Download file to see previous pages...
Bank analysts forecasted that the federal government may encounter a budget deficit of $40 billion for 2009 (Annis, 2009).
Among the first institutions to fall is Nortel Networks, a century-old telecommunications company. However, Nortel’s problems are not caused by the crisis alone; since 2001 the firm had become prone to market weakness when it bought two companies for $ 15 billion just before the Internet crash in the US market. The company’s recovery after that was cut short, this time by an accounting scandal for which then CEO Frank Dunn was fired and seven corporate officers charged with massive accounting fraud (Duffy & Greene, 2009; Brieger, 2007). As a result of the collapse of Nortel, it filed for bankruptcy protection from creditors in January 2009; unfortunately, it also stopped paying severance, transition allowances, deferred wages and pensions to its former employees and retirees. This has brought untold suffering to many of these who have no other source of income.
Despite its problems, I believe the Canadian government did not bail out Nortel because of the financial recklessness of the company officials in embarking on a massive acquisition program in the high-tech boom for which it incurred a high amount of debt. But more than this, it is likely due to the accounting fraud that company officials committed in 2004, to the disadvantage of corporate operations. A timeline diagram shows the facts about Nortel:
Many causes have contributed to the US financial crisis, all traceable to the failure of regulatory procedures applied to banks and financial institutions. Firstly, the Basel II Accord provisions ensuring the financial safety of banks were circumvented by cosmetic financial reporting (Jones, 2000), although regulators would have been able to detect these violations had they been more vigilant.
...Download file to see next pagesRead More
This paper will define what financial markets and institutions are and their implication in an economy particularly in a largely consolidating world market.
Financial markets "consist of agents, brokers, institutions, and intermediaries transacting purchases and sales of securities." The individuals and institutions operating in the financial markets are linked by contracts and communications networks that form an externally visible financial structure, laws, and friendships.
According to Krugman a long term prosperity can only be ensured by a growth in total factor productivity as opposed to the growth in productivity brought about by capital investment. The Mexican Peso crises may lend credence to this argument with the after effect being the loss of confidence in Asian securities and subsequent withdrawal of capital by foreign investors.
The rest of the paper is organised as follows: in section a discussion of financial liberalisation including its history and goals is provided; section 3 provides a discussion of the reasons why financial liberalisation continue to lead to financial crisis; section 4 provides possible explanations for the credit crunch in the United Kingdom and the United States of America; and section 5 provides some conclusions and recommendations.
Since it was the most serious crisis in the Canada's history, thus this paper will examine the reasons which cause such horrible outcome, criticize the present situation and have a better understanding in unemployment for prevention.
Therefore, any modeling of financial assets is directed towards the reduction of the uncertainties & risks involved with the value of an asset or the pricing agreements that govern the variation of the determinants of financial assets' evaluation. Therefore, any such evaluation is performed so s to strike a perfect balance between the non-risky assets and the non-risky assets.
The US dollar has been a world standard in terms of foreign exchange rates for decades. This and a lot of other factors clearly highlight how powerful and significant is US economy on a world scale. They also infer how pervasive its effect on the world environment can be.
Remarkably, the financial markets facilitate the connection between the well-developed financial institutions and the borrowers who want to invest more than they earn, which suits the needs of the savers and borrows; hence,