Auditing Coursework Example | Topics and Well Written Essays - 750 words - 1

Auditing - Coursework Example The last day of business came during 1998. During that period, Enron diversified its operation by taking part in the water sector that culminated in the creation of the Azurix Corporation. The business had part of its stocks floated in the NYSE during June 1999. a) They established numerous limited liability special purpose entities and allowed Enron to transfer the liability to their target so that it would not appear in its accounts. The decision enabled Enron uphold a sophisticated and robust stock price that kept increasing therefore maintaining its essential investments rating and credit grade. Such a fraudulent approach ensured that Enron did not report its losses and debts, besides its financial statements did not report losses and debts. Enron used a number of fraudulent accounting malpractice, bewildering, and deception to cover frauds that were supposed to be reported on their financial information. The entries depicted Enron as the most profitable organization contrary to the truth of the matter. In fact, that built the pressure to maintain the trend of profitability as earlier portrayed. For this reason, it meant that corporate officers were required to perform more financial fraud each quarter to retain the illusion The hiring of Andrew Fastow as the Chief Financial Officer by Jeffrey Skilling who was the Chief Operating Officer played a significant role in the crafting and implementation of the entire scheme. The CFO had a good understanding of burgeoning deregulated market, which the COO had the thirst to exploit. Therefore, Andrew Fastow began the establishment of several limited liabilities with the special purposes entity. Although Andrew Fastow was the chief architect in the execution, other people individual who collaborated in hiding offshore losses were instrumental in the execution as well. Yes, I think that Enron manipulated the prices and the availability of power in the state of

The first two chapters of Hard Times Essay Example for Free

The first two chapters of Hard Times Essay Dickenss was a lively writer who knew what he wanted to write about but also what his readers wanted to read. In each of his books dickenss is careful to select a balance between his own ideas a morel intention with that of what the Victorian public enjoyed, (mystery, crime, romance and comedy). Dickens also felt strongly about the unfair class division in the cities. He was determined to portray the wrongs done to children and make a stand against the utilitarianism in society. (Perhaps his own childhood experiences never left him). All of these factors contributed to the initial creation of Hard Times. In this essay, I will look at the satiric methods Dickens uses in the opening chapter of Hard Times). When first reading the opening chapters of the novel it is apparent that there is an obvious difference in style and language from todays text. The sentences are far longer, some of the language is unfamiliar and Dickenss is clearly manipulating the reader. To do this, Dickens uses a number of techniques, such as humour, irony, wit and exaggeration to describe the education system in this period. These methods combined are known as satire and are all used simultaneously to engage the reader into reading further and believing the plot. This was a very common tool used in the Victorian time as it encompassed comedy and exaggeration to attack an otherwise difficult situation. However this method sometimes involved the twisting of facts and over amplification of ideas in order to convey a view point. Despite this, the technique was widely accepted by Victorian society as they much preferred an exciting and interesting read. Determined to portray an insight into the education system, dickens set about describing a sinister class room scene with the aid of satire. The school is host to a new schoolmaster starting his first day teaching pupils. Dickenss carefully assigns names to each character in relation to their individual personality or stature. For example, the figures of authority are named Mr Gradgrind and Mr Chokumchild which both suggest rough, abrasive and menacing individuals. In contrast a young girl, new to the class, is named Sissy Jupe. A name which compliments her weak, feminine and vulnerable persona.

Strategic options to globalisation

Strategic options to globalisation Different organizations around the world strive to expand and grow. Igor Ansoffs matrix is a tool that helps businesses decide their product and market growth strategy. Ansoffs product/growth matrix suggests that a business attempts to grow depend on whether it markets new or existing products in new or existing markets. The output from Ansoffs matrix is a series of suggested growth strategies that a set direction for the business strategy. They are as follows: Market penetration. Selling existing products existing markets. Product development. Selling new products to existing markets. Market development. Existing products being sold to new markets. Diversification. Selling new products to new markets. The report explores the strategies mentioned above in detail and provides examples of global firms that have used the strategies. INTRODUCTION Globalisation is the gradual integration and growing interdependence of natural economies. It allows firms to view the world as an integrated market place. Firms will use different methods to expand. METHODOLOGY The contents of this report were acquired by research, that is, by reading different books as well as the internet. MARKET PENETRATION This strategy applies to selling an existing product in an existing market. It is suitable in a growing market which is as yet not saturated. Market penetration seeks to achieve four main objectives: Maintain or increase the market share of current products- this can be achieved by a combination of competitive pricing strategies, advertising, sales promotion and perhaps more resources dedicated to personal selling. Secure dominance of growth markets Restructure a mature market by driving out competitors, this would require a much more aggressive promotional campaign supported by a pricing strategy designed to make the market unattractive for competitors. Increase usage by existing customers, for example by introducing loyalty schemes. . An example of market penetration is recognizing that software as a service can be a potent market penetration tool, Dell is assembling a services portfolio that now includes e-mail disaster recovery, spam/virus filtering and archiving via its messageOne acquisition.(www.soopertutorials.com). It is unlikely for this strategy to require much investment in new market research as it is likely that the firm will have good information on competitors and customer needs. The typical risk of market penetration is that it may lead to price wars with competitors with the same strategy and low pricing could be detrimental to the perceived brand value and to the company reputation. PRODUCT DEVELOPMENT This involves developing new products to sell in existing markets. It is usually employed with branded goods so that the qualities of the new product are linked to the customers confidence in the established brand. This strategy may require the development of new competences and builds on customer loyalty. New product development can be an amendment of existing products in order to produce products which are new to the market or it can totally be innovative. The Booz Allen Hamilton model outlines the stages of new product development as follows: IDEA GENERATION Ideas are collected from perhaps the sales force, distributors and customers. The company actively looks for opportunities, and new products can be produced in response to a perceived, or recognized demand. Ideas must be collected, considered feasibility and eventually passed to people who are responsible for screening. SCREENING The firm will set a certain criteria, for example the product must fit with the rest of the range; there must be a recognized level of demand; it must give a stated level of profit. Assuming some ideas meet the criteria, they are then passed on to people responsible for the next stage. CONCEPT TESTING This is not a product test but an idea test. The idea is taken to potential buyers as well as to the internal processing people to check on manufacture, packaging, distribution. OUTLINING POSSIBLE MARKETING STRATEGIES The results of the concept testing can help a company to decide just how it will market the product. Discussions made at this time depend a great deal not only on the results of the concept testing but also o the knowledge of the marketplace and the planning skills of the marketers involved. Knowledge of the marketplace is something which requires research. BUSINESS ANALYSIS It is here that potential profits are compared to the production and marketing costs to see if its worth proceeding. It is at this stage that products are often rejected as they do not demonstrate enough potential earnings in a given period of time, whereas given the appropriate support they may actually be products which could give huge profits over a longer period of time. PRODUCT DEVELOPMENT To begin manufacturing a new product is a risky venture. Because of this some manufacturers will choose to produce a prototype, or small batches, in order to test effectiveness before they give full commitment to production. The effort in producing in small quantities adds to the expense and time involved, not to mention the possibility of the competition becoming aware of what the company is doing. TEST MARKETING The product is introduced to a representative sample of the potential market. Although it may be expensive, it is better to use more than one testing area so that comparisons can be made. Different prices, advertisements, methods of distribution and perhaps even packaging may be used in different areas so that the company can see which methods are most effective. The problems that arise at his stage include: Buyers people often buy a product just to try it. They may like it and tell a researcher so, but will often revert back to their normal purchases because of brand loyalty. Distributors and suppliers they may be willing to give a new product exposure because of an introductory incentive, but once the incentive is withdrawn they may not be so willing to cooperate. Competition if they have relatively similar products, competitors may take defensive action and introduce promotional activity that will undermine the testing. COMMERCIALISATION This is the full scale manufacture and launch of the product onto the marketplace. If all of he stages have been carried out correctly, the product should have a good chance of success. An example of a firm that used the product development strategy is Hewlett and Packard who practiced allocating work time to encourage new designs. Another example is the Apple iPhone has been such a success and the company now dominates the smart phone world.(Michael Malone) The risks of product development are uncertainty of new technology, teething troubles of the new products and time pressure due to competition. MARKET DEVELOPMENT This involves offering an existing product in a new market. This strategy is used when a regional business wants to expand, or when new markets are opening up. Market development might take three forms: New segments. For example in the public services, a college might offer its educational services to older students than its traditional intake, perhaps via evening courses. New users. Here an example would be aluminium, whose original users packaging and cutlery manufacture are now supplemented by users in aerospace and automobiles. New geographies. The prime example of this is internationalization. The four risks of internationalization are commercial risk, currency risk, country risk, cross-cultural risk. When selecting an entry strategy, managers should consider the following six variables: The goals and objectives of the firm, such as profitability and market share. Unique conditions in the target country such as legal, cultural, economic circumstances, as well as the nature of business infrastructure, such as distribution and transport systems. The nature and extent of competition from existing rivals and from firms that may enter the market later. The characteristics of the product or service to be offered to customers in the market. The financial, organizational, and technological resources and capabilities available to the firm. The risks inherent in each proposed foreign venture in relation to the firms and objectives in pursuing internationalization. A firm can use the following strategies when entering new markets geographically. EXPORTING Exporting is the strategy of producing products or services (often the producers home country), and selling and distributing them to customers located in other countries. There are two types of exporting Indirect exporting which is accomplished by contracting with intermediaries located in the firms home market. Direct exporting that is accomplished by contracting with intermediaries located in the foreign market. Firms venturing abroad for the first time usually use exporting as their entry strategy. Exporting is also the entry strategy most favored by small and medium sized enterprises. Advantages of exporting Increased overall sales volume, improve market share, and generate profit margins that are often more favorable than in the domestic market. Diversify customer base, reducing dependence on home markets. It minimizes risk and maximizes flexibility as compared to other entry strategies. It avoids substantial costs of establishing manufacturing operations in the host country. Increases economies of scale therefore and reduces per-unit cost of manufacturing. Lower cost of market entry since the firm does not have to invest in the target market or maintain a physical presence there. This is how Sony came to dominate the global TV market, how Japanese automakers made inroads in the U.S market and how South Korean firms such as Samsung gained market share in computer memory chips. location to the rest of the world. The more successful managers use a systematic approach to improve the firms prospects by assessing the potential markets, organizing the firm to undertake exporting, acquiring appropriate skills and competencies, and implementing export operations. FOREIGN DIRECT INVESTMENT This is an internationalization strategy in which the firm establishes a physical presence abroad through acquisition of productive assets such as capital, technology, labor, land, plant and equipment. Foreign direct investment is characterized by six key features. It represents greater resource commitment. It has far more taxing on the resources and capabilities than any other entry strategy. It implies local presence and operations. It allows the firm to achieve global scale efficiency, which helps enhance the performance of the firm. It entails substantial risk and uncertainty because establishing a permanent fixed presence in a foreign country makes the firm vulnerable to specific circumstances in that country. Investors must deal more intensively with particular social and cultural variables presenting the host market. Multi national firms increasingly strive to behave in socially responsible ways in host countries. STRATEGIC ALLIANCES Strategic alliances refer to cooperative agreements between potential or actual competitors. Strategic alliances range from formal joint ventures, in which firms have high equity stakes (Fuji-Xerox), to short term contractual agreements, in which two companies agree to cooperate on a particular task. Advantages of strategic alliances Strategic alliances facilitate entry into foreign markets. Alliances allow firms to share fixed costs of developing new products and processes. Alliances are a way of bringing together complementary skills and assets that neither company could easily develop on its own. Disadvantages of strategic alliances They give competitors a low cost route to new technology and markets. Unless a firm is careful it can give away more than it receives. JOINT VENTURES A joint venture entails establishing a firm that is jointly owned by two or more otherwise independent firms. The firm benefits from the local partners knowledge of the host countrys competitive conditions, culture, language, political, systems and business systems. When risks and costs of opening a foreign market are high a firm might gain by sharing these costs or risks with a local partner. A firm entering into a joint venture risks giving control of its technology to its partner. However, joint venture agreements can be contracted to minimize this risk. LICENSING A licensing agreement is an arrangement whereby a licensor grants the rights to intangible property to another entity (the licensee) for a specified period and in return receives a royalty fee from the licensee. Intangible property includes patents, inventions, formulas, processes, designs, copyrights and trademarks. High technological firms routinely license their patents and know-how to foreign companies. For example, Disney licenses the right to use its cartoon characters in the production of shirts and hats to clothing manufacturers in Hong Kong. Disney also licenses its trademark names and logos to manufacturers of apparel, toys and watches for sale worldwide. Coca-Cola has licensed its famous trademark to clothing manufacturers, which have incorporated the design into clothing. Many firms have made the mistake of thinking they could maintain control over their know-how within the framework of the licensing agreement. RCA corporation for example, once licensed its colour TV technology to Japanese firms including Sony. These firms quickly assimilated the technology, improved on it, and used it to enter the US market, taking substantial market share away from RCA. TURNKEY CONTRACTING This refers to an arrangement where the focal firm or a consortium of firms plans, finances, organizes, manages, and implements all phases of a project abroad and then hands it over to a foreign customer after training local personnel. Turnkey projects are most common in the chemical, pharmaceutical, petroleum refining, and metal refining industries, all of which use complex, expensive production technologies. For example, many Western firms that sold oil-refining technology to firms in Saudi Arabia, Kuwait, and other gulf states now find themselves competing with these firms in the world oil market. FRANCHISING Franchising is an advanced form of licensing in which the focal firm allows an entrepreneur the right to use an entire business system in exchange for compensation. The franchisor will often assist the franchisee to run the business on an on going basis. McDonalds is a good example of a firm that has grown by using franchising strategy. McDonalds strict rules as to how franchises should operate a restaurant extend to control over the menu, cooking methods, staffing policies and design and location. McDonalds also organizes the supply chain for its franchises and provides management training and financial assistance. Another example is the curves fitness center which was ranked the number two franchise in 2004 by the entrepreneur magazine. . DIVERSIFICATION Diversification is the name given to the growth strategy where a business markets new products to new markets. This has the advantage of preventing the company from relying too much on its existing strategic business units. Diversification might be chosen for a variety of reasons, some more value creating than others. Potential value creating reasons for diversification areas follows. Efficiency gains can be made by applying the organizations existing resources or capabilities to new markets and products or services. These are often referred to as economies of scope. Stretching corporate parenting capabilities into new markets and products or services can be another source of gain. In a sense, this extends to a point above about applying existing competences in new areas. Increasing marketing power can result from having a diverse range of businesses. There are two types of diversification these are related diversification and unrelated diversification. RELATED DIVERSIFICATION This is when a company develops beyond its present product and market whilst remaining in the same area. This form of diversification can occur by: Backward diversification, when activities related to inputs in the business are developed further backing the value chain. Forward diversification, when activities are further forward in the value chain. Horizontal diversification, when a company develops interests complementary to its current activities. An example, internet search company Google has spread horizontally into news mages and maps and other services. UNRELATED DIVERSIFICATION This is used to describe a company moving beyond its present interests, that is, it moves beyond its current capabilities and value network. Unrelated diversification is often referred to as a conglomerate strategy because there are no obvious economies of scope between the different businesses. Examples of unrelated diversification include: the easy Group which consists of easy Jet, easy internet cafà ©, easy car, easyValue.com and easy.com. Virgin media which moved from music producing to travels and mobile phones. Walt Disney which moved from producing animated movies to theme parks and vacation properties. The typical risks of diversification include It requires a company to acquire new skills , new technologies and new facilities Insufficient know how Insufficient management span of control May require risky acquisitions Loss of brand focus or credibility RECOMMENDATIONS Market penetration is generally the cheapest strategy to adopt. It is the least risky and is especially suitable for small and medium sized firms that may not afford to develop new products and/or enter new markets. Before taking up product development or diversification, a firm should ensure extreme research and development that the new product and/or venture is viable as it is costly to develop new products as new technologies have to be purchased and employees would have to be trained on the new practices. It takes time to be effective. CONCLUSION In conclusion it can be seen that global firms can apply any one of Ansoffs strategies in an attempt to expand and grow be it in their existing markets or new ones, and their current product offering or new ones.

Analysis of Angelas Ashes Narrated by Frank McCourt Essay -- Angelas

Analysis of Angela's Ashes Narrated by Frank McCourt Angela's Ashes: A Memoir is Frank McCourt's acclaimed memoir. It charts the author's childhood from his infant years in Brooklyn, through his impoverished adolescence in Limerick, Ireland, to his return to America at the age of nineteen. First published in 1996, McCourt's memoir won the 1997 Pulitzer Prize in the category of best Biography/Autobiography, and has gone on to become a worldwide bestseller. McCourt, who for many years taught writing in a New York public high school, waited for over forty years to write about his troubled youth. Arguably, waiting for years before writing his autobiography allowed Frank McCourt to talk about his childhood in the most objective way possible. McCourt treats the subject of his own difficult life with even-handedness and objectivity. McCourt never downplays the fact that he suffered from acute hunger and deprivation in his youth. He once described this autobiography as "an epic of woe." Nothing about the author's boyhood was easy. But Frank's world is not one of self-pity. Although the protagonist endures a troubled upbringing, it is one that instills in him strong moral values and a healthy sense of humor. McCourt's prose style is ambitious in its scope, yet detailed in his focus; it is prosaic in order to capture everyday life, but poetic in order to evoke a homeland. McCourt wrote a sequel to Angela's Ashes entitled 'Tis, which describes his experiences as a young man in America. A film version of Angela's Ashes was made in 1999. Summary The narrator, Frank McCourt, describes how his parents meet in Brooklyn, New York. After his mother, Angela becomes pregnant with Frank, she marries Malachy, the father of her child. The family grows, and Angela struggles to feed her growing family of sons while Malachy spends his wages on drink. Frank's much-loved baby sister Margaret dies, and Angela becomes depressed. The McCourts decide to return to Ireland. In Ireland, more troubles plague the McCourts. Angela has a miscarriage, Frank's two younger brothers die, and Malachy constantly drinks away the dole money. McCourt's childhood is characterized not only as a time of great deprivation, but as a time of good humor and adventure. When the first floor of the house floods during the winter, Angela and Malachy announce that the family will leave the cold dam... ..., priests, family members, and people in positions of authority. Even Frank's father may be seen as an antagonist, since his alcoholism aggravates his family's poverty. However, Frank's true antagonist is not one individual, but the general discrimination he faces because of his poverty Setting (time) - Late 1930's and 1940's Setting (place) - Brooklyn, New York (briefly) and Limerick, Ireland Point of View - First person Falling Action - Frank earns enough money to leave for America, and says an emotional farewell to Ireland Tense - Present tense or immediate past; the author writes as though he is experiencing events for the first time, in the present moment Foreshadowing - The death of baby Margaret seems to anticipate Frank's near-continual state of bereavement in Limerick, as he struggles to cope with the demise of two of his brothers, Theresa, and many other friends and relations Tone - Humorous, self-effacing, matter-of-fact. McCourt matches his tone to the age of the narrator, becoming more serious and worldly as the narrative progresses Themes - Guilt, class distinction, hunger Motifs - Anti-English sentiment, stories and folktales Symbols - River Shannon, eggs Analysis of Angela's Ashes Narrated by Frank McCourt Essay -- Angela's Analysis of Angela's Ashes Narrated by Frank McCourt Angela's Ashes: A Memoir is Frank McCourt's acclaimed memoir. It charts the author's childhood from his infant years in Brooklyn, through his impoverished adolescence in Limerick, Ireland, to his return to America at the age of nineteen. First published in 1996, McCourt's memoir won the 1997 Pulitzer Prize in the category of best Biography/Autobiography, and has gone on to become a worldwide bestseller. McCourt, who for many years taught writing in a New York public high school, waited for over forty years to write about his troubled youth. Arguably, waiting for years before writing his autobiography allowed Frank McCourt to talk about his childhood in the most objective way possible. McCourt treats the subject of his own difficult life with even-handedness and objectivity. McCourt never downplays the fact that he suffered from acute hunger and deprivation in his youth. He once described this autobiography as "an epic of woe." Nothing about the author's boyhood was easy. But Frank's world is not one of self-pity. Although the protagonist endures a troubled upbringing, it is one that instills in him strong moral values and a healthy sense of humor. McCourt's prose style is ambitious in its scope, yet detailed in his focus; it is prosaic in order to capture everyday life, but poetic in order to evoke a homeland. McCourt wrote a sequel to Angela's Ashes entitled 'Tis, which describes his experiences as a young man in America. A film version of Angela's Ashes was made in 1999. Summary The narrator, Frank McCourt, describes how his parents meet in Brooklyn, New York. After his mother, Angela becomes pregnant with Frank, she marries Malachy, the father of her child. The family grows, and Angela struggles to feed her growing family of sons while Malachy spends his wages on drink. Frank's much-loved baby sister Margaret dies, and Angela becomes depressed. The McCourts decide to return to Ireland. In Ireland, more troubles plague the McCourts. Angela has a miscarriage, Frank's two younger brothers die, and Malachy constantly drinks away the dole money. McCourt's childhood is characterized not only as a time of great deprivation, but as a time of good humor and adventure. When the first floor of the house floods during the winter, Angela and Malachy announce that the family will leave the cold dam... ..., priests, family members, and people in positions of authority. Even Frank's father may be seen as an antagonist, since his alcoholism aggravates his family's poverty. However, Frank's true antagonist is not one individual, but the general discrimination he faces because of his poverty Setting (time) - Late 1930's and 1940's Setting (place) - Brooklyn, New York (briefly) and Limerick, Ireland Point of View - First person Falling Action - Frank earns enough money to leave for America, and says an emotional farewell to Ireland Tense - Present tense or immediate past; the author writes as though he is experiencing events for the first time, in the present moment Foreshadowing - The death of baby Margaret seems to anticipate Frank's near-continual state of bereavement in Limerick, as he struggles to cope with the demise of two of his brothers, Theresa, and many other friends and relations Tone - Humorous, self-effacing, matter-of-fact. McCourt matches his tone to the age of the narrator, becoming more serious and worldly as the narrative progresses Themes - Guilt, class distinction, hunger Motifs - Anti-English sentiment, stories and folktales Symbols - River Shannon, eggs

Globalization of the U.S. Subprime Mortgage Crisis Essay

The U. S sub prime Mortgage Crisis upset the world financial markets. The economy of the United States of America could combat the mortgage foreclosures for its efficiency. The global investors were wary of the fact that the sub prime mortgage crisis is a symptom of some unknown problems that the US economy is suffering from. In 1994, an almost insignificant less than 5% of all the mortgages in the U. S were sub prime. However by 2005, the figure had risen drastically to 20%. Sudden changes in the banking system were responsible for this increase. Earlier, mainly commercial banks were used to serving the American societies and they mainly offered fixed charge mortgages. In Detroit and in Boston this figure was 24. 6% and 15% respectively, whereas in California this figure was 14%. After a long period of stable interest rates with only a small downward trend, the rates started increasing. This decreased the demand for homes and hence causing a decrease in home prices. There was competition between the mortgage finance companies and mortgage brokers and the traditional banks in offering some new products. This growing competition produced a number of mortgage products and choices like sub prime loan of different varieties for the American consumers. Homeowners could not combat the increases in payments or even sell their homes because of market price depreciation. Almost 77% of the homes were overvalued in big cities like California (Enoch & Charles, 2007). Causes of the current U. S sub prime mortgage crisis. There seems to a common consensus that periods of rapid credit growth are accompanied by loosening lending standards. The former Federal Reserve Chairman Alan Greenspan pointed in his speech to the Independent Community Bankers of America in 2001 that there was an unfortunate tendency among bankers to lend aggressively at the peak of a cycle and noted that this aggressive kind of lending could result to bad loans. This therefore means that the credit boom in America had a hand in causing the current sub prime crisis. Indeed more of the major banking crisis in the last a quarter a century occurred at times that there was an extremely fast credit growth. However not all credit booms are immediately followed by a banking crisis. For instance in a study by Barajas et al (2007), of the 135 credit booms that were identified, only 23 of them preceded a systematic banking crisis with this proportion increasing to 31 if the non-systemic episodes of financial distress are included. However almost half of the banking crisis were preceded by a credit boom. Larger and longer-lasting credit booms and those that have coincided with higher inflation and lower growth are more likely to end up in a crisis. Booms associated with fast rising assets and real estate prices are also more likely to lead to a crisis. The increase in home prices in early 2000 was completely unrealistic and made the homeowners believe that home prices will continue increase and make future refinancing and subsequent mortgages quite profitable. The loose standards made them believe that in buying expensive homes than they could have afforded with the traditional fixed rates loans and more expensive than they can afford now with their adjustable mortgage loans resetting. Most of the players in the mortgage market contributed to the crisis. Homeowners, brokers, lenders, rating agencies regulators, investors and central banks all played a role in the crisis. The homeowners ran into flexible loans with no understanding of them and even some lied on stated income loan applications (Giang, & Anthony, 2007, p. 39). The lenders hurriedly offered riskier loans to borrowers as loan products with adjustable rates transfer great part of a risk from the lender to the borrower. This risk transfer is the reason was the main contributing factor as to why the offered higher commission to brokers if they sold adjustable loan. Brokers were also controlled by greed and started offering adjustable mortgages to borrowers who would qualify for prime loans. However, lenders never expected such huge foreclosures and extreme flooring of house prices. Central banks and other huge investors have experienced significant losses as a result of mortgage asset devaluation. The risk of investing in securities backed by mortgage never came to realization as should have been. The investor mainly relied on investment grade ratings applied to mortgage backed securities by rating agencies. Historical data backed models are mainly used by rating agencies to provide investment rating. Mortgage backed securities have excellent historical date whereas adjustable mortgage loans and their innovative variations being new products on the mortgage market have no historical data. The regulators missed to prevent the crisis through legislation that would regulate higher lending standards. They can play a great role in prevention of an economic crisis (Eric, 2008). Global Spread of the U. S sub prime mortgage The recent volatility in the global financial markets due to the US sub prime mortgage has not spared banks throughout the world. In Saudi Arabia, banks have been able to absorb only minimal exposure to distressed loans. For instance, Saudi Basic Industries Corporations have faced some constraints. Superficially, the happenings of the global market seems little unaffecting to Saudi Arabia. However since the peaking of the US stock markets, the Tadawul All-share Index has been maintaining an upwards trend. For instance, strong demand meant that investors accepted a lower yield than previously indicated for a SABIC bond in the month of July 2007. In this case, the bulk of demand came from Middle East and mainly from Saudi Arabia. Other bonds issued by the Gulf Cooperation council suffered and a greater caution could likely have had an impact on investor perceptions of Saudi Arabia risk. Higher credit spread had increased the cost of borrowing even after taking into consideration any reduction in the Federal funds rate. Even though the costs of borrowing were not high to deter borrowing, the prospect of issuing debt had deteriorated forcing the companies to revise their plans. This placed an opportunity to large Saudi investors who are not reliant on new or foreign borrowing and therefore were better positioned to acquire foreign assets, generally at lower prices than prior to recent market moves. Saudi Arabia has been developing its mortgage market though the mortgage law is still to be approved, the housing finance industry is beginning to take off and there are loans available for homeowners to secure. However with the legal and regulatory infrastructure not in place, the crisis in the US has slowed the growth. The crisis in the US also hit demand and thus prices for other commodities produced by Saudi Arabia such as plastics. Lastly, due to the exchange rate peg, the interest rates were cuts further and this further the riyal weakened along with the dollar (Gerry & Paul, 2007). European country such as the United Kingdom and Spain faces an even larger housing problem as lenders are becoming more cautious. This implies that consumer spending in Europe is also experiencing the crunch of the US sub prime crisis. The current slowdown impacts on all parts of the chemical industry as housing is a key source of chemical demand. Sectors that directly supply the housing and automotive sector in the West are hardest hit. In the United Kingdom, though there are different circumstances, the effect of the US sub prime mortgage crisis are being experienced. First, there are fewer mortgages given to people of less credit worthiness compared to the other mortgages in the market in the UK whereas in the US this proportion is significantly large. In addition, about half of the borrowers in this proportion of sub prime mortgage in the UK do not have a history of significant payment problems. Secondly, the interest rates in the UK have been relatively stable compared to the US where there had been rapid rises in interest rates. Thirdly, in the UK, the house prices have been booming compared to the Us where the house prices have been decreasing leaving borrowers mired in negative equity and unable to sell their homes in order to service their loans. Finally, the lending criteria in the UK are much stricter than in the US that have been loose. However, despite all these the effect of the US sub prime mortgage crisis is being felt in the UK with the Bank of England taking a warning of then dangers of bailing out institutions that had taken reckless lending decision for profits. It also leads to the Bank of England cutting interest rates at the start of 2008. The US sub prime mortgage crisis has an impact on the Germany economy where the hardest hits are the German banks. The Industrial bank in Germany managed a fund that had invested in credit portfolios, which included US sub prime real estate loans. Commerce bank, which is the second largest bank in Germany, reported that the US subprime mortgage market had cost it 80 million euros in the second and last quarter of the financial year 2007. In the financial years 2007/2008, IKB expects that the crisis will influence negatively on its projected earning of 280 euros (Christopher, 2008). References Christopher B. L. (2008). The Next Slum, The Atlantic Monthly.New York: Oxford university press. Enoch and Charles. (2007). Rapid Growth in Credit: Endless Boom or EarlyWarning? New York: International Monetary Fund and Palgrave. Eric Janszen. (2008). The next bubble: The markets for tomorrow’s big crash. London: Harper’s press. Gerry, G. & Paul, F. (2007). A House of Cards: from fantasy finance to global crash. London: Lupus Books. Giang, H. and Anthony. (2007). â€Å"The Varying Effects of Predatory Lending Criteria on Mortgage Applications†, Reserve Bank of St. Louis Review 89(1), pp. 39-59.

Human Impact on the Environment – Problems caused by population growth

In about 1830 the human population reached one billion, there are now somewhere around six billion people on the planet today and that figure is growing at a very high and very rapid rate. Past populations were controlled by disease, war and famine but now because of technology and modern medicine. The environment around us has been built to support these growing numbers but this development is having a huge effect on the world's ecosystems. Human population's clear other space and habitats of other species to make way for their own. This ignorance has killed many species to extinction and polluted the environment; this has endangered our survival and the survival of other species at risk. Read this Ch. 22 Respiratory System However, in natural ecosystems factors are limiting whereas human ecosystems are different as we have the technology to maximise resources and find new ones when existing ones run out. The planet obviously can only hold a certain number of people, most species never reach their maximum numbers but they have a peak, then the numbers start to decline. Activities that have changed the landscape Industrial and domestic waste has to be disposed of, and as the population is increasing the waste is becoming more and more difficult to get rid of. There are a lot of things that cause pollution in varying rates on a big scale oil spill to a normal deodorant can which uses cfc's. Here is a table that shows the pollutant and its effects on humans and the environment. Pollutant Effects on humans and the environment. Air Smoke Makes breathing difficult. Sulphur Dioxide Causes acid rain. Ozone Damages leaves. CFC's Damages ozone layer. Carbon Dioxide Increases the ‘Greenhouse Effect'. Water Sewage Eutrophication. Fertilisers Eutrophication. Acid Rain Makes soils, lakes and rivers acidic. Oil Spills Kill fish. Toxic Chemicals e.g. mercury Kill fish and other aquatic life. Land Solid waste disposal at landfill sites Methane causes explosions and increases the ‘Greenhouse Effect'. Mining waste e.g. Lead Water run-off poisons plants and animals. Heavy metals kill most plants and animals. The Pollution of the Water There are a number of different ways and processes of water pollution the main ones are ‘waste disposal', ‘organic pollution' and ‘eutrophication'. Waste disposal is the domestic and industrial waste which is treated in sewage plants to remove impurities. The problem is that some of this waste is being disposed in many rivers and canals and polluting them heavily. This has destroyed many freshwater ecosystems like the ‘Great Lakes of North America' and parts of the ‘Norfolk Broads'. Organic pollution is where domestic sewage is disposed in rivers and canals and the organic content in the sewage is a food source for bacteria and fungi. These organisms also take the dissolved oxygen in the water so that fish and other aquatic animals die out. Eutrophication is when the nitrate and phosphate levels are high this encourages the growth of algae. These algae can cause a lot of damage to the water ecosystem. * Algae grow rapidly and give an ‘algal bloom' over the surface of the water. * Many blue-green algae produce toxins which kill some plants and animals. * Small animals that feed on algae do not multiply fast enough to check the increase in the algae. * Algae block out the light for the rooted plants growing on beds of lakes and they die. This reduces the amount of oxygen. * The algal population crashed due to competition for resources. The algae are then decomposed by bacteria which use the oxygen in the water. * This lack of oxygen kills many invertebrates and fish. All this is the process of eutrophication. The pollution of the atmosphere Pollution is a term used to describe the presence of an unwanted substance. Although air contains lots of microscopic particles, like volcanic dust and tiny sand grains from deserts, this pollution is natural in origin. Man-made pollution of the atmosphere however, is now causing a lot of concern. Most of this air pollution comes from the burning of coal, oil and gas – the fossil fuels – in power stations, factories and homes, and petrol and diesel in cars and other road vehicles. We need energy and electricity to keep us warm and to cook our food, but unfortunately we do not make enough from other non-polluting sources. Burning fossil fuels releases greenhouse gases into the air. This may be changing the climate and causing global warming. Other pollutants like sulphur dioxide and nitrogen oxides are also given off. This can reduce the quality of air which we breathe, leading to health problems, and can cause acid rain. Global Warming Global air temperatures as measured by land-based weather stations show an increase of about 0.45 degrees Celsius over the past century. These may be mistakes in data or climatic variation. Satellite data indicate a slight cooling in the climate in the last 18 years. These satellites use advanced technology and are not subject to the â€Å"heat island† effect around major cities that alters ground-based thermometers. Projections of future climate changes are uncertain. Although some computer models predict warming in the next century, these models are very limited. The effects of cloud formations, precipitation, the role of the oceans, or the sun, are still not well known and often inadequately represented in the climate models although all play a major role in determining our climate. Scientists who work on these models are quick to point out that they are far from perfect representations of reality, and are probably not advanced enough for direct use in policy implementation. Interestingly, as the computer climate models have become more sophisticated in recent years, the predicted increase in temperature has been lowered. However, 98% of total global greenhouse gas emissions are natural (mostly water vapour) and only 2% are from man-made sources. Sustained Development Sustainable development is where a population can make developments and improvements to their area or their needs without causing harm to the environment. Sustainable development is all about a greener planet in both developed and developing countries by not polluting the environment and being more energy friendly. Sustainable development is * Social progress which recognises the needs of everyone * Effective protection of the environment * Prudent use of natural resources Sustained development can be achieved by using less fossil fuels and researching into environmentally friendly sources of energy like solar and geothermic sources. Be less wasteful so that we use fewer resources so that they are prolonged and regenerate, find more effective ways of disposing of waste and producing less waste in the first place.