example, OLAP tools and hand-coded SQL, have gradually lost their place. When a bank want to find the reason why the number of customer churn increased, or marketing department decide to push precise advertisement to their customer, they need to analyze customer behavior. These data from customer service emails, phone call records, sales interview reports, login data from mobile devices, and so on. Almost all of these data cannot be analyzed by traditional data analytic techniques. That’s why these new techniques development so rapid and fierce. How a company adopt big data analytics? According to the article Big Data, Analytics and the Path from Insights to Value† published on MIT Sloan Management Review, the author categorized the company who used big data analytics into three stages (See Exhibition II). For most companies, it is easy to establish an enterprise data warehouses (EDW’s). However, how to interpret these data and finding the business value from these data become the most crucial factor for companies. Besides, so many techniques and tools behind the term big data. For any company who decide to adopt big data analytics, the leading obstacle is lacking of understanding of how to use analytics to improve their business. From the article, the author gave 5 recommendation to any company who wanted to adopt big data analytics. 1. Think Big. Focus on the biggest and highest value opportunities. Narrow down the options. 2. Start in the Middle. Within each opportunity, start with questions, not data. Company prefer to collect data and information at first place. In fact, start with questions could help company continue to narrow down the scope and define the most valuable direction. 3. Make analytics come alive. When Problem was defined, company need to apply analytics. Choosing the propriety tools to analyze the data. 4. Add, dong detract. Use centralized analytics. Every analysis is connected. 5. Build the parts, plan the whole. Big data from everywhere. The data will become more and more big and complex. Building the data infrastructure is crucial for big data analytics. Big Data, Big Opportunity When company decide to concern big data, it means every department are involved. Big data is not IT department’s or analysts’ responsibility. In fact, big data analytics need information and help from sales, marketing, RD, IT and even external sources. Today, number of companies have entered into big data market. The following chart lists some big organizations who have adopted big data analytics. Besides, some of them provide big data services to other companies These organizations are just the tip of the iceberg. When big data converted from Blue Ocean to Red Ocean, some of these organizations have turned into services provider. This become a future trend in big data area. Big data needs expensive hardware and labor cost. Not every company can afford that. Besides, big data involved so many different computer technologies, not everyone understood all these techniques. For that matter, there will be more and more companies try to seek big data service from external environment. Using the external big data platform or tools could reduce the cost for building a totally new technique teams. What the companies need to do is finding the problem, narrow down the scope and sending the needs to services provider. When they get the analysis result, they could use the valued result to take the next action. Furthermore, these services provider will not only focus on big companies. The new fashion is to provide friendly interface and easy to use product to individual customer. What behind big data will be still mystery for people, however, the face or terminal of big data will become more and more friendly and simple. There is an example: Twithink. Twithink is a program invented by a MIT group. They provide customized twitter behavior analysis for customer. This program could draw some conclusion by analysis the unstructured information on Twitter. They collected the gender, location, time, key words, images, etc. from tweets. Then they analysis these data under certain arithmetic to draw conclusions. The last research was the Election in 2012. The latest research is Gun Control discussion which still in progress. Problem and threats. Although big data has many opportunity and advantage for enterprises, it still has some disadvantages. The first crucial problem is privacy invasion. After you searched one product on Amazon, the next time when you login to Amazon, you will find the products you may interested which was Amazon pushed to you. This is called precise advertisement. However, you even didn’t know when amazon collected your information. Another example was Google Analyst, company embedded code into their website to collect people’s internet behavior. These things happened every day and everywhere. It is hard to argue this action is right or wrong. Maybe some are good. However, if personal data is sold or published by someone, it will affect individual’s daily life. It will become a crucial problem. The Second problem is information’s validity. According to the article â€Å"With big data comes big responsibilities† points out that â€Å"big data sets are never complete†. If data is insufficient, the analysis result would be invalid or distorted. The invalid information would guide company to wrong direction and cause a big loss. Thus, big data also has two side. How to use it to create more value for company is the first consideration for all managers. Reference 1. Office 2013 Brings BI, Big Data to Windows 8 Tablets. ZDNet. N.p., n.d. Web. 25 Jan. 2013. 2. Big Recognition for IBM Big Data. Smarter Computing Blog Big Recognition for IBM Big Data Comments. N.p., n.d. Web. 25 Jan. 2013. 3. Big Data. Wikipedia. Wikimedia Foundation, 26 Jan. 2013. Web. 26 Jan. 2013. 4. Structured Data. Webopedia. N.p., n.d. Web. 26 Jan. 2013. 5. Unstructured Data. Webopedia. N.p., n.d. Web. 26 Jan. 2013. 6. Group of EMC. Big Data: Big Opportunities to Create Business Value. Rep. EMC, n.d. Web. 26 Jan. 2013. 7. Philip Russom. Big Data Analytics. N.p.: TDWI, 2011. Print. 8. Lavalle, Steve. Big Data, Analytics and the Path from Insights to Value. MIT Sloan Management Review Winter 2011: 21-31. Web. 9. Ã¥ ¤ §Ã¦â€¢ °Ã¦  ®Ã¥ · ²Ã¦Ë† Ã§ º ¢Ã¦ µ ·Ã¯ ¼Å¸Ã¯ ¼ Ã¥â€¦ ¨Ã§ Æ'Ã¥  Ã¥â€ºâ€ºÃ¤ ¸ ªÃ¥ ¤ §Ã¦â€¢ °Ã¦  ®Ã¥â€¦ ¬Ã¥  ¸Ã¥â€¦ ¨Ã©  ¢Ã§â€ºËœÃ§â€š ¹Ã¯ ¼ . N.p., n.d. Web. 26 Jan. 2013. 10. IBM InfoSphere Platform Big Data, Information Integration, Data Warehousing, Ma ster Data Management, Lifecycle Management Data Security. IBM InfoSphere Platform Big Data, Information Integration, Data Warehousing, Master Data Management, Lifecycle Management Data Security. N.p., n.d. Web. 26 Jan. 2013. 11. Amazon Web Services, Cloud Computing: Compute, Storage, Database. Amazon Web Services, Cloud Computing: Compute, Storage, Database. N.p., n.d. Web. 26 Jan. 2013. 12. Oracle Big Data Appliance. Oracle Big Data Appliance. N.p., n.d. Web. 26 Jan. 2013. 13. Google BigQuery Feedback on This Document. Google BigQuery. N.p., n.d. Web. 26 Jan. 2013. 14. EMC Greenplum Data Computing Appliance Data Warehousing, Data Analytics (FW).EMC Greenplum Data Computing Appliance Data Warehousing, Data Analytics (FW). N.p., n.d. Web. 26 Jan. 2013. 15. Teradata. Data Appliance, Data Warehouse, Business Intelligence à ¢Ã‚€Â“. N.p., n.d. Web. 26 Jan. 2013. 16. Twithinks. TwiThinks. N.p., n.d. Web. 26 Jan. 2013. 17. Eria Naone. With Big Data Comes Big Responsibilities. N.p.: MIT Technology Review, n.d. 2011.

Theoretical Analysis of the Banking Crisis

Theoretical Analysis of the Banking Crisis Crisis in the banking sector The current crisis and the Great Depression Theories and the crises: Several theories exist connected to the financial crises that have happened since the banking system was established. Some of them tried to explain the reasons and the origin of them however none of these theories could provide an acceptable solution how to prevent the crisis. To determine the continuity in the timeline and the spread of the crisis it was not enough to create just an economic comparison. The analysts set some mathematical and other type of model to investigate the behavior of the market. The two mostly accepted models of banking panics are the Diamond and Dybvig model and the Calomiris and Kahn model. These models were set in the 1990s as the reflection of the systematic banking crisis since 1970.Both of the two theories were accepted the fact that the banks liabilities are more liquid than its assets. In the Diamond and Dybvig model they set a hypothetical world without the banking system. The banks make contract to transform its illiquid assets.( Federal Reserve Bank of Minneapolis Quarterly Review Vol. 24, No. 1, winter 2000, pp. 14-23, Dybvig: Bank Runs, Deposit Insurance, and Liquidity).The problems with the contract is that it doesnt include any risk-sharing option. The deposit insurance is the only way to reduce the risk because its decrease the ability of the bank to transform its assets. The asymmetric information affects the liquidity demand. The final conclusion of this model is that the bank run is triggered only because patient agents believe.†This result is a self-fulfilling prophecy (panic): Because patient agents expect other patient agents to withdraw their funds early, they do the same. As a consequence too many funds are actually withdrawn, which otherwise would have not been the case. (Banking and Finance /Banking Crises.ppt/2008.12.03)† The Calomiris and Kahn model basis is the Diamond and Dybvig model, but it is more complex (Charles W. Calomiris, Charles M. Kahn, â€Å"The Role of Demandable Debt in Structuring Optimal Banking Arrangements† in American Economic Review, Vol. 81, 1991). They introduced one other potential option that the banks follow a risky behavior and put their investors money into risky projects. Because the asymmetric information the investors dont know about this step. Then, two possible things can happen; the project turns out well or not. If the project turns out negatively the bank starts to invest again. In the model the depositors can purchase information, but if is shows a negative indicator they withdraw their money. If there are a huge number of the depositors who want to withdraw the bank has serious liquidity problems and the bank panic starts. The only possible solution, according to this model, is to increase monitoring in the banking sector and strengthen the regulation to avoid moral hazard. I. The Great Depression 1. The beginning of the Great Depression (1928-30) The history of the Great Depression is important to analyze the main aspect of the crisis. From May of 1928 the stock market rise continuously and the average stock price increased because the FED raised its discount rate, and saw the stock market was booming and the stock price doubled, as excessive speculation. They tried to resolve this by increased monetary policy to raise interest rate and a new deflationary policy was introduced. As a consequence, a huge financial bubble evolved. In October 22, 1929 New York Times published an article; â€Å"Fisher Says Prices of Stocks Are Low†. (The 1929 Stock Market: Irving Fisher Was Right, Ellen R. Mc Grattan p.1) Then, two days later the stock market went crashing and the stock prices had fallen by 30 %: According to Irving Fisher the problem was that the people have been speculating on the small margins. It was not that the stock market was too high, but the people so enthusiastic to making money that they properly expected to mak e. It created debts because the people bought stocks on borrowed money. The politicians issued optimistic predictions to prevent the selling panic in the U.S. market (The causes of the 1929 stock market crash, Harold Bierman).The secretary of the Treasury, Andrew W. Melon stated: â€Å"There is no cause to worry. The high tide of prosperity will continue†. The stock market did come back in the middle of 1930, more than half of the stock that has been decline as been reversed. People thought it was over recession turned into something different. The agriculture sector stocks continued to decline. This regressive tendency was intensive not only because the Great Depression. Massive overproduction started in the European agricultural production sector after the World War I to recover the lack of the agricultural goods. To increase the legislative protection of the domestic farmers the Smoot-Hawley Tariff Act of June 1930 raised U.S. import tariffs (U.S Department of State, http://future.state.gov/). The Smoot-Hawley Tariff declined the international trust and cooperation and caused some problems in international trade. As a result of market crush bank collapsed from October 1930 until March 1933 by this time over a third of Americans bank was out of business. It continued to decline by mid 1932, the stock had declined to 10% their value in the peak 1929 and the increase in this in uncertainty from unsettled business conditions created by economic contraction made adverse selection and moral hazard problem worse in credit market. (The great crash, 1929, John Kenneth Galbraith) There was reduction in the number of intermediation due to loss of one-third of banks. This only increases adverse selection and moral hazard problem. Funds to firm with productive investment opportunities were greatly decreased due to this problem. In some sectors like manufacturing sector the production fell dramatically which was the basis of the Firms wage rates cuts. The level of price fell by 25% in the period of 1930-1933. Debt deflation was triggered in which net worth fell C:Documents and SettingsJudyAsztalunemploymen t.gifbecause of the increase burden of indebtedness borne on the firm. One sector problems affected the others. Millions of people lost their jobs. In the period of 1900-1947 two types of unemployment were made. These researches were developed the data set for the civilian labor force and for the Non-farm employees. (Historical unemployment in relation to today, A. Andrews)The employment rate declined by approximately 20% and the economic contraction and unemployment rose to 25 percent because of the decline in net worth. The result was more increase in adverse selection and moral hazard in the credit market. This was the worst ever experienced in the United States of America. 2. The FED This system was introduced to the public as economic stabilizer in 1913 to prevent further economic crisis although Federal Reserve System was totally passive during the Great Depression. In general, the Federal Reserve controls the interest rates and the money supply (inflation).The FED is controlled by its Board members and the majority of the twelve member Constitute the Federal Open Market Committee with five Reserve Bank The Fed not only supply the money to economy, it loans the money to them at interest. Besides, it regulates the value of the currency being issued. It should have acted as the last resort to lend as that its role. For the period of 1921-1929 the FED increased the money supply by 62% .The main reasons they did nothing was they never anticipated the negative of bank failure could have on money supply and economic activity. They thought a bank failure is as a consequence of poor bank management or bad banking practice. Small banks failures were the first to be affe cted in the bank panics in the early stages. And since the big city bank was the most influential they saw the failure of the small banks as complacency. Some suggested that political role might have played an important role in the passivity of the Federal Reserve System at that period. The New York Federal Reserve System was the most dominant force in the 1928, and it supported the Fed in open market purchase to lend money to the banks during the bank panics. This was opposed by other powerful member in the Federal Reserve System and the New York position was out voted. There were multiple causes and many theories about the origin of the Great Depression. According the monetarist theory the Crisis is the consequence of the lack of the FEDs policy making. The level of government influence on a bank varies from one country to another let say for example, in China the government regulation is very high probably the highest in the world and in United Kingdom the government regulation i s very low .It can be said that in the United Kingdom it high if we compare with the United State. So depending of which countries are comparing to another, government influence is usually different. 3. The economic decline (1930-32) Thanks to the Tariff Act the world market suffered a huge damage but, the act was not enough to recover the U.S. economy. People starting lose their jobs, homes and their confidence to the system and they take out their money from the banks and in the end they couldnt repay their loans. The continuous decline shows the effect in political elections in November 1930 when the representatives of the Republican Party lost their places in the Senate and their number and voting power reduced dramatically. In 1931 some new predictions appeared in the news which says that the depression would be over in the end of that year. During this year the deepening economic depression hit Europe and credit structures collapsed there. The media blamed United States for create this depression by cutting back on imports. Various conspiracy theories were voiced about the Soviet Union and some Biblical prophecy appeared too. In1932 a new presidential campaign started where Hoover and Roosevelt describe two different political aspects about the Depression. Hoovers economic aspect based on voluntarism and individualism, but the natural economic forces and the voluntary action by business groups couldnt work in the last 3 years. So his voters lost the trust in Hoover and he was easily beaten in the election (Burner David, Herbert Hoover: Alfred A. Knopf, New York, 1979). 4. The New Deal Roosevelt the new president was introduced a new program called the New Deal that contained social and economic reforms in 1933. He settled up new governmental agencies with the Glass-Steagall Act. â€Å"It gave tighter regulation of national banks to the Federal Reserve System; prohibited bank sales of securities; and created the Federal Deposit Insurance Corporation (FDIC), which insures bank deposits with a pool of money appropriated from banks. (New York Times, http://topics.nytimes.com /topics/reference/ timestopics/subjects/g/glass_steagall_act_1933/index.html )â€Å" The senate tried to restore the peoples trust in the U.S financial system with the Glass-Steagell Act .It made a clear separation between the investment and the commercial banks .To handle the banks poor asset management Franklin Roosevelt declared a â€Å"bank holiday â€Å"as a result of bank panic in March 1933.The† bank holiday† regulated that the banks had to be until the governmental inspecto r investigation. The inspector after a monitoring process judged about the banks reopening. Another program was started namely in that time: the Agricultural Adjustment Act which helped to increase the income of the farmers. The overproduction created corps surplus and the government pay the farms, in the frame of this program, to leave the fields fallow and not to raise pigs and lambs. (Ronald Edsforth: The New Deal: Americas Response to the Great Depression, 2000) The Act aimed to raise the value of the corps, but few months later, natural disasters destroyed almost all the corps and the machinery. To help the farmers and teach them how to measure and reduce erosion the government established the Soil Conservation Service. This program stopped in 1936 when a new agricultural act had been accepted. The new regulation provides a possibility to the farmers to get federal subsidies. Besides of this, NIRA (National Industrial Recovery Act) had been accepted by the government to generate more jobs, strengthen the right of collective bargaining. The unemployment increased since the Great Depression had started. Based on this reason, they provided jobs in government projects such as work camps. Approximately two million people participated in this program until 1934. The unskilled workers got hard work like digging and railway repairs but they earned only a little money. National Labor Relations Act introduced new fair labor practices in 1935.The New Deal program had helped the US economy but didnt bring the end of the Great Depression. The roots of the economic problem came from the financial insecurity and the distribution of money, because the people on relief lived from one day to another (Bernardit Bellushit, The Failure of the NRA (1975)). The investors were afraid of buying sto cks and lose their money. The companies couldnt sell their new products because the people spent their money to food. The inventories were full and nobody wanted to produce more and that stopped the cycle of the economy. 5. The Second New Deal President Roosevelt decided to set a group of new economic and social measures and provided some legislative initiatives. The public and political forces lead the president to make some radical steps. . In 1936 Roosevelt won the election but the Americans wanted the government to take greater responsibility for the welfare of the nation. The Second New Deal as legislative program established some government controlled agencies and projects. He allocated billions of dollars to start and give a financial budget for the Work Progress Administration (WPA).Roosevelt nominated the social worker Harry Hopkins to be the head of the WPA. In its early years it focused on the construction programs such as build schools and government buildings. Attempt to the population of the United States it found that the one of every six people was unemployed and most of them was unskilled (http://www.u-shistory .com /pages /h1599.html). Unskilled laborers the forgotten man of past generation works at decen t wages. The nation was building and repairing schools, public buildings, community centers and airports to meet the changing needs of the modern world. In one project twelve hundred men were employed to improve bowling field and construct building hangers and administration buildings. In addition to the hundreds of the unskilled laborers, many skilled workers were employed in this improvement project. Hundreds of homes have been treated from bondage of property. In New York City WPA housing demolisher project was started which improved the families living conditions. In many other cities of the country old firetraps are being demolished to make way to modern buildings. Swimming pools and parks were constructed to make more public value to the community and remove the children from the streets. In many parts of the country nursery schools were established to where almost 10 thousand children got hot meals, supervised train activities. In these projects employment has been provided 6 00 hundred teachers nurses dieticians and cooks. More than 300 thousand adults learned to read and write first time in their life and started to learn foreign languages from native teachers. In cooperation with the national youth administration 26500 young man and women were employed as instructors laboratory assistants and clerical helpers.( Historical unemployment in relation to today, A. Andrews) Clerical white -collar workers find employment at filling and checking important land records. As part of the program of rehabilitation of the conservation of human resources a number of household training school were established by WPA. In these school girls from relief families are prepared for domestic works. Health education is an important part of the WPA program in a number health centers in large cities teaches the proper care of the children and adults. In some cities sawing rooms were established to support the poor families with clothes. Another type of permanent construction was the community stadium as a representative a large group of project provides the public gatherings all over America. Hundreds of new bridges were constructed thousands of old bridges have been repaired and made safe. In Many cities the construction was undertaken with the cooperation of the public health agencies. The rapid growth of air traffic gives the opportunity to built modern airports and gives a job to thousand s to improve and repair the existing facilities. The increased air transportation also made necessary the development of hundreds of emergency landing fields. In cooperation with the local police departments in several cities automobile inspection stations were established to reduce the unsafe vehicles on the roads. Women who had the principle to support their families are paid for the work. And the product they made was distributed free to the families on relief (John Salmond, The New Deal: The National Level (1975). pp. 188-89). Many other type of employment was provided for women and other part-time jobs were provided in kitchen and in libraries and schools. As a result of some projects thousand of books and maps were translated. This program also contained training for adults t o learn tailoring. The financial support of the administration was enough to invest into more projects like Federal Writers Projects , Federal Theater Project, Federal Art Project, National youth Administration ,to generate more jobs for white-collar workers.â€Å"Because Harry Hopkins believed that the work provided by the WPA should match the skills of the unemployed, artists were employed to paint murals in public buildings, sculptors created park and battlefield monuments, and actors and musicians were paid to perform. These white-collar programs did not escape criticism and the term â€Å"boondoggling† was added to the English language to describe government projects of dubious merit.( Jim Crouch, The Works Progress Administration Eh. Encyclopedia(2004)). The WAP was a long program and finally was abandoned in 1943.Social security act created a new health insurance system based on employer and employee contributions, supported by taxes 6. The SWOT Analysis of the WPA SWOT Strengths: Weaknesses: Education to unskilled workers Started project didnt wanted Various types of jobs WPA as Financial â€Å"black hole† Provide part-time jobs Political influences Jobs for Artist and Black people and Women No ability to control the workers productivity Improve the health care system Opportunities : Threats: Starting more useful projects Instable economical environment Decreasing political aspects of the projects Living expenses increases, because import stop Strengthen the economy throughout projects Potential health problems, disease could stop projects Developing international export-import partnerships Other political parties critics-political intervention Support the banking act, provide more financial security The SWOT analysis is for compute the Strength, Weaknesses, Opportunities and Threats of a sector or a company (Mehta, S. (2000) Marketing Strategy). It is used for strategic planning to create a way to the desired goal or objective. In this case it was decided to apply this technique to set a real picture about the Second New Deal through WPA. The main aim of the current analysis is not generate alternative strategies, but to summarize the situation of WPA and the critiques in 1930s.Starting with the strength of the WPA it can be seen that the group of different types of jobs were provided to a high-scale target area. People could achieve different skills by the WPAs trainings and educations, and they got motivation to learn and use their knowledge in long-term. There were several weaknesses of the program from the beginning. As a governmental project the WPA needed a huge financial background to work and in some cases they only waste the money. The critiques described that some part of the program was only started to get more votes. The real leaders of the WPA had no ability to control the workers productivity and their effectiveness. To mention some real threats the instable economic environment remained the same. The diseases could spread faster among the workers and it may stop many constructing projects and it may indicate more financial problems in the health care system. One of the most important opportunities was to prevent more political fight and decrease the obvious political aspects of the projects. It would have been useful if they could solve the import problems. The following table above contains the main strength, weaknesses, opportunities and threats. 6.1. The external factor analysis EFAS (External Factor Analysis Summary) External Factors: Weight Ratings Weighted Score Opportunities: O1 Starting more projects 0,1 3 0,3 O2 Decreasing political aspects of the projects 0,2 4 0,8 O3 Strengthen the economy through projects 0,05 3 0,15 O4 Developing international export-import partnerships 0,1 2 0,2 O5 Support the banking act, provide more financial security 0,05 3 0,15 Threats: T1 Instable economical environment 0,2 4 0,8 T2 Living expenses increases, because import stop 0,1 3 0,3 T3 Potential health problems, disease could stop projects 0,05 2 0,1 T4 Other political parties critics-political intervention 0,15 3 0,45 Total Scores: 1 1,0-5,0 3,25 The SWOT table can be used to introduce three other type of analysis the EFAS, the IFAS and the SFAS. The External factor analysis and the internal factor analysis are calculated in a same way. The external factors (opportunities, threats) are used to show the economic background of the company or the sector. The elements of the SWOT table are the main factors of these tables. Every row contains weights and the rates and the multiplied result; the weighted score. The sum of every weight has to equal by 1, and the factors ratings should be between 1 and 5.The total score will be the sum of the weighted scores and it shows a real picture about the companys position. The company is in danger if the result is less 3,5 than. 6.2 The internal factor analysis IFAS(Internal Factor Analysis Summary ) Internal Factors: Weight Ratings Weighted Score Strenghts: Education to unskilled workers 0,15 3 0,45 Various types of jobs 0,15 4 0,6 Provide part-time jobs 0,1 3 0,3 Jobs for Artist and Black people and Women 0,2 2 0,4 Improve the health care system 0,1 3 0,3 Weaknesses: Started project didnt wanted 0,05 3 0,15 WPA as Financial â€Å"black hole† 0,05 2 0,1 Political influences 0,1 4 0,4 No ability to control the workers productivity 0,1 3 0,3 Total Scores: 1 1,0-5,0 3 If the result is more than 3,5, the company is in safe. The internal factors (Strengths, Weaknesses) are closely related to the object of the analysis. The internal strengths and weaknesses summarize the main topics the company has to deal with. The total score is 3 and this means that the company is not in safe and for a long -term basis the management has to handle the weaknesses to strengthen the company position in the market. SFAS(Strategic Factor Analysis Summary ) Factors: Weight Ratings Weighted Score Duration (in terms) S Strenghts: Short Medium Long S1 Education to unskilled workers 0,2 3 0,6 X S4 Jobs for Artist and Black people and Women 0,2 4 0,8 X W Weaknesses: W3 Political influences 0,15 4 0,6 X W4 No ability to control the workers productivity 0,1 2 0,2 X O Opportunities: O1 Starting more projects 0,05 5 0,25 X O2 Decreasing political aspects of the projects 0,05 1 0,05 X T Threats: T1 Instable economical environment 0,2 4 0,8 X T4 Other political parties critics-political intervention 0,05 3 0,15 X Total Scores: 1 1,0-5,0 3,45 6.3. The Strategic Factor Analysis Summary The Strategic Factor Analysis Summary (Business Policy and Strategy lecture SFAS power point presentation 2008.12.03) has an additional column, the duration that is separated into three different parts; long-term, medium-term, and short-term .The most important factors are listed here with weights and ratings to represent the main internal and external aspects of the WPA and to make a summary about the problems and possibilities. As a conclusion, based on the analysis listed below, the SFAS ‘s weighted score is 3,45.It means that the WPA could work in a long-term if the leadership could handle the problems. The WPA project stopped in 1944; therefore the main reasons did not connected to the internal factors, but only the externals. Some critiques had right the all the projects of WPA had only a political step to achieve more cotes in the elections. 7. The worlds reaction to the Great Depression (Theories) The world reacted in a several way to the Great depression and created a lot of theories how to solve the situation. The most famous reaction was the communism, fascism and the Keynesian theory. The fascism took place in Germany, Italy and it represented a highly centralized economy. The public construction programs provided jobs for unskilled labourers to built roads, work camps and military facilities. It increased the demography of the population, but the system was highly dictatorial. According to the statistics the unemployment rate decreased dramatically from 6 million to 0.2 million people.The Communism, as a highly bureaucratic and centralized system, was one of response to the Great Depression. It focused to fully employ the people in a strictly regulated obligatory way. The Keynesian theory: It states that the fully employment is needed, but only the intervention of the government can create this possibility. It can be long -term purpose of the existence of the government. The Keynesian theory changed the way of the thinking about the unemployment. The idea of the welfare state was another solution of the crisis. The education, the minimal guarantee of a job to every citizen is the basis of a welfare system. It guarantees the minimum wages and the minimum social and healthcare system. II. The Current Financial Crisis 1. The beginning of the Current Crisis The current financial crisis started in 2007, but it was not until the last quarter of 2008 .Firstly, this part of the thesis going to show how it all started, the causes and those who were affected by the crisis and how they are trying to deal with the crisis. Most of the people are pointing directly to real estate as the major cause of the current financial crisis even financial institutions that not directly involve with real estate are affected. It can be seen how the subprime mortgages and unscrupulous lenders has caused the unsustainable real estate bubble which began to collapse in 2006.There was increase in homeownership in the United State to about 5 million in little more than six years thanks to the increase in subprime lending. Within these six years constructions of new house sing units grew more but this housing bubble could not grow forever. In this period the price of house went so high and rent price went so low. When the price of housing began to decrease in the lat e 2006 to early 2007, many subprime borrowers had very hard time to make their payment. The housing bubble or the excesses of the subprime mortgage market became even more evident when subprime mortgage lender filed for bankruptcy. All the sectors like households, businesses (including financial institutions), and government are the main participants in the financial market and hit by the crisis. The secondly related financial groups are the surplus units provide funds and while the other group that enter the financial market to obtain fund are the deficit units. If market securities yield low returns why invest in it? Three factors can be seen to why it important to make investment in market securities these are, as we have said before the advantage to convert to cash rapidly so it can be substitute as cash. The second reason is that when a firm has excess cash let say for a month it can invest the excess cash in form of securities as not to hold too much cash in hand. The third reason is that when a firm know it going to pay a loan soon it gathers the money monthly to pay and this money could be invest in market securities before the loan is to be paid. As it have seen when the financial crisis started the public could see that the financial system is in a deep trouble some even call it recession because the stock market came crashing and lost almost 42% of it original price. Before the peak of the financial crisis the total world stock market worth $62.5 trillion and now it $36.6 trillion so it lost $25.9 trillion. Let compare the stock market of leading countries of one day and another day and see how it doing. STOCK MARKETS May 5 prev %chg SP 500 903.8 907.24 -0.38 Nasdaq Comp 1754.12 1763.56 -0.54 Dow Jones Ind 8410.65 8426.74 -0.19 FTSEurofirst 300 846.81 842.7 +0.49 DJ Euro Stoxx 50 2407.55 2419.53 -0.50 FTSE 100 4336.94 4243.22 +2.21 FTSE All-Share UK 2226.6 2174.64 +2.39 CAC 40 3225.0 3237.97 -0.40 Xetra Dax 4853.03 4902.45 -1.01 Nikkei (c) 8977.37 Hang Seng 16430.08 16381.05 +0.30 FTSE All World $ 153.46 153.19 +0.18 ( source New York Times May 5 2008) There was turmoil in the all over the international financial system due to the losses in the subprime mortgage in the mid-2007.This was wide spread global crisis even thus firm not associated with the mortgage firm. This made the financial institutions very nervous and the stock market got very weak. Between July 2007 and March 2008, there was a significantly drop in the price of shares in the large, small and investment bank. A Theoretical Analysis of the Banking Crisis Theoretical Analysis of the Banking Crisis Crisis in the banking sector The current crisis and the Great Depression Theories and the crises: Several theories exist connected to the financial crises that have happened since the banking system was established. Some of them tried to explain the reasons and the origin of them however none of these theories could provide an acceptable solution how to prevent the crisis. To determine the continuity in the timeline and the spread of the crisis it was not enough to create just an economic comparison. The analysts set some mathematical and other type of model to investigate the behavior of the market. The two mostly accepted models of banking panics are the Diamond and Dybvig model and the Calomiris and Kahn model. These models were set in the 1990s as the reflection of the systematic banking crisis since 1970.Both of the two theories were accepted the fact that the banks liabilities are more liquid than its assets. In the Diamond and Dybvig model they set a hypothetical world without the banking system. The banks make contract to transform its illiquid assets.( Federal Reserve Bank of Minneapolis Quarterly Review Vol. 24, No. 1, winter 2000, pp. 14-23, Dybvig: Bank Runs, Deposit Insurance, and Liquidity).The problems with the contract is that it doesnt include any risk-sharing option. The deposit insurance is the only way to reduce the risk because its decrease the ability of the bank to transform its assets. The asymmetric information affects the liquidity demand. The final conclusion of this model is that the bank run is triggered only because patient agents believe.†This result is a self-fulfilling prophecy (panic): Because patient agents expect other patient agents to withdraw their funds early, they do the same. As a consequence too many funds are actually withdrawn, which otherwise would have not been the case. (Banking and Finance /Banking Crises.ppt/2008.12.03)† The Calomiris and Kahn model basis is the Diamond and Dybvig model, but it is more complex (Charles W. Calomiris, Charles M. Kahn, â€Å"The Role of Demandable Debt in Structuring Optimal Banking Arrangements† in American Economic Review, Vol. 81, 1991). They introduced one other potential option that the banks follow a risky behavior and put their investors money into risky projects. Because the asymmetric information the investors dont know about this step. Then, two possible things can happen; the project turns out well or not. If the project turns out negatively the bank starts to invest again. In the model the depositors can purchase information, but if is shows a negative indicator they withdraw their money. If there are a huge number of the depositors who want to withdraw the bank has serious liquidity problems and the bank panic starts. The only possible solution, according to this model, is to increase monitoring in the banking sector and strengthen the regulation to avoid moral hazard. I. The Great Depression 1. The beginning of the Great Depression (1928-30) The history of the Great Depression is important to analyze the main aspect of the crisis. From May of 1928 the stock market rise continuously and the average stock price increased because the FED raised its discount rate, and saw the stock market was booming and the stock price doubled, as excessive speculation. They tried to resolve this by increased monetary policy to raise interest rate and a new deflationary policy was introduced. As a consequence, a huge financial bubble evolved. In October 22, 1929 New York Times published an article; â€Å"Fisher Says Prices of Stocks Are Low†. (The 1929 Stock Market: Irving Fisher Was Right, Ellen R. Mc Grattan p.1) Then, two days later the stock market went crashing and the stock prices had fallen by 30 %: According to Irving Fisher the problem was that the people have been speculating on the small margins. It was not that the stock market was too high, but the people so enthusiastic to making money that they properly expected to mak e. It created debts because the people bought stocks on borrowed money. The politicians issued optimistic predictions to prevent the selling panic in the U.S. market (The causes of the 1929 stock market crash, Harold Bierman).The secretary of the Treasury, Andrew W. Melon stated: â€Å"There is no cause to worry. The high tide of prosperity will continue†. The stock market did come back in the middle of 1930, more than half of the stock that has been decline as been reversed. People thought it was over recession turned into something different. The agriculture sector stocks continued to decline. This regressive tendency was intensive not only because the Great Depression. Massive overproduction started in the European agricultural production sector after the World War I to recover the lack of the agricultural goods. To increase the legislative protection of the domestic farmers the Smoot-Hawley Tariff Act of June 1930 raised U.S. import tariffs (U.S Department of State, http://future.state.gov/). The Smoot-Hawley Tariff declined the international trust and cooperation and caused some problems in international trade. As a result of market crush bank collapsed from October 1930 until March 1933 by this time over a third of Americans bank was out of business. It continued to decline by mid 1932, the stock had declined to 10% their value in the peak 1929 and the increase in this in uncertainty from unsettled business conditions created by economic contraction made adverse selection and moral hazard problem worse in credit market. (The great crash, 1929, John Kenneth Galbraith) There was reduction in the number of intermediation due to loss of one-third of banks. This only increases adverse selection and moral hazard problem. Funds to firm with productive investment opportunities were greatly decreased due to this problem. In some sectors like manufacturing sector the production fell dramatically which was the basis of the Firms wage rates cuts. The level of price fell by 25% in the period of 1930-1933. Debt deflation was triggered in which net worth fell C:Documents and SettingsJudyAsztalunemploymen t.gifbecause of the increase burden of indebtedness borne on the firm. One sector problems affected the others. Millions of people lost their jobs. In the period of 1900-1947 two types of unemployment were made. These researches were developed the data set for the civilian labor force and for the Non-farm employees. (Historical unemployment in relation to today, A. Andrews)The employment rate declined by approximately 20% and the economic contraction and unemployment rose to 25 percent because of the decline in net worth. The result was more increase in adverse selection and moral hazard in the credit market. This was the worst ever experienced in the United States of America. 2. The FED This system was introduced to the public as economic stabilizer in 1913 to prevent further economic crisis although Federal Reserve System was totally passive during the Great Depression. In general, the Federal Reserve controls the interest rates and the money supply (inflation).The FED is controlled by its Board members and the majority of the twelve member Constitute the Federal Open Market Committee with five Reserve Bank The Fed not only supply the money to economy, it loans the money to them at interest. Besides, it regulates the value of the currency being issued. It should have acted as the last resort to lend as that its role. For the period of 1921-1929 the FED increased the money supply by 62% .The main reasons they did nothing was they never anticipated the negative of bank failure could have on money supply and economic activity. They thought a bank failure is as a consequence of poor bank management or bad banking practice. Small banks failures were the first to be affe cted in the bank panics in the early stages. And since the big city bank was the most influential they saw the failure of the small banks as complacency. Some suggested that political role might have played an important role in the passivity of the Federal Reserve System at that period. The New York Federal Reserve System was the most dominant force in the 1928, and it supported the Fed in open market purchase to lend money to the banks during the bank panics. This was opposed by other powerful member in the Federal Reserve System and the New York position was out voted. There were multiple causes and many theories about the origin of the Great Depression. According the monetarist theory the Crisis is the consequence of the lack of the FEDs policy making. The level of government influence on a bank varies from one country to another let say for example, in China the government regulation is very high probably the highest in the world and in United Kingdom the government regulation i s very low .It can be said that in the United Kingdom it high if we compare with the United State. So depending of which countries are comparing to another, government influence is usually different. 3. The economic decline (1930-32) Thanks to the Tariff Act the world market suffered a huge damage but, the act was not enough to recover the U.S. economy. People starting lose their jobs, homes and their confidence to the system and they take out their money from the banks and in the end they couldnt repay their loans. The continuous decline shows the effect in political elections in November 1930 when the representatives of the Republican Party lost their places in the Senate and their number and voting power reduced dramatically. In 1931 some new predictions appeared in the news which says that the depression would be over in the end of that year. During this year the deepening economic depression hit Europe and credit structures collapsed there. The media blamed United States for create this depression by cutting back on imports. Various conspiracy theories were voiced about the Soviet Union and some Biblical prophecy appeared too. In1932 a new presidential campaign started where Hoover and Roosevelt describe two different political aspects about the Depression. Hoovers economic aspect based on voluntarism and individualism, but the natural economic forces and the voluntary action by business groups couldnt work in the last 3 years. So his voters lost the trust in Hoover and he was easily beaten in the election (Burner David, Herbert Hoover: Alfred A. Knopf, New York, 1979). 4. The New Deal Roosevelt the new president was introduced a new program called the New Deal that contained social and economic reforms in 1933. He settled up new governmental agencies with the Glass-Steagall Act. â€Å"It gave tighter regulation of national banks to the Federal Reserve System; prohibited bank sales of securities; and created the Federal Deposit Insurance Corporation (FDIC), which insures bank deposits with a pool of money appropriated from banks. (New York Times, http://topics.nytimes.com /topics/reference/ timestopics/subjects/g/glass_steagall_act_1933/index.html )â€Å" The senate tried to restore the peoples trust in the U.S financial system with the Glass-Steagell Act .It made a clear separation between the investment and the commercial banks .To handle the banks poor asset management Franklin Roosevelt declared a â€Å"bank holiday â€Å"as a result of bank panic in March 1933.The† bank holiday† regulated that the banks had to be until the governmental inspecto r investigation. The inspector after a monitoring process judged about the banks reopening. Another program was started namely in that time: the Agricultural Adjustment Act which helped to increase the income of the farmers. The overproduction created corps surplus and the government pay the farms, in the frame of this program, to leave the fields fallow and not to raise pigs and lambs. (Ronald Edsforth: The New Deal: Americas Response to the Great Depression, 2000) The Act aimed to raise the value of the corps, but few months later, natural disasters destroyed almost all the corps and the machinery. To help the farmers and teach them how to measure and reduce erosion the government established the Soil Conservation Service. This program stopped in 1936 when a new agricultural act had been accepted. The new regulation provides a possibility to the farmers to get federal subsidies. Besides of this, NIRA (National Industrial Recovery Act) had been accepted by the government to generate more jobs, strengthen the right of collective bargaining. The unemployment increased since the Great Depression had started. Based on this reason, they provided jobs in government projects such as work camps. Approximately two million people participated in this program until 1934. The unskilled workers got hard work like digging and railway repairs but they earned only a little money. National Labor Relations Act introduced new fair labor practices in 1935.The New Deal program had helped the US economy but didnt bring the end of the Great Depression. The roots of the economic problem came from the financial insecurity and the distribution of money, because the people on relief lived from one day to another (Bernardit Bellushit, The Failure of the NRA (1975)). The investors were afraid of buying sto cks and lose their money. The companies couldnt sell their new products because the people spent their money to food. The inventories were full and nobody wanted to produce more and that stopped the cycle of the economy. 5. The Second New Deal President Roosevelt decided to set a group of new economic and social measures and provided some legislative initiatives. The public and political forces lead the president to make some radical steps. . In 1936 Roosevelt won the election but the Americans wanted the government to take greater responsibility for the welfare of the nation. The Second New Deal as legislative program established some government controlled agencies and projects. He allocated billions of dollars to start and give a financial budget for the Work Progress Administration (WPA).Roosevelt nominated the social worker Harry Hopkins to be the head of the WPA. In its early years it focused on the construction programs such as build schools and government buildings. Attempt to the population of the United States it found that the one of every six people was unemployed and most of them was unskilled (http://www.u-shistory .com /pages /h1599.html). Unskilled laborers the forgotten man of past generation works at decen t wages. The nation was building and repairing schools, public buildings, community centers and airports to meet the changing needs of the modern world. In one project twelve hundred men were employed to improve bowling field and construct building hangers and administration buildings. In addition to the hundreds of the unskilled laborers, many skilled workers were employed in this improvement project. Hundreds of homes have been treated from bondage of property. In New York City WPA housing demolisher project was started which improved the families living conditions. In many other cities of the country old firetraps are being demolished to make way to modern buildings. Swimming pools and parks were constructed to make more public value to the community and remove the children from the streets. In many parts of the country nursery schools were established to where almost 10 thousand children got hot meals, supervised train activities. In these projects employment has been provided 6 00 hundred teachers nurses dieticians and cooks. More than 300 thousand adults learned to read and write first time in their life and started to learn foreign languages from native teachers. In cooperation with the national youth administration 26500 young man and women were employed as instructors laboratory assistants and clerical helpers.( Historical unemployment in relation to today, A. Andrews) Clerical white -collar workers find employment at filling and checking important land records. As part of the program of rehabilitation of the conservation of human resources a number of household training school were established by WPA. In these school girls from relief families are prepared for domestic works. Health education is an important part of the WPA program in a number health centers in large cities teaches the proper care of the children and adults. In some cities sawing rooms were established to support the poor families with clothes. Another type of permanent construction was the community stadium as a representative a large group of project provides the public gatherings all over America. Hundreds of new bridges were constructed thousands of old bridges have been repaired and made safe. In Many cities the construction was undertaken with the cooperation of the public health agencies. The rapid growth of air traffic gives the opportunity to built modern airports and gives a job to thousand s to improve and repair the existing facilities. The increased air transportation also made necessary the development of hundreds of emergency landing fields. In cooperation with the local police departments in several cities automobile inspection stations were established to reduce the unsafe vehicles on the roads. Women who had the principle to support their families are paid for the work. And the product they made was distributed free to the families on relief (John Salmond, The New Deal: The National Level (1975). pp. 188-89). Many other type of employment was provided for women and other part-time jobs were provided in kitchen and in libraries and schools. As a result of some projects thousand of books and maps were translated. This program also contained training for adults t o learn tailoring. The financial support of the administration was enough to invest into more projects like Federal Writers Projects , Federal Theater Project, Federal Art Project, National youth Administration ,to generate more jobs for white-collar workers.â€Å"Because Harry Hopkins believed that the work provided by the WPA should match the skills of the unemployed, artists were employed to paint murals in public buildings, sculptors created park and battlefield monuments, and actors and musicians were paid to perform. These white-collar programs did not escape criticism and the term â€Å"boondoggling† was added to the English language to describe government projects of dubious merit.( Jim Crouch, The Works Progress Administration Eh. Encyclopedia(2004)). The WAP was a long program and finally was abandoned in 1943.Social security act created a new health insurance system based on employer and employee contributions, supported by taxes 6. The SWOT Analysis of the WPA SWOT Strengths: Weaknesses: Education to unskilled workers Started project didnt wanted Various types of jobs WPA as Financial â€Å"black hole† Provide part-time jobs Political influences Jobs for Artist and Black people and Women No ability to control the workers productivity Improve the health care system Opportunities : Threats: Starting more useful projects Instable economical environment Decreasing political aspects of the projects Living expenses increases, because import stop Strengthen the economy throughout projects Potential health problems, disease could stop projects Developing international export-import partnerships Other political parties critics-political intervention Support the banking act, provide more financial security The SWOT analysis is for compute the Strength, Weaknesses, Opportunities and Threats of a sector or a company (Mehta, S. (2000) Marketing Strategy). It is used for strategic planning to create a way to the desired goal or objective. In this case it was decided to apply this technique to set a real picture about the Second New Deal through WPA. The main aim of the current analysis is not generate alternative strategies, but to summarize the situation of WPA and the critiques in 1930s.Starting with the strength of the WPA it can be seen that the group of different types of jobs were provided to a high-scale target area. People could achieve different skills by the WPAs trainings and educations, and they got motivation to learn and use their knowledge in long-term. There were several weaknesses of the program from the beginning. As a governmental project the WPA needed a huge financial background to work and in some cases they only waste the money. The critiques described that some part of the program was only started to get more votes. The real leaders of the WPA had no ability to control the workers productivity and their effectiveness. To mention some real threats the instable economic environment remained the same. The diseases could spread faster among the workers and it may stop many constructing projects and it may indicate more financial problems in the health care system. One of the most important opportunities was to prevent more political fight and decrease the obvious political aspects of the projects. It would have been useful if they could solve the import problems. The following table above contains the main strength, weaknesses, opportunities and threats. 6.1. The external factor analysis EFAS (External Factor Analysis Summary) External Factors: Weight Ratings Weighted Score Opportunities: O1 Starting more projects 0,1 3 0,3 O2 Decreasing political aspects of the projects 0,2 4 0,8 O3 Strengthen the economy through projects 0,05 3 0,15 O4 Developing international export-import partnerships 0,1 2 0,2 O5 Support the banking act, provide more financial security 0,05 3 0,15 Threats: T1 Instable economical environment 0,2 4 0,8 T2 Living expenses increases, because import stop 0,1 3 0,3 T3 Potential health problems, disease could stop projects 0,05 2 0,1 T4 Other political parties critics-political intervention 0,15 3 0,45 Total Scores: 1 1,0-5,0 3,25 The SWOT table can be used to introduce three other type of analysis the EFAS, the IFAS and the SFAS. The External factor analysis and the internal factor analysis are calculated in a same way. The external factors (opportunities, threats) are used to show the economic background of the company or the sector. The elements of the SWOT table are the main factors of these tables. Every row contains weights and the rates and the multiplied result; the weighted score. The sum of every weight has to equal by 1, and the factors ratings should be between 1 and 5.The total score will be the sum of the weighted scores and it shows a real picture about the companys position. The company is in danger if the result is less 3,5 than. 6.2 The internal factor analysis IFAS(Internal Factor Analysis Summary ) Internal Factors: Weight Ratings Weighted Score Strenghts: Education to unskilled workers 0,15 3 0,45 Various types of jobs 0,15 4 0,6 Provide part-time jobs 0,1 3 0,3 Jobs for Artist and Black people and Women 0,2 2 0,4 Improve the health care system 0,1 3 0,3 Weaknesses: Started project didnt wanted 0,05 3 0,15 WPA as Financial â€Å"black hole† 0,05 2 0,1 Political influences 0,1 4 0,4 No ability to control the workers productivity 0,1 3 0,3 Total Scores: 1 1,0-5,0 3 If the result is more than 3,5, the company is in safe. The internal factors (Strengths, Weaknesses) are closely related to the object of the analysis. The internal strengths and weaknesses summarize the main topics the company has to deal with. The total score is 3 and this means that the company is not in safe and for a long -term basis the management has to handle the weaknesses to strengthen the company position in the market. SFAS(Strategic Factor Analysis Summary ) Factors: Weight Ratings Weighted Score Duration (in terms) S Strenghts: Short Medium Long S1 Education to unskilled workers 0,2 3 0,6 X S4 Jobs for Artist and Black people and Women 0,2 4 0,8 X W Weaknesses: W3 Political influences 0,15 4 0,6 X W4 No ability to control the workers productivity 0,1 2 0,2 X O Opportunities: O1 Starting more projects 0,05 5 0,25 X O2 Decreasing political aspects of the projects 0,05 1 0,05 X T Threats: T1 Instable economical environment 0,2 4 0,8 X T4 Other political parties critics-political intervention 0,05 3 0,15 X Total Scores: 1 1,0-5,0 3,45 6.3. The Strategic Factor Analysis Summary The Strategic Factor Analysis Summary (Business Policy and Strategy lecture SFAS power point presentation 2008.12.03) has an additional column, the duration that is separated into three different parts; long-term, medium-term, and short-term .The most important factors are listed here with weights and ratings to represent the main internal and external aspects of the WPA and to make a summary about the problems and possibilities. As a conclusion, based on the analysis listed below, the SFAS ‘s weighted score is 3,45.It means that the WPA could work in a long-term if the leadership could handle the problems. The WPA project stopped in 1944; therefore the main reasons did not connected to the internal factors, but only the externals. Some critiques had right the all the projects of WPA had only a political step to achieve more cotes in the elections. 7. The worlds reaction to the Great Depression (Theories) The world reacted in a several way to the Great depression and created a lot of theories how to solve the situation. The most famous reaction was the communism, fascism and the Keynesian theory. The fascism took place in Germany, Italy and it represented a highly centralized economy. The public construction programs provided jobs for unskilled labourers to built roads, work camps and military facilities. It increased the demography of the population, but the system was highly dictatorial. According to the statistics the unemployment rate decreased dramatically from 6 million to 0.2 million people.The Communism, as a highly bureaucratic and centralized system, was one of response to the Great Depression. It focused to fully employ the people in a strictly regulated obligatory way. The Keynesian theory: It states that the fully employment is needed, but only the intervention of the government can create this possibility. It can be long -term purpose of the existence of the government. The Keynesian theory changed the way of the thinking about the unemployment. The idea of the welfare state was another solution of the crisis. The education, the minimal guarantee of a job to every citizen is the basis of a welfare system. It guarantees the minimum wages and the minimum social and healthcare system. II. The Current Financial Crisis 1. The beginning of the Current Crisis The current financial crisis started in 2007, but it was not until the last quarter of 2008 .Firstly, this part of the thesis going to show how it all started, the causes and those who were affected by the crisis and how they are trying to deal with the crisis. Most of the people are pointing directly to real estate as the major cause of the current financial crisis even financial institutions that not directly involve with real estate are affected. It can be seen how the subprime mortgages and unscrupulous lenders has caused the unsustainable real estate bubble which began to collapse in 2006.There was increase in homeownership in the United State to about 5 million in little more than six years thanks to the increase in subprime lending. Within these six years constructions of new house sing units grew more but this housing bubble could not grow forever. In this period the price of house went so high and rent price went so low. When the price of housing began to decrease in the lat e 2006 to early 2007, many subprime borrowers had very hard time to make their payment. The housing bubble or the excesses of the subprime mortgage market became even more evident when subprime mortgage lender filed for bankruptcy. All the sectors like households, businesses (including financial institutions), and government are the main participants in the financial market and hit by the crisis. The secondly related financial groups are the surplus units provide funds and while the other group that enter the financial market to obtain fund are the deficit units. If market securities yield low returns why invest in it? Three factors can be seen to why it important to make investment in market securities these are, as we have said before the advantage to convert to cash rapidly so it can be substitute as cash. The second reason is that when a firm has excess cash let say for a month it can invest the excess cash in form of securities as not to hold too much cash in hand. The third reason is that when a firm know it going to pay a loan soon it gathers the money monthly to pay and this money could be invest in market securities before the loan is to be paid. As it have seen when the financial crisis started the public could see that the financial system is in a deep trouble some even call it recession because the stock market came crashing and lost almost 42% of it original price. Before the peak of the financial crisis the total world stock market worth $62.5 trillion and now it $36.6 trillion so it lost $25.9 trillion. Let compare the stock market of leading countries of one day and another day and see how it doing. STOCK MARKETS May 5 prev %chg SP 500 903.8 907.24 -0.38 Nasdaq Comp 1754.12 1763.56 -0.54 Dow Jones Ind 8410.65 8426.74 -0.19 FTSEurofirst 300 846.81 842.7 +0.49 DJ Euro Stoxx 50 2407.55 2419.53 -0.50 FTSE 100 4336.94 4243.22 +2.21 FTSE All-Share UK 2226.6 2174.64 +2.39 CAC 40 3225.0 3237.97 -0.40 Xetra Dax 4853.03 4902.45 -1.01 Nikkei (c) 8977.37 Hang Seng 16430.08 16381.05 +0.30 FTSE All World $ 153.46 153.19 +0.18 ( source New York Times May 5 2008) There was turmoil in the all over the international financial system due to the losses in the subprime mortgage in the mid-2007.This was wide spread global crisis even thus firm not associated with the mortgage firm. This made the financial institutions very nervous and the stock market got very weak. Between July 2007 and March 2008, there was a significantly drop in the price of shares in the large, small and investment bank. A