To what extent should the use of Capital Punishment be a matter for Essay

To what extent should the use of Capital Punishment be a matter for Political & Moral Choice rather than based simply on its Ethnicacy as a deterrent against cr - Essay Example Dramatic changes in the letter and the practice of criminal law inevitably indicate that cultural work is being done, that a paradigm shift is occurring in the understanding of crime, criminals, and police power. The main problem is that the debates about capital punishment and its effectiveness are based on ethical principles rather than political or moral rules. Many critics state that capital punishment should be analyzed and discussed in accordance with moral and political principles rather than a 'common sense', values and traditions. Traditionally, the public discussion of crime and punishment encompasses more than the penal code and debates about courts, judges, and juries. The modern criminal justice system emerged at the same time as the fields of psychiatry, criminology, sociology, anthropology, and psychology. These disciplines purported to apply scientific methods of inquiry to behavior, mental illness, and the social and psychological dimensions of crime. In general, moral arguments can be made both for and against capital punishment (Logan, 1999). Long a key element of the debate, moral arguments also have tended to remain fairly static over the years, and often have been used in conjunction with religious arguments. Two moral arguments have remained particularly important throughout the death penalty debate: retribution and the sanctity of life. Those favoring the death penalty often argue that society must express moral outrage at, and condenmation of, heinous crimes such as murder (Coyne & Entzeroth, 2006). The conscience of society should be educated in the view of such a penalty; if it were not, or when it is not, poor and cheap indeed is the estimate placed upon the sacredness of human life. Conversely, abolitionists often argue that rather than upholding the sanctity of life, the death penalty violates it. Both Henry Fielding and Charles Dickens used moral and political arguments to oppose capital punishment. These same issues have been the subject of even greater attention and controversy in the modern era, as scientific studies have attempted to determine whether capital punishment acts as a deterrent to murder and/or whether it has a "brutalizing" effect on society. In spite of the fact that Fielding supported execution for Bosavern Penlez, he rejected the idea of capital punishment as the only possible measure to prevent crimes (Fielding, 1980). Proponents of capital punishment typically consider deterrence to be one of its fundamental goals. The execution sermons of the early colonies were full of warnings against following in the footsteps of the condemned, and executions were public events designed to instill fear and reverence for the law in the people of the community (Colson 1997). Also, critics admit that such mental state as monomania is an elusive form of insanity manifested itself in a single narrow area. Monomaniacs could thus appear sane and normal most of the time but would become obsessive, wildly irrational, and even homicidal in regard to one particular subject (Coyne & Entzeroth 2006). The rational faculties of the moral imbecile could be entirely intact, but the moral faculties common to normal humans were totally lacking. In court, and in some state penal codes, these new categories sometimes led to an "irresistible impulse" test: For the monomaniacal murderer or the moral imbecile, a single act of explosive violence might expose a lifetime of apparent normalcy as a

Faith Diversity Essay Example for Free

Faith Diversity Essay This paper will look and examine four diverse faiths: Christianity, Buddhism, Rastafarianism and Islam spiritual perspective on healing. In Christianity, prayer is a way that a person can stay healthy physically, mentally and spiritually. Health is viewed by having a strong spiritual relationship with the Lord and living ones life by the word of God. Buddhist need a balance of health both mentally and physically in order to achieve optimal health. They way that they are able to restore health would be by practicing healthy dietary habits or meditation. Rastafarianism view on health as a balance of the mind, the body and the soul achieved with a more holistic approach like prayer and herbal treatments. Lastly, Islam reaches ultimate purity by having a clean body and soul. They must cleanse often and pray often. Religions differ in many ways; they could have a different sacred books, have different deities, or have different views on how to live a full life, ultimately they want the same thing, to have their faiths respected and incorporated into the care they are receiving. Introduction Throughout the world, there are thousands of distinctly different religious affiliations. In the United States alone, there are approximately 313 religions and denominations (All Religions and Denominations in the US, 2008). This paper will examine four diverse faiths Christianity, Buddhism, Rastafarianism and Islam. It will look at the philosophy of these four faiths when having care provided to them. It will specifically look at the spiritual perspective on healing. It will examine the critical components of healing for these faiths. Along with looking at these diverse faiths, this paper will look at what is important for people who are receiving care from health care providers whose views differ from their own. Christianity The Christians were the first people to start the worlds first voluntary charitable institutions which were hospitals (Trangelder, 2007). The reason that they started these hospitals is because they wanted to help the poor and those that were sick and dying (Trangelder, 2007). Health care and Christian belief go hand in hand. One of the most crucial components in healing is prayer. The Christians hold prayer in very high regard. They feel that prayer has the ability to make them better. In the book James 5:14-15(English Standard Version) it states, Let him call for the elders of the church, and let them pray over him, anointing him with oil in the name of the Lord. And the prayer of faith will save the one who is sick, and the Lord will raise him up(Biblegateway, 2001). Along with prayer, the bible mentions many ways that a person can stay healthy physically, mentally and spiritually. Ultimately, the way to stay healthy is by having a strong spiritual relationship with the Lord and living ones life by the word of God. Buddhism The Buddhist has a different holy book then the Christian faith. There sacred book is called Tripitaka. This holy book mentions that the only way to be truly healed is to be healthy in mind and body. Western medicine focuses on curing symptoms to treat medical problems, but the Buddhist see this only as a short term fix. In order for one to be healed one must also treat the spiritual aspect of the disease and its mind-based causes and remedies must be the primary considerations(Buddhism, Medicine, and Health, n. d. ). Buddhist feel that possible reasons for illness or disease would be 1) an imbalance of the four elements (earth, water, fire, and wind), 2) irregular dietary habits, 3) incorrect meditation methods, 4) disturbances by spirits, 5) demon possession, and 6) the force of bad karma (Buddhism, Medicine, and Health, n. d. ). They way that they are able to restore health would be by practicing healthy dietary habits, meditation, paying respect to the Buddha, repentance, reciting mantras, reciting the Buddhas name and using the dharma as medicine (Buddhism, Medicine, and Health, n. d. ). By doing this they would be able to find a balance physical and mentally and find long-term health. Rastafarianism Like the Christians, the Rastafarians sacred text that they pray to is the Bible, but the difference is how it is interpreted. The Rastafarians also feel that the head or God incarnate is Haile Selassie. He was a former Emperor of Ethiopia (Griffith, 2009). In Rastafarianism health care takes a holistic approach to healing; they believe that the concept of health extends to three spheres: the mind, the body and the soul (though sometimes the psychological and spiritual can sometimes be categorized together)(Rastafari and the Environment, 2012). They cure illnesses by use of home remedies or tonics rather than visiting a doctor. Rastafarians disown western influences of ideology, diet, lifestyle and religion in favor of belief systems and practices of African origin, which emphasizes the use of natural ingredients and tools(Rastafari and the Environment, 2012). Islam For the Islam, their sacred text is the Quran. In the Quran, unlike the Christians, Muhammad is the prophet sent to Earth to pass the word of the Lord, Allah. The Muslims feel that good health is one of the ways to get to heaven. In the Quran, it has teachings that show people how to protect his or her health and live life in a state of purity (Muslim Health Network (n. d). The single most important thing for this faith is prayer. Muslims perform it five times a day. The obligatory prayers provide a good means for the circulation of blood, breathing and general suppleness of joints (Muslim Health Network (n. d). Along with prayer they must cleanse after prayer, have a healthy diet, fast and refrain from intoxicates. Despite these religious differences in the United States, peoples only wish is to have their religious views respected and honored if possible. No matter if healthcare providers spiritual beliefs differ from those in their care, patients want their faith to be incorporated into the care that they are receiving. The Christian philosophy as written in the book of Luke 6:31 (English Standard Version) And as you wish that others would do to you, do so to them(Biblegateway, n. d. ). This goes in line as all people would like to be treated, no matter how different spiritual views might be. In conclusion, the author learned that although many religions differ ultimately they want the same thing, to have their faith incorporated into the care they are receiving. Religions differ in many ways, they could have a different scared book, have different deities, or have different views on how to live a full life. Medication, chanting or prayer can help achieve inner peace to ultimately reach health inside and out. ? References Biblegateway (2001). James 5:14-15 ESV Is anyone among you sick? Let him call Bible Gateway. Retrieved from http://www. biblegateway. com/passage/? search=James+5%3A14-15version=ESV Biblegateway (n. d. ). Luke 6:31 ESV And as you wish that others would do to Bible Gateway. Retrieved from http://www. biblegateway. com/passage/? search=Luke%206:31version=ESV Buddhism, Medicine, and Health. (n. d. ). Retrieved from http://www. blia. org/english/publications/booklet/pages/37. htm Griffith, J. K. (2009). THE RELIGIOUS ASPECTS OF NURSING CARE (4th ed. ). Vancouver, B. C Muslim Health Network (n. d. ). Islam Health. Retrieved from http://www. muslimhealthnetwork. org/islamandhealth. shtml Tangelder, J. D. (2007). A Christian Perspective on Healthcare. Retrieved from http://www. reformedreflections. ca/faith-and-life/chr-perspective-healthcare. html Rastafari and the Environment (2012). Natural Healing and Medicine. Retrieved from http://caribbeanreligionuvm. wordpress. com/category/natural-healing-and-medicine/

Clearly state what constitutes performance indicators? Why do people :: Economics

Clearly state what constitutes performance indicators? Why do people want organisations to produce these? Suggest your own type of performance indicators that Could be used with a doctor's surgery (general practise). ACCOUNTING AND CONTROL IN ORGANISATIONS 2003 Q. a) Clearly state what constitutes performance indicators? b) Why do people want organisations to produce these? c) Suggest your own type of performance indicators that Could be used with a doctor's surgery (general practise). d) What problems might arise when you try to use the Performance indicators that you produced in part c). a) The purpose of performance indicators is to evaluate and monitor how well a system responsible for providing a service is performing; to report this information in quantitative terms; and to direct the system's efforts and resources towards desirable goals. The fundamental problem, however, with defining what such a set of performance indicators should be made of due to there sometimes being a lack of consensus on what are desirable goals and, therefore, a lack of definition of what constitutes good performance. Performance indicators can consequently be measuring very different aspects of performance, yet they are all generally concerned with measuring the success of a venture and the success of the people who are managing it. As performance indicators are concerned with the measurement of the success of an organisation, and its management, you need to look at what success is to see what constitutes one. The obvious answer is that success is earning a profit and that the greater the profit the larger the success. Profit as measured in accordance with generally accepted accounting principles is, however, a somewhat unsure gauge of success. This is because profits can be kept up for years while a business is being milked dry by cutting down on research, maintenance and certain kinds of advertising, or by realising assets which have been steadily appreciating in value. Alternatively profits can be kept down by stepping up these expenditures and by declining to realise assets which have appreciated in value. Furthermore, what does "the larger profit" actually mean. If it simply means the greatest number of absolute pounds, then there is the criticism that a manager who has access to unlimited capital, with either a free rate of interest or a very low rate, can probably increase the absolute profit he shows by pumping in more capital, so long as he can show any return at all on it. If, however, it is measured by the rate of return on capital employed then is a high rate of return on a small capital better or worse than a lower but still satisfactory return on a larger capital.

Food Safety Illness

Jeremiah went grocery shopping on a hot summer day. He bought food for an upcoming family BBQ; ground beef for hamburgers, a couple of steaks, and the ingredients for making potato salad.When he left the store, he put his groceries in the trunk and stopped by the sports outlet store to pick up a Frisbee and croquet set. It took about 10 minutes at the sports store, and then Jeremiah headed home to prepare the food. He was concerned that it had been too hot in the car, but everything was still cold when he got home.Jeremiah took the groceries home and put everything in the refrigerator. The meat fit well on the top shelf, right above the potato salad ingredients.Later on, he got the groceries out to prep everything for the BBQ. He cooked the potatoes and used a sharp knife to trim some excess fat off of the raw steaks. Then he cut up the rest of the vegetables for the potato salad with the sharp knife on a cutting board.Jeremiah formed the hamburger patties, seasoned the steaks, and f inished making the potato salad. With only about 45 minutes to go before leaving for the BBQ, Jeremiah left everything sitting out on the counter while he showered and got ready.When he arrived at the BBQ, he set the potato salad on the picnic table and went to grill the steaks and burgers. He cooked both to about medium doneness, meaning both were pink in the middle.Jeremiah enjoyed one of the steaks he prepared and gave one to his cousin. The other family members enjoyed the burgers and potato salad; in fact, Jeremiah didn’t have a chance to try the salad. A couple of days after the BBQ, Jeremiah learned that everyone at the BBQ, with exception of himself and his cousin, experienced a bout of flu-like symptoms the following day.Write 50- to 150-word responses to each of the following questions. Be clear and concise, use complete sentences, and explain your answers using specific examples.1. Based on Scenario 1, what are the possible sources of food-borne illness? The possib le sources of food-borne illness could be cross-contamination from Jeremiah cutting off the fat from the steaks and cutting up the vegetables for the potato salad. If the same knife was used or if the same surface was even used to prepare both the meat and vegetables it could have contaminated the vegetables or the ground beef.2. Although Jeremiah did not get sick, there were several areas throughout Jeremiah’s day that could have led him to a serious case of food-borne illness. Point out these areas and briefly explain why they are of concern and what Jeremiah could have done differently. One time that a food-borne illness could have been obtained when Jeremiah put the groceries in the trunk of his car, typically the trunk of a car is the hottest part of a vehicle, so the groceries could have gone below the appropriate temperature to store it at.If Jeremiah would have been in the store more than twenty minutes, all depends on the temperature outside; it could have spoiled th e meat. Secondly, if Jeremiah bought mayo or any type of dressing for the potato salad it could have spoiled and therefore made the guest sick. Also Jeremiah never got to eat any of the potato salad so if it was cross contaminated than he would have not gotten sick.3. Why is it safe for steak to be pink in the middle, but potentially dangerous for a hamburger not to be cooked all the way through? It is safe for steak to be pink in the middle compared to the hamburger due to the hamburger being processed through a machine and being handled human beings  so therefore the meat can be contaminated more easily. With cooking the hamburger to being well done with no pink than it can kill some bacteria. For example some companies do not cleanse or clean their machines to cut down on the bacteria and any contamination that might have occurred.Scenario 2:After enjoying a delicious dinner of lasagna, Martha cleaned up the kitchen and left the covered tray of leftover lasagna on the counter t o cool. Since the lasagna was so dense and thick, it took about 4 hours for it to feel cool enough to go into the fridge for the night. The next day, Martha served leftover lasagna for lunch. She heated the lasagna thoroughly and it was finished.Within about 2–3 hours, everyone who ate the lasagna developed stomach cramps, fever, and nausea; most eventually started vomiting. The illness was pretty awful, but thankfully relatively short-lived.Write 50- to 150-word responses to each of the following questions. Be clear and concise, use complete sentences, and explain your answers using specific examples.1. How could this illness have been prevented? The illness could have been prevented by having the lasagna uncovered while it was cooling so that condensation would have not built up on the cover. Then the water went into the lasagna, which was bacteria, and made the employees sick that ate it. The other thing that could have been done is had the lasagna put into the oven until it was thoroughly cooled.2. Based on the incubation period and symptoms of the illness, what is the most likely microorganism responsible for this illness? E-coli would be the most reasonable reason for the illness. Because Martha did not reheat the lasagna properly for the second time around the bacteria was never killed off. If she would have reheated the lasagna in the oven at the proper temperature the bacteria would have been killed off.3. Describe the temperature danger zone. It would have to cook at a certain temperature to cook all the bacteria and the microorganisms out of the lasagna. Harmful bacteria such as E-coli contaminate food without physical signs, smells or tastes. Temperatures hotter than 165 °F not just the outside but making sure the inside is also cooked correctly.4. How could Martha have sped up the cooling process of the lasagna? If she would have left the lasagna uncovered on the counter it would have cooled down a lot faster. As soon as it would have bec ame room temperature she could have covered it and put it in the refrigerator.5. If the leftover lasagna was thoroughly reheated, (which it was), how did it still lead to food-borne illness? When Martha put the lasagna into the microwave it wasn’t hot enough for the bacteria to be cooked out of the lasagna. If she would have reheated in the lasagna would in the stove instead all the bacteria would have been cooked out and no one would have gotten sick.Scenario 3:Sally was making marinated shish-kabobs to grill for dinner. She made a beautiful marinade and then cut up the raw chicken on a cutting board. She put the chunks of chicken in the marinade and let it sit on the counter for about 3 hours until it was time to cook.While the chicken was marinating, Sally prepared the vegetables. She cut them using the same cutting board and knife; she rinsed both off with warm water between cutting the chicken and the vegetables.Once the chicken had marinated, Sally put the chicken and v egetables on skewers to be grilled. She also started rice in the rice cooker to go with the shish-kabobs.As the shish-kabobs were grilling, Sally put the marinade in a serving dish for extra sauce to put over the rice.Several hours later, Sally and her family members all developed nausea, vomiting, diarrhea, fever, headache, and abdominal pain.Write 50- to 150-word responses to each of the following questions. Be clear and concise, use complete sentences, and explain your answers using specific examples.1. What could be the cause of Sally and her family members’ illness? Would be improper food preparation by leaving chicken out on the counter more than allotted time as it developed bacteria and salmonella. She also prepared vegetables on the cutting board without proper cleaning with hot water and soap. Also reusing the marinated sauce on the rice, she should have been cooked so all the bacteria could have been cook out.2. How could this illness have been prevented? This illn ess could have been prevented with proper cleaning of all preparation and utensils materials. With proper washing with soap and hot water it would not cross contaminate the chicken, vegetables and the marinate. The illness could have also been prevented if she would have properly stored the chicken in the kitchen to make sure that bacteria would have not been growing.

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.

Free Essays on Dance Toward Happiness

, too, can cross barriers, build bridges, and touch our hearts; and like beautiful music, a good story is timeless. In Persuasion, Austen uses music to define Anne’s character, to show her connectedness to people or her lack of it, and to show her gradual reawakening to life and to love. Anne’s great depth of character is illustrated by her appreciation of books and music, two things that give her deep and lasting pleasure. When confronted by Mary for being tardy in coming to her, Anne mentions that she had â€Å"a great many things† (41) to do in getting ready to leave Kellynch Hall. Most of her preparations are for her father and Elizabeth, but when talking about preparing her own possessions to be moved, the only items she mentions specifically are her â€Å"books and music† (41). Anne’s regard for books and music is also seen as Anne compares herself to the Miss Musgroves. The Miss Musgroves use music, but for purposes other than the purely artistic appreciation of it. They have a â€Å"grand piano forte and a harp,† but their time is not invested in playing them, but in arranging the piano and harp, along with â€Å"flower stands and little tables,† around â€Å"the old-fashioned square parlor† for the lates t fashionable effect: â€Å"the proper air of confusion† (42). In contrast, for Anne, playing the piano is a way to give â€Å"pleasure . . . to herself† (48) and... Free Essays on Dance Toward Happiness Free Essays on Dance Toward Happiness In Persuasion Jane Austen tells the story of Anne, a young woman who suffers terrible losses yet does not let these losses embitter her. But the death of her mother during Anne’s youth and the loss of her true love in her early adulthood certainly leave their mark on Anne. She survives with great strength of character, yet she withdraws from life. But Anne does not withdraw alone; she takes her music with her. Music has been called the language of the heart. It has an enduring quality, and it can cross barriers and build bridges. Music moves us. Words, too, can cross barriers, build bridges, and touch our hearts; and like beautiful music, a good story is timeless. In Persuasion, Austen uses music to define Anne’s character, to show her connectedness to people or her lack of it, and to show her gradual reawakening to life and to love. Anne’s great depth of character is illustrated by her appreciation of books and music, two things that give her deep and lasting pleasure. When confronted by Mary for being tardy in coming to her, Anne mentions that she had â€Å"a great many things† (41) to do in getting ready to leave Kellynch Hall. Most of her preparations are for her father and Elizabeth, but when talking about preparing her own possessions to be moved, the only items she mentions specifically are her â€Å"books and music† (41). Anne’s regard for books and music is also seen as Anne compares herself to the Miss Musgroves. The Miss Musgroves use music, but for purposes other than the purely artistic appreciation of it. They have a â€Å"grand piano forte and a harp,† but their time is not invested in playing them, but in arranging the piano and harp, along with â€Å"flower stands and little tables,† around â€Å"the old-fashioned square parlor† for the lates t fashionable effect: â€Å"the proper air of confusion† (42). In contrast, for Anne, playing the piano is a way to give â€Å"pleasure . . . to herself† (48) and...

Attaining Knowledge despite Bias and Selection Essays

Attaining Knowledge despite Bias and Selection Essays Attaining Knowledge despite Bias and Selection Essay Attaining Knowledge despite Bias and Selection Essay Name: Course: Lecturer: Date: Attaining Knowledge despite Bias and Selection Knowledge refers to the information that a person has, which is acquired through learning, perception or experience. People usually gain knowledge through studying. Some people may argue that this is biased learning, since they do not have a choice concerning what they are learning. They enter into an education system, which has already been designed and selected for them. They therefore, have no choice but to study what they are taught. Knowledge goes through a process of selection, whereby some of the elements, which do not succeed the various tests that are applied to them, are eliminated, and those which succeed are retained (Geisler, 169). Human beings naturally choose what they want to learn. The idea that they have a choice in the matter, gives them the will they need to study. Bias means preference or favor towards a particular thing. Selection means carefully choosing someone or something that seems most suitable. Bias and selection have influenced the information that peop le acquire. I will argue that it is possible to acquire knowledge despite bias and selection by examining history and art. My knowledge claim in history is that it is possible to attain knowledge despite bias and selection. Personally, I think that history is the main political events and structural changes that are especially linked to human affairs. History continues to permeate the society because human beings have the ability to record past events. Bias and selection play a crucial role in this case, since in most cases, people have to depend on memory to record the events. History is biased since not all the events that occurred at a particular time are recorded. Whoever records the events will choose, which accounts he or she considers important to record, and will omit other accounts that seem insignificant. Some of the examples of history include the French Revolution, the shooting of John F. Kennedy, World War I and II, the fall of the Berlin Wall, and the recent account of 9/11. All the events have several things in common. They all happened in the past, they have had a significant impact on ma ny people, and in our country, they have all been documented, they all have different interpretations, they all affected significant people, and they are all traced to a single event. In addition, these events had a significant impact, and they carried heavy consequences, thus they were documented. Art is one of the most difficult terms to define because it has a broad meaning. It has various forms such as visual forms, music and literature. It means different things to different communities. Even people within the same community may differ concerning the true definition of art. The study of art that was created many years ago has revealed certain aspects of the society during the time. It has enabled people to know the culture, traditions, beliefs and practices of the people that lived in a particular time. This is represented in various art forms. A person can attain a lot of knowledge by observing different pieces of art from different periods in history. For instance, there is a clear difference between medieval, renaissance and classical art. By observing the art made by the medieval artists, one learns that religion was more prevalent in the society. The artists were more reserved in the sense that the figures in the paintings were fully clothed. Artists in the renaissanc e period were different, in that they had more freedom. The figures in the paintings were either nude or clothed. They explored the secular as well as the religious worlds. The artists were more interested in nature than in religion. Some of the famous artists during the time included Leonardo da Vinci and Michelangelo My counterclaim is that the knowledge gained from art and history is not accurate and therefore it cannot be trusted. Historians usually record the historical events using information from different sources. This information can sometimes be misleading in the sense that different authors can have conflicting information. They also choose to record the information that seems most relevant to them. For instance, most history books record the victory of kings and presidents in war. They do not mention all the people who were involved in the war. One cannot trust the information from different art sources. This is especially the case in visual forms of art and literature, where the artists usually use their imagination liberally to create different forms of art. In some cases, it is not possible to separate the reality from the fiction. The interpretation of history and art depends on a person’s interpretation. This can be affected by the person’s perception, emotions, reas oning or language. History that is learnt through books will depend on the perception of the writer. It is possible for two people to be present when one event is happening, but they will record different accounts of the events later. They have different perceptions concerning the event, and they will therefore record what they consider relevant and important. In the same way, a piece of art will depend on the artist’s perception when creating the art. Artists do not just paint or do other forms of artwork just because someone has asked them to do so. They will instead choose to specialize on the type of art that they are most comfortable with, and they will perfect it. Some people write fictional works of art such as novels. These novels depend entirely on the perception of the writer. The main argument concerning historical events is that they tend to have many different interpretations. People tend to trust the documented accounts since they were not present when these particular events were happening. Emotion can be a problem when interpreting history. People are controlled by their emotions despite the evidence presented. This is especially the case when the subject is controversial or sensitive. Emotions are important in the interpretation of art and history. People have different emotions when they see acquire knowledge concerning an area that affects them personally. For instance, Jews are more emotional than others are when they remember the holocaust. African Americans react strongly when they read about slavery. Time also determines how people react. For instance, many historical events, especially those that happened many years ago do not affect me the same way as recent historical events. This is mainly because I have had the chance to experience the recent historical events. For instance, the 9/11 event affected me deeply when it happened more than the Pearl Harbor. Though both events were tragic and significant, I related more to the 9/11 event more than the Pearl Harbo r. Time is therefore, an important determinant when interpreting history, as it makes the events more realistic and significant to me. Some people interpret history and art based on reason. They want to understand the reason why things happened the way they did. They want to understand why an artist chose to do his or her work in a certain manner. They will therefore develop theories and arguments that will help them understand more. This has led many to interpret various art forms based on the intention of the artists. This can sometimes be misleading since in some cases-such as when the artists are dead-it is not possible to know what the artists’ intentions were. Language affects our thinking process, in the sense that our thoughts are limited by our language. A person cannot think in a language that he or she does not understand. Language is an important part of history, as it is used to document historical records. People think in their native language, and this may present a problem in interpretation. In some cases, historical books are written in English, and the full meaning of the work is lost if translated to another language. This is because some English words do not have an equal meaning in other languages. Some languages do not have the right terms or phrases to use to describe a particular art form. Despite the shortcomings of language, it is essential to understand that something does not stop existing just because it does not have a name in a specific language. Meaning is a fundamental concept of knowledge. I do not think that a person can get any knowledge if he or she does not understand the meaning of something. The meaning of a piece of art is more subjective, since it depends on the viewers’ perception. Meaning in art, is the main determinant of the reaction and the response to art. A person will respond based on what a particular piece of art means to them. We are able to know of the historical events that happened because they have been documented in historical texts by many different authors. Although the records are biased, they enable us to attain knowledge. This is enabled by the fact that people are able to read different accounts that happened from different authors. They are thus able to note some of the similarities in the texts. Artists create their works through imagination and reality (Worth). Their environment and their imagination are their main inspiration. This means that viewers of different forms of art have to be careful when observing different pieces of art. They have to separate imagination from reality. Over the years, many people have acquired knowledge from looking at different pieces of art. The different art forms have enabled them to know different things concerning the era the piece of art was created. It is therefore possible to attain knowledge using history and art despite bias and selection.

Let Your Wishes Be a Writing Prompt

Let Your Wishes Be a Writing Prompt Let Your Wishes Be a Writing Prompt Let Your Wishes Be a Writing Prompt By Mark Nichol In 1970, poet Kenneth Koch went into classrooms at a Manhattan elementary school and benevolently tricked children into realizing that every one of them was a writer. It’s been a long time since I read Wishes Lies, and Dreams, his paperback memoir/anthology, but I do recall that the first thing he did was ask the students to write a list of wishes. After reading some of the lists aloud, he congratulated the kids on their poetry, which surprised them, because few of them had ever thought of themselves as poets. But poets they all were. We’re not talking about roses-are-red rhyming here, either; in these and other exercises, with Koch as their guide, the children unleashed their creativity with sophisticated, eloquent, heartfelt imagery. I do not read or write poetry, but I was enchanted by the results of Koch’s efforts, and I encourage you to use the following prompts to help you express yourself: Wishes Lies Dreams Noises Colors After you’ve tackled each theme, combine two or more of them in one piece of writing. Then, for a little more of a challenge, explore relationships between things: Comparisons Metaphors Being an Animal or a Thing I Used to . . ./But Now. . . I Seem to Be . . ./But Really I Am . . . If you find yourself stumbling, use the experience and run with it. For example, in one of Koch’s exercises, a third grader who meant to write â€Å"a swarm of bees† misspelled swarm as swan. Instead of marking up the spelling error, Koch challenged the students to come up with similar fantastical expressions, giving as additional examples â€Å"a window of kisses† and â€Å"a blackboard of dreams.† This book and its successor, Rose, Where Did You Get That Red? (the title is the opening line of a student’s poem), feature even more prompts, including, in the latter book, ten inspired by classic poems. Both books are still in print. If you’re a teacher or a parent, let children’s imaginations soar with these ideas, but not before you try them out yourself. If you’re not, don’t use that excuse to avoid these inspiring ideas. Want to improve your English in five minutes a day? Get a subscription and start receiving our writing tips and exercises daily! Keep learning! Browse the Fiction Writing category, check our popular posts, or choose a related post below:70 Idioms with HeartThe Difference Between "will" and "shall"Personification vs. Anthropomorphism

Analyies Essay Example | Topics and Well Written Essays - 500 words

Analyies - Essay Example As a result, the price begins to fall. As such, this paper seeks to illustrate how these macroeconomic forces are applied to world markets through an analysis of a recent article about world oil demand. Oil is a commodity that drives the economy in every country and for this reason, it is in demand across the whole globe. According to International Energy Agency (2015), â€Å"The price of oil continued to collapse into January as rising supplies collided with weak demand growth and OPEC maintained its commitment to not cut production. Brent crude futures last traded at $48.40/bbl, near a six-year low.† the problem is heightened by weak macroeconomic forces that continue to restrain global oil demand according to the energy agency. The graph below illustrates the trend in oil demand across the globe. It can be observed that the supply of this precious commodity is higher than the actual demand. Given such a scenario, it can also be noted that the price of this commodity begins to fall. The law of demand and supply applies in every market economy. There are quite a number of macroeconomic forces that come into play in as far as the price of a particular commodity is concerned. For instance, it the consumers have enough disposable income, it means that the price of the commodity is likely to decrease. On the other hand, more supply of the commodity than what is actually demanded in the market entails that the product price will also decline. Many countries across the globe are slashing the prices of fuel because of the fact that oil prices are falling on the world market. Given such as situation, it can be observed that countries in different parts of the globe a compelled to respond according to the macroeconomic conditions obtaining on the ground. In the same vein, when the supply of oil declines, the price of the commodity increases. As discussed above, it can be seen that the price of a certain