The Causes And Effects Of The Credit Crunch Finance Essay - Free Essay Example

Sample details Pages: 5 Words: 1391 Downloads: 10 Date added: 2017/06/26 Category Finance Essay Type Cause and effect essay Level High school Did you like this example? The words credit crunch have been all over the financial headlines in the UK, including the effects that has hit the financial markets both in the UK and in other parts of the world have been reflected in a number of ways, affecting both financial institutions(banks) and consumers. Several authors and regulators have showed their different views about the causes and effect of credit crunch. Many economists studying the credit crunch explain it as a cyclical fall in credit demand. What is credit crunch? Bernanke and Lown (1991) define a credit crunch as a decline in the supply of credit that is abnormally large for a given stage of the business cycle. Credit normally contracts during a recession, but an unusually large contraction could be seen as a credit crunch. From Investopedia; credit crunches are usually considered to be an extension of recessions, also making it impossible for companies to borrow because lenders are scared of bankruptcies or defaults, which results in higher rates. The consequence is a prolonged recession (or slower recovery), which occurs as a result of the shrinking credit supply. The credit crunch is also known as the credit crisis and is represented by a reduction in the general availability of loans which leads to sudden tightening of the conditions required to obtain a loan/credit from banks. Also, a broader definition of a credit crunch has been summarized by the Council of Economic Advisers (1992):A credit crunch occurs when the supply of cred it is restricted below the range usually identified with prevailing market interest rates and the profitability of investment projects. Amongst the things affected in the UK as a result of the credit crunch are: Liquidity: The atypical flow of money looking for a home went into the Wests economies. Trade surpluses were recycled in the early part of the decade. This stimulated the search for production of labor and, in turn, the uncertainty in price of risk as investors imagined the high returns they were offered were safer than they proved. E.g. In September 2007, during the financial crisis of 2007-2010, the Bank had borrowed from the Bank of England a sum of about  £13 billion, a liquidity support facility, this showed that the total amount was a loss of deposits. which followed problems in the credit markets caused by the US sub- prime mortgage financial crisis. And it was of great shock that could be avoided to the bringing down of Northern Rock was a risk. Howev er, the result of two unsuccessful offers to take over the bank, not being able to achieve the repayment of taxpayers money. This made the Government immediately take possession, away from its shareholders. Also reported cases showed some shareholders had their life savings in the shares, which were taken from them. Sub-prime lending: This covers different types of credit, including mortgages, auto loans, and credit cards. Sub-prime loans allows the opportunity for borrowers with a less-than-ideal credit record (considered as people with bad credit history)to be home owner. Some of theses lenders may use the credit in purchasing homes,sometimes in financing other types of spendings e.g. paying for living expenses, remodelling a home, or even paying down on a high-interest credit card or purchasing a car. Sub-prime lending (mortgages to be precise)provides a method of credit repair. Also with the interest rates low and liquidity in plentiful supply, financial institutions an d businesses did not bother with adequate checks before, lending billions, who they realise could not afford repayments when some of this types of credits came with high interest rates, increased fees and costs which was a major cause for credit crunch. Sub- prime lending became popular in the U.S. in the mid-1990s, with outstanding debt increasing from $33 billion in 1993 to $332 billion in 2003. The cause for the crisis was an increase in sub- prime mortgage defaults, which was first noted in 2007. If general principle of lending : CAMPARI model, which could be used to determine whether a loan or overdraft proposal is a good idea or not and to satisfy it will require: Character: The willingness to pay versus the ability to pay, which sometimes can be from the length of time the customer(s) has been with the bank. Ability to repay: Adequate cash flow to meet repayment, which can be the age, the health and dependence of the borrower. Margin of finance: The lender b orrowers must introduce a certain level of commitment, since the lender will not grants total financing. Purpose: The borrowing purpose must be clearly defined and supported by relevant documents; speculative reasons are considered risky. Amount: The amount of commitment the bank is prepared to take a risk on the applicant .e.g. Before the era of credit crunch, banks would lend 3 times the gross income of the customer. Repayment terms: is considered as the most important, as this is the structure and terms of the repayment. Insurance / Security: this could be seen as a second line of defence incase the main source of repayments fail(s), there is a pay-out source. Securitisation Blackà ¢ÃƒÆ' ¢Ãƒ ¢Ã¢â€š ¬Ã… ¡Ãƒâ€šÃ‚ ¬ÃƒÆ' ¢Ãƒ ¢Ã¢â€š ¬Ã… ¾Ãƒâ€šÃ‚ ¢s Law Dictionary defines securitisation as a structured finance process in which assets, receivables or financial instruments are acquired, classified into pools and offered as collateral for third-party inv estment. Due to securitisation, investor long for mortgage-backed securities (MBS) and the tendency of rating agencies to give investment-grade ratings to MBS, loans with a high risk of default could be provided, packaged and the risk readily transferred to others. Although, the problems arises when the customers defaults. This is a cause of credit crunch as banks lent to poor customers (sub-prime customers) who could default. Increase in unemployment: In a country like the United Kingdom, the effect of credit crunch cuts deeply into all societies especially with migrants in the country and who also work in the UK. The security for jobs are very slim as credit crunch holds a tolls, where peoples services are not needed any more as some businesses affected by the crunch are less effective or productive. Immigrants are more likely than the native born to be affected by the economic crisis. Most times, they are more likely to be fired first and they tend to have higher unem ployment rates than their native counterparts. Experience selective layoffs and discrimination in the labor market occurs, a trend that is likely to occur during an economic downturns. Reduced standard of living / Lower income: This threaten funding and raise difficult options e.g. customers and businesses confidence are low due to the uncertainty of the economy by spending their money. Also, as the demand for council services increase, local authorities income drops, this is due to public deficit leading to constraints on all public spending; Loss of fees from planning receipts; Reduced income from section 106; Increased concessionary travel; Higher utilities costs; Pension increases; Reduction in prices for recyclable materials which leads to a sizeable reductions in income. E.g. Newcastle City Council expect reductions in capital receipt income of approximately  £20m over the next three years. Government bailout: This meant that the markets / businesses own stabilization mechanisms looks to be undermined by the implicit promise of government intervention if it were needed. Many businesses, in many cases, prefer to outsmart the regulatory authorities this is to secure bailouts or favourable terms instead of having losses. Recessions: A period of general economic fall, this could be said to be a fall in gross development product(GDP) for two or more consecutive quarters. This is usually either from the drop in stock market, and decline in housing market. Increased Taxation: People in their various jobs in the current credit crunch era are suffering from the constant increase of tax on their income(s) by the Government. Many UK businesses (53%), do not think the regulatory and taxation environment is business friendly, as they also face several barriers to business growth, and one key area highlighted by more than half is the UK regulatory and taxation environment as smaller businesses struggle the most with red tape.ÂÆš Regulatory burden Conclusion. A key uncertainty facing the UK economy at present is how far the effects of the recent credit crunch will spill over from banks and other financial institutions to the rest of the economy. The recessions come and go and the markets can and do recover if given enough time. Don’t waste time! Our writers will create an original "The Causes And Effects Of The Credit Crunch Finance Essay" essay for you Create order

The Bay Of Pigs - 1217 Words

The Bay of Pigs was an attempted invasion that occurred on the south coast of Cuba. While researching this occurrence, it seems that it was a failed attempt to invade communist Cuba. This invasion was to overthrow the communist leader, Fidel Castro, had power in office until the year 2008. The main reason for the failure, many believe, is because of the Central Intelligence Agency, under the power of the young President John F. Kennedy (Bay of Pigs 378). The purpose of this research paper is to review the events of what was supposed to happen, opposed to what actually took place. Communism is a different type of economic system in which only one person, or a group of people with the same political views, are in power of the country. Some†¦show more content†¦At first, the United States accepted this new form of government as a relief from Batista’s way of governing Cuba. Castro soon started making harsh decisions while in office. He announced his decision to form into Marxism-Leninism, which scared the United States (Goode-Stephen). Cuba then started strengthening its military by forming alliances with other countries and investing in upgrading their military equipment. Fidel Castro took great pride in his military abilities, he expanded his army to 400,000 soldiers. This size of army was about ten times as much as what Batista had it at. Kennedy’s cabinet was frightened by this. Because of the extensive military, â€Å"What was Castro planning to do?† they asked themselves. This made Cuba, and its alliances, at top priority for the CIA (Goode-Stephan). About six mots before the Bay of Pigs invasion, the Cuban Minister told the leaders at the United Nations meeting that he was aware of plans of the invasion. He then stated that he knew the United Stated CIA was behind the attack. They figured out this information from various media networks that were informed about the invasion by the CIA being careless about where and who they we re revealing their plans to. This allowed Castro to become prepared for the invasion along with the areas that were going to be attacked and a time line of when the United States were planning on attacking. On April 14, 1961, the Liberation army sent six different

Cultural Competence in Healthcare for Diversity- myassignmenthelp

Question: Discuss about theCultural Competence in Healthcare for Diversity. Answer: Reflection Diversity within a nation brings with it both opportunities and challenges in the health care system. It has become increasingly important for the providers of care, the policy makers and the health care systems to embrace cultural competence in provision of services (Jeffreys, 2015). According to Ang and Van (2015), cultural competence can be defined as possession of the qualities and ability to provide healthcare services that are effective and that meet the social and cultural needs of the patient. When healthcare providers are culturally competent, there is a high likelihood of improvement of health outcomes and quality of care. It can also lead to a significant elimination of health disparities that result from racial and ethnic differences. This paper reflects my values, beliefs and behaviours and how they contribute or may detract me from being a culturally safe practitioner in a multicultural healthcare environment. Personal values affect the cultural competence of a healthcare provider, either positively or negatively. I have mastered the art of confidentiality. In my day to day life, I endeavour to maintain confidentiality of information revealed to me. This means that I do not share such information without the go ahead of involved parties or where such revealing will be a breach of confidentiality. I believe that this is a positive attribute and would improve my cultural competence while offering care to patients. As Shen (2015) observes confidentiality is likely to make a patient trust the health care provider and reveal even more information that is necessary for optimal care. I also possess the value and quality of integrity. Being honest leads to more trust in human relations (Han and Cho, 2015). Consequently, this would be a great contributor to cultural competence in a multicultural setting since it would mean that I am providing the patients with truthful information in every step of the care process. This is in turn likely to improve the health outcomes and quality of care. Resilience is another quality that I would boast of but only to a certain extent. I do persist in carrying on with an activity even if there seems to be little success, but after some time I tend to give up. This is an attribute that would reduce my cultural competence since sometimes events in healthcare provision would need resilience. For instance, when dealing with a patient who takes quite some time to grasp information, resilience would be a key factor to promote successful health education. As such it is a key value in ensuring cultural competence when working with people from different backgrounds (Gallagher and Polanin, 2015). The fourth value to be discussed will be empathy. In my interaction with people, I have learnt to imagine I was in their own shoes to understand how they feel and offer the help I can. This is potentially a great value when it comes to cultural competence. It would mean that I will effectively create helping relation with patients/clients and consequen tly improve the quality of care. It becomes a potential barrier to competence sometimes when it crosses over to sympathy. I easily become sympathetic. As demonstrated by Diaz, Clarke and Gatua (2015), sympathy may prevent development of a helping relationship between a healthcare provider and their patients/clients. Therefore, the attribute of empathy need to be strongly developed to reduce the incidences of sympathy. The values that one upholds play an important role in shaping their beliefs. If one has plenty of positive values, they are likely to uphold positive beliefs too. Beliefs in turn plays a role in shaping behaviour. The three (values, beliefs and behaviours) cumulatively determine the cultural competence of a person (Dauvrin and Lorant, 2015). The beliefs that I uphold and how they are likely to affect my cultural competence are discussed next. I believe that no one should be discriminated against due to their cultural background, race, gender and beliefs. I believe that such discrimination does no good and that it is unnecessary. For this reason, I can interact freely with persons of different beliefs, gender, cultural background and race. This would most likely affect my cultural competence positively. It would improve it since I would have little challenges interacting with professionals and patients/clients of different parameters mentioned above. It would however pose some challen ge where the culture of the region of work stipulates a belief that is different from mine. The second belief is that every person deserves respect and care. For this reason, I have learnt to treat other people with great care and respect just the way I would like to be treated myself. This would be a strong contributor to cultural competence. This is because I would treat my patients with outmost dignity and care. As Betancourt, Corbett and Bondaryk (2014) observes the two are likely improve the self esteem of the patients which may dramatically improve the health outcomes. The third belief is that of beauty/strength in diversity. I believe that diversity should not bring differences but unity. We all need each other for a peaceful and harmonious coexistence. The doctors, the engineers, persons with disabilities, different cultures etc., represent diversity. When we choose to see the beauty of the diversity we live well together and in peace. This belief would likely contribute positively to my cultural competence as I would view each person as unique and treat them as tha t. The fourth belief is appreciating other peoples cultures. Whenever I interact with persons from different cultures, I desist from treating my own culture as superior to theirs. Rather, I choose to believe that theirs is as important as mine. This belief would potentially contribute to my cultural competence. As demonstrated above, both values and beliefs shape a persons behaviour. In this paragraph, I am going to explore four behaviours and how they affect my cultural competence. These are directly or indirectly linked to the values and beliefs that I have explained above. Since almost all the details regarding the behaviours has been covered when discussing values and beliefs, only brief information is going to be provided here. The first behaviour is that I do respect every person. The second is that I demonstrate empathy. The third is that I appreciate each persons culture. The fourth is that I exhibit resilience. The first three behaviours are likely to make me more culturally competent. The fourth, however, as explained above, needs more improvement. I should learn to be more resilient to be more culturally competent. In conclusion, cultural competence is very important in the provision of healthcare. When the healthcare providers, the health care system and the policy makers become culturally competent, there is a high likelihood of improvement in health outcomes and the quality of care. The values, beliefs and behaviours of a person play a role in determining how culturally competent they are. They may contribute or detract one from being culturally competent. Being confidential, maintaining integrity, being empathetic contributes to this competent. Being sympathetic and not resilient enough on the other hand may detract one from being competent. The values and beliefs are directly or indirectly linked to the behaviours of a person. Consequently, they affect the cultural competence. References Ang, S., Van Dyne, L. (2015).Handbook of cultural intelligence. Routledge. Betancourt, J. R., Corbett, J., Bondaryk, M. R. (2014). Addressing disparities and achieving equity: cultural competence, ethics, and health-care transformation.Chest,145(1), 143-148. Dauvrin, M., Lorant, V. (2015). Leadership and cultural competence of healthcare professionals: a social network analysis.Nursing research,64(3), 200. Diaz, C., Clarke, P. N., Gatua, M. W. (2015). Cultural competence in rural nursing education: are we there yet?.Nursing education perspectives,36(1), 22-26. Gallagher, R. W., Polanin, J. R. (2015). A meta-analysis of educational interventions designed to enhance cultural competence in professional nurses and nursing students.Nurse Education Today,35(2), 333-340. Han, S. Y., Cho Chung, H. I. (2015). Development of a cultural competence scale for nursing students.Journal of Korean Academy of Nursing,45(5), 684-693. Jeffreys, M. R. (2015).Teaching cultural competence in nursing and health care: Inquiry, action, and innovation. Springer Publishing Company. Shen, Z. (2015). Cultural competence models and cultural competence assessment instruments in nursing: a literature review.Journal of Transcultural Nursing,26(3), 308-321.