Analysis of Starbucks - 5240 Words

An Analysis of Starbucks Company History Starbucks was opened its first coffee company in Seattle’s Pike place Market on 1971. The name was taken from the first mate in Herman Melville’s Moby Dick (Company Profile, 2005). Products Beverages: Brewed coffees, Italian-style espresso, cold blended beverages, roasted whole bean coffees, tea products, fruit juice, sodas, and coffee liqueur. Food: Sandwich, Salads, pastries and ice creams. Non food items: Mugs, Travel tumblers, coffeemakers, coffee grinders, storage containers, compact discs, games, seasonal novelty items, Starbucks card, media bar. International Business Development In order to achieve Starbucks mission to be a global company, the†¦show more content†¦It means that domestic market in China can supply abundant coffee beans, besides importing from the United States. Besides, rapid growth of economy in China is one of aspects to which Starbucks paid much attention. Although China is still among the developing countries with a relatively low per capita income, it has had tremendous economic growth since the late 1970s. According to the report of Asian Development Bank, China s growth rate for the coming 2-3 years is predicted to be 8.5 % and above (â€Å"Economy of China†, 2005). Therefore, We believe that China has enormous growth potential, said Martin Coles, president of international operations at Starbucks (â€Å"China is Starbuck s Cup of Tea†, 2005). Detail Analysis SWOT Analysis Strengths * The reputation of brand name and image Strong brand name and image of Starbucks allow brand recognition and consumer retention. Therefore, the expanding of stores to other countries is easier and proficient. * High revenues and profits The financial performance of company has positive aspects. The revenues of Starbucks in 2004 were $5.3 billion, growing at about 30 percent. Moreover, in 2004 there was a sharp growth in profit, at 44 percent (Investor relationships, 2005). The exponential growth in revenue and profit creates the strong financial statement and reliability toShow MoreRelatedStarbucks : Starbucks Financial Analysis1185 Words   |  5 PagesStarbucks Financial Analysis It’s hard to drive the street these days and not see a Starbuck’s coffee house sitting on a corner with cars lined up in the drive-thru or consumers gathering in their cafà © to socialize. This has been the scene since the first Starbucks was opened in 1971. Since then, Howard Schultz, chairman and CEO, has embarked on a quest to bring Italian bistro traditions to the United States. Starbucks mission statement is simple, â€Å"to inspire and nurture the human spirit – oneRead MoreStarbucks : Starbucks Economic Analysis1673 Words   |  7 PagesStarbucks Economic Analysis 1 Starbucks Economic Analysis PATTEN UNIVERSITY JULY 29, 2015 MGT407 Managerial Economics Starbucks Economic Analysis 2 The coffee industry had never been the same since the early 1970s when three investors started a Seattle business called Starbucks Coffee, Tea, and Spice in Pikes Peak Market. Each invested about one thousand dollars and-and borrowed five thousand more from a bank to launch their endeavor. The coffee-loving character in Herman Melville’s great novel MobyRead MoreStarbucks Case Analysis : Starbucks1580 Words   |  7 Pages7/25/15 Starbucks Case Study I chose to do a case analysis on Starbucks because I am a huge fan, as a college student I am addicted to caffeine and Starbucks is how I get my caffeine fix! I am a gold card member with Starbucks meaning, I drink so much of their coffee they rewarded me as a valuable customer. Some perks include a free food or beverage after twelve purchases, a free food or beverage on my birthday, as well as discount coupons and exclusive member deals. The first Starbucks locationRead MoreGlobal Analysis Of Starbucks And Starbucks1401 Words   |  6 Pagesstore in 1971, the transnational Starbucks Corporation has successfully flooded the globe with their coffee. Currently, there are 20,519 Starbucks stores globally, serving a total 65 countries . In order to provide coffee to such a large number of stores and maintain a steady profit, Starbucks must source their coffee beans from 27 different countries. This essay will aim to show that globalisation has provided many benefits to the workers and host-nations of the Starbucks coffee bean production and hasRead MoreAnalysis Starbucks1085 Words   |  5 PagesIntroduction to Digital Marketing â€Å"Analysis of Starbucks Web site† Irina Popova MIB 17.05.2012 980 words Analysis of Starbucks web site How corporate web site should look like in 2012 and which requirements it should follow to be successful and to help organization to implement its strategy? Let’s explore this topic on the example of Starbucks Company. Today accessibility became the defining factor for future success of a corporate web site. Your adventure starts if you can access company’sRead MoreStarbucks Analysis7711 Words   |  31 PagesMANAGEMENT STRATEGIC MANAGEMENT TROY UNIVERSITY TROY UNIVERSITY STARBUCK CASE ANALYSIS STARBUCK CASE ANALYSIS Instructor: Min Carter, Ph.D. Instructor: Min Carter, Ph.D. LY NGOC HUY TRAN QUOC HUY HOANG VAN VINH TON KHANH PHUONG VU NGUYEN TRAM ANH LY NGOC HUY TRAN QUOC HUY HOANG VAN VINH TON KHANH PHUONG VU NGUYEN TRAM ANH Saigon, May 20, 2013 Saigon, May 20, 2013 TABLE OF CONTENTS I. INTRODUCTION 1 II. ANALYSIS FIRM’S CURRENT SITUATON 1 1. Mission 1 2. Vision 1 3. InformationRead MoreStarbucks Analysis : Starbucks Mission5454 Words   |  22 PagesCompany Overview Starbucks mission is â€Å"to inspire and nurture the human spirit- one person, one cup, and one neighborhood at a time.† Starbucks strives to provide every customer with the best experience possible. It values its customer’s thoughts and feelings in its effort to exceed expectations. It wants to establish and maintain good relations with every customer. In its desire to focus on the customer it has a relaxing ambiance which adds to an enjoyable, tranquil experience. Starbucks also aims forRead MoreStarbucks Analysis7510 Words   |  31 PagesTable of Contents 1.0 Executive Summary 03 2.0 Company Overview 04 2.1 Company Structure 04 2.2 Mission Statement 05 2.3 Financial Analysis 06 3.0 Competitive Analysis 06 3.1 Second Cup 06 3.2 Timothys 08 3.3 The Symposium Cafe 09 3.4 Tim Hortons 10 4.0 Competition in Canada 10 4.1 Direct Competition 10 4.2 Indirect Competition 11 5.0 Starbucks Current Positioning 13 5.1 Retail Positioning Matrix 13 6.0 Strengths and Weaknesses 14 6.1 Strengths 14 6.2 Weaknesses 15 7.0 External FactorsRead MoreStarbucks Analysis : Starbucks And Dunkin Donuts901 Words   |  4 PagesStarbucks financial statements were analyzed for the fiscal year ended September 27, 2015. Like all public companies, annual and quarterly financial statements are required to allow regulators and other interested parties to analyze the financial status and management decision making of the company. This analysis focuses on the results of Starbucks most recent published annual report containing their balance sheets, statement of earnings and cash flows. These statements will be analyzed againstRead MoreStarbucks Analysis3390 Words   |  14 PagesEconomics of Starbucks CONTENTS A. Introduction B. Analysis economics of Starbucks 1. Nature of product/service 2. Market trends 3. Production/supply process and costs 4. Structure of the industry/market 5. Government role 6. Business environment 7. Firm/Industry Location 8. Business and pricing strategies 9. Entrepreneurial ability of managers C. Conclusion D. References Introduction Starbucks, what started in Seattle in 1971s by three friends:

An Insight On Literacy Is Not My Strong Suit - 919 Words

An Insight On Literacy Since a child going up, literacy was not my strong suit. Literacy throughout my life seem not to cope with me. Later as I grew up, literacy meant to me that it is one’s ability to read, write, and speak. More importantly there is a more meaning of literacy, meaning that not only writing, reading, and speaking, but able to understand, analyze, and communicate with other peoples’ ideas. Soon enough literacy has made an impact on my life, it has been and will be a lifelong process. Literacy will always be with me, starting from my past and ending in my future. As a child, English language seemed hard to me coming from parents that barely spoken and understand it. I was taught some of my native language, but soon enough English came upon me. My parents could not really tell me story nor read to me because they found themselves confused. One of my earliest memories that spark my interest was my second grade teacher. As we were all about to read a book, The Rainbow Fish, she asked us what do we think about the cover. Some kids saying that it just a beautiful fish that lives in the sea, but as I answered I said the fish is different from other and maybe it does not get along with other fishes because of its unique skin color. Looking back to that very moment, I see why my teacher asked us that question, she was trying to get us to think conceptually. I took that skill with me all the way through middle school. As I reached high school, the school workShow MoreRelatedEssay on Assessing Learners Needs in Education1607 Words   |  7 Pages Units 101 amp;105 In this essay I shall be examining the importance of accurate initial assessment of learner’s needs. In order to do this it is necessary to correctly identify my learners so that appropriate teaching methods can be structured for them. From there, I shall explore how to best support learners throughout their period of study, both in terms of educational support, and in terms of developing their self confidence. The students I teach are studying toward a 2 year diploma in CreativeRead MoreFinding the Right Path Essay1095 Words   |  5 PagesFinding the Right Path INTRODUCTION I have chosen to research about my future. I know that I want to major somewhere in Special education, but I am not sure where. I am going to research becoming a special education teacher and becoming a speech pathologist. Both are right down my path, but I am unsure of which suits me better. I am senior; therefore, this research is critical to the next step of my life. As of right now, I know a little about becoming a teacher. I have taken a class, Future EducatorsRead More Technology in Teaching and Learning Essay2206 Words   |  9 Pagesare being utilized in every way shape and form, from inline gaming to numeracy, literacy and painting by numbers. From learning to leisure we have embraced the internet, in online chat rooms we communicate, interact and move into future learning through educational programmes and technology that lets us learn virtually. Instruction and directions are sent across cyberspace which change perceptions and give us an insight into different cultures far away across the other side of the world .The enigmaRead MoreLeadership Is A Dynamic Relationship Based On Mutual Influences And Common Purposes Between Leaders And Collaborators2417 Words   |  10 Pagesclear goals for the employees. A leader’s behaviour is acceptable to employees when it is a source of satisfaction and motivation. The Path goal theory identifies four styles of leadership which make use of different types of leader behaviours to suit both the situation and the follower’s needs these leadership styles are; supportive, participative, directive and achievement-oriented. (Zahibi, 2012) Supportive leadership- In this form of leadership the manager makes work pleasant for the employeesRead MoreDisaster Warnings For The Deaf And Hard Of Hearing2456 Words   |  10 Pagesavailable at shelters, and no state plans specifically addressed ASL interpretation† (Ivey et al., 2014, p.152). This insufficiency may be representative of a lack of understanding of ASL as a fully fledged language. One author explains, â€Å"an important literacy consideration is that ASL differs from English in its syntax, grammar and idiom vocabulary. Words in English or other languages may not exist in ASL, as has been found for some emergency preparedness terms† (Neuhauser et al., 2013, p.3). 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Value and culture:Read MoreE T Level 4 CERT PORTFOLIO Anon27074 Words   |  109 Pages Page PTLLS certificate†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.1, 2 Level 2 Literacy†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.. 3 Level 2 Numeracy†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦..4 Unit 3: Delivering Education and Training DECLARATION. I CONFIRM THAT THE EVIDENCE IN THIS PORTFOLIO IS AUTHENTIC AND A TRUE REPRESENTATION OF MY OWN WORK. 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The organization’s initiatives include an afterschool program, an adult computer literacy program and social and immigration services for the community. It is important to note that all of the services provided by this organization are open to the public and not limited to immigrants from Sierra Leone. The group regularly organizes culturalRead MoreTermpaper on Status of Life Insurance in the Philippines6002 Words   |  25 PagesUNIVERSITY DISTANCE EDUCATION IMPORTANCE OF LIFE INSURANCE TO FILIPINO SOCIETY ABSTRACT This research and study is intended for future researcher’s reference and insights of the importance of life Insurance in the Philippine Society. the first part contains the history of Insurance in the Philippines, Statements of what Life Insurance is, the types of Insurance, its advantage and disadvantage. The research also

A Jamaican music Essay Example For Students

A Jamaican music Essay A Jamaican music genre which originated from the aka and rocketed. The word reggae means rags, ragged. This also mean ragged dance music. The music style of reggae has an offbeat rhythm, syncopated, and staccato chords. Reggae music use also stringed instruments like guitar, bass guitar and piano. For the percussion, reggae use snare drums and tomato drums. Horns are also used like the saxophone, trumpet and trombone. Some of the lyrics of reggae talk about love and sometimes about praising God. There were lyrics written to raise consciousness in lattice issues and national racism. Examples of reggae song: 1 . Long Shot Kick The Buckets by the Pioneers 2. Roots Rock Reggae by Bob Marble 3. The Harder They Come by Jimmy Cliff Punk Punk means beginner or novice It is a rock music developed during the ass. It was originated from the garage rock and pronouns music. Punk music simply uses simple melody and simple chords. Lyrics oftentimes pertain to political and social issues. Instruments used are guitars, piano and drums. In hard rock music, electric guitar is highlighted. Examples of hard rock music: 1 . Stairway To Heaven and Whole Lotto Love by Led Zeppelin 2. Paranoid by Black Sabbath Glam Rock Sometimes referred to as glam rock. A musical style where performers wear glamorous and extravagant costumes, heavy aka-up and hairstyle. It has various musical styles. The music is performed with various styles ranging from Hollywood glamour, science fiction and fantasy influences, to mysticism and mythology. Few of the popular glam rock and musicians: 1. Eastman and Life on Mars by David Bowie 2. Blockbuster by The Sweet Progressive Rock Also known as Prop and is also referred to as classical rock. This style of music is originated from United Kingdom. Progressive music do not follow the formal popular format of verse-chorus-verse type of composition. This style became popular during the ass. Popular names associated with prop music are: 1. Pink Flood 2. Jotter Tulle 3. The Moody Blues 4. Emerson Palmer Heavy Metal Another genre of rock music that developed during the late ass to early ass. Heavy metal bands produce a sounds that are massive, thick, and characterized by highly amplified distortion, emphatic rhythm, and generally loud sounds. The lyrics and performance style are often associated with masculinity and aggression. Some famous heavy metal artists and their popular works: 1 . Stairway To Heaven by Led Zeppelin 2. Smoke on The Water by Deep Purple 3. Battle and Fuel by Metallic

Much ado about nothing

Much ado about nothing is a romantic intriguing comedy written by William Shakespeare. By focusing on relationships, the author of the play highlights the impact of deception to unity, love and happiness. Deceitfulness is the device the characters use to either destroy or improve each other’s lives. The love relationships are either build or destroyed due to tricks, envy or mere bad luck.Advertising We will write a custom essay sample on Much ado about nothing specifically for you for only $16.05 $11/page Learn More Similarly, some of the characters find joy in lying or playing tricks to their friends or lovers in order to achieve their personal selfish ambitions. Surprisingly, the aspect of self-deceitfulness arises among a few characters. Succinctly, the theme of deceit revolves around love relationships in the play. Therefore, the elusive bonds created between different characters are weak mainly because they are build on the foundation of dece itfulness as expounded in the next discussion. According to Shakespeare, a love relationship is like fate and therefore, only a self-deceptive person can separate two people who have a common interest. Set in a royal environment, Claudio announces his intention of courting and eventually, marrying Hero who has royal blood. Luckily, Don Pedro the Spanish prince encourages Claudio to go ahead with his plans. Although Benedick is against Claudio’s intentions of dating Hero, Claudio puts him off by saying â€Å"in mine eye she is the sweetest lady that ever I looked on† (Shakespeare Act I scene I 135-137). Benedick deceives himself when he thinks that he can change Claudio’s mind/intentions not to date Hero. For instance, he says, â€Å"God forbid it should be so† (Shakespeare Act I scene I 140). During his conversation with Don Pedro, Benedick’s announces that he does not intend to marry either. However, he does not know what lies ahead (fate carries) . Therefore, Benedick’s compact mind or inability to accept other people’s opinions or intentions motivates him to lie continuously to himself. Benedick’s fights to change Claudio’s intentions to marry Hero but he does not succeed. Similarly, Beatrice practices self-deceit, when she also proclaims that she is better of single than married. For example in Act II she says â€Å"Just if he sends me no husband; for the, which blessing I am upon my knees every morning and evening† (Shakespeare Scene I 137-140). Although Beatrice’s prayer is to remain single, she ironically goes against her wish and finally marries Benedick.Advertising Looking for essay on british literature? Let's see if we can help you! Get your first paper with 15% OFF Learn More Thus, her prayer/wish is a proof of self-deceit among characters. Eventually, due to fate, Claudio and Hero embark on a love Journey and Benedick’s and Beatrice find themselves in a love relationship. Therefore, Shakespeare shows self-deceit is a behavior, which may encourage people to live in a denial, as it is the case with Benedick and Beatrice. In addition, self-deceit can be the only the channel people can use to build strong bonds. More over, through focusing on self-deceit Shakespeare discourages people in the contemporary society against undermining their potential or God’s intention. Another case of deceitfulness in the story arises when Don Pedro assigns himself the duty of wooing Hero for Claudio. However, Claudio does not trust Don Pedro mainly because of his earlier elusive interaction with Don John. Although Don John is Don Pedro’s brother, he lies to Claudio that his brother loves Hero. Eventually, a disagreement ensues between Don Pedro and Claudio. Due to the constant practice of deceit among the characters, Claudio believes that Don Pedro is wooing Hero for himself. The constant practices of self-deceit among the characters pus h them to view all other people as deceitful. Nevertheless, Claudio’s relationship with Hero begins. Therefore, Shakespeare enlightens the contemporary society that deceit can lead to disunity, family break up and fights. Furthermore, some people use the element of deceit to revenge or fulfill their self-ambitions, as it is the case with Don John. When Claudio starts dating Hero, it is a lesson to the audience or reader that people should not be quick to judge, believe or trust any negative thoughts/ words from friends, family members and partners. People should not deny themselves happiness because of mere allegations from third parties. Therefore, sometimes deceit can be a form of encouragement to the affected parties and thus, people should use that chance to achieve their personal ambitions. According to Shakespeare, deceit can be the only way to solve social problems. For instance, through lies/deception Don John achieves his intention of breaking the relationship or wed ding between Claudio and Hero. Claudio humiliates Hero at the wedding when he realizes or believes that she is unfaithful (through deception).Advertising We will write a custom essay sample on Much ado about nothing specifically for you for only $16.05 $11/page Learn More Don Pedro and Claudio also unite in the public humiliation of Hero while Margret the proprietor of the break up shamelessly watches the fall of Hero especially when she faints during the wedding. However, Leonato and the Friar fake Hero’s death in order to ascertain the truth. Through sympathy, Claudio accepts to marry Leonato’s niece (who actually is Hero). Due to deception and its eventual impact, Claudio accepts to marry a stranger. Surprisingly, the congregation (women) appears in masks and Claudio has to wear a mask during the wedding. This form of deception is beneficial to both Claudio and Hero who end up establishing a solid relationship. During the wedding, Claud io asks, â€Å"Which is the lady I must seize upon† (Shakespeare Act V scene IV 53)? This shows that Claudio is ready to marry any woman even if he does not love her. Consequently, the author shows that deceit is the only way, which can assist in solving challenging situations especially, which comes about due to deceit. Therefore, according to Shakespeare marriage is a social institution that may not necessarily be build on love. Claudio’s decision to marry a stranger is to enable him socially fit in the society. Thus, guilt or remorseful may not necessarily be the main motivation behind his act. Thus, deceit creates illusion that eventually, benefits both parties. In addition, the author also proves that most relationships especially marriages are broke or build based on deceit. However, the manner in, which an individual handles the lies/deceits may build or destroy his or her future. In brief, the main theme highlighted in the play is deceit. Most of the relationsh ips are either build or destroyed because of deceitfulness. However, behind any form of lie or deceit always a lasting solution to a conflict or problem emerges. When Shakespeare focuses on the element of self-deceit among his characters especially Beatrice and Benedick, he discourages the audience against living in self-denial. Both Beatrice and Benedick do not believe in love or marriage relationship but eventually they end up marrying each other. Secondly, Shakespeare shows that through deceit individuals can solve their social problems especially regarding love relationships, as it is the case with Claudio and Hero.Advertising Looking for essay on british literature? Let's see if we can help you! Get your first paper with 15% OFF Learn More Therefore, deceit is part of the society. However, people should learn to solve positively a problem build on basis of deceit. Finally, although deceit creates tension in the play, the relationship build on lies end up stronger. Works Cited Shakespeare, William. Much Ado about Nothing. New York: Penguin press, 1998. Print This essay on Much ado about nothing was written and submitted by user Daphne Rush to help you with your own studies. You are free to use it for research and reference purposes in order to write your own paper; however, you must cite it accordingly. You can donate your paper here.

101 Intro to Research and Report Purpose Professor Ramos Blog

101 Intro to Research and Report Purpose Diversity Michael Che Black Lives Matter Diversity Diversity: the condition of having or being composed of differing elements; especially the inclusion of different types of people (such as people of different races or cultures) in a group or organization. Types of diversity, include, but are not limited to: race gender ethnicity sexual orientation politics age socioeconomic status religion disability class Which one of these applies to your report? Remember, you report has to focus around diversity and issues or problems. Quick Write How would you feel if someone used your ideas or work without giving you credit? Intro to Research Scholarly research is research that is published by people with specialized knowledge on what they are researching. It is peer reviewed, reviewed by other researchers and specialist in the field, and is generally trustworthy. Blogs, Newspapers, Magazines are not Scholarly but are popular sources. ProCon.org  No subscription needed. Good place to look at the main issues around a topic. Occupational Outlook Handbook  The OOH can help you find career information on duties, education and training, pay, and outlook for hundreds of occupations. Google Scholar  Google academic database search. Great place to start. Specific Research Questions The topic or issue will help narrow down what you can research for your report. A specific research question will help focus your research to a specific area. A broad question like â€Å"What is global warming?† is way to big to write about and try to research in our time allotted. Plus, that one has already been answered. A better, more narrow question on this topic would be, â€Å"How does global warming affect the California shorelines?† This research question narrows down a broad topic and connects it to you. If you are a Business major, you might want to ask, â€Å"What are carbon credits, and how might they affect the California economy?† This question connects your interest or topic to your major. Report Purpose and Topic Answer questions. Review what is already known about a subject. Report new knowledge. Free Write What topic are you considering? From the three choices above, which one do you think best serves your topic? Write everything you know about the topic. Write for 5 minutes without stopping. Write sentences, bullet points, words, examples, etc.; anything that comes to mind regarding your topic. Free Write Take the topic you are thinking about researching for your report and write it at the top of a page. For the next five minutes I want you two write down everything you know about it. Do not edit as you write. Just keep writing and see where it takes you. Just keep writing. If you thought runs out, skip a line and start a new thought. Keep writing. What do you know about your topic? What questions do you have about your topic? What do you need to research about your topic? Civil Rights Movement Non Violent sit ins led to the Civil Rights Movement We have come a long way. Annotated Bibliography Chapter 11 in our textbook explains the purpose of an annotated bib. An annotated bib is a works cited or references page with additional information added to each citation. You begin with the correct reference citation for your sources. For this assignment we will have at least five sources. Here is a good explanation of  citations in MLA. Here is the format: Author(s). â€Å"Article Title.†Ã‚  Source, vol. #, no. #, season year, pp. xx-xx.  Database,  URL. Example: Kong, Les. â€Å"Business Sources for Education Majors.†Ã‚  Education Graduate Students Journal, vol. 75, no. 4, 2014, pp. 12-19.  JSTOR,  jstor.org/stable/52506788. To each entry you will add the annotation, the paragraph or two that explains the source, why you are using it, and its reliability. Each professor you will have in the future may have specific guidelines for what to include in an annotated bibliographic entry. Always follow their instructions. For this assignment, you should include: Summary of Source, 2-4 sentences How you are using it in your report, 1-3 sentences Reliability of source, 1-3 sentences In total, you should have a short paragraph, 4-10 sentences, explaining the three points above.

Professions of a New Generation You Can Get Without an Academic Degree

Professions of a New Generation You Can Get Without an Academic Degree We are often told that the best way to get ahead is with a college education. The reality though is that an academic degree is not always the best choice. The good news is that rewarding job opportunities exist. Below are just a few examples of careers that one can be truly proud of that do not require years of advanced education and study. Health Industry 1.Dental Hygienist Dental Hygienists responsibilities are all related to keeping a patient’s teeth clean and healthy. They are the ones that educate patients on brushing, flossing, and assisting them in choosing the right products. Most dental hygienists need to be accredited so a 12-month course at a community college should be all the education that is required. Salary: $72,330 Education: a 12-month course at a community college. 2.Diagnostic Medical Sonographer Sonographers operate the sonogram machines used to determine an unborn baby’s gender and medical condition. These machines are also needed to identify tumors and other medical conditions a patient may have. There are no formal license requirements that must be met but applicants will have to pass a certification exam, which may require at least a fundamental knowledge of how to use the equipment and analyze the results. Salary: $68,970 Education: fundamental knowledge on the equipment usage. 3.Occupational Therapy Assistant OTAs are responsible for following through on the occupational therapist’s guidelines laid out to help patients get back to a normal routine and lifestyle after a debilitating medical condition, injury or an accident. This job does require an AA degree, which can be completed in one to two years at a local community college. Salary: $57,870 Education: an AA degree at a local community college. Internet Technology 1.Web Developer Web Developers design and create websites. While some jobs do require a BA degree to land the job there are plenty of other jobs that require only a specialized certification in their area of expertise. These can be acquired by attending a local trade school. For many companies, employers put more emphasis on an applicant’s portfolio rather than their degrees so creating a mock-up of your design ideas may be all that is needed to get your foot in the door. Salary: $64,970 Education: specialized certification in the area of expertise. 2.Computer Support Specialist Computer Support Specialists are responsible for troubleshooting computer and technical problems. They are required to have a solid foundation in both hardware and software issues and how to resolve them but these skills that can be learned on the job. Proof of competency is more important than the degree so as long as you can pass the exam you have a good shot at getting the job. Salary: $62,250 Education: solid foundation in both hardware and software issues. 3.Content Marketer While content marketing is more about the writing it is a job that blends those writing skills with modern technology. A good content marketer has knowledge of web design, basic computer technology, and marketing strategies. Salary: $58,302 Education: knowledge of web design, basic computer technology, and marketing strategies. Industry 1.Electric Power Line Installer With new construction happening every day the demand for power is at an all time high. Installers work under dangerous conditions so it is considered to be a high risk job however, the skills required can be mastered through an apprenticeship program or some form of on-the-job training, which you should be able to start with only a high-school diploma. Salary: $66,213 Education: an apprenticeship program or some form of on-the-job training. 2.Wind Turbine Technician Wind techs are responsible for the operation and maintenance of the massive wind turbines used to generate power. Most of the job requirements are technical and can be learned on the job. However, if you want to get a leg up in this field it may help to complete a 1-2 year AA degree at a local trade school or community college. Salary: $51,050 Education: a 1-2 year AA degree at a local trade school or community college. 3.Heavy and Tractor Truck Drivers It is estimated that every year there are at least 1.7 million jobs posted for commercial drivers. To get a CDL license you can take a short course of about seven to eight weeks many of them offered by the company you will work for. The cost for these courses can often be included in the hiring package so you don’t have to come out with cash up front to get the job. Salary: $40,000 Education: a course of about seven to eight weeks. Finance 1.Insurance Sales Agent Insurance agents work in many different fields. Their primary role is to sell home, health, auto, life, and business insurance to corporations. In corporate insurance they may also be expected to sell liability and property damage policies. The insurance industry is heavily regulated and an agent must be licensed by their state. However, with a little personal study one could get licensed with just a high-school diploma. Salary: $48,200 Education: a license that can be gotten with a little personal study. 2.Tax Preparers Tax Preparers are always in high demand, especially during tax season. They help Americans get their taxes filed, claim refunds, and declare business and personal deductions. Every year there is a huge gap in the number of preparers needed and the number of positions filled. Salary: $41,000 Education: high school diploma. 3.Bookkeeper Bookkeepers are responsible for maintaining financial records for businesses. They record all transactions, update statements, and are on hand to clarify any discrepancies in the records. No extensive education is required but they should have basic math and computer skills as well as an understanding of bookkeeping techniques. Salary: $40,991 Education: basic math and computer skills. So, while an advanced degree can be rewarding, it is still possible to have a financially satisfying career without one.

All Worthwhile Learning Occurs in Educational Institutions Essay

All Worthwhile Learning Occurs in Educational Institutions - Essay Example This knowledge base takes a person through a variety of life experiences to help him or her practice a profession, meet people and basically, make a life. This paper discusses the fact that the process of worthwhile learning is not limited merely to educational institutions. The paper has been constructed in terms of a discussion of the determinants as outcomes of worthwhile learning outside the educational institutions. From there, it goes into finer details as far as aspects of those determinants of cognitive development are concerned. These aspects have to do with general and other competencies. Before launching into a discussion of the same, I have separated informal and formal learning so as to better understand the basis on which the determinants of worthwhile learning have been taken. ... It could be argued that any learning that contributes to the overall shaping of a person's cognitive development for positive interactions within their various spheres of operation are the de terminants of what learning is 'worthwhile learning'. Also, it is decided from his or her social position which affects the criteria of people of what is worthwhile due to the different needs and potentialities that exist in each social class. This fact raises some social issues about the inequality between people to gain access to privileged education (e.g. the notion of 'elite' universities) that will not be analyzed in this essay. So, the definition of worthwhile learning is a subjective view as according to Johnson: "One person's useful knowledge was another's useless ignorance" (see Johnson, 1988, p.23). But how do experiences structure any kind of learning Usually, it has been believed that the education system begins at home, for example involving the learning of specific sets of values. To begin with, the role of experience and learning from the same in one's life is one that fulfills the need to belong (Byram and Morgan, 1994). This sense of belonging rises from one's immed iate environment where there is focus on the values that one is born into and more characteristics of culture, region, and terrain. It should, of course, be acknowledged that not all learning in the home will necessarily be helpful as sometimes children can learn behaviors from parents that are not acceptable in a wider society like to be racist or sexist. The experience offers people first-hand knowledge of a variety of symbols (example) like judgment calls, decision-making process, and others, that one comes to associate with a place.

Shakespeare othello Essay Example | Topics and Well Written Essays - 1250 words

Shakespeare othello - Essay Example He is a manipulator and vicious and desires for the demise of Othello by evoking jealousy in his mind against his wife Desdemona. Othello is a gentleman while Lago is a vicious character who succeeds in destroying the life of Othello and his wife through his malicious nature. Analysis of relationship of Othello with Lago The Othello is the hero of the play and Lago is villain and thus both share a contradicting relationship with each other. The relationship of both is of conflicting nature. The conflict is between two characters who had been warmest friends in the nearest time. Othello being the General and Lago being the trusted officer shared a lovable relationship with one another until the latter desires for promotion in his career and wanted to ruin Othello’s life completely.Until the conflict both were looked upon as individual with excellent ability and amicable character. Othello was known as the â€Å"noble moor† and Lago was his confident with honest character . The change in the attitude of Lago was sudden one and he immediately turned into a selfish man and mortal enemy of Othello. Lago treats Othello as a rival and wants promotion and take over the higher status in military. Othello has a â€Å"free and open mind† and this is utilized by Lago by conveying treacherous story of Desdemona to Othello. Yet Othello says that â€Å"She had eyes and Chose me â€Å".The rivalry rages between Lago and Othello, when the former hears that Cassius the friend of Desdemona had been promoted to lieutenant status which leaves him behind in professional hierarchy. Lago relationship with Othello turns bitter when he realizes that Othello has preferred Cassius for lieutenant role over him. He believes that Othello has disregarded rules of military and friendship, hence is only worth to be his enemy. The Othello had immense trust on Lago and was unaware of the bitterness growing in his mind against him. However, Lago’s start to saw seeds of hatred in the mind of Othello against Desdemona his beloved wife. The relationship verification of Othello and Lagos represents good versus bad. From the beginning of the play Lago is evil to Othello and as the play moves further he reveals his true colors. In the play, the character and intention of Lago remains same evil and Othello remains a puppet in his hand. Primary motive of Othello In the beginning of the play â€Å"Othello†, the central character Othello does not have any unjust motive. However as Lagos poisons his mind, he wishes to kill his wife due to the honor and pride he carried with his personality. He is definitely not much jealous as he is dishonored while hearing the disloyalty carried out by his beloved wife. The motive of honor encouraged him to kill his wife as he cried and enraged as an honored husband. Othello is a black man and he is being considered outcast by his wife’s father who was white .But Othello loved Desdemona deeply and the sexual jealousy brought forward by Lago hurts his ego, love and honor provokes him to kill Cassius and Desdemona. Primary motive of Lago The character Lago from the beginning of the play till the end is evil . He is a person who disregards moral beauty, ethics or nobleness. His primary motive is treacherous and wants to destroy Othello in every way. His eyes are on promotion and destruction of Othello’s. professional as well as personal life. He is wicked and is expert in performing acts

Coupon Accounting Abuse Essay Example for Free

Coupon Accounting Abuse Essay The incentive, opportunity, and rationalization to commit fraud have plagued business organizations for many years. There are numerous ways that managers and employees can commit fraud. This makes it a necessity for businesses to have quality internal controls that help prevent fraudulent activity. However, even with the best set of controls businesses are still susceptible of fraud. This paper will concentrate on the case study concerning coupon accounting abuse and will answer questions pertaining to company controls, ways to prevent coupon abuse, parties who may be harmed, and the type of fraud presented in the case. Coupon Accounting Abuse Question 1: Discuss whether the situation described can happen to a company with a good control environment. It is imperative for a company to have good accounting internal controls. A company that has a good control environment will help deter fraud, but these controls can only provide a company with reasonable assurance. In this situation the brand manager is committing the fraud. This would make it very hard even for a company with good controls to detect fraud. In what is known as management override, managers can simply circumvent a company’s internal controls. Question 2: Describe any steps a company could take to prevent such abuse. There are many steps that a company can take to prevent fraud abuse. A company should implement a strong code of ethics policy. Every manager and employee should be trained and very aware of the policy. This will help in maintaining the integrity of the workforce. There should be a strong screening process that includes background checks to help ensure the company is hiring honest employees. There should also be a segregation of duties. In this case the brand manager has complete control over estimating the coupon liability. This estimate should be approved by another manager at the company. The company should inform independent and internal auditors of the significance that coupons can have on the company’s financial statements. A risk management group should be established whose task is to facilitate and co-ordinate the overall risk management process. Depending on the size and nature of the organization, the risk management group may be in the form of a committee who meet from time to time (CIMA, 2009). Question 3: List those parties who might be harmed by this situation. Fraud is often mistakenly considered a victimless crime. However, fraud can have considerable social and psychological effects on individuals, businesses and society (CIMA, 2009). In this situation the brand manager is harming multiple parties. When the manager replaces the 4% estimated redemption rate with 2% he is increasing revenue making the company look more profitable than it really was. This is misleading to managers and shareholders who are reading the financial statements. It could be detrimental to the business if managers think a brand is doing better than it really is. The shareholder will also be impacted in the coming year because of the added liability expenses. The brand manager is putting himself at risk to be harmed because if he is caught his job will be terminated and he will be prosecuted. Question 4: Do you consider this example to be management fraud or employee fraud? I consider this to be management fraud. Management fraud often involves senior or high level management’s intentional misrepresentation of financial statements, theft or improper use of accompany resources. Employee fraud involves a non-senior employee theft or improper use of company resources (Gottlieb, 2011). The fraud that was committed was by the brand manager who developed a myopic view and knew that he would be managing another brand in the next year. This situation is becoming increasingly common in the workplace. In order to combat fraud and white collar crime in businesses, a concerted effort must be exerted by the management of the business, the external auditors, and by all employees of the business. Everyone must realize that fraud is not a victimless crime. The cost of fraud and theft are shared by all through higher costs and lower corporate profits. Through adequate internal controls by management, better working environments for employees, more stringent requirements for external auditors, and codes of ethics for employees, everyone can start to combat frauds and defalcations within corporate America (Farrell, Franco, 1999).

Waxing A Snowboard :: essays research papers

How to wax a snowboard   Ã‚  Ã‚  Ã‚  Ã‚  There several ways to go about waxing a snowboard. Firs you have to determine what conditions you will be riding in. Then you will have to choose a wax. Say you are going to Vail and the snow condition are.... well lets just say the temp.. of the snow is about 20*. Well the thing you need to do is find a low temp. wax. The way you determine a low temp. wax from a high temp. wax is by the rating.. Low temp. waxes will be in a range from -20* to about 25*. A high temp. wax will be in a range from about 25* to 40*. There are waxes made for higher conditiond above 45* that are used in conditions that are referred to as, summer conditions. The wax that is used in summer conditions is a harder wax that will protect your board from sand, dust, and ice crystals.   Ã‚  Ã‚  Ã‚  Ã‚  If you are riding in low temp. conditions with a high temp wax your performance will not be that good. If the conditions are going to go back and forth in temp. you should wax your board with a low temp. wax or you can use a wax that can be used in all temps. WAXING INSTRUCTIONS FOR HOT WAXING   Ã‚  Ã‚  Ã‚  Ã‚  1. Select wax or waxes for correct snow temperature and condition.   Ã‚  Ã‚  Ã‚  Ã‚  2. Use in a well-ventilated area or with a respirator. (Only if you are hot waxing)   Ã‚  Ã‚  Ã‚  Ã‚  3. Heat iron below the 'smoking iron'; temperature.   Ã‚  Ã‚  Ã‚  Ã‚  4. Melt the smallest end of the wax on the iron and drip all over the snowboard.   Ã‚  Ã‚  Ã‚  Ã‚  5. Smooth out drips with iron.   Ã‚  Ã‚  Ã‚  Ã‚  6. Let wax completely dry then scrape with a plastic or metal scraper.   Ã‚  Ã‚  Ã‚  Ã‚  7. Buff wax with a buffing pad. IF YOU ARE DOING A RUB ON WAS YOU WILL NEED TO FALLOW THESE INSTRUCTIONS

Midterm 2 Essays Essay

1) Ben-Hur is the last great film score in the tradition of the golden age until 1977. Describe the characteristics of the classical film score as exemplified in this film. Include a description of significant themes and scenes. (10 points) William Wyler directed a 1958 American epic historical drama film, Ben-Hur. This film is well known to be one of the greatest film scores reflecting in the classic traditions. The film portrays lives of two men (i.e., Jesus Christ and Judah Beh-Hur), in which the plot illustrates number of parallels and reversals. Rozsa utilizes modal harmonies and parallel chords to deploy the spirit of the Roman era. Throughout the film, he embraces traditional love themes for the three separate love relationships. Rozsa incorporates overall stylistic harmony by applying musical ideas that are associated with Roman, Hebrew, and early Christian. Furthermore, it can be seen that Rozsa chose many of the melodies to be modal. He also used parallel harmonies to maint ain the same pitch correlation from chord to chord and limits any possible sense of harmonic progression. For example, the first three chords of the score move in parallel motion where each pitch moves down a entire step and returns back to the original pitch. Throughout the â€Å"Redemption theme†, the overture plays a melody that implies the Phrygian mode. In the Christ theme and several of the Roman marches, the Western triadic chords can be heard. The score also displays a complex system of leitmotifs. The â€Å"Christ theme† plays an organ with a wavering sound where high strings with harmonics are often added. These combinations create a halo effect around the melody. In addition, the number three is an important symbol for Christianity due to the Trinity where it consists of three-note chords. Moreover, it can be seen through the Redemption theme that the first three pitches played are exactly the same as that of the Christ theme. It is interesting to observe the Friendship theme between Judah Ben-Hur and Messala contained with warmth while he also uses disturbing elements to foreshadow the Hate theme displayed by triton interval. During Ben-Hur’s desert march, chromatic melody strongly correlates to the Hate th eme. These musical melodies support for dramatic moods, settings, characters, and actions, which can be seen  throughout the film. Rozsa also uses significant orchestral medley to establish his principal themes during the overture and the opening credits. Most recognized and impressive is the powerful bass sound playing during the credits. In regards to the climax and resolution, Rozsa composes two musical climaxes (i.e., one for Christ and one for Ben-Hur). The Ben-Hur’s desert march consisted with chromaticism and dissonance underscoring the moment filled with bitterness. When Miriam and Tirzah gets cured after the storm, The Christ theme comes in with full orchestration. Throughout this film, we can see that Rozsa extensively uses music and exploits full range of orchestral colors as seen through general characteristics of the classical film score established during the mid-late 1930’s. 2) Psycho helps usher in the New American Cinema era. Using Psycho as a model, discuss the major changes to film music in the 1960s. (10 points) There were a significant transformation during the 1960s, where decline of Hollywood traditions and the rise of a new style initiated. Europeans influenced the way into the new era for the filmmakers in a global-scale. Innovative plots with uncertain beginnings and endings, unclear moral implication, and unusual plot lines started to emerge. We can clearly see that Alfred Hitchcock chose to shoot the film Psycho in black and white to signify the cold and empty atmospheric moods as well as to lower the production costs, which can be linked with the European imports. Bernard Herrmann supports Hitchcock’s visual and narrative effects where music is written for a string orchestra, where limited orchestral colors are prominent rather than a full symphonic ensemble. He correlated the usage of single tone color with the black and white cinematography. Herrmann utilized a unified score that is constantly dissonant. Although there are variation of mood from loving sound to the terror of the shower, all the cues are observed to be used with minor seconds and major sevenths. He also uses distinct sound using the â€Å"percussive-sounding strings† through deploying microphone close to the instrument to demonstrate the sound to be harsher, which can be seen as some of the new approaches that Herrmann accomplished through this film as the start of â€Å"a New American Era†. In addition, new approach in film scoring can be seen through the lack of contrast in a cue. When a cue starts, it stays consistent and repeats the mood with no varia tion where there are absence of shifts within a cue. Moreover, descending and ascending chords  of the Transition theme have an aloof characteristic with no display of emotions. This in return provides an overall disquieting mood to the story. During the Norman’s story, Hermann employs ostinato to maintain tension and discomforting sound of melody. 3) Discuss the growth of the various types of popular music in films from the late 1940s through the early 1970s. Please mention specific films, styles, and composers when you can. (20 points) Throughout late 1940’s through the early 1970’s, the growth of various types of popular music and trends are historically observed. Starting from postwar trends dating back from the late 1940’s where World War II delivered significant changes in filmmaking, which also had a huge impact on film music. During this time, pessimism and cynicism were two primary themes in films. It is clearly evident that there were three significant developments where music composed for Film Noir, the appearance of several outstanding scores reflecting the American nationalist musical style, and the resurgence of European centers. Film noir gave numerous unique characteristics consisted of one prevailing mood (primarily dark and pessimistic), minimal usage of musical cues, orchestration for small ensembles, predominantly low-pitched instruments (e.g., bass clarinet), focus on the lower registers of the strings, non-traditional orchestral sound, angular melodies, harsh dissonant harmonies, and the usage of jazz. Miklos Rozsa, one of Hollywood’s finest composers, earned much respect for film noir scores including his work through Double Indemnity and The Killers. In the late 1940’s, many of the excellent film scores reflected the musical style of American nationalism. Hugo Friedhofer created one of the most memorable score The Best Years of Our Lives, where he integrated many of the features of Copland’s American nationalist style. As for Aaron Coplan, he composed his last two scores for films The Red Pony and The Heiress. In the 1950’s, the American film industry suffered from decreasing revenues and increasing costs due to major competition from television industry. This in return made American filmmakers to respond with outputs of excellent films, which also had a major influence on the development in film music. The expanding role of popular music began in the early 1950’s. Newer forms of jazz (bebop) followed by its characteristics of hard accents, rapi d notes, and increased volume and intensity. Other trends in popular music in the 1950s are country and western, and rock and roll. Elmer  Berstein employs intense sounds of jazz along with traditional symphonic scoring through one of his first film scores, The Man with the Golden Arm. Dimitri Tiomkin, one of Hollywood’s veteran composers, brought a key innovation to film music when he incorporated a country and western song to High Noon. He also includes Leimotifs for the theme song, colorful orchestrations, and orchestra underscoring tension and action. A film, The Blackboard Jungle, introduced the rock music for the teenagers to rapidly adopt this exciting new kind of music in mid-late 1950’s. The birth of the blockbuster occurred in 1956. In films Around the World in 80 days and The Bridge on the River Kwai were both seen with the application of popular melodies, that is, walz tune and a British march. Adolph Deutsch employs traditional symphonic scoring in the film Something like it Hot. He liberally integrates popular music to underscore the fun where it includes musical, scurrying saxophone line, and use of the tango. In addition, a film Touch of Evil: Beginning in the late 1950’s is described as the last great film noir. Henry Mancini includes the mixture of Mexican and American popular musical styles. Variety of other popular musical styles are heard throughout the score, which includes country and western music, rock music, and intense jazz. Variety of modern styles in the late 1950’s are also seen through films such as Big Country, Vertigo, and North by Northwest. For example, Jerome Moross’s score for Big Country displays an influential new western sound, where he made concrete western sound. New Wave were greatly influential on American films in the early 1960’s. Through music in the New Era, music in from the films in 1960’s tends to create general moods rather than to illustrate specific or varying emotions. While filmmakers were faced with economic challenges, increased reliance on a smaller collaborative performance rather than the standard orchestra provided financial savings. It was also clearly observed that both popular and modern musical styles were well suit ed. These musical styles are demonstrated through three films in the early 1960’s, which are The Hustler, The Pawnbroker, and The Manchurian Candidate. Through the film, The Hustler, musical cues are often scored for jazz ensembles. However, in The Pawnbroker, Quincy Jones gets incorporates a modern style as required. One of the most distinct instruments employed throughout this film was harpsichord, which is a keyboard instrument used to renovate earlier form of  music for a more authentic sound. Furthermore, David Amram, who composed a film score for The Manchurian Candidate, uses various modern styles (e.g., American nationalist style for scenes of the soldiers returning to the US, and avant-garde styles to represent disoriented nightmares that some of the soldiers had. As observed in To Kill a Mockingbird, Elmer Bernstein’s musical score indicates small number of instruments used throughout the film along with general modern style. By 1967, sexuality and graphic violence were prevalent. In the film Bonnie and Clyde composed by Charles Strouse, most feature instruments associated with country music. From 1968 through early 1970’s, American society drew much concerns and frustrations due to many shocking events (e.g., Martin Luther King assassination, Robert Kennedy’s death from shooting, public view on Vietnam War, and war protests). As a result, filmmakers continued to use traditional musical scoring to maintain strong sense of reality. In Planet of the Apes, Jerry Goldsmith’s score consists of avant-garde style. John Barry mixed variety of popular styles with a few passages of modern electronic music through the film Midnight Cowboy and Easy Rider. It also included rock style to relate the prominence of drugs in the plot. Finally, during the films of the early 1970’s where tensions were observed throughout America’s society, films often went with modern musical styles to underscore the hindrance of America due to widespread criminal activities and corrupted government officials.

Recession in India Essay

We have compiled the said report which helps in understanding what corrective steps were taken which helped the banks to emerge out of the turmoil. Financial Crisis The financial crisis of 2007 to the present is a crisis triggered by a liquidity shortfall in the United States banking system caused by the overvaluation of assets. It has resulted in the collapse of large financial institutions, the bailout of banks by national governments and downturns in stock markets around the world. In many areas, the housing market has also suffered, resulting in numerous evictions, foreclosures and prolonged vacancies. It is considered by many economists to be the worst financial crisis since the Great Depression of the 1930s. It contributed to the failure of key businesses, declines in consumer wealth estimated in the trillions of U. S. dollars, substantial financial commitments incurred by governments, and a significant decline in economic activity. Many causes have been suggested, with varying weight assigned by experts. Both market-based and regulatory solutions have been implemented or are under consideration, while significant risks remain for the world economy over the 2010–2011 periods. The collapse of a global housing bubble, which peaked in the U. S. in 2006, caused the values of securities tied to real estate pricing to plummet thereafter, damaging financial institutions globally. Questions regarding bank solvency, declines in credit availability, and damaged investor confidence had an impact on global stock markets, where securities suffered large losses during late 2008 and early 2009. Economies worldwide slowed during this period as credit tightened and international trade declined. Critics argued that credit rating agencies and investors failed to accurately price the risk involved with mortgage-related financial products, and that governments did not adjust their regulatory practices to address 21st century financial markets. Governments and central banks responded with unprecedented fiscal stimulus, monetary policy expansion, and institutional bailouts. | Background and causes The immediate cause or trigger of the crisis was the bursting of the United States housing bubble which peaked in approximately 2005–2006. Already-rising default rates on â€Å"subprime† and adjustable rate mortgages (ARM) began to increase quickly thereafter. An increase in loan packaging, marketing and incentives such as easy initial terms and a long-term trend of rising housing prices had encouraged borrowers to assume difficult mortgages in the belief they would be able to quickly refinance at more favorable terms. However, once interest rates began to rise and housing prices started to drop moderately in 2006–2007 in many parts of the U. S. , refinancing became more difficult. Defaults and foreclosure activity increased dramatically as easy initial terms expired, home prices failed to go up as anticipated, and ARM interest rates reset higher. Share in GDP of U. S. financial sector since 1860 Low interest rates and large inflows of foreign funds created easy credit conditions for a number of years prior to the crisis, fueling a housing construction boom and encouraging debt-financed consumption. The combination of easy credit and money inflow contributed to the United States housing bubble. Loans of various types (e. g. mortgage, credit card, and auto) were easy to obtain and consumers assumed an unprecedented debt load. As part of the housing and credit booms, the number of financial agreements called mortgage-backed securities (MBS) and collateralized debt obligations (CDO), which derived their value from mortgage payments and housing prices, greatly increased. Such financial innovation enabled institutions and investors around the world to invest in the U. S. housing market. As housing prices declined, major global financial institutions that had borrowed and invested heavily in subprime MBS reported significant losses. Falling prices also resulted in homes worth less than the mortgage loan, providing a financial incentive to enter foreclosure. The ongoing foreclosure epidemic that began in late 2006 in the U. S. continues to drain wealth from consumers and erodes the financial strength of banking institutions. Defaults and losses on other loan types also increased significantly as the crisis expanded from the housing market to other parts of the economy. Total losses are estimated in the trillions of U. S. dollars globally. While the housing and credit bubbles built, a series of factors caused the financial system to both expand and become increasingly fragile, a process called financialization. Policymakers did not recognize the increasingly important role played by financial institutions such as investment banks and hedge funds, also known as the shadow banking system. Some experts believe these institutions had become as important as commercial (depository) banks in providing credit to the U. S. economy, but they were not subject to the same regulations. These institutions as well as certain regulated banks had also assumed significant debt burdens while providing the loans described above and did not have a financial cushion sufficient to absorb large loan defaults or MBS losses. These losses impacted the ability of financial institutions to lend, slowing economic activity. Concerns regarding the stability of key financial institutions drove central banks to provide funds to encourage lending and restore faith in the commercial paper markets, which are integral to funding business operations. Governments also bailed out key financial institutions and implemented economic stimulus programs, assuming significant additional financial commitments. The crises culminated on Sept. 15th 2008 with Lehman Brothers filing for bankruptcy. It has been reported that JP Morgan helped drive Lehman into bankruptcy and kicked off the credit crises by forcing it to give up billions in cash reserves on the afternoon of Friday September 13, 2008. Growth of the housing bubble Main article: United States housing bubble A graph showing the median and average sales prices of new homes sold in the United States between 1963 and 2008 (not adjusted for inflation) Between 1997 and 2006, the price of the typical American house increased by 124%. During the two decades ending in 2001, the national median home price ranged from 2. 9 to 3. 1 times median household income. This ratio rose to 4. 0 in 2004, and 4. 6 in 2006. This housing bubble resulted in quite a few homeowners refinancing their homes at lower interest rates, or financing consumer spending by taking out second mortgages secured by the price appreciation. In a Peabody Award winning program, NPR correspondents argued that a â€Å"Giant Pool of Money† (represented by $70 trillion in worldwide fixed income investments) sought higher yields than those offered by U. S. Treasury bonds early in the decade. Further, this pool of money had roughly doubled in size from 2000 to 2007, yet the supply of relatively safe, income generating investments had not grown as fast. Investment banks on Wall Street answered this demand with the MBS and CDO, which were assigned safe ratings by the credit rating agencies. In effect, Wall Street connected this pool of money to the mortgage market in the U. S. , with enormous fees accruing to those throughout the mortgage supply chain, from the mortgage broker selling the loans, to small banks that funded the brokers, to the giant investment banks behind them. By approximately 2003, the supply of mortgages originated at traditional lending standards had been exhausted. However, continued strong demand for MBS and CDO began to drive down lending standards, as long as mortgages could still be sold along the supply chain. Eventually, this speculative bubble proved unsustainable. The CDO in particular enabled financial institutions to obtain investor funds to finance subprime and other lending, extending or increasing the housing bubble and generating large fees. A CDO essentially places cash payments from multiple mortgages or other debt obligations into a single pool, from which the cash is allocated to specific securities in a priority sequence. Those securities obtaining cash first received investment-grade ratings from rating agencies. Lower priority securities received cash thereafter, with lower credit ratings but theoretically a higher rate of return on the amount invested. By September 2008, average U. S. housing prices had declined by over 20% from their mid-2006 peak. As prices declined, borrowers with adjustable-rate mortgages could not refinance to avoid the higher payments associated with rising interest rates and began to default. During 2007, lenders began foreclosure proceedings on nearly 1. 3 million properties, a 79% increase over 2006. This increased to 2. 3 million in 2008, an 81% increase vs. 2007. By August 2008, 9. 2% of all U. S. mortgages outstanding were either delinquent or in foreclosure. By September 2009, this had risen to 14. 4%. Easy credit conditions Lower interest rates encourage borrowing. From 2000 to 2003, the Federal Reserve lowered the federal funds rate target from 6. 5% to 1. 0%. [31] This was done to soften the effects of the collapse of the dot-com bubble and of the September 2001 terrorist attacks, and to combat the perceived risk of deflation. [32] U. S. current account or trade deficit Additional downward pressure on interest rates was created by the USA’s high and rising current account (trade) deficit, which peaked along with the housing bubble in 2006. Ben Bernanke explained how trade deficits required the U. S. to borrow money from abroad, which bid up bond prices and lowered interest rates. Bernanke explained that between 1996 and 2004, the USA current account deficit increased by $650 billion, from 1. 5% to 5. 8% of GDP. Financing these deficits required the USA to borrow large sums from abroad, much of it from countries running trade surpluses, mainly the emerging economies in Asia and oil-exporting nations. The balance of payments identity requires that a country (such as the USA) running a current account deficit also have a capital account (investment) surplus of the same amount. Hence large and growing amounts of foreign funds (capital) flowed into the USA to finance its imports. This created demand for various types of financial assets, raising the prices of those assets while lowering interest rates. Foreign investors had these funds to lend, either because they had very high personal savings rates (as high as 40% in China), or because of high oil prices. Bernanke referred to this as a â€Å"saving glut. † A â€Å"flood† of funds (capital or liquidity) reached the USA financial markets. Foreign governments supplied funds by purchasing USA Treasury bonds and thus avoided much of the direct impact of the crisis. USA households, on the other hand, used funds borrowed from foreigners to finance consumption or to bid up the prices of housing and financial assets. Financial institutions invested foreign funds in mortgage-backed securities. The Fed then raised the Fed funds rate significantly between July 2004 and July 2006. This contributed to an increase in 1-year and 5-year adjustable-rate mortgage (ARM) rates, making ARM interest rate resets more expensive for homeowners. This may have also contributed to the deflating of the housing bubble, as asset prices generally move inversely to interest rates and it became riskier to speculate in housing. USA housing and financial assets dramatically declined in value after the housing bubble burst. Sub-prime lending U. S. subprime lending expanded dramatically 2004-2006 The term subprime refers to the credit quality of particular borrowers, who have weakened credit histories and a greater risk of loan default than prime borrowers. The value of U. S. subprime mortgages was estimated at $1. 3 trillion as of March 2007, with over 7. 5 million first-lien subprime mortgages outstanding. In addition to easy credit conditions, there is evidence that both government and competitive pressures contributed to an increase in the amount of subprime lending during the years preceding the crisis. Major U. S. investment banks and government sponsored enterprises like Fannie Mae played an important role in the expansion of higher-risk lending. Subprime mortgages remained below 10% of all mortgage originations until 2004, when they spiked to nearly 20% and remained there through the 2005-2006 peak of the United States housing bubble. A proximate event to this increase was the April 2004 decision by the U. S. Securities and Exchange Commission (SEC) to relax the net capital rule, which permitted the largest five investment banks to dramatically increase their financial leverage and aggressively expand their issuance of mortgage-backed securities. This applied additional competitive pressure to Fannie Mae and Freddie Mac, which further expanded their riskier lending. Subprime mortgage payment delinquency rates remained in the 10-15% range from 1998 to 2006, then began to increase rapidly, rising to 25% by early 2008. Fannie Mae, the nation’s biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people†¦ In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980s. A 2000 United States Department of the Treasury study of lending trends for 305 cities from 1993 to 1998 showed that $467 billion of mortgage credit poured out of Community Reinvestment Act (CRA)-covered lenders into low and mid level income borrowers and neighborhoods. Nevertheless, only 25% of all sub-prime lending occurred at CRA-covered institutions, and a full 50% of sub-prime loans originated at institutions exempt from CRA. While the number of CRA sub-prime loans originated were less than non-CRA sub-prime loans originated, it is important to note that the CRA sub-prime loans were the more â€Å"vulnerable during the downturn, to the detriment of both borrowers and lenders. For example, lending done under Community Reinvestment Act criteria, according to a quarterly report in October of 2008, constituted only 7 percent of the total mortgage lending by the Bank of America, but constituted 29 percent of its losses on mortgages. Economist Paul Krugman argued in January 2010 that the simultaneous growth of the residential and commercial real estate pricing bubbles undermines the case made by those who argue that Fannie Mae, Freddie Mac, CRA or predatory lending were primary causes of the crisis. In other words, bubbles in both markets developed even though only the residential market was affected by these potential causes. Predatory lending Predatory lending refers to the practice of unscrupulous lenders, to enter into â€Å"unsafe† or â€Å"unsound† secured loans for inappropriate purposes. A classic bait-and-switch method was used by Countrywide, advertising low interest rates for home refinancing. Such loans were written into extensively detailed contracts, and swapped for more expensive loan products on the day of closing. Whereas the advertisement might state that 1% or 1. 5% interest would be charged, the consumer would be put into an adjustable rate mortgage (ARM) in which the interest charged would be greater than the amount of interest paid. This created negative amortization, which the credit consumer might not notice until long after the loan transaction had been consummated. Countrywide, sued by California Attorney General Jerry Brown for â€Å"Unfair Business Practices† and â€Å"False Advertising† was making high cost mortgages â€Å"to homeowners with weak credit, adjustable rate mortgages (ARMs) that allowed homeowners to make interest-only payments. â€Å". When housing prices decreased, homeowners in ARMs then had little incentive to pay their monthly payments, since their home equity had disappeared. This caused Countrywide’s financial condition to deteriorate, ultimately resulting in a decision by the Office of Thrift Supervision to seize the lender. Former employees from Ameriquest, which was United States’s leading wholesale lender,[60] described a system in which they were pushed to falsify mortgage documents and then sell the mortgages to Wall Street banks eager to make fast profits. [60] There is growing evidence that such mortgage frauds may be a cause of the crisis. [60] Deregulation Further information: Government policies and the subprime mortgage crisis Critics have argued that the regulatory framework did not keep pace with financial innovation, such as the increasing importance of the shadow banking system, derivatives and off-balance sheet financing. In other cases, laws were changed or enforcement weakened in parts of the financial system. Key examples include: * Jimmy Carter’s Depository Institutions Deregulation and Monetary Control Act of 1980 (DIDMCA) phased out a number of restrictions on banks’ financial practices, broadened their lending powers, and raised the deposit insurance limit from $40,000 to $100,000 (raising the problem of moral hazard). Banks rushed into real estate lending, speculative lending, and other ventures just as the economy soured. * In October 1982, U. S. President Ronald Reagan signed into Law the Garn–St. Germain Depository Institutions Act, which provided for adjustable-rate mortgage loans, began the process of banking deregulation, and contributed to the savings and loan crisis of the late 1980s/early 1990s. * In November 1999, U. S. President Bill Clinton signed into Law the Gramm-Leach-Bliley Act, which repealed part of the Glass-Steagall Act of 1933. This repeal has been criticized for reducing the separation between commercial banks (which traditionally had a conservative culture) and investment banks (which had a more risk-taking culture). In 2004, the U. S. Securities and Exchange Commission relaxed the net capital rule, which enabled investment banks to substantially increase the level of debt they were taking on, fueling the growth in mortgage-backed securities supporting subprime mortgages. The SEC has conceded that self-regulation of investment banks contributed to the crisis. * Financial institutions in the shadow banking system are not subject to the same regulation as d epository banks, allowing them to assume additional debt obligations relative to their financial cushion or capital base. This was the case despite the Long-Term Capital Management debacle in 1998, where a highly-leveraged shadow institution failed with systemic implications. * Regulators and accounting standard-setters allowed depository banks such as Citigroup to move significant amounts of assets and liabilities off-balance sheet into complex legal entities called structured investment vehicles, masking the weakness of the capital base of the firm or degree of leverage or risk taken. One news agency estimated that the top four U. S. banks will have to return between $500 billion and $1 trillion to their balance sheets during 2009. This increased uncertainty during the crisis regarding the financial position of the major banks. Off-balance sheet entities were also used by Enron as part of the scandal that brought down that company in 2001. * As early as 1997, Federal Reserve Chairman Alan Greenspan fought to keep the derivatives market unregulated. With the advice of the President’s Working Group on Financial Markets, the U. S. Congress and President allowed the self-regulation of the over-the-counter derivatives market when they enacted the Commodity Futures Modernization Act of 2000. Derivatives such as credit default swaps (CDS) can be used to hedge or speculate against particular credit risks. The volume of CDS outstanding increased 100-fold from 1998 to 2008, with estimates of the debt covered by CDS contracts, as of November 2008, ranging from US$33 to $47 trillion. Total over-the-counter (OTC) derivative notional value rose to $683 trillion by June 2008. Warren Buffett famously referred to derivatives as â€Å"financial weapons of mass destruction† in early 2003. Increased debt burden or over-leveraging Leverage ratios of investment banks increased significantly 2003-2007 U. S. households and financial institutions became increasingly indebted or overleveraged during the years preceding the crisis. This increased their vulnerability to the collapse of the housing bubble and worsened the ensuing economic downturn. Key statistics include: * Free cash used by consumers from home equity extraction doubled from $627 billion in 2001 to $1,428 billion in 2005 as the housing bubble built, a total of nearly $5 trillion dollars over the period, contributing to economic growth worldwide. U. S. home mortgage debt relative to GDP increased from an average of 46% during the 1990s to 73% during 2008, reaching $10. 5 trillion. * USA household debt as a percentage of annual disposable personal income was 127% at the end of 2007, versus 77% in 1990. * In 1981, U. S. rivate debt was 123% of GDP; by the third quarter of 2008, it was 290%. * From 2004-07, the top five U. S. investment banks each significantly increased their financial leverage (see diagram), which increased their vulnerability to a financial shock. These five institutions reported over $4. 1 trillion in debt for fiscal year 2007, about 30% of USA nominal GDP for 2007. Lehman Brothers was liquidated, Bear Stearns and Merrill Lynch were sold at fir e-sale prices, and Goldman Sachs and Morgan Stanley became commercial banks, subjecting themselves to more stringent regulation. With the exception of Lehman, these companies required or received government support. * Fannie Mae and Freddie Mac, two U. S. Government sponsored enterprises, owned or guaranteed nearly $5 trillion in mortgage obligations at the time they were placed into conservatorship by the U. S. government in September 2008. These seven entities were highly leveraged and had $9 trillion in debt or guarantee obligations, an enormous concentration of risk; yet they were not subject to the same regulation as depository banks. Boom and collapse of the shadow banking system In a June 2008 speech, President and CEO of the New York Federal Reserve Bank Timothy Geithner  Ã¢â‚¬â€ who in 2009 became Secretary of the United States Treasury  Ã¢â‚¬â€ placed significant blame for the freezing of credit markets on a â€Å"run† on the entities in the â€Å"parallel† banking system, also called the shadow banking system. These entities became critical to the credit markets underpinning the financial system, but were not subject to the same regulatory controls. Further, these entities were vulnerable because of maturity mismatch, meaning that they borrowed short-term in liquid markets to purchase long-term, illiquid and risky assets. This meant that disruptions in credit markets would make them subject to rapid deleveraging, selling their long-term assets at depressed prices. He described the significance of these entities: In early 2007, asset-backed commercial paper conduits, in structured investment vehicles, in auction-rate preferred securities, tender option bonds and variable rate demand notes, had a combined asset size of roughly $2. trillion. Assets financed overnight in triparty repo grew to $2. 5 trillion. Assets held in hedge funds grew to roughly $1. 8 trillion. The combined balance sheets of the then five major investment banks totaled $4 trillion. In comparison, the total assets of the top five bank holding companies in the United States at that point were just over $6 trillion, and total assets of the entire banking system we re about $10 trillion. The combined effect of these factors was a financial system vulnerable to self-reinforcing asset price and credit cycles. Paul Krugman, laureate of the Nobel Prize in Economics, described the run on the shadow banking system as the â€Å"core of what happened† to cause the crisis. He referred to this lack of controls as â€Å"malign neglect† and argued that regulation should have been imposed on all banking-like activity. Financial markets impacts Impacts on financial institutions 2007 bank run on Northern Rock, a UK bank The International Monetary Fund estimated that large U. S. and European banks lost more than $1 trillion on toxic assets and from bad loans from January 2007 to September 2009. These losses are expected to top $2. 8 trillion from 2007-10. U. S. banks losses were forecast to hit $1 trillion and European bank losses will reach $1. 6 trillion. The IMF estimated that U. S. banks were about 60 percent through their losses, but British and eurozone banks only 40 percent. One of the first victims was Northern Rock, a medium-sized British bank. The highly leveraged nature of its business led the bank to request security from the Bank of England. This in turn led to investor panic and a bank run in mid-September 2007. Calls by Liberal Democrat Shadow Chancellor Vince Cable to nationalise the institution were initially ignored; in February 2008, however, the British government (having failed to find a private sector buyer) relented, and the bank was taken into public hands. Northern Rock’s problems proved to be an early indication of the troubles that would soon befall other banks and financial institutions. Initially the companies affected were those directly involved in home construction and mortgage lending such as Northern Rock and Countrywide Financial, as they could no longer obtain financing through the credit markets. Over 100 mortgage lenders went bankrupt during 2007 and 2008. Concerns that investment bank Bear Stearns would collapse in March 2008 resulted in its fire-sale to JP Morgan Chase. The crisis hit its peak in September and October 2008. Several major institutions either failed, were acquired under duress, or were subject to government takeover. These included Lehman Brothers, Merrill Lynch, Fannie Mae, Freddie Mac, Washington Mutual, Wachovia, and AIG. Credit markets and the shadow banking system TED spread and components during 2008 During September 2008, the crisis hit its most critical stage. There was the equivalent of a bank run on the money market mutual funds, which frequently invest in commercial paper issued by corporations to fund their operations and payrolls. Withdrawals from money markets were $144. 5 billion during one week, versus $7. 1 billion the week prior. This interrupted the ability of corporations to rollover (replace) their short-term debt. The U. S. government responded by extending insurance for money market accounts analogous to bank deposit insurance via a temporary guarantee and with Federal Reserve programs to purchase commercial paper. The TED spread, an indicator of perceived credit risk in the general economy, spiked up in July 2007, remained volatile for a year, then spiked even higher in September 2008, reaching a record 4. 65% on October 10, 2008. In a dramatic meeting on September 18, 2008, Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke met with key legislators to propose a $700 billion emergency bailout. Bernanke reportedly told them: â€Å"If we don’t do this, we may not have an economy on Monday. † The Emergency Economic Stabilization Act, which implemented the Troubled Asset Relief Program (TARP), was signed into law on October 3, 2008. Economist Paul Krugman and U. S. Treasury Secretary Timothy Geithner explain the credit crisis via the implosion of the shadow banking system, which had grown to nearly equal the importance of the traditional commercial banking sector as described above. Without the ability to obtain investor funds in exchange for most types of mortgage-backed securities or asset-backed commercial paper, investment banks and other entities in the shadow banking system could not provide funds to mortgage firms and other corporations. This meant that nearly one-third of the U. S. lending mechanism was frozen and continued to be frozen into June 2009. According to the Brookings Institution, the traditional banking system does not have the capital to close this gap as of June 2009: â€Å"It would take a number of years of strong profits to generate sufficient capital to support that additional lending volume. † The authors also indicate that some forms of securitization are â€Å"likely to vanish forever, having been an artifact of excessively loose credit conditions. While traditional banks have raised their lending standards, it was the collapse of the shadow banking system that is the primary cause of the reduction in funds available for borrowing. Global effects A number of commentators have suggested that if the liquidity crisis continues, there could be an extended recession or worse. The continuing development of the crisis has prompted in some quarters fears of a global economic collapse although the re are now many cautiously optimistic forecasters in addition to some prominent sources who remain negative. The financial crisis is likely to yield the biggest banking shakeout since the savings-and-loan meltdown. Investment bank UBS stated on October 6 that 2008 would see a clear global recession, with recovery unlikely for at least two years. Three days later UBS economists announced that the â€Å"beginning of the end† of the crisis had begun, with the world starting to make the necessary actions to fix the crisis: capital injection by governments; injection made systemically; interest rate cuts to help borrowers. The United Kingdom had started systemic injection, and the world’s central banks were now cutting interest rates. UBS emphasized the United States needed to implement systemic injection. UBS further emphasized that this fixes only the financial crisis, but that in economic terms â€Å"the worst is still to come†. UBS quantified their expected recession durations on October 16: the Eurozone’s would last two quarters, the United States’ would last three quarters, and the United Kingdom’s would last four quarters. The economic crisis in Iceland involved all three of the country’s major banks. Relative to the size of its economy, Iceland’s banking collapse is the largest suffered by any country in economic history. At the end of October UBS revised its outlook downwards: the forthcoming recession would be the worst since the Reagan recession of 1981 and 1982 with negative 2009 growth for the U. S. , Eurozone, UK; very limited recovery in 2010; but not as bad as the Great Depression. The Brookings Institution reported in June 2009 that U. S. consumption accounted for more than a third of the growth in global consumption between 2000 and 2007. â€Å"The US economy has been spending too much and borrowing too much for years and the rest of the world depended on the U. S. consumer as a source of global demand. With a recession in the U. S. and the increased savings rate of U. S. consumers, declines in growth elsewhere have been dramatic. For the first quarter of 2009, the annualized rate of decline in GDP was 14. 4% in Germany, 15. 2% in Japan, 7. 4% in the UK, 18% in Latvia, 9. 8% in the Euro area and 21. 5% for Mexico. Some developing countries that had seen strong economic growth saw significan t slowdowns. For example, growth forecasts in Cambodia show a fall from more than 10% in 2007 to close to zero in 2009, and Kenya may achieve only 3-4% growth in 2009, down from 7% in 2007. According to the research by the Overseas Development Institute, reductions in growth can be attributed to falls in trade, commodity prices, investment and remittances sent from migrant workers (which reached a record $251 billion in 2007, but have fallen in many countries since). The has stark implications and has led to a dramatic rise in the number of households living below the poverty line, be it 300,000 in Bangladesh or 230,000 in Ghana. By March 2009, the Arab world had lost $3 trillion due to the crisis. In April 2009, unemployment in the Arab world is said to be a ‘time bomb’. In May 2009, the United Nations reported a drop in foreign investment in Middle-Eastern economies due to a slower rise in demand for oil. In June 2009, the World Bank predicted a tough year for Arab states. In September 2009, Arab banks reported losses of nearly $4 billion since the onset of the global financial crisis. U. S. economic effects Real gross domestic product — the output of goods and services produced by labor and property located in the United States — decreased at an annual rate of approximately 6 percent in the fourth quarter of 2008 and first quarter of 2009, versus activity in the year-ago periods. The U. S. unemployment rate increased to 10. 1% by October 2009, the highest rate since 1983 and roughly twice the pre-crisis rate. The average hours per work week declined to 33, the lowest level since the government began collecting the data in 1964. Effects of Recession on India There is, at least in some quarters, dismay that India has been hit by the crisis. This dismay stems from two arguments. The Indian banking system has had no direct exposure to the sub-prime mortgage assets or to the failed institutions. It has very limited off-balance sheet activities or securitized assets. In fact, our banks continue to remain safe and healthy. So, the enigma is how can India be caught up in a crisis when it has nothing much to do with any of the maladies that are at the core of the crisis. The second reason for dismay is that India’s recent growth has been driven predominantly by domestic consumption and domestic investment. External demand, as measured by merchandize exports, accounts for less than 15 per cent of our GDP. The question then is, even if there is a global downturn, why should India be affected when its dependence on external demand is so limited? The answer to the above frequently-asked questions lies in globalization. First, India’s integration into the world economy over the last decade has been remarkably rapid. Integration into the world implies more than just exports. Going by the common measure of globalization, India’s two-way trade (merchandize exports plus imports), as a proportion of GDP, grew from 21. 2 per cent in 1997-98, the year of the Asian crisis, to 34. 7 per cent in 2007-08. Second, India’s financial integration with the world has been as deep as India’s trade globalization, if not deeper. If we take an expanded measure of globalization, that is the ratio of total external transactions (gross current account flows plus gross capital flows) to GDP, this ratio has more than doubled from 46. 8 per cent in 1997-98 to 117. 4 per cent in 2007-08. Importantly, the Indian corporate sector’s access to external funding has markedly increased in the last five years. Some numbers will help illustrate the point. In the five-year period 2003-08, the share of investment in India’s GDP rose by 11 percentage points. Corporate savings financed roughly half of this, but a significant portion of the balance financing came from external sources. While funds were available domestically, they were expensive relative to foreign funding. On the other hand, in a global market awash with liquidity and on the promise of India’s growth potential, foreign investors were willing to take risks and provide funds at a lower cost. Last year (2007/08), for example, India received capital inflows amounting to over 9 per cent of GDP as against a current account deficit in the balance of payments of just 1. 5 per cent of GDP. These capital flows, in excess of the current account deficit, evidence the importance of external financing and the depth of India’s financial integration. So, the reason India has been hit by the crisis, despite mitigating factors, is clearly India’s rapid and growing integration into the global economy. The contagion of the crisis has spread to India through all the channels – the financial channel, the real channel, and importantly, as happens in all financial crises, the confidence channel. India’s financial markets – equity markets, money markets, forex markets and credit markets – had all come under pressure from a number of directions. First, as a consequence of the global liquidity squeeze, Indian banks and corporates found their overseas financing drying up, forcing corporates to shift their credit demand to the domestic banking sector. Also, in their frantic search for substitute financing, corporates withdrew their investments from domestic money market mutual funds putting redemption pressure on the mutual funds and down the line on non-banking financial companies (NBFCs) where the MFs had invested a significant portion of their funds. This substitution of overseas financing by domestic financing brought both money markets and credit markets under pressure. Second, the forex market came under pressure because of reversal of capital flows as part of the global deleveraging process. Simultaneously, corporates were converting the funds raised locally into foreign currency to meet their external obligations. Both these factors put downward pressure on the rupee. Third, the Reserve Bank’s intervention in the forex market to manage the volatility in the rupee further added to liquidity tightening. The transmission of the global cues to the domestic economy has been quite straight forward – through the slump in demand for exports. The United States, European Union and the Middle East, which account for three quarters of India’s goods and services trade are in a synchronized down turn. Service export growth is also likely to slow in the near term as the recession deepens and financial services firms – traditionally large users of outsourcing services – are restructured. Remittances from migrant workers too are likely to slow as the Middle East adjusts to lower crude prices and advanced economies go into a recession. Beyond the financial and real channels of transmission as above, the crisis also spread through the confidence channel. In sharp contrast to global financial markets, which went into a seizure on account of a crisis of confidence, Indian financial markets continued to function in an orderly manner. Nevertheless, the tightened global liquidity situation in the period immediately following the Lehman failure in mid-September 2008, coming as it did on top of a turn in the credit cycle, increased the risk aversion of the financial system and made banks cautious about lending. The purport of the above explanation is to show how, despite not being part of the financial sector problem, India has been affected by the crisis through the pernicious feedback loops between external shocks and domestic vulnerabilities by way of the financial, real and confidence channels. Effect on Banks The actual effect of recession was only realised in February 2008 in Banking Industry. Before this there were lot of questions and queries regarding whether the U. S. recession will have any impact on India or Indian banking sector. In Feb 2008, the markets suddenly crashed the actual picture came in front. The effects which came across the banking sector are as follow * Credit Card and loan settlements. As soon as the impact of recession was realized by the banking sector, the Indian banking system came into the mode of consolidation. Each and every bank started reviewing their NPA’s and the amount of lending they have done which is yet to be recovered. Bank concentrated more on retail loans and Credit Card payments. The first priority for bank was to recover such amount which was unpaid from their customers. The banks hired external agencies for calling up clients and requesting them to settle their respective dues. This in turn created a panic in the customers mind. The banks in order to recover their dues and make the process fast provided attractive offers to its customers. For e. g. By settling the entire amount by cash there were discounts which were given amounting to about 5% of the entire due amount. * Call money market. In the initial stages of recession there was lot of demand for short term cash amongst the bank as the bank needed to fulfil the requirement of CRR and SLR. The money which was lended by the bank were taking time to recover and therefore there was a sudden requirement of short term money. The interest rate which were use to be at 5-6% grow up to 14-15% for a time period of 11-15 days. These requirements by few banks were enchased fully by other banks which were low on lending. The banks like ING Vysya bank, Yes Bank, IDBI Bank were amongst the few who were lending through call money market to other banks. * Fixed Deposit Rates Before recession hit the market FD rates were at a sky high level. Lot of private sector banks as well as public sector banks were offering interest rates in long term period upto 11-12%. When the recession kicked in the money demand for long term had almost finished. This was because of the reason that banks were in the mode of consolidation and did not want to lend further till the time most of the money was recovered. The bank deposit rates came down to a level of 6-7% as there was ample liquidity in the banking sector because of funds being not given ahead as loans. * Private banks became unpopular. During recession looking at the bankruptcy of foreign banks there was panic in the mind of investors even in india. There were lot of question that were raised whether the private sector banks who take exposure in foreign securities are safe in investing or not. During this period only there was a news which came for ICICI Bank. ICICI Bank had taken direct exposures in securities which issued by Lehman Brothers and Merill Lynch. In fact even few of public sector banks had taken similar exposures but since public sector banks were backed up by the government, there was a comfort factor amongst the investors. If we look at what happened with ICICI Bank, the liquidity was ample and it was just a few percentage of exposure that has gone as bad debt but other private marked players like HDFC Bank and Kotak Mahindra Bank encashed on these opportunities and placed their canopies next to each and every branch and ATM of ICICI Bank. There was a lot of panic which was created within the investors and they wanted to park their funds in a safer bank. Many of them shifted to nationalized banks and others were diverted to other private banks. This not only hampered the image of ICICI Bank but also created a bad image of Indian Private Banks. They were much difficulties which were faced by these banks to get additional deposits from investors and even retain theri clients who were shifting toward nationalised banks. * Diversifying and churning of funds. While the recession was impacting the country and the banking system there were informations that were given to the investors that the government insures on Rs. 1 lakh for any particular individual. This was misinterpreted by lot of investors in what they believed was with respect to one particular bank. With these being public diversification started. Each investor to safeguard his/her money started opening many accounts in different banks and keeping the funds equal in all. There was a lot of churning which happened from private sector banks to public sector banks as there were lot of uncertainity about funds being saved in a private sector bank. Investor created portfolios in different nationalised banks because of which private sector banks faced decline in their interest earnings as well as corpus and faced losses. After a while this myth was broken by RBI governor that the government only ensures Rs. lakh in totality no matter how many banks an investor has. * Lending Choked. The banks private sector as well as public sector were uncertain with what more negative impact were forthcoming. This resulted in, banks not at all lending to retail and corporate which were related to infrastructure or real estate. The cycle of churning of funds had suddenly stopped. Many projects which were about to start or were half way completed we re forced to put their projects on hold as no additional funds were being provided. This created commotion in real estate market which resulted in decline of prices. Even on retail side many of the housing loans were rejected which propelled the negativity more. Even for Large Cap companies the banks were demanding additional securities in cash apart from normal tangible assets. Even for processing loans for investors who had excellent credit history, the banks put ahead lot of extra conditions and terms. This further created panic and investors postponed their financial goals and loans were not applied for. After a while many loan divisions of banks were shut down and the employees were shifted to other departments were asked to leave. This even further increased the liquidity with banks. * Banks Investment Primary earning for any bank is through lending. Loans were not being processed and since the banks were uncertain of what more negative impact will come the banks were desperately looking out for other avenues to make money. The most safest option available with banks was to invest in G-Secs (Government of India Securities). Many banks started heavily into govt. Securities and bonds. These securities were traded quite highly at that period. Other sources including were through reverse repo and short term lending to different banks. During this time period much more focus was given to income from wealth management as markets has been corrected and banks insisted on educating the investors to park their funds in the equity market. Though the banks were heavily investing in G-Secs and other bonds it was not enough for their survival. Sooner or later the banks had to lend where they make the maximum profit. * Unemployment During the time of recession many jobs were lost in all the sectors. The similar effect was seen in banking but it was not in totality but few departments specific. The maximum hits were taken by two divisions which suffered most during the recession time. The first being the Wealth management division of banks. Though the feeling was correct that the markets have come down and valuations are excellent, it was very difficult convincing the investors. This resulted in many job losses in wealth management department of all the banks as revenue was expected which was not possible to generate. The next division which suffered was the loan division. The lay off’s happened more as the departments closed down and were not functional at all. Most of the bank had outsourced the servicing part as it was cheaper compared to keeping the existing team operational. Close to 1100 jobs were lost in the matter of 3 months in the entire banking sector. There were lot of apprehensions in the mind of new jonnies and soon working for a retail bank became unpopular. * Nationalised Banks popularity During all these events the only player in banking who were waiting to claw back the market shares were the nationalised bank. There was enough panic in retail investor’s regarding their funds being safe and sound, which the nationalised banks encashed fully. Maximum number of promotional activities and advertisement were given by them in the news paper and new channels. Even the investors responded to them equally and more than willingly because the backing up of the government was more than enough to provide a relief factor. Even in terms of employment, soon the nationalised banks became very popular and the people who were asked to leave from private banks where looking out for safe options to enter again. They were not willing to take any more risk. With this the bank got best of the aggressive talent in cheap prices. What corrective measures were taken? Decrease in CRR and repo rates. RBI again cuts repo rates ; CRR to inject additional liquidity of Rs 20,000 crore January 2, 2009: On a review of current global and domestic macroeconomic situation, the Reserve Bank has decided to take the following further measures: Repo Rate To reduce the repo rate under the liquidity adjustment facility (LAF) by 100 basis points from 6. 5 per cent to 5. 5 per cent with immediate effect. Reverse Repo Rate To reduce the reverse repo rate under the LAF by 100 basis points from 5. 0 per cent to 4. 0 per cent with immediate effect. Cash Reserve Ratio To reduce the cash reserve ratio (CRR) of scheduled banks by 50 basis points from 5. 5 per cent to 5. 0 per cent from the fortnight beginning January 17, 2009. The reduction in the CRR will inject additional liquidity of around Rs. 20,000 crore to the financial system. It is expected that the reduction in the policy interest rates and the CRR will further enable banks to provide credit for productive purposes at appropriate interest rates. The Reserve Bank on its part would continue to maintain a comfortable liquidity position in the system. Background to announcement of present monetary stimulus by RBI: The global financial situation continues to be uncertain. Since the official recognition of recession in the US, the UK, the Euro area and Japan, the downside risks to the global economy have increased. Concomitantly, the policy initiatives in the advanced economies are geared towards managing the recession and defusing potentially deflationary trends. The US has reduced the Federal Funds Rate to 0 – 0. 25 per cent. Several other advanced and emerging economies such as Japan, Canada, Republic of Korea, Hong Kong and China too have reduced their policy rates. India’s financial sector has remained resilient even in the face of global financial turmoil that is so deep and pervasive. Our financial markets continue to function in an orderly manner. India’s growth trajectory has, however, been impacted both by the financial crisis and the follow-on global economic downturn. This impact has turned out to be deeper and wider than earlier anticipated. Concurrently, because of global developments coupled with supply and demand management measures at home, inflation is on the decline. Reflecting these developments, the Reserve Bank has adjusted its policy stance from demand management to arresting the moderation in growth. In particular, the aim of these measures was to augment domestic and forex liquidity and to ensure that credit continues to flow to productive sectors of the economy. Notably, since mid-September 2008, the Reserve Bank has reduced the repo rate under the liquidity adjustment facility (LAF) from 9. 0 per cent to 6. 5 per cent, reduced the reverse repo rate under the LAF from 6. 0 per cent to 5. 0 per cent and the cash reserve ratio from 9. 0 per cent to 5. per cent How it helped? With these measures of RBI there was ample liquidity which was created in the market which forced the bank to lend out to companies as the funds in the banks were lying ideal and making no money for the bank. This actually started the lending process of the banks. * Role of fiscal stimulus package by government. There is a relationship between budget deficits and the hea lth of the economy, but is certainly not a perfect one. There can be massive budget deficits when the economy is doing quite well – the past few years of the United States being a prime example. That being said, government budgets tend to go from surplus to deficit (or existing deficits become larger) as the economy goes sour. This typically happens as follows: 1. The economy goes into recession, costing many workers their jobs, and at the same time causing corporate profits to decline. This causes less income tax revenue to flow to the government, along with less corporate income tax revenue. Occasionally the flow of income to the government will still grow, but at a slower rate than inflation, meaning that flow of tax revenue has fallen in real terms. 2. Because many workers have lost their jobs, there is increased use of government programs, such as unemployment insurance. Government spending rises as more individuals are calling on government services to help them out through tough times. 3. To help push the economy out of recession and to help those who have lost their jobs, governments often create new social programs during times of recession and depression. FDR’s â€Å"New Deal† of the 1930s is a prime example of this. Government spending then rises, not just because of increased use of existing programs, but through the creation of new programs. Because of factors one, the government receives less money from taxpayers, while factors two and three, the government spends more money. Money starts flowing out of the government faster than it comes in, causing the government’s budget to go into deficit. * How it helped? With the government spending more the government securities started declining in performance. As more and more securities were being issued the interest rate on securities started rising which has a direct impact on the gsec return. This again closed one more avenue of investment for banks as they were investing heavily into them instead of lending it out to corporate. This in all diverted the funds of the bank to the needful and thus started the lending process again. Future outlook In India there is evidence of economic activity slowing down. Real GDP growth has moderated in the first half of 2008 / 09. The services sector too, which has been our prime growth engine for the last five years, is slowing, mainly in construction, transport and communication, trade, hotels and restaurants sub-sectors. For the first time in seven years, exports have declined in absolute terms for three months in a row during October-December 2008. Recent data indicate that the demand for bank credit is slackening despite comfortable liquidity in the system. Higher input costs and dampened demand have dented corporate margins while the uncertainty surrounding the crisis has affected business confidence. The index of industrial production has shown negative growth for two recent months and investment demand is decelerating. All these factors suggest that growth moderation may be steeper and more extended than earlier projected. There are also several structural factors that have come to India’s aid. First, notwithstanding the everity and multiplicity of the adverse shocks, India’s financial markets have shown admirable resilience. This is in large part because India’s banking system remains sound, healthy, well capitalized and prudently regulated. Second, our comfortable reserve position provides confidence to overseas investors. Third, since a large majority of Indians do not participate in equity and asset markets, the negative impact of the wealth loss effect that is plaguing the advanced economies should be quite muted. Consequently, consumption demand should hold up well. Fourth, because of India’s mandated priority sector lending, institutional credit for agriculture will be unaffected by the credit squeeze. The farm loan waiver package implemented by the government should further insulate the agriculture sector from the crisis. Finally, over the years, India has built an extensive network of social safety-net programmes, including the flagship rural employment guarantee programme, which should protect the poor and the returning migrant workers from the extreme impact of the global crisis. RBI’s policy stance Going forward, the Reserve Bank’s policy stance will continue to be to maintain comfortable rupee and forex liquidity positions. There are indications that pressures on mutual funds have eased and that NBFCs too are making the necessary adjustments to balance their assets and liabilities. Despite the contraction in export demand, we will be able to manage our balance of payments. It is the Reserve Bank’s expectation that commercial banks will take the signal from the policy rates reduction to adjust their deposit and lending rates in order to keep credit flowing to productive sectors. In particular, the special refinance windows opened by the Reserve Bank for the MSME (micro, small and medium enterprises) sector, housing sector and export sector should see credit flowing to these sectors. Also the SPV set up for extending assistance to NBFCs should enable NBFC lending to pick up steam once again. The government’s fiscal stimulus should be able to supplement these efforts from both supply and demand sides. What Industry experts think? Mentioned below is what the senior experts in banking think of how the banking sector survived the crisis. 1). Mr. Anil Kumar Gupta (Vice President) Wealth management division- North and east region ING VYSYA BANK LTD. â€Å"The banking sector is very strong in India. Especially with the help of a governing body like RBI monitoring all the banks in Indian. † â€Å" I would say that step’s that were taken by the RBI in terms of rate cuts made so much liquidity in banking system that they were compelled to lend out to corporate. The recession gets more dangerous if the spending cycle by the people of the country or the lending cycles by the banks are put on a hold. † 2). Mr. Manavjeet Awasty (Senior Vice President) CITI BANK LTD- North â€Å"The ratio’s that the banks need to maintain because of RBI like CRR and SLR are the life savers for any banking firm. During financial crisis the condition of bankruptcy comes only when liquidity is crunched. The ratio’s which are maintained makes sure that enough liquidity is available in the system. † When the turnaround comes Over the last five years, India clocked an unprecedented 9% growth, driven largely by domestic consumption and investment even as the share of net exports has been rising. This was no accident or happenstance. True, the benign global environment, easy liquidity and low interest rates helped, but at the heart of India’s growth were a growing entrepreneurial spirit, rise in productivity and increasing savings. These fundamental strengths continue to be in place. Nevertheless, the global crisis will dent India’s growth trajectory as investments and exports slow. Clearly, there is a period of painful adjustment ahead of us. However, once the global economy begins to recover, India’s turn around will be sharper and swifter, backed by our strong fundamentals and the untapped growth potential. Meanwhile, the challenge for the government and the RBI is to manage the adjustment with as little pain as possible. Conclusion To conclude, we would say that the Indian banking sector is very strong in terms of its maintaining the said regulations and to follow the rule implied by its governing body which is RBI. The necessary steps were taken during the financial crisis which helped the banking sector to emerge out of the crisis without any major disturbance.