Banking and international banking system Essay Example | Topics and Well Written Essays - 2000 words

Banking and international banking system - Essay Example Major financial institutions collapsed or near collapsed and credit markets were frozen. Bear Stearns and Sachsen LB (German bank), banks fell in 2007. It was followed by IndyMac Bank in receivership and demise of Lehman Brother in the quarter of 2008 (Drea 2009). After September 2008, panic in the financial global sector escalated and spread to other sectors of the economies. Investors were shocked by losses that they incurred on assets they thought were safe. There was strong evidence that contagion was linked with global financial crisis. This happened through liquidity and risk-premium channels in the financial markets. There was clear evidence informed by research that contagion during subprime crisis was clearly shown by significance of t-statistic for lagged ABX index returns in 2006 (Longstaff, 2010). Cross-market linkages were stronger and significant during subprime crisis indicating that that 2007 subprime crisis resulted in large shifts in trading activity, liquidity and funding in the financial markets across the world. A number of reasons have been advanced concerning the recent global financial crisis. ... The foreign money was savings piling up and owners wanted to invest their monies away from home where they were assured of some returns. The net inflow of foreign savings into the United States in 2006 was about 6 percent of the United States’ output. Instead of investing foreign moneys appropriately, financial institutions in the United States that received the surplus funds from Asia converted the monies to loans that were aggressively given to borrowers, especially homeowners. Mortgage market was attractive to investors because over 80 percent of mortgage market in the United States was securitized and they that their monies would be invest well (Financial Crisis Inquiry Commission, 2010). Securitization created the much needed diversification to investors and liquidity for business entities and individuals. Securitization refers to pooling mortgages together as securities. Once pooled as securities, they are sold to investors. However, investors and players in the industry lacked the business acumen to realize that securitization lacked clarity and transparency. Financial institutions also underestimated the risk associated with securitization and sold mortgage backed securities to investors across the world. The investors, which included banks, money markets, pension hedge and mutual funds, purchased the mortgage backed securities thinking they were safe. However, securitization was not able to provide protection against systematic risks. Even, credit rating agencies failed to take into account systematic risks and awarded the mortgage backed securities with AAA rating because it was considered low risk securities. Therefore, credit rating agencies could not price systematic risks into subprime mortgage pools. In

Obama's Views on War and Terrorism Essay Example | Topics and Well Written Essays - 1750 words

Obama's Views on War and Terrorism - Essay Example President Obama’s agendas have proved to be stronger and more viable over time. President Obama is a law graduate. President Obama’s years of public services has seen immense achievements. He mentioned numerous pointers, or tasks to be completed, in his Inaugural Speech on 20th January 2009. These included reviving the economy by creating jobs for people, developing renewable energy resources, increasing the educational standards, economic and infrastructure development, scientific research and lowering the healthcare costs, and to make federal budget spending transparent in front of masses. Most of these objectives the president has already achieved and continues to improve on. The inaugural speech also contained a specific emphasis on war on terrorism and how the worldwide contempt and hatred is to be tackled. This is the world’s biggest concern so far and, as United States of America is the most powerful country in the world, it also shoulders a certain respon sibility regarding maintaining peace in the world. President Obama’s Inaugural speech received worldwide viewership and interest for his views and interests on the subject of war and terrorism. President Obama’s Inaugural speech contained specific references to the war-zones of that time. â€Å"We will begin to responsibly leave Iraq to its people, and forge a hard-earned peace in Afghanistan. With old friends and former foes, we’ll work tirelessly to lessen the nuclear threat, and roll back the specter of a warming planet† (Obama). It is evident in these words that President Obama, at the time of gaining office, aimed to establish worldwide peace. He intended to retrieve the United States’ army from Iraq which had been deployed during former president Bush’s reign following the 9/11 chaotic incident. Obama’s priorities also included establishing peace in Afghanistan which had also deteriorated into a war zone in search of Al-Qaeda le ader Osama bin Laden and in search of nuclear weapons which were sadly never discovered. President Obama stressed that he would go to any lengths to establish peace in the region by communicating beneficially with both friends and enemies. As a super power of the world, President Obama specifically felt the responsibility of peace and hence placed extra emphasis on it. President Obama’s other notions have been successfully completed or are in the process. 2.6 million Jobs were added to aid the recession-stricken nation of America and for the country’s economic growth. This would also influence the education sector positively as more people would be able to acquire education if personal financial conditions were satisfactory. President Obama’s efforts do not end here as he furthers his cause and plan till the completion of his tenure. President Obama seems to be carrying a huge impact of his law schooling. He is a strict disciplinary regarding corruption and its legal implications. Not only has he applied his legal educational background to federal budget spending by placing it online in plain view of all United States citizens, but the same is also reflected in his foreign policies and his course of action against terrorism. When talking about President Obama’s views on wars, it is imminent that his views before his presidency were hardly any different. â€Å"I am not opposed to all wars. I am opposed to dumb wars† (Obama). It is clear from his 2002 speech against the Iraq