Case study in business at college level Essay Example | Topics and Well Written Essays - 1250 words

Case study in business at college level - Essay Example Penetration or predatory pricing is the opposite and means setting a low price in anticipation of future cost declines in order to grab a bigger share of a growing market (Bagozzi 54-55). Price skimming works for the products Gadgets2u.com sells (line 58). Predatory pricing works best once the level of sales starts to decline, with the effect of discouraging any potential competitors. 2.a) Gadgets2u.com's problem (lines 44-46) is not in the structure but in the lines of communication between project teams and staff (lines 39-43). This is common in fast-growing e-businesses and the solution is "not to automatically transform the flat structure into a formal hierarchy, but to make the hyperarchical system efficient by making it easier for project team leaders to communicate with each other, collect and evaluate the relevant information, and make decisions" (Amor 48). Gadgets2u.com's matrix structure is hyperarchical1 and characterized by flexibility, fast information flow, and quick decision-making. Improving communication efficiency will make the structure scalable or adaptable to growth. 2.b) Homeworking (or telecommuting) is done by five employees (line 138), but if their productivity is low and having them in the office will improve it, or if they have new assignments where their office presence is needed, then bringing them to the office is acceptable. Otherwise, this will backfire. The employee(s) may resign or be demotivated, leading to lower productivity and worse problems. Homeworking is a good way to keep and motivate good employees, especially creative types or those with health problems or multiple roles2 (family or community). Good employees are satisfied if they know they are more productive working from home and their contributions to the company's success are recognized. It is assumed that workers are given full management support and resources (communication lines, clear assignments, etc.). The appraisal system (line 137) will give Tom and the management more information on this matter (if homeworking is productive, motivating, or not). 3.a) Holding too much stock is a problem because stock costs money and space (which costs something and is therefore also money). Declining future sales may affect profits. Holding too little stock is also a problem because if the goods sell very well, the market will be frustrated with the company. Market satisfaction seems to be a problem lately (lines 119-120), although distribution is the main reason for that. 3.b) Just-in-time (JIT) stock control, currently under study by the management (lines 98-99) is one of the ultimate goals of any e-business (Amor 49). JIT is a system where inflow and outflow of stocks are balanced, or where the company has almost exactly the amount of goods that the market wants to buy (Germane 192). JIT requires near-perfect coordination between Gadgets2u.com and the suppliers, and demands accurate knowledge of market behavior which, because it is very dynamic, is difficult to predict. This ideal of

Rio Carnival Essay Example | Topics and Well Written Essays - 2250 words

Rio Carnival - Essay Example The social background to the Carnival is that it was once considered to be a riotous, disorganized and essentially anti-authoritarian expression by the people that the government was forced to accept because of its popularity but which it did not positively condone. The Rio Carnival found its roots in the 1830's when the city's rich imported the practice of holding balls and masquerade parties from Paris. Gradually, over the next century, the festival took on the shape that it now holds, acquiring elements derived from African and South American Indian cultures. It is this mixture of cultures into a remarkably diverse and yet recognizably unified "Rio Carnival" that is the prime social characteristic of the celebration. The Carnival is the reason that Rio de Janeiro is famous throughout the world. Indeed, it may be the only thing that most people know about the city. This influences both the social and economic identity of the city, for better or worse. Thus while the original idea came from France, the cordoes were introduced by the Portuguese in the late 1800s. The cordoes were groups of people who danced through the streets playing music and generally celebrating. They are known today as blocos, and consist of people who dress in theme costumes and celebrate Carnival in a specific way. Certain neighborhoods are associated with certain blocos. In a social aspect that stems from a number of different traditions, a "fat man" is elected to act out the role of the Rei Morno, or the "King of Carnival" (Cowley, 2002). In recent years, cultural changes within the world as a whole, and within the developed world in particular, have been reflected within the social makeup of the Rio Carnival. For example, many different travel companies advertise the "Gay Rio Carnival" in which "the beaches are loaded with eye candy as far as the eye can see . . . people joke that everyone seems a little gay during carnival" (zoom, 2007). Small gay festivals have become a part of Carnival, and may be regarded as part of a sub-culture of hedonism in which this city, known for its surprisingly permissive attitudes vis--vis social mores, becomes even more accepting during this celebration of freedom. There is a great mixture of factors going into the social impact of Carnival upon the city in particular, and the country in general. As Teissl puts it: Carnival is all the little festivals and parades in the streets and favelas, Rio de Janeiro's poor quarters. Carnival is also masked balls, elegant and often uninhibited - even debauched, where one sees fewer masks but plenty of skin, And Carnival is a time for competition in which countless participants pay thousands of dollars for luxurious and fantastic costumes. But Carnival is also a time of fraternization, tolerance, and genuine human friendship. (Teissl, 2000) So variety and indeed a degree of contradiction exists within Carnival. Thousands of dollars may be spent on a single costume for a rich masked ball while in some neighborhoods that still attempt to celebrate Carnival the average yearly wage may not reach that amount. This contrast can be seen in two main ways. One, more positive manner is to regard it as showing just how universal the feelings and atmosphere surrounding Carnival is. Thus, within this interpretation, "Carnival" is a transcendent social structure which

Free trade is beneficial and should be promoted Essay

Free trade is beneficial and should be promoted - Essay Example Like in capitalistic national economies, rules and regulation restrict operations in international businesses and this forms the basis of defining different types of international trade environments. Free trade is one of the types and defines an international trade in which no regulations exists. Buying and selling of commodities are only subject to laws of demand and supply and not domestic laws or international barriers. This is contrary to the current international trade environment in which laws restrict trade and treaties exist to facilitate trade with specific partners. This paper argues that free trade is a better option for the contemporary global economy. Diversified views exist against free trade. One of such arguments is the risk of structural unemployment that a domestic economy may experience when it opens up its borders to free trade. According to the perspective, free trade may make some industries more competitive than others may and therefore shifts investments and d emand for labor to the more competitive industries and ventures. The consequence is dissertation of some industries that may render experts in those industries jobless. Finding jobs with redundant skills, especially at old age may be a challenge and a threat to people’s welfare and economic growth. It is also argued that free trade exposes an economy to trends in other economies and to global economic trends. Inflation in one country may induce inflation in another country because traded goods from the affected country transfers the inflation effect into the recipient economy. Similarly, recession in one economy may reduce its potentials to import commodities and reduce demand for another country’s export. Cases of perishable commodities would result into economic loss in the exporting countries. Opponents of free trade also claim that the international market favors some economies than others. Countries that are more efficient are able to trade at competitive advantag es and this hinders development of emerging economies that lack such advantages. This basis limits benefits of free trade to developed countries that continues to expand their economies while economies of developing countries stagnate. Regulations are also necessary for environmental conservation and free trade is a threat to this because it eliminates or weakens environmental laws. Organizations that produce commodities in less regulated environments also have advantage over those that operate in strictly regulated environments and this may facilitate the urge to eliminate all environmental regulations. Doing so, based on the opponents’ perspectives, is a key to global environmental concerns such as the contemporary global warming. There are also circumstances in which natural justice requires regulations. Examples are in cases of economic downturns such as the recent global recession that called for regulations to prevent unemployment rates (Edge 1). Moral and rational anal ysis of the opposing arguments identifies weaknesses in their validity. Threats of structural unemployment are for example not real, because people can operate in different industries and organizations’ compositions identify diversity. Transition that focuses interest from one industry to another will therefore only shift employment in that direction. Limiting free trade in order to protect domestic industries and domestic economies is also not rational because such industries failed to thrive in previous restricted market environment and all economies suffered from previous recessions under regulated trade. A moral perspective, rather that rule based approach can also help in resolving issues such as environmental protection and protection of employments during economic crisis (Edge 1). A review of arguments for free

Savings and Loans Crisis Essay Example for Free

Savings and Loans Crisis Essay INTRODUCTION In the 1980’s, the savings and loan (SL) industry was in turmoil with the watershed event of this being the implementation of price fixing legislation in favour of home ownership in the 1930’s. Even though it was the basis of the crisis, the trigger lies in more fundamental concepts, including fiscal policy, mismanagement of assets and liabilities, pure imprudence by SL institutions, brokered deposits and the cyclicality of the regulation/deregulation process and this was fuelled by economic reactions such as inflation. It would be ‘unfair’ to attribute it to only one factor. Therefore, to properly investigate the crisis and with a view of having all round perspective of the crisis, this report will discuss this financial disaster’s main causes. The impact of the crisis was borne mostly by the SL industry, the savings and commercial banks in the US and more generally, the US economy. This report will further cover the corrective measures undertaken by regulators and the government with the aim of saving the SL sector as the number of institutions with worsening financial conditions steeply increased. The consequences of this crisis persisted until the early 1990’s and this long term effect is understood by analysing the regulations enacted in the aftermath of the crisis. The main turning point has been the enactment of the Financial Institutions Reform, Recovery and Enforcement Act in 1989. Finally, there are essential lessons to be learned from the SL crisis, not only for the SL institutions, but also the banking industry, regulators and the government. CAUSES In the 1930s the SL industry was a conservative residential mortgage sector surrounded by legislation put in place during that period to promote home ownership. At the same time it has its own regulator which is the federal savings and home loan banking loan, and its own insurance firm to insure deposits at SL institutions. However the regulatory and interest rate environment started to change dramatically as from the 1960s when congress applied the Regulation Q to the SL industry by putting a ceiling on the interest rate that SLs can pay to depositors. The purpose was to help thrift institutions to extend interest rate ceiling to them in order to reduce their cost of liabilities and protect them from deposit rate wars since there were inflationary pressures in the middle till late 1960s. Regulation Q was price fixing, and in trying to fix the prices, Regulation Q caused distortion where the costs outweigh any benefits it may have offered. Regulation Q created a cross subsidy, passed from saver to home buyer, that allowed SLs to hold down their interest costs and thereby continue to earn, for a few more years, an apparently adequate interest margin on the fixed-rate mortgages they had at that recent past years. The problem was that the SL industry was not competing effectively for funds with commercial banks and securities market leading to large things in the amount of money available for mortgage lending. The ceiling on interest rate that SL could offer to depositors as per the Regulation Q led dampening of competition for depositors funds between bank and SL. But as new money market funds began to compete fiercely during the 1970s for depositors’ money by offering interest rates set by the market, SLs suffered significantly withdrawal of deposits during periods of high interest rates. This caused outflows from financial institution into higher yielding investment such as capital market instrument, government securities and money market funds. This process is known as disintermediation. Disintermediation has several undesirable consequences. Most important, it both restricted the availability of credit to consumers and increased its cost, particularly for home mortgages, the same consequences affected small and medium sized businesses that did not have access to the commercial paper market. In additional, because normal cash outlays increased to meet deposit withdrawals while cash inflows decreased as new funds were diverted to alternative investments, disintermediation slowed the growth of financial institutions and caused them liquidity problems. To have the cash available to meet withdrawal demands, banks and thrifts were often forced either to borrow money at above-market interest rates or to sell assets, often at a loss from book value. At the same time, rise in oil prices in 1979 pushed inflation and headline interest rates up. Growing inflation in the 1970s received two huge boosts: the first comprised the late-1973 and 1979 oil shocks from OPEC (the Organization of Petroleum Exporting Countries). Soaring oil prices compelled most American businesses to raise their prices as well, with inflationary results. The second boost to inflation came in the form of food harvest failures around the world, which created soaring prices on the world food market. Again, U.S. companies that imported food responded with an inflationary rise in their prices. In order to combat the increase in inflation, there was a rise in interest rates to encourage people to save and spend less. The Federal Reserve opted for tightening monetary measures in reaction to inflationary concerns. As a result of the subsequent monetary tightening, interest rates rose abruptly and significantly. Interest rates soared from 9.06% in June 1979 to 15.2% in March 1980. Such drastic change in base rates caused the yield curve to become inverted. The spread between the 10 year Treasury bond and the 3-month T-Bill became negative as seen in the table below reaching 373 basis points in 1980. (http://www.milkeninstitute.org/pdf/InvrtdYieldCurvesRsrchRprt.pdf) The graph below shows the variation of US Treasury three-month T-Bill. The large rise and the volatility of short term interest rates is evident from the graph. (http://www.milkeninstitute.org/pdf/InvrtdYieldCurvesRsrchRprt.pdf) The following 10-year Treasury against the effective Federal Funds Rate spread also illustrates how the yield curve inverted during the SL crisis. (http://www.milkeninstitute.org/pdf/InvrtdYieldCurvesRsrchRprt.pdf) With high volatility of interest rates during these periods, the SL industry failed to tackle the risk inherent in the funding of long term, fixed mortgages by means of short term deposits. In other words, there was a mismatch of asset/liability with a negative gap and rising short term interest rates. Aftermath In the1982’s, to attempt at resuscitating the SL industry, Congress tried to deal with the crisis by enacting the Depository Institutions Deregulation and Monetary Control Act in 1980 and the Garn-St Germain Depository Institutions Act in 1982, allowed lower capital requirements, which were based largely on book values rather than more market-value oriented techniques, grossly overstate the health of financial institutions. Regulators relaxed regulatory restrictions by decreasing the net worth requirement from 4% to 3% of total deposits, with additional flexibility of not complying with the generally accepted accounting principles (GAAP). The process of deregulation further included the extension for the period of amortisation of supervisory goodwill and the Bank Board removes the specific limitations for the SL shareholders, changing the minimum 400 shareholders restriction to only one, with no one shareholder or group holding more than 10% and 25% respectively and the acceptance of means of payment other than cash. In particular, rules on net worth changed so that thrifts could continue to operate even at historically low levels. Also, â€Å"supervisory goodwill† was used to balance out the books in terms of capital requirements and accounting numbers. This goodwill had no economic sense and simply helped to compensate any institutions, in a merger, when taking over economically impaired assets of insolvent institutions. All in all, the changes in accounting and capital treatment of supervisory goodwill enabled SL’s to post stronger accounting and capital numbers even though the underlying economic situation had deteriorated. There was a cancellation of the ceiling of the loan to value ratio as well. Forbearance or the decline in regulatory oversight was also a major factor of the debacle. Most importantly, savings and loan interest rate ceilings were removed. SL’s had a large proportion of variable rate liabilities (deposits) funding fixed-rate assets they held 84.5% of their assets as home mortgages. These institutions had a negative GAP as the amount of RSL was larger than that of RSA. GAP = RSA RSL Therefore, they were exposed to any rise in interest rates as the yield on the assets were fixed while the cost of liabilities increased. With the rapid increase in base rate in the 1980’s, FI’s cost of RSL rose faster than they could adjust their return on their assets. They had to maintain a high level of interest paid on deposit to avoid deposit withdrawal. The Net Interest Income – the difference between interest on assets and cost of liabilities decreased significantly. NII = Asset Return – Cost of Liabilities On average, the returns on home loans were 9% with an average deposit rate of 7% which implied a 2% net interest income. Given the tight regulations surrounding the SL’s, these institutions relied in the 2% net interest income as their main source of income. However, as the base rate rose dramatically, the NII dropped to negative figures, reaching -1.0% in 1981. Many institutions lost huge amounts of money. Savings and Loans specialised in originating and holding home mortgage loans that were relatively long term assets with fixed interest rates. However, these were funded by relatively short term deposits whose interest rates were variable. There was a maturity mismatch that was exposed to risk of interest rate rise. With the market value of the assets being more volatile because of its longer maturity, and as a consequence a longer duration, the rise in interest rate decreased the value of the mortgages to very low levels. The value of the liabilities decreased as well but to a smaller extent. Since net worth is the difference between market value of assets and market value of liabilities, this led to negative equity of financial institutions. Δ E = (DA DLg) x A x Δr/(1+r) Since DA DLg, with Δr 0, change in net worth value ΔE is negative. The leverage adjusted duration gap between the assets and liabilities was so large and with a large rise in interest rate, the equity value decreased to being negative. By the early 1980s, savings and loans throughout the country were insolvent by about $110 billion and the fund was reporting only $6 billion in reserves (Barth, 1991; Brumbaugh, 1988; Kane, 1989) The legislation also allowed savings and loans to begin to diversify into commercial real estate loans and other loans commercial banks could already make. Congress hoped that if SL’s invested in riskier, and thus, higher yielding assets, they would be able to offset the loss they previously made. The savings and loans were also allowed to originate adjustable-rate home loans. By 1983, most SLs were deemed economically profitable but 9% of the SL industry was insolvent. However, the Federal Home Loan Bank Board (FHLBB) and the Bank Board, went ahead with their plan of regulating the industry by imposing a 7% net worth limit for new entrants in the thrift industry so as to promote safe risk management practices and investments. Although all these developments were intended to help savings and loans, they gave rise to a subsequent twist in the crisis. The new changes did indeed allow savings and loans to reduce their interest rate risks but the changes exposed savings and loans to new risks mainly credit risks. While defaults on the home mortgages were low, defaults and associated losses on other types of loans and investments are typically much higher. By combining interest rate risk with credit risk, spread over a wider geographical area, experienced institutions had greater opportunities to choose a prudent overall balance of risk and return. However, many savings and loans began making commercial real estate loans, activities in which they were relatively inexperienced. Since investing in real estate loans entailed unique risks and required specific skills, SL’s eventually made losses on the real estate loans. These credit quality problems are reflected in the net income of the industry plunging once again, but even more than in the early 1980s, when the yield curve inverted. The industry lost nearly $21 billion in 1987 and 1988, and almost another $8 billion in 1989. Many open but insolvent savings and loans had incentives to take excessive risks and â€Å"gambled for resurrection† because of the phenomenon of moral hazard. If ever something turned wrong, the federal deposit insurance fund would bear the losses; yet the owners would reap the rewards if everything went well. The legislation, however, did not change how premiums were set for federal deposit insurance, meaning that riskier institutions and prudent ones were charged the same premium. Actually, the level of insured deposits was raised from $40,000 to $100,000. The new, lower capital requirements and broader opportunities to lend and invest allowed some savings and loan to take larger risks. With federally insured deposits and the ability to attract more deposits by offering higher rates of interest, deeply troubled savings and loans always had ready access to additional funds. Deregulation encouraged increased risk-taking by SL’s. However, in the mid- to late 1980s, with considerable real estate loans and investments, regional recessions struck the USA, which reduced commercial real estate values. In particular, an unexpected plunge in the price of oil in 1986 contributed to recession. To make matters worse, the Congress passed the Tax Reform Act of 1986 that more than eliminated the tax benefits to commercial real estate ownership it had conveyed only a few years earlier. Commercial real estate values fell dramatically as a result. This severely affected the asset value of the SL’s. In 1987, the Bank Board emphasised the importance of capitalisation by imposing a supervisory approval for SLs which engage in investments that are above 2.5 the multiplier of their tangible capital base. The main turning point was the Financial Institutions Reform Recovery and Enforcement Act (FIRREA), restructuring the industry as a whole by setting up the Resolution Trust Corporation which in total resolved or liquidated 747 thrifts, with assets valued at $394 billion, jettisoning both the FHLBB and FSLIC and setting up a new regulatory institution Office of Thrift Supervision. The key to this act was that instead of trying to save the SLs which were barely solvent, it dissolved them and focused on the solvent ones to reform the industry. With the assistance of market fundamentals – favourable conditions of interest rates, the reinstatement of GAAP accounting and real estate market, the industry stabilised. LESSONS LEARNT The thrift crisis had a bailout plan of $153 billion, of which around 80% was financed by taxpayers. The number of institutions in the SL industry receded considerably until 1995 and before then, the ability of the regulators and the government to deal with the crisis was questioned many times. What followed was a series of court battles, corruption charges and major restructuring. Therefore, consequences were substantial enough for everyone to extract some observations and lessons. The starting point of it all was overregulation, which outlined the restrictions and conditions under which an SL would function. That included rigidity of the institutions to be flexible at a time economic conditions were changing and the financial sector was advancing. With fixed interest rates, it proved difficult for the SL to engage in competition as their means of investing was limited. One crucial point is that additional regulations do not necessarily mean fewer risks. SLs had to assume additional exposure to interest rate risk and alongside with banks, they were prevented from optimising their credit risk exposure. The government sometimes does not modify the regulations as fast as the structure of the industry is changing leading to new risks emerging and the cycle goes on. To keep up with advancement, the government has to put in place tighter risk management policies and controls. However, regulators and government should not direct the investment decisions of institutions. Rather, investments should be in line with market and economic forces. At a later stage, the industry was deregulated in order to remedy the situation. However, this translated into a decrease in market discipline as the SLs made high risk investments as they relied on the safety net of federal guarantee to cover any losses. Moral hazard, adverse selection and passive management were noted. Therefore, it exposes the disadvantage of FSLIC at that time which encouraged the SLs to take long-term and unreported risks. The deregulation, reducing the capital requirements, left the thrift industry more vulnerable to economic changes. From the failure of resuscitating the industry, it was deduced that forbearance treatment towards insolvent institutions might not always be the best option as it can lead to a freeze in lending and stifle the economy. One of the lessons from the thrift crisis which has been consistently taken into account over the years was the reliance on capital ratios. During the deregulation period of the crisis, there was no monitoring of the capital bases of the thrifts which ultimately lead to insolvency. From then on, institutions had to follow certain standard capital requirements put in place by regulators. However, this focus proved recently in the credit crunch to be detrimental, showing that banks favour trust and confidence. It is important to realise that capital ratios and other accounting ratios might not reveal the real economic strength of the institution. The crisis led to more disclosure and market value accounting. It has been understood that it would have been best to restrict involvement of public funds as a means of saving the industry. Using state or public funds to buy-out thrifts below value is not in accord with public welfare. A solution would have been to subdivide the thrifts into insured and uninsured ones with varying degrees of supervisory regulations concerning deposits and investments. One lesson learned was the emergence of an adjustable insurance premium rate which became a function of the institution’s regulatory rating, risk and capital levels. CONCLUSION For some years the final bill for the SL crisis remained uncertain. However, it is known now that, the thrift crisis cost an extraordinary$153 billion – one of the most expensive financial sector crises the world has seen. Of this, the US taxpayer paid out $124 billion while the thrift industry itself paid $29 million. The consequences of the SL crisis for the structure and regulation of the US financial industry were profound. The number of institutions in the SL industry fell by about half between 1986 and 1995, partly due to the closure of around 1,000 institutions by regulators, the most intense series of institution failures since the 1930s. The failures prompted an overhaul of the regulatory structure for US banking and thrifts, a shake-up in the system of deposit insurance and implied Government guarantees. Regulators shifted towards a policy of earlier intervention in failing institutions so that the principal costs are more likely to be borne by shareholders than other stakeholders. There was also a shift towards more risk-sensitive regulatory regimes, with respect to both net worth assessments and the payments to deposit insurance funds, while deposit insurance reform made it less likely that taxpayers would shoulder so great a burden in any future crisis. At a wider level, the SL crisis taught politicians, regulators and bankers how misleading rules-driven regulatory and accounting numbers can be in relation to risky bank activities. At different stages of the crisis, reporting of the financial condition of SLs was deliberately selected by interested parties to cover up the true economic extent of the unfolding disaster. It was a risk reporting failure on grand scale that greatly worsened the long term economic consequences fort the ultimate stakeholder: the US taxpayer. REFERENCES 1. Myth: Carter ruined the economy; Reagan saved it. http://www.huppi.com/kangaroo/L-carterreagan.htm [Accessed 31 October 2010 to 18 November 2010] 2. The U.S. banking debacle of the 1980’s : A lesson in government mismanagement http://www.thefreemanonline.org/featured/the-us-banking-debacle-of-the-1980s-a-lesson-in-government-mismanagement/ [Accessed 31 October 2010 to 18 November 2010] 3. Inverted Yield Curve Research Report, Milken Institute http://www.milkeninstitute.org/pdf/InvrtdYieldCurvesRsrchRprt.pdf [Accessed 31 October 2010 to 18 November 2010 4. The Cost of the Savings and Loans Crisis, FDIC Banking Review http://useconomy.about.com/library/s-and-l-crisis.pdf [Accessed 31 October 2010 to 18 November 2010] 5. The SL Crisis: A Chrono-Bibliography, FDIC http://www.fdic.gov/bank/historical/s%26l/index.html [Accessed 31 October 2010 to 18 November 2010] 6. The Savings and Loan Crisis http://wapedia.mobi/en/Savings_and_loan_crisis.html [Accessed 31 October 2010 to 18 November 2010] 7. US Savings and Loans Crisis, Sungard Bancware Erisk http://www.prmia.org/pdf/Case_Studies/US_SL.pdf [Accessed 31 October 2010 to 18 November 2010] 8. Savings and Loans Crisis, FDIC Report Vol. 1 http://www.fdic.gov/bank/historical/history/167_188.pdf [Accessed 31 October 2010 to 18 November 2010] 9. The Economic Effects of the Savings and Loans Crisis, Congressional Budget Office http://www.cbo.gov/ftpdocs/100xx/doc10073/1992_01_theeconeffectsofthesavings.pdf [Accessed 31 October 2010 to 18 November 2010] 10. The Cost of Savings and Loans Crisis: Truth and Consequences, FDIC Banking Review http://fcx.fdic.gov/bank/analytical/banking/2000dec/brv13n2_2.pdf [Accessed 31 October 2010 to 18 November 2010]

Three Worlds Of Welfare Capital Politics Essay

Three Worlds Of Welfare Capital Politics Essay The three worlds of welfare capitalism  written by Esping- Andersen in 1990 set the bar for welfare typologizing and has sparked a volatile and ongoing debate ever since. Most of the literature for those studying and analysing social policy is now based around mending or re forming the welfare capitalist in to something which acknowledges more factors which shape welfare provision and bring the original txt in to a modern or argument/ issue specific context. Issues such as gender, the role of the family and an expansion of the original categories of Welfare state have been the focus of much of Europes modern day social policy research and the defining factor in all of this research is that Esping-Andersen is almost always used as the starting point . This is the case despite the comment that typologizing is the lowest form of intellectual endeavour (Baldwin, 1996, p29). No matter how intellectually miniscule it may be reported to be the process of typologizing is an essential and b asic tool for carrying out and analysing strengths and weakness in welfare states and approaches to welfare and despite all the critiques and revisions it must be argued that if Andersens work is still being used as a basis of modern day research then it must have a fairly large amount of academic credibility left.   In the work of Esping-Andersen a typology was created by critically analysing 18 welfare states in relation to three main themes. These themes of: Decommodification; the extent to which welfare is reliant upon market forces, social stratification; the role of welfare states in maintaining society and equality within that society and the private-public mix which includes the role of the family and the voluntary sector, even though Andersen largely missed those out in his overall conclusions leading to significant criticisms being raised about his overall conclusions. How these states operate and how decomodified they are were the main criterion which lead to these welfare states being compartmentalised in to three welfare regime types; Liberal, Conservative and Social Democratic.(Esping-Andersen; 1990) Conservative welfare states are distinguished by their emphasis on the maintenance of status and the insurance based nature of welfare provision. Conservative welfare programmes, in which benefits are often earnings-related, are administered through the employer and what one puts in is what they get out. There is little or no redistribution of benefits or wealth within conservative welfare states. The role of the family is also emphasised and expected to some extent and a male breadwinner model is enshrined by the welfare system. France and Germany are strong examples of the Conservative model however according to Andersen so are the southern Mediterranean states which he analyzed. (Esping-Andersen; 1990) In Liberal countries, welfare is strictly controlled with entitlement criteria, and recipients are usually means-tested. Welfare is distributed on a sliding scale to those who need it most however Welfare provision is often very low meaning that often the effects of the welfare provided are negligible. The Social Democratic regime is the smallest of all 3 regimes. Welfare provision in social democratic countries is universal and relies on citizenship as its only real criteria for distribution. Social democratic countries try to promote full employment and the employed workforce is highly unionised. They also attempt to redistribute wealth throughout the population and there is much less of a stigma attached to this and much more of a willingness to contribute than in other welfare regimes. There are therefore a range of substantive critiques which can be used to critically assess the welfare capital and its modern day relevance; however an important starting point would be its relationship with gender. The gender-blind (Bambra, 2004, p201) concept of Decommodification and, the seeming unawareness of the role of women in the provision of welfare is startling. The welfare capital has been accused of being a; misleading comparison of aggregate welfare state expenditure (Bambra, 2004, p201). Not taking gender in to account has caused scholars and researchers to focus on this specific issue very acutely to point out how different the classifications of states could look with this factor included. This factor affects the Sothern European states to a disproportionate degree and many researchers and scholars have therefore pointed out how different the welfare categories would be if gender was accounted for. However there are more issues than simply gender issues which could l ead to the separation of the Sothern states from the conservative category and this must be addressed separately to which welfare states, and welfare state regimes, facilitate female autonomy and economic independence from the family. We must also asses the shift from the male worker model to the Adult worker model as well as the role of women in the home and look at how this has affected state policy and welfare provision. Many states now encourage women to enter the workplace and welfare is increasingly becoming about the individual rather than the family. This is certainly the case in some conservative countries but much less so in the southern welfare states of Europe. If Andersen had taken this factor in to account then once again we could likely have seen a very different set of results produced. The range of countries used to construct Esping-Andersens typology has met with criticism. Esping-Andersen only examined 18 OECD countries. This lead to countries such as Greece and Germany being grouped in the same category. Considering the economic differences and differences in terms of social structure this seems to be an unrealistic conclusion. It has therefore been suggested that given the unique characteristics of many of the southern European nations mainly; Portugal, Greece, Italy and Spain there is sufficient scope to create a fourth southern European welfare category. In the Journal of European Social Policy Arts and Gelissen state it seems logical to see the South European countries as a separate cluster (ArtsGelissen,2002,p145) . Southern welfare states are viewed as being extreamly basic in their welfare provision with strong emphasis on the family and fragmented care. They do however seem to have significant expenditure in some areas and more underdeveloped and limited expenditure in others. Pensions tend to be generous in southern European welfare states and this may be a feature of reliance on the family and a strong ethic of family protection and reliance on elderly people to provide services such as child care which are not provided by the state. There are also strong criticisms of the liberal states and the huge differences in both expenditure between liberal countries in total and on specific areas. Liberal nations in Esping-Andersens research tend to be groped as English speaking nations however the English speaking nations listed have huge ideological differences and state approaches to welfare funding and entitlement. A number of policy areas within nations also contravene the natural policy stances which are set out in the social categories too. For example the Universal UK NHS is not something which one would expect to see in a liberal model and it is not consistent with the criteria for the liberal welfare category and yet such policy variations have to be put aside in favour of an overall picture. Andersens has also been heavily criticised for his use and analysis of data and how this data has been presented and how easily manipulated it can be. Attention has been placed particularly upon decommodification indexes and the use of means to produce the final categories.  This method has a noticeable impact on the classification of certain countries, eg. the UK which, if a different cut-off point was used, may not have fallen within the Liberal regime. This is highlighted in the work of Bambra where she; Highlights an overlooked error in Esping-Andersens original calculations that led to the incorrect positioning of three borderline countries (Japan, the UK and Ireland) and resulted in the empirically erroneous composition of the Three Worlds of Welfare (Bambra,2006). Bambra Uses different methods to show how current data and the original data used by Esping-Andersen can be changed to produce very different catogories of welfare to great effect and she highlights the glairing errors as well in Esping-Andersens original calculations. (Banbra,2006). Therefore in conclusion it is clear that Arts and Glitsen are almost certainly correct when they state that Real welfare states are hardly ever pure types and are usually hybrid cases (Arts and Glitsen, 2002). It is also however clear that there is a basic role for the three worlds of welfare capitalism and that as a piece of work Esping-Andersen set the groundwork for the next 20 years of research and study in to European welfare spending and the grouping of European welfare states. Typologizing although a very inexact science in most cases is never the less extremely useful and we should not take that fact for granted. Nor should we take for granted the significant research that Esping-Andersen has subsequently inspired and the significant impact that his work has had on thinking within social policy.

Death as a Theme Our Town :: essays papers

In the play Our Town, the people of Grover’s Corners mask their worries and thoughts about death in their quest for happiness. In the first act, a few deaths occur, and the attitude of the people towards these deaths is a negligent one of briefly acknowledging death and moving on. Also, the children in act two who are faced with adulthood are reluctant to accept the burden, through their hesitance to grow up and approach death. In the third act, when we finally get a clear picture of death, the reader sees that the people who are dead are regretful that their mundane lives were incomplete, not realizing the importance of life until they are dead. This method of living proves unfulfilling, as the dead arduously mourn their trivial lives yearning to have made a difference. The stage manager directs the flow of the play throughout, and his transient attitude towards death reflects Grover’s Corners overall outlook on a life that tries to mentally avoid death. This stance is established primarily by the stage manager in his first act narrative, which hastily describes the fatalities, masking their importance and reality. â€Å"Want to tell you something about that boy Joe Crowell there. Joe was awful bright – graduated from high school here, head of his class. So he got a scholarship to Massachusetts Tech. Graduated head of his class there, too. It was all wrote up in the Boston paper at the time. Goin’ to be a great engineer, Joe was. But the war broke out and he died in France.† This brief account demonstrates the importance placed on a man’s death. The people of Grover’s Corners live in a world where change is frowned upon; consequently, the means of dealing with such a great adjustment as death is to prevent themselves from thinking of it. In the stagnant society of Grover’s corners, death is the ultimate obstacle, and ignorance is the remedy. Another instance where the stage manager subtly demonstrates this practice of evading notions of death is his intervention in scenes that broach the topic. â€Å"Only it seems to me that once in your life before you die you ought to see a country where they don’t talk in English and don’t even want to.† The stage manager enters briskly from the right. He tips his hat to the ladies (P.

Distractions: Classroom and Facebook Essay

Electronics is one of the main and worst distractions. Cell phones, laptops, desktop, and various other electronics are some of just a few distractions that take place in the class room, But the biggest one I think is laptops. People use laptops in the classroom to take notes, plan there day, and to do work on, but after a while it can those same usefulness can become a distraction. A lot of professors and instructors have decided to ban laptops from the classroom because people tend to lose focus with laptops in front of them. They start to go off and do other things like on Facebook or YouTube. This can become a big problem because they not paying attention so they don’t know what’s going on with the lesson which can affect what students might need to do for homework or what they need to study for that big test coming up. They not only are a distraction to the person using it but also a distraction to people around them. The typing may become annoying to a neighbor who may need to focus. Some professors find them a really distracting the typing and students seem to find more interest in the computer then in the lesson. Along with Cell phones, Laptops are becoming banned from classrooms due to the distraction to the person that uses them, their peers, and their professor. Laptops are just one of many distractions in the classroom and is one of the worst and main distractions along with cell phones and various other electronics that cause distractions.