The Economic Impact Of The One-Child Policy

The Economic Impact Of The One-Child Policy The One-Child Policy helped China to bring its financial development up in the previous decades. China had the option to control the pace of the populace development lower than the pace of the GDP development, and along these lines the GDP per capita increments drastically in the previous decades. In relapse model 1, over 53% of the financial development can be clarified by the strategy; in relapse model 2, over 74% of the monetary development can be clarified by the arrangement. Thus this paper has indicated the adjustment in the monetary development of China could be clarified by the impacts of the One-Child Policy. Despite the fact that the unrefined birth rate isn't appeared to have long haul or transient impact on the GDP per capita, the gross fixed capital development has a huge positive effect on the GDP per capita. The gross fixed capital development couldn't have expanded that much without the nearness of the One-Child Policy. While the populace development diminishes, more assets are utilized to improve the expectation for everyday comforts. The drawn out impact of the One-Child strategy was likewise considered in the exploration. The outcomes acquired in relapse model 2 have demonstrated the alumni financial development in China can be all around clarified by the impact of the One-Child Policy. The coefficients of the rough birth rate were negative in both relapse models; it proposed that piece of the Malthusian hypothesis and the neo-Malthusian hypothesis were support. The primary analysis of the speculations was the hypotheses didn't account the development in the innovation, and in this manner the food gracefully has expanded quicker than math progress. The science and innovation in China has developed hugely in the previous a long time since the One-Child Policy has executed. In this manner, the Malthusian hypothesis and the neo-Malthusian may not be pertinent in the cutting edge world today. This view has been support in crafted by Galor and Weil (1999, pp.150-154). In addition, some portion of the Revisionism hypothesis was upheld. The hypothesis recommended that the populace development doesn't upset the populace development in thick territory and China is a thickly populated nation. In relapse model 2, slacked unrefined birth rate was utilized. Since the populace will enter the workforce at the matured of 16, the rough birth rate was tried for the effect on the GDP per capita. The variable was discovered unimportant to clarify the adjustments in the GDP per capita. The outcomes recommended that China was not confronting the reducing return of work. Since the rough birth rate isn't corresponded with the development of GDP per capita, there is no populace hypothesis which is completely bolstered in the investigation of China. In spite of the fact that China was not confronting a Malthusian dynamic of overpopulation and lessening return of work elements, it is basic for the usage of the One-Child Policy. On the off chance that the populace was not controlled and kept on expanding, China would before long need to confront the issues related with overpopulation and decreasing come back to work. Taking everything into account, the choice of the execution of the One-Child Policy in 1979 was bolstered in this exploration. Despite the fact that the One-Child Policy has appeared to have profited the monetary development of China temporarily and 16 years long haul, it might have an unfriendly impact in the extremely long haul. The one kid presently needs to help his/her two guardians and four grandparents. Subsequently, the execution of the One-Child Policy was bolstered in 1979 yet the choice of the continuation of the One-Child Policy is to be stayed dubious. 6.2 Limitations of the Study The outcomes got in the examination just give a recommendation of the execution of the One-Child Policy. There are sure confinements in the examination. Various estimation issues should be tended to are expressed beneath. As an intermediary of the instruction level, it is smarter to utilize the normal number of tutoring as it gives a more clear image of the training level of the populace. Sadly, the National Bureau of Statistics of China has not recorded this variable for the period, 1979 2007. As an intermediary of the expectation for everyday comforts, it is smarter to utilize the gross fixed capital arrangement per capita as it accounts the way that the expectation for everyday comforts increments quicker than the populace development. Shockingly, the size work power was additionally not recorded. (Net fixed capital arrangement per capita = Gross fixed capital development/Workforce) There are a few missing figures in the information. The missing figures generally happen in 1980 to 1985. In spite of the fact that addition has used to compute the missing information in the middle of, the absence of information may prompt errors in the outcomes. There might be errors in the figures of the unrefined birth rate. Numerous illicit birth of child young ladies happened because of the conventional child inclination in China. The genuine rough birth rate ought to be higher as the unlawful births were not recorded. The absence of the example sizes may likewise prompt errors in the outcomes which decide the drawn out impact of the One-Child Policy. There are just 13 perceptions after the modifications, which may prompt no huge variable being identified regardless of whether there is a one present. Moreover, just the work showcase was accounted to decide the drawn out impact of the One-Child Policy in this investigation. The 4-2-1 issue can not accounted in the investigation, as the strategy has just executed for a long time and it isn't long enough for the examination of this impact. In spite of the fact that the execution of the One-Child Policy was commonly upheld in the outcomes, it may not be bolstered in various regions of China. The normal rough birth rate was utilized in the exploration, and along these lines the choice of the One-Child Policy may not be bolstered in singular urban areas. For example Urban regions The official numbers from the National Bureau of Statistics of China may have misrepresented the development of GDP [The Economist: Chinas horrid insights (Anon., 2009)], which will prompt the overestimation of the impact of the One-Child Policy. 6.3 Potential Areas of Study The examination gives general investigation on the usage of the One Child Policy in China. It very well may be additionally concentrated to accomplish a more profound degree of comprehension of the strategy. As referenced in the past segment, the investigation of the usage of the One-Child Policy may contrast from urban areas. The quantity of births has been generally diminished, and the populace began to age. Urban regions may have begun to confront the lack of work and issues identified with segment maturing. This recommendation has been bolstered as the residents in Shanghai were urged to have two youngsters for each family since 2009 (Xie Linli, 2009). Besides, the activity taken in Shanghai has bolstered my decision in the exploration which China was not confronting the lessening return of work. The connection between the GDP per capita and the unrefined birth rate in various urban communities can be reconsidered by urban areas. The populace hypotheses will perhaps be upheld by the investigations in various urban areas. Same techniques and tests can be utilized and the information required can likewise be found in the official site of the National Bureau of Statistics of China. Since the One-Child Policy was scrutinized to have abused the human rights, the outcomes acquired from this further exploration will help the discover recommendations to other family arranging in China. On the off chance that the rough birth rate was found emphatically connected with the monetary development in various urban areas, some arrangement proposals can be made. For instance, more births can be permitted or just the dispersing between births is controlled. Change of the arrangement will conceivably carry points of interest to China. The reactions of the family arranging may lessen; the quantity of female child murders may likewise be decreased, and may prompt the further increment in the financial development in China. The One-Child Policy has consistently been a wellspring of discussion since its execution; there are a lot progressively potential considering territories. In the examination section, the development in the quantity of tertiary enrolment in China was discovered unimportant to clarify the monetary development. Another free factor, for example, the level of individuals that have completed auxiliary schools can be utilized as an intermediary of the instruction level. More examination should be possible on the connections between the One-Child Policy, training and rough birth rate. The connection between the factors can likewise be discovered utilizing the time arrangement OLS relapse. In spite of the fact that the training level of the individuals was expanded by the One-Child Policy, there are different components that influence the instruction level. As the instruction level of the individuals expanded, the longing of improving the characteristics of life may increment and the craving having kids may diminish. Thus, the rough birth rate may not exclusively be influenced by the One-Child Policy, yet in addition the expanded degree of instruction. The outcomes got can assist with seeing if the impact of the One-Child Policy was overestimated in the current examination, and simultaneously help to increase a superior comprehension of the monetary development in China. Further investigation could incorporate examining the sex proportions in China. It has consistently been a functioning discussing subject. The One-Child Policy has influenced to the sex proportion because of the customary child inclination in China. The sex specific fetus removal has prompted the abundance births of guys and the unbalance sex proportion in China. An exploration has been done on the unequal sex proportions, and the specialist, Hesketh states that, guys younger than 20 surpassed females by in excess of 32 million in China, and more than 1.1 million overabundance births of young men happened. Since there are 32 million a greater number of guys than females, a portion of the men will be not able to get hitched and have a family. Less births will be happened as there are less hitched couples, and along these lines the uneven sex proportions may likewise diminish the unrefined birth pace of the populace. In addition, the kids may need to take care significantly more old as opposed to just their own 2 guardians and 4 guardians, however their family members also. The G

Business Ethics in Retail Sector

Question: Examine about the Business Ethics in Retail Sector. Answer: Presentation: Moreover with that, the supportability components and commitment of the partners in the area have been illustrated. The investigation additionally holds the portrayal of the variables that are making the associations in the retail segment handle moral issues all the more genuinely. At endures the benefit of dealing with the business morals that the associations have gotten. Different associations in the retail division have neglected to deal with their business as far as manageability. This disappointment has come about into analysis. Concerning shoppers, particularly the individuals who face brought down trust in the area have endured most due to the analysis. Objective: The motivation behind the investigation is depicting the business morals in the retail division. The essential focal point of the investigation is on the moral issues in the segment. Investigation of the Sector: Moral Issues in the Retail Sector: Green issue: Among the top retailers among the world the issue that was most regular is the natural issue. The associations which are at the highest point of the retail business, for example, divider bazaar considers as nature as the essential segment inside the program of morals. UK retail industry is confronting a few issues with the green items as the customers have questions about the obligation of the association toward the earth (Barbosa et al. 2015). In UK just twenty seven percent of purchasers are happy to spend on the green items. Figure 1: Green Processes to be kept up in Retail (Source: Barbosa et al. 2015, pp-367-370) Corporate social obligation: CSR or corporate social duty has become a renowned word quickly. It very well may be considered as the augmented discernment duty. The association among condition and association is comprising of various qualities (Korschun, Bhattacharya and Swain 2014). CSR is commonly known as the assessment of the qualities. According to the perspective on an association, the obligation of the association toward its customer can be considered as the CSR (Capelle-Blancard and Petit 2012). The coordination of monetary, social, condition and morals inside strategic approaches and techniques are the worries of the CSR. At present in excess of 8,000 associations is utilizing CSR. Figure 2: Jantzi Researchs Weights for Retail Sector (Source: Capelle and Petit 2012, pp-570) Moral sourcing: It can be considered as the most basic moral issue in piece of clothing industry. The consciousness of the buyer in regards to the practical sourcing has expanded as of late as a result of the developing ecological concerns (Perry, Wood and Fernie 2015). Therefore, the shoppers are requesting the fabrics that are made of natural cotton and can be washed in low temperatures. Considering on the circumstance, at present numerous associations are incorporating moral sourcing as a part of corporate obligation plan. Figure 3: Audit Program Finding for Ethical Sourcing (Source: Gonzalez 2016, pp-39) Supportability in Retail: The issues in regards to the supportability in hold part are as following. Environmental change: The specialists consider the significant of environmental change more than the shoppers. A limited quantity of the purchasers perceive the hugeness of environmental change in the retail business. As far as the effects of environmental change and its causes, the purchasers who indentify the issue of environmental change attempts to separate themselves from environmental change (Howard et al. 2014). It is hard for the shoppers to connect issue of environmental change and retailers alongside their buying designs. For dealing with this issue the estimation of carbon impression in the association are thinking about as an incredible wellspring of perceiving the effect of the association on environmental change. The coordinated effort between the Carbon Trust, retail segment and different gatherings can be come about into the advancement of a standard model for estimating the carbon impression (Fernie and Sparks 2014). Figure 4: Climate Change Framework (Source: Fernie and Sparks 2014, pp-217) Squander: It is a pivotal issue for the retail area. The retailers produce an immense measure of waste which is making monstrous test to the supportability. Both the customers and partners are thinking about the waste decrease truly. As indicated by Brandenburg et al. (2014) the waste is the principal maintainability issue that spooky the retail business. Figure 5: Waste Management in Retail (Source: Papargyropoulou et al. 2014, pp-109) For dealing with the issue the retail business is thinking about the arrangement, three Rs. The three R speaks to diminish, reuse and reuse. Diminish alludes to the way toward giving things to the purchaser without overabundance bundling. Reuse alludes that one ought to give old product or items to the some association which can utilize it further. Reuse process alludes to give or offer recyclable items to the association which accomplishes crafted by reusing (Brandenburg et al. 2014). Finally the waste which can't be ordered into any of the expressed above is arranged. Association of Stakeholder in Ethics: By virtue of the broadness of focal points that sensibility programs provide for associations, it is routinely difficult to pinpoint a lone explanation a retailer begins a particular undertaking (Carroll and Buchholtz 2014). Regardless, obviously associations much of the time found acceptability programs because of at least one significant accomplices' propelling needs. Laborers, contenders, and government are the primary three accomplices driving retailers to strengthen their acceptability programs. Figure 6: Influence of the Consumers on Sustainability Activities (Source: Carroll and Buchholtz 2014, pp-371) The Factors behind Managing Ethics Successfully: The six factors that constrained the association in the retail segment to concentrate on dealing with the business morals are as following. Believability: For making validity is one factor behind focusing on overseeing business morals. The association that takes virtues genuinely centers around making believability truly. It is on the grounds that the association needs every individual in the general public to realize its name even the individual has no data at about the association (Ferrell and Fraedrich 2015). Taken for instance, Infosys drives its business toward social duty activities and great corporate administration. Dynamic: The target of any association is to incorporating the whole choices that it has taken from its foundation (Hartman, DesJardins and MacDonald 2014). That is the reason improved dynamic is an extraordinary figure each association the retail business. Meeting fundamental necessity: Being moral is a basic prerequisite for any association in this part. The representatives consistently wish to work in an association that is moral in its procedures (Ferrell and Fraedrich 2015). Same goes for the purchasers, they generally need to purchase from the provider which incorporates moral falsifications. Individuals and administration: Values that drives an association is the one of the most significant factor for any association. These qualities are the explanation for joining the partners and workers in a typical stage (Hartman, DesJardins and MacDonald 2014). So joining individuals and administration can be considered as a factor. Making sure about society: The retail business thinks about morals as a factor for protecting the general public. Morals has the possibility spare the general public interestingly of moderate open intrigue suits. Long haul increases: According to a review the associations that follow qualities and morals have been increased more bit of leeway over the long haul than the individuals who don't (Khalid, Ramly and Lau 2014). Advantage of Managing Business Ethics: Improved society: Trusts controlled a couple of business sectors to the extent that expenses were settled and little associations smothered out. Worth settling debilitated commonplace business division qualities. Laborers were finished considering characters. Effect was associated through threatening and incitement. By then society reacted and mentioned that associations put high regard on sensibility and comparable rights. Threatening to believe laws were sorted out (Ruedy et al. 2013). Government associations were set up. Associations were sifted through. Laws and controls were set up. Keeping up moral course: Consideration in regards to industry morals is fundamental in the midst of inward change times a lot of like those mate now by associations, both for-advantage and not-for-benefit. Over the span of times of progress, there is as often as possible no indisputable great compass to direct pioneers through complex conflicts about what is right or misguided (Zikmund et al. 2013). Advancing sound open picture: Regard for morals is likewise firm promoting, truth be told, oversight morals should not to be finished chiefly for thought processes of exposure. However, to be totally honest, the strategy that an association continually presents view for its morals can depict a firm constructive outcome to the basic populace (Shu et al. 2016). End: From the above investigation it tends to be inferred that the attention on the business morals can be a critical factor for the associations in the retail area as far as increasing long haul points of interest. From the examination on the issues in the business morals it has been perceived that however the associations have done well as far as keeping up business morals, they need to lead extra a few overviews for picking up customers full help and trust. The partner investigation on the retail segment has had a reasonable effect of individual partner regarding improving the business morals. The figure six demonstrates that the financial specialist has the most impact for dealing with the morals in retail industry. The examination was constrained as far as gathering crude information straightforwardly from the administrators rather it shows the information gathered by different creators. References: Barbosa, N.A., Paes, M.C.D., Guimaraes, P.E.

Marketing Project Example

Showcasing Project Example Showcasing Project Example The promoting venture model is the sort of imaginative work intended to effectively publicize items or administrations.  In the advanced world, the pattern of favoring nearby makers of all the potential products is turning out to be increasingly well known each year. Individuals will in general accept that a nearby maker would have the best nature of basic food item or different merchandise since they are delivered in the territory around customers. That is the reason, the advertising venture model will portray the crusade intended for the nearby organization. To begin the nearby organization, a business person ought to do a colossal measure of work. A basic advance is to lead a promoting effort about the result of things to come organization to discover the market size, conceivable income, and volume of deals. The organization, which would be the extent of the examination is the new supermarket with 100% normal, GMO and pesticides free items. The initial step of each advertising effort is defining the objective of it. It sounds marginally simple however each motivation behind deals or showcasing ought to have various battles, which utilize various instruments and techniques to work it. On account of propelling another nearby staple brand, the promoting effort should respond to the inquiries regarding planned volume of deals, showcase size, and assumptions regarding benefit. The cutoff time for this promoting venture consummation is three months, which is sufficient to direct a broad research and dissect the acquired outcomes. The accomplishment of the promoting task and its degree of certainty fundamentally relies upon the techniques for advertising research, which were to make this undertaking. It implies that system ought to be picked cautiously. On account of another supermarket, it was chosen to pick a viable blend of techniques, which would give both logical and ‘field’ information. Right off the bat, center gathering strategy would be applied. It would assist with getting the logical social data about the expected customers of this territory and to survey the possibilities of the new store. The subsequent strategy would be the perception of the genuine basic food item occasions during two months. It would give the showcasing authorities the most applicable data, which is accumulated ‘on the field’. The explanation of picking those two techniques is on the grounds that they bolster one another. One is entirely valid with little gatherings, yet at the same time is a sociological one, which implies that it could have unimportant information in view of the center gathering size. Another strategy isn't so careful, however it gives a general thought regarding the market and prospects of the new brand. Following two months, the examination pros could begin working with assembled data to arrange it into the best possible advertising venture rundown. The acquired data was assembled by fifty center gatherings; each comprised of fifteen individuals with an alternate segment foundation. Moreover, the investigation of eleven occasions from the planned market, for example, end of the week basic food item advertises or topical occasions of this industry have likewise given some pertinent information. The promoting experts made an astounding activity to break down the acquired information, utilizing the last form of STATISTICS programming. The advertising venture is dependable and pertinent, which is appeared by the 95 percent certainty of the got information. References Corridor, R. (2009). Splendid advertising. Harlow, England: Pearson Prentice Hall. Kerin, R., Hartley, S., Rudelius, W. (2009). Showcasing. Boston: McGraw-Hill/Irwin. Peck, D. (2011). Think before you lock in. Indianapolis, IN: John Wiley Sons. Treadaway, C. Smith, M. (2010). Facebook promoting. Indianapolis: Wiley Pub.

The role of the IMF in helping poor and debt-troubled countries Assignment

The job of the IMF in helping poor and obligation pained nations - Assignment Example This job was solidified by the fall of the Soviet Union, where sovereign nations who were under the Soviet umbrella admired the IMF to remake their battered economies. In 1999, the IMF rebuilt its job from furnishing money related help to nations with low degrees of pay to lessening the paces of neediness and developing their economies (Bird 2). The IMF has built up itself as a parity of installment organization. Many creating nations experience a diligent current record equalization of installment deficiency. It is imperative to take note of that not all nations with this issue go to the foundation for help. At the point when a province can't get to outside financing or private capital market, they go to the IMF to settle the equalization of installment shortfall. Low save possessions have additionally been clarified as the purpose for the utilization of IMF assets by low salary nations. Poor nations have represented the biggest extent of the organization's help somewhere in the range of 1991 and 2002. They have moreover been depicted as having delayed utilization of IMF assets (Bird 8). The foundation's job of loaning to poor nations additionally assists with opening outer financing or rather filling in as an impetus for different establishments to loan to the nations concerned. By loaning to a nation, the IMF imparts a si gn demonstrating that the nation has sound monetary approaches, financial specialist certainty and a helpful situation for venture. Regarding the IMF, the conditions forced are arrangements which ought to be met before a nation can get any assets. These conditions mean to ensure that the part nation will inevitably have the option to settle its parity of installment issues and simultaneously reimburse the credit. The reserve has two kinds of conditions concerning loaning to creating nations. It forces quantitative and auxiliary conditions. Quantitative conditions incorporate macroeconomic objectives which must be

Englisg Language Yesterday, Today and Tomarrow

GO ANYWHERE. This articulation helps us how significance to remember English for human life is. As worldwide or all inclusive language, English isn't possibly empowers us to communicate†¦ Premium If You Given An Opportunity To Run a 3 Days Training On Excellent Public Speaking. How Would You Implement†¦ World and one of the most significant language in the World is English. As of now, English language is at number three on the most communicating in language in the World. Even†¦ Premium Important Of English Language figuring out how to convey in English is essential to enter and at last prevail in standard America.Working information on the English language can make many†¦ Premium Importance Of English Language 512 words (approx. 2 pages at 300 words for each page). [pic] More Information View The English Language Study Pack 96 Alternative Definitions Search Results†¦ Premium Importance Of English Language ? A considerable lot of us wonder about the significan ce of realizing English in this day and age. In any case, such issues are looked by individuals who can't communicate in the language fluidly. The need†¦ Premium Importance Of English Language most prominent conceivable adaptability, and happier individuals must put forth additional attempts to bring down import hindrances on least created nations exports.Developing countries†¦ Premium Importance Of English Language To The Students American football, referred to in the United States basically as football and in some cases as field outside the United States and Canada,[1][2] is a game played between two†¦ Premium Importance Of English Language SPELLING RULES 1. For a solitary syllable word, finishing in a solitary consonant went before by a solitary vowel twofold the consonant: swim; swimmer; swimming rob†¦ Premium Cultural Effects On English Language Collocation As Foreign Language and lexical collocation.For individuals who view the English language as an unknow n dialect or second language, its so hard to communicate it as great. This mini†¦ Premium Importance Of English least will be reasonable. There are different purposes behind the significance of English language. They are recorded underneath. 1. Travel: When an individual goes to another†¦ Premium Oral Communication In English Language as their mechanism of study and not their neighborhood language. This will again shows the significance of English language. English language will surely improve Malaysians†¦ Premium Importance Of English Education orld of globalization. English language is a typical language and is spoken in numerous nations. Nobody prevents the significance from securing English language in the present time†¦ Premium Investigating The English Language Needs Previous research in the field of designing demonstrated that English language is of foremost significance in the scholastic and expert existences of building students†¦ Premium Importance Of English of media, exchange and science. In Pakistan, the significance of English language is developing and now English language is obligatory in generally all schools and colleges†¦ PremiumImportance Of English and lavish in light of the fact that without the nearness of English tongue things is difficult to occur. So we ought to consider the significance of English language in day by day life†¦ Premium Importance Of English pioneers of different nations is generally in English. This connecting factor additionally recounts the significance of English language. 5. Web: regardless of the development of†¦ Premium Importance Of English In India IMPORTANCE OF ENGLISH LANGUAGE IN THE NATIONAL LIFE OF INDIA TODAY From 26 January 1965 Hindi has been proclaimed the official language of India. Be that as it may, alongside it†¦ Premium

MITiplication

MITiplication It was sometime during Act III of finals study week, in the pressure-cooker minutes before the curtains fell on our loose-spined textbooks and leafed-over study guides, that I asked aloud, “What is 7 times 47?” In the space of the paragraph break above, youve probably calculated the answer, brewed yourself a cup of coffee, and commented “FIRST!” on my blog already. Great. Were now ready to play a short psychological game. A private, procrastinatory research project that I adopted in the dwindling time before my first final showed that everyone* interviewed found the answer by one of three methods: *i.e., everyone likewise procrastinating in one of Random Halls lounges at 11 pm on Sunday. 1.Take 7 times 4, multiply by 10, add 7 times 7. 2.Take 7 times 5, multiply by 10, subtract 7 times 3. 3.Imagine a piece of paper, do cross-multiplication on your imaginary piece of paper with your imaginary pencil and eraser, and then proudly circle your imaginary answer. Ex: “7 times 7 is 49, drop the 9, carry the 4 to the next column, 7 times 4 is . . .” etc. My hypothesis is that if your first instinct was Method 2, youd also show a natural talent for parallel parking. Rationale: when evaluating the most direct route to your goal, be it the answer to a multiplication problem or the cathartic resolution to a neck-twisting parking maneuver, you dont hesitate to overshoot your target and then back up until youre perfectly centered. (By the same reasoning, people who followed Method 1 probably had trouble getting their drivers licenses; people who followed Method 3 should stick to riding bicycles.) It remains unclear whether this theory has valid support, but unexpected anecdotal data collected during the study has lead the author to vow against carpooling with certain denizens of Random Hall. Since Ive been having difficulties making Nobel-worthy discoveries in either of my summer UROPs this week, Ive decided to resurrect my parallel-parking-mental-multiplication (PPMM) experiment. Comment with (1) your natural method of calculation and (2) how often you rear-end other cars (if applicable). Data collection via blog comments is the new trend in science, so Ive heard. A subtle yet heartbreakingly crucial property of summer projects is that they tend to exist in pairs. Or triplets. Or where n-tuplets, where n = n+1 for every time that someone batters down your self-restraint with an email like: I conclude with a sampling of current projects filed under “Continued self-delusions of infinite free time”: 7. Rebuild the bridge from pikas balcony to pikas treehouse. 14. Deploy a Rube Goldberg machine in the basement, preferably designed around the theme of vegetarianism and explosives. 21. Eat at every single dim sum restaurant in Boston. (Alright, I will admit that this isnt a project so much as a function of my tidal desires to consume entire subrainbows of the culinary spectrum, especially compelling on Saturday mornings.) 28. Read the complete published works of David Foster Wallace, then metamorphosize into David Foster Wallace. 35. Take more photos with metaphoric gravitas, so that I can start a gallery collection and open a critically-acclaimed art exhibit at the List Center. To start: (Its a fence, and theres a sky behind it. It represents the human condition, or something.) 42. Start running up to 10 miles regularly. (Im at 6 miles right now.) 49. Witness the finishing of a 6000-piece jigsaw puzzle, a retina-melting endeavor started last night as a peaceful (thus far) collaboration between pika and WILG, two of MITs independent living groups. The puzzle itself is currently living in WILGs 2nd-floor lounge and, until completed, will remain an effective hindrance to activities like vacuuming. 56. Bike along the entire shoreline of Bostons Inner Harbor, or until I discover this to be an impossibility. View Larger Map Arathi and I made a reasonable effort on Wednesday. I hitched up the rust-barnacled, long-abandoned bicycle that I befriended in the humid depths of pikas garage (single-speed, one functional brake, cracked turquoise paint, perfectly unlovable) and we ETed ourselves into the cinematic sunset, pedaling along the Charles River, past the Science Museum, past wherever-we-originally-intended-to-go, around regally-named hotels, through Bostons touristy Colonial-era marketplaces and a irresistibly charming block of Little Italy (gelaterias, pastry shops, open-windowed pizza restaurants- all adorable in the way that somehow makes you want to re-watch The Godfather), up Beacon Hill, against rush-hour traffic, and finally: On second thought, lets add “Learn to parallel-park” to the list.

Juvenile Justice Final Paper D.C. Sniper Attacks - Free Essay Example

Abstract October 2002 was the beginning of three treacherous weeks in the Washington Metropolitan area. Not one Washingtonian wanted to believe what was occurring in the city. The D.C. sniper attacks were a series of well thought out shootings that continued for three weeks in October 2002. The D.C. sniper events took place in the states of Maryland and Virginia, and the District of Columbia. Ten citizens were killed and three citizens were seriously injured by John Allen Muhammad and Lee Boyd Malvo. Several of the shootings took place in the Washington Metropolitan area and along Interstate 95 in Virginia (Dwyer, 2018 ). The mastermind and leader behind all the D.C. sniper attacks was John Allen Muhammad. When the shootings took place Muhammad was 41 years old (Battle, 2018). His accomplice was Lee Boyd Malvo. Lee Boyd Malvo was only 17 at the time of the attacks making him a juvenile(Battle, 2018). Although he was a juvenile at the time of the attacks, he was tried as an adult after the attacks. The D.C. sniper shootings changed the lives of thousands in the D.C., Maryland and Virginia area. Reporters, investigators, and citizens all followed the story hoping to find a pattern from the angry serial killer. America later found out this was a random killing spree by a crazy lunatic. The shootings were all part of a huge plan put together by John Allen Muhammad. Although Muhammad initiated the idea of the attacks, Lee Boyd Malvo was the active shooter at each crime scene (Augenstein, 2018). When the shooting initially took place, investigators and nearby civilians thought the attack was coming from a white van. After more attacks occurred and investigators continued to follow the story they realized the white van was not responsible for the shooting. It was not until after several deaths when investigators discovered that these shootings were being conducted by John Allen Muhammad, and his young and confused teenage accomplice Lee Boyd Malvo. All of the shootings were conducted out of a blue 1990 Chevrolet Caprice sedan (Battle, 2018). On October 2 2002, a random shot was launched from a window of a Michaels Craft Store in Aspen Hill (Dwyer, 2018). Luckily no one was shot or killed at this scene. About an hour after the random shot, Muhammad and Malvo made their first attack in the Washington Metropolitan area. An innocent pedestrian named James Martin was shot and killed in the parking lot of a grocery store (History.com Editors, 2018). The Grocery store was located in Glenmont. James Martin was a 55-year-old program analyst at NOAA (Battle, 2018).The next morning, Malvo and Muhammad shot four more people within a span of two hours. The shootings took place in Montgomery County Maryland and other nearby areas. Only a couples hours after the four shootings Malvo and Muhammad began to shoot in another area. Another civilian was killed that evening in the District of Columbia, the shooting took place only ten minutes away from Maryland. In each shooting, the victims were killed by a single bullet fired from some distance(Nuamah, 2017). Although the majority of the shootings were completed with the same gun, investigators did not pick up on a pattern. The pattern was later detected after the shootings occurred on October 3 (Nuamah, 2017). The Washington metropolitan area was filled with despair. The news of the shooting was spreading everywhere including outside of the Washington metropolitan area. All parents were concerned and began picking their c hildren up from school early. Several parents did not allow their children to ride the bus back home from school. D.C. public schools and Montgomery County public schools were on lockdown. Not allowing anybody in or anybody out. Also restricting the youth from having outside lunch, outside physical education classes, and recess. Muhammad and Malvo were the topic of discussion and everybody had their eyes out for the murderers. Malvo and Muhammad moved through Maryland, Washington D.C., and Virginia which caused them to take more time before launching another attack. The snipers relentlessly pursued their killing spree until October 23. Lee Boyd Malvo was only 17 at the time of the attacks. Juveniles are often prosecuted in juvenile courts. Juveniles who are found guilty are sent to facilities that practice rehabilitation as well as punishment. Most Juveniles only spend up to 6 months incarcerated but juveniles who commit more heinous crimes are detained until age 21. Investigators, lawyers, and judges did not have any mercy on a juvenile who committed such horrible crimes. Prosecutors did not waste any time when applying state laws that allow juveniles charged with serious felonies such as murder to be treat ed as adults. Although Malvo was a juvenile, he was still tried as an adult and prosecuted in traditional criminal courts rather than courts set up for juvenile delinquency. Juveniles being tried as adults is an area of the law that many citizens do not agree with because it does not allow the juvenile to grow and reap the benefits of the rehabilitative programs set up for nurturing juveniles. Because Lee Boyd Malvo shot and killed several innocent civilians he never got the opportunity to be accused of committing a delinquent act. He was formally charged with a crime since the first day of court. If Lee Boyd Malvo had been tried as a juvenile he would have had the opportunity to be under the authority of the juvenile courts until he was an adult. This would have been a year of age appropriate treatment and healthy rehabilitation until Malvo was an adult or even longer. Lee Boyd Malvo is now a convicted murderer. He is currently serving multiple life sentences at Red Onion State Prison in Virginia, a supermax prison(Augenstein, 2018). Lee Boyd Malvo was classified as a psychopathic serial killer. Researchers have debated whether or not his psychopathy had anything to do with the vicious killing spree. Lee Boyd Malvo said he was brainwashed and forced to be a part of the attacks(Lavoie, 2018). Malvo claims he was manipulated into believing that the $10 million ransom sought from the US government to stop the sniper killings would be used to establish a Utopian society for one hundred and forty homeless black children on a Canadian compound(Lavoie, 2018). Lee Boyd Malvo and his mother, Una Sceon James, had their first encounter with John Allen Muhammad in Antigua and Barbuda around 1999(Battle, 2018). Una Sceon James and John Al len Muhammad were involved in a romantic relationship. After a couple years of living together, Malvos mother moved from Antigua to Fort Myers, Florida (Augenstein, 2018). She used fake documents to come to America (Augenstein, 2018). Malvo was left behind with John Allen Muhammad. Muhammad became a father figure to Malvo. Malvos mother had planned to smuggle her son to America in the near future. In 2001 Malvo traveled to America and arrived in Miami. After only a couple of months he and his mother were both caught by the Border Patrol(Augenstein, 2018). Una James was deported to Jamaica on December 15, 2002 in the aftermath of the shootings (Dwyer, 2018). Malvo served time at a local jail until he was released on bond in January 2002. After being released from jail Malvo moved to Bellingham, Washington, where he lived in a homeless shelter with Muhammad(Augenstein, 2018). Regardless of not having much money and living in a homeless shelter, Malvo enrolled in Bellingham High School. In order for him to enroll in school Muhammad had to lie and list himself as Malvos father (Augenstein, 2018). After the shootings, students from Bellingham High school spoke out about Malvo saying he never spoke to anyone at school and he did not make any friends. One day after school Malvo shoplifted a Bushmaster XM-15 from Bulls Eye Shooter Supply (Augenstein, 2018). This gun would later be used in all the vicious attacks in the Washington Metropolitan area. Malvo was initially arrested and charged with more than one federal offense. The charges were quickly dropped due to location. Malvo was moved to a jail in Fairfax county Virginia. He was later charg ed by the Commonwealth of Virginia for two capital crimes: the murder of FBI analyst Linda Franklin in the commission of an act of terrorism and the murder of more than one person in a three-year period (citation). Not only was he charged with murder, he was also charged with the unlawful use of a firearm in the murder of Franklin (citation). While in jail Malvo made a recorded confession to Detective Samuel Walker in which he stated that he intended to kill them all (citation). His court venue was later moved from FairFax Virginia to Chesapeake Virginia. Malvo pleaded not guilty. He claims he was insane and was under the complete control of Muhammad. Malvo should have received more sympathy from the court because he was a juvenile at the time of the shootings. Although his crimes were diabolical, he should have been tried as a juvenile. Juvenile courts are responsible for three categories of youths which include delinquents, status offenders, and dependent and neglected children. Lee Boyd Malvo was technically a delinquent at the time of the shooting because he committed crimes that would be defined as criminal even if he was an adult. Juvenile courts cover both misdemeanors and felonies but Lee Boyd Malvo was not given the chance for Juvenile court. Lee Boyd Malvo was also a dependent/neglected child at the time of the shootings. His mother had left him with Muhammad and after moving to America he became a slave to Muhammad. Malvo could have easily been affected by Anomie theory. Anomie theory can also be defined as normlessness. It is the lack of normal or ethical or social standards. The Anomie theory first emerged in 1893 by French sociologist David ?†°mile Durkheim. Durkheim first explained the idea of Anomie theory in his book entitled The division of labor in Society. In the book Durkheim indicated that the rules of how individuals interact with one another were deteriorating and therefore people were unable to determine how to interact with one another. He is saying that the expectations of behavior were unclear and the system has broken down. Durkheim claims that normlessness can cause extreme deviant behavior, depression, and suicide. The idea of Anomie theory explains individuals who choose criminal activity because the individual believes there is no reason not to. Lee Boyd Malvo was partially raised by a malicious psychopath who more than likely taught him to do wrong things. He never had anyone to explain to him what was wrong and right. He was only taught to follow demands from Muhammad without question. People such as John Allen Muhammad use corruptive and manipulative techniques to tak e control of other people. They brainwash their partners using a practice called perspecticide. When the word partner is used people usually think of a romantic partner. However a partner can be any person who takes part in an activity with another or many other people. In this case Lee Boyd Malvo serves as John Allen Muhammad partner in crime. People who are in an abusive relationship are more likely to become victim to perspecticide. In several interviews Malvo says Muhammad would often physically abuse him when growing up and used extreme physical abuse when planning for the attacks. Malvo also says he was sexually molested by Muhammad. Muhammad used physical abuse to make Malvo believe so many things that arent true. He no longer understood what was real and what was fake, he only knew what Muhammad told him. Malvo had become a prisoner in his own life. He was not allowed to do anything unless Muhammad told him to do it. He ultimately could not think on his own and depended on Muhammad for instruction. Whi le Malvo was on trial, one of his public defenders said that violent video games had also affected the way Malvo was thinking. The brutally violent video games also contributed to Malvos willingness to commit murder. Cooley his public defendant said, Hes trained and desensitized with video games, computer games, to train him to shoot human forms over and over(citation). Malvo could have been affected by social learning theory if he played the violent video game every day. It is proven that People learn through observing others behavior, attitudes, and outcomes of those behaviors(citation). If Malvo only had interactions with Muhammad and violent video games, it would be easy for him to learn violent behavior. Most human behavior is learned observationally through modeling: from observing others, one forms an idea of how new behaviors are performed, and on later occasions this coded information serves as a guide for action. (Bandura). Sociologists Lawrence Kutner and Cheryl K. Olson who followed and studied the case argue against Malvo. Kutner and Olson say his testimony in court proves he was not influenced only by video games. Malvo admitted to shooting a real gun at paper plates. The paper plates would represent a human head. Prior to the D.C. sniper shootings Malvo had a background of being antisocial. He also had a criminal background that included torturing animals at a young age. Torturing animals is one of the most famous signs of future violent criminal acts (citation). Despite the many negative aspects that could have encouraged Lee Boyd Malvo to engage in the terrorist like D.C. sniper shootings, he was still convicted of both charges. The jury deliberated for over 13 hours and decided on convicting Malvo with both charges. The jury thought this was the best way to serve justice to all the families who lost someone in the reckless attacks. The jury harshly recommended a sentence of life in prison. As if life in prison was not harsh enough for a 17 year old minor, the jury also recommended that Malvo have no chance at getting out of prison. They recommended life without the possibility of parole for the murder of Franklin. On March 10, 2004, Malvo was sentenced to life in prison without parole (citation). Seven months after being sentenced to life in prison without parole Malvo returned back to court under a plea bargain. Malvo was willing to plead guilty in order to avoid getting the death penalty. Malvo knew that the death penalty was a huge option especially because Muhammad had been sentenced to death earlier in the year. Malvo pleaded guilty to attempting to murder Caroline Seawell while in Virginia and murdering Kenneth Bridges (citation). While in court, Malvo also pleaded guilty to having two illegal firearms. The firearms were found in the vehicle with Muhammad and Malvo when they were both caught sleeping. Malvo was later sentenced again to life in prison without parole for murder. The judge also added eight additional years to his life sentence due to the weapons charges (citation). Although Malvo had already been sentenced to life in prison with an additional 8 years, Virginia prosecutors in Prince William County still wanted him to receive the death penalty. The prosecutors decided to wait before attempting to have Malvo executed. They could not move forward with charging Malvo with addit ional capital charges because he was a juvenile at the time of shooting. It was up to the U.S. Supreme Court to decide whether juveniles could be officially sentenced to death and executed by the U.S. government (citation). In 2005 the Supreme Court decision in Roper v. Simmons highlighted the fact that the Eighth Amendment does not allow execution for crimes committed when under the age of 18. Therefore, the prosecutors in Prince William County could not move forward with charging Malvo. Malvo and Muhammad had murdered civilians all around the Washington metropolitan area. They also murdered people in Louisiana and Alabama. Although the prosecutors in Prince William County could not proceed, prosecutors in Maryland, Louisiana and Alabama were still interested in putting both Malvo and Muhammad to death. Lee Boyd Malvo could face more sentencing in Alabama and Louisiana. Malvo being under the age of 18 when committing the crimes may be the only reason he is still alive. As of right now he cannot face the death penalty. Both Muhammad and Malvo were both arrested in Maryland. Although they were arrested in Maryland they were extradited to Virginia because of the different laws on the death penalty. The death penalty is allowed in Maryland, however it does not apply to people under the age of 18 when committing a crime. Virginia laws do allow the death penalty to people under the age of 18 when committing a crime. Prosecutors wanted both Muhammad and Malvo to be sentence d to death and they knew the sentencing was more likely to result in execution in Virginia than in Maryland. Virginia is known for executing murderers where Maryland has a reputation of being more lenient than Virginia. Maryland later abolished its death penalty for both juveniles and adults in 2013. Because Malvo and Muhammad had committed various crimes across state lines it was hard for the courts to come to a decision. After three long years Maryland and Virginia came to an agreement. Maryland was able to start the prosecuting process for some of the many charges Muhammad and Malvo had pending. When Maryland began prosecuting Malvo, he was extradited back to Maryland. Malvo was finally moved to Montgomery County, Maryland under heavy security before receiving his final sentencing. In conclusion, Lee Boyd Malvo served as an accomplice to John Allen Muhammad in the 2002 D.C. Sniper attacks. Malvo could have easily been brainwashed due to the way he grew up and the people around him. Although he should pay for what he did to innocent Americans, he did not receive any sympathy for his upbringing or for his mental health. Malvo also did not receive any rehabilitative service as a Juvenile. Although h e will spend the remainder of his life in prison rehabilitative services, mental health programs, therapy, and human interaction can be beneficial to him changing as a person.

Admire Person - 1676 Words

The person I want to describe is my mother. She’s 55 years old, medium-built, and she’s about 166 centimetres in height. She has an attractive face and looks younger than her age. She has round face, big eyes, and beautiful eyelashes. She likes wearing casual clothes unless she’s at work when she normally wears lady’s formal wear. My mother works as an accountant in a trade company. She studied accounting at Fudan University and she has always been working as an account since graduation. She’s warm-hearted, open-minded, and always willing to help other people who are in need of help. Although she’s not a young lady anymore, she’s very willing and ready to accept new things. She likes singing, dancing, watching movies, reading, planting†¦show more content†¦I still have his early work on my walls, and I am still in love with it and being inspired by it. Also, Santjes Oomen was an artist whose work -- while I never acquired any -- lingers in my mind, and I recognize how it has influenced me. And, finally, I have to say the work of Philip Seymour Hoffman has inspired me tremendously. He is more than an actor; he is an artist, and if you pay attention to the subtleties of his work, his delving into the psychology of the characters he plays -- its really amazing. There is something about his work that moved me to get up off of the couch and start making stuff again. The park I want to describe is Yan’an Park. It’s very close to my home, just behind the Sheraton Hotel. One can either enter the park through the main gate on Yan’an Road, or from the east gate on Yili Road. The park is really beautiful. It’s got quite a few different areas and it is very peaceful. There are pathways all around the park and a lot of grass and trees. There are two ponds in the park – a small one where you can go fishing in the summer time, and a very large pond where you can go skating in the winter time. Near the large pond is a picnic area where you can sit down and relax. It’s nice and shady because there are many tall trees nearby. There’s also a play area for small children with games and rides, a restaurant and a snack bar, and an indoor swimming pool. I first found theShow MoreRelatedThe Is The Person That I Admire1230 Words   |  5 PagesLecrae Moore is the person that I admire and look up to the most. Lecrae is a Grammy winning contemporary Christian rapper. But if you ask him, he will tell you that he is a Christian and he is a rapper but he is not a Christian rapper like his world attained title proclaims him to be. He claims that his faith doesn’t define his career. For example, we don’t call the local car mechanic the â€Å"Christian car mechanic†. He is just the car mechanic. 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Support For The Sub Primary Market Finance Essay - Free Essay Example

Sample details Pages: 30 Words: 9098 Downloads: 3 Date added: 2017/06/26 Category Finance Essay Type Research paper Did you like this example? The financial turmoil that engulfed the US during 2007-09 began in the mortgage lending markets. Indicators of the emerging problems came in early 2007 when, first, the Federal Home Loan Mortgage Corporation (commonly known as Freddie Mac or Freddie) announced it would no longer purchase high-risk mortgages and, second, New Century Financial Corporation a leading mortgage lender to riskier customers filed for bankruptcy. The crisis set in as house prices started to fall and the number of foreclosures rose dramatically. Don’t waste time! Our writers will create an original "Support For The Sub Primary Market Finance Essay" essay for you Create order This in turn caused credit rating agencies to downgrade their risk assessments of asset-backed financial instruments in mid-2007. The increased risk restricted the ability of the issuers of these financial products to pay interest, and reflected the realisation that the bursting of the US housing and credit bubbles would entail unforeseen losses for asset-backed financial instruments. Between the third quarter of 2007 and the second quarter of 2008, $1.9tr of mortgage-backed curities received downgrades to reflect the reassessment of their risk. This represented an immediate and severe dislocation of the financial markets.The odds are only about 1 in 10,000 that a bond will go from the highest grade, AAA, to the low-quality CCC level during a calendar year. So imagine investors surprise on Aug. 21 when, in a single day, SP slashed its ratings on two sets of AAA bonds backed by residential mortgage securities to CCC+ and CCC, instantly changing their status from top quality to pure junk. Amidst continuing tight credit markets, 5mortgage and financial firms received support from the Federal Reserve (Fed) through short-term lending facilities and auctions for the sale of mortgage-related financial products. However, such actions were unable to prevent rapid falls in asset prices as institutions sought to relieve themselves of these risky burdens and replenish their risk-weighted 6capital ratios. Mortgage lender Countrywide Financial was bought by Bank of America for $4bn in January 2008, while many other firms had their credit ratings downgraded  [1]  . It would have been hard, even a few months prior to the collapse of Lehman Brothers, to anticipate the impact that the global financial crisis would have on the Indian economy. This is because the Indian banking system did not have any direct exposure to subprime mortgage assets or any significant exposure to the failed institutions, and the recent growth had been driven predominantly by domestic consu mption and investment. And yet, the extent to which the global crisis impacted India was dismaying, spreading through all channels the financial channel, the real channel and the confidence channel. The reason why India was hit by the crisis was because of its rapid and growing integration into the global economy.  [2] CHAPTER 1 GLOBAL CRISIS; ITS ROOT CAUSES The global economic crisis that began in 2007 was largely unexpected. Just before the crisis, the IMF in its bi-annual World Economic Outlook announced that risks to the global economy had become extremely low, given that capital inflows pushed up borrowing and asset prices, while reducing spreads on risky assets. 9 Also, since 2000, the world economy had continuously expanded at high rates. High growth of the world economy was spread across advanced, emerging and developing countries and allowed unemployment and poverty to decline (Figure 1). High demand from fast-growing developing and emerging markets led to high commodity prices that benefited growth in natural resource-rich countries. 1980-1999 200-2008 Here blue colour shows world, whereas red is for advanced economy and green is of emerging and developing economy. The Great ModerationÃÆ' ¢Ãƒ ¢Ã¢â‚¬Å¡Ã‚ ¬- was considered to be the result of several developments: for one, business and financial deregulation as w ell as financial innovation had created a more flexible and adaptable economic system. Financial assets were considered to be less risky than before, giving rise to higher levels of financial intermediation which in turn helped fuel growth as well as greater financial innovation, especially through hedge funds. Volatility of business cycles had also declined because the world experienced abundant liquidity-partly reflecting surplus savings in a number of emerging markets-giving the false sense that stability was due to some structural improvement in the financial system. Also, growing globalization and free trade, partly boosted by Chinas entry into the World Trade Organization in 2001, as well as the buoyant growth of China and other newly emerging economies was expected to keep inflation at bay even as global growth accelerated  [3]  . Causes of the financial turmoil The US housing market ; Creation of a housing bubble  [4] US house prices rose dramatically from 1998 until late 2005, more than doubling over this period (see Chart 2), and far faster than average wages. Further support for the existence of a bubble came from the ratio of house prices to renting costs which rocketed upwards around 1999. Furthermore, Yale economist Robert Schiller found that inflation-adjusted house prices had remained relatively constant over the period 1899-1995. Pointing to the escalation in house prices and marked regional disparities. The rise in house prices reflected large increases in demand for housing and happened despite a rise in the supply of housing. The significant increase in the demand for housing is attributed to a number of factors. Low interest rate Sustained low interest rates from 1999 until 2004 made adjustable-rate mortgages (ARMs) appear very attractive to potential buyers. At least in part, low interest rates were driven by the large current account deficit run by the USA, mirrored by capital inflows from countries like China which avidly purchased US Treasury bonds , but also the decision (justified by a new economic paradigm) on the part of the Fed to keep interestrates lower than in similar previous scenarios. The Fed and many of the worlds other leading central banks continued to pump liquidity into credit markets to ensure credit would continue to flow at low rates of interest. Support for the sub primary market  [5] There is strong evidence to suggest that, in many parts of the US, it had become a lot easier, and cheaper, to receive a mortgage. A Federal Reserve study found that the gap between the interest rates facing the sub-prime and prime markets, Americas most and least risky borrowers, fell dramatically from 2.8% in 2001 to 1.3% in 2007. Mortgage lenders who had previously sold their subprime loans on to Fannie and Freddie were threatening to bypass the middle-man and sell straight to the banks who sought to bundle up the loans into profitable securities. This activity posed a serious risk of moral hazard. As mortgage lenders became more profitable, selling riskier loans became more attractive as banks could sell on these mortgages. Empirically, this process of securitisation has been associated with a decline in credit quality. Accordingly, they devised teaser schemes with initially low-interest rates or even interest-free mortgages to attract buyers who saw it as a chance to cast a bet on the continuation of the inexorable rise in house prices. The initial lower rate period was also attractive for the banks as it gave them time to sell on mortgages before they defaulted. In addition, down payments were reduced, mortgages increasingly required little or no documentation or proof of income, and in some cases required no income, job or asset at all to qualify for a mortgage. In spite of its legal mandate to regulate abusive lending practices, the Fed failed to prevent such predatory lending. It is also likely that many of the mortgages were underpinned by fraudulent activity perhaps up to 70% in the case of some lenders . Speculations  [6] The upward rise in house prices was accentuated by property speculation. In some markets, 10% to 15% of buyers were speculators. Speculative activity was exacerbated by the USs comparatively generous foreclosure rules: unlike in the UK, where foreclosure is likely to result in personal bankruptcy, homeowners in the US can generally just walk away from their home and mortgage. Consequences Together, these factors created a huge housing bubble. By 2005-06, the value of subprime mortgages relative to total new mortgages was estimated at 20% as opposed to less than 7% in 2001. Subprime mortgage lending rose from $180bn in 2001 to $625bn in 2005. New Alt-A mortgages, the risk level between subprime and prime, had risen from 2% in 2001 to 14% by 2006. Dean Baker, co-director of the Center for Economic and Policy Research, valued the housing bubble at $8 trillion. The collapse of the bubble By 2006 a number of factors had conspired to burst the bubble. First, average hourly wages in the US had remained stagnant or declined since 2002 until 2009; in real terms this represented a decline. Consequently, prices could not continue to rise as housing became increasingly unaffordable. Second, growth in housing supply tracked price rises. 5While prices were able to withstand this downward pressure until 2005, once demand had subsided excess supply exacerbated the sharp fall in prices. Third, as interest rates rose to a peak of 5.25%, ARMs became less attractive and effectively removed many non-prime prospective buyers from the market in the first half of 2006, the Mortgage Bankers Association found the value, and total number, of subprime mortgages to be down 30% on the second half of 2005. Fourth, as personal saving from disposable income fell below zero, fewer households had the requisite finance to support increases in debtThe collapse in house prices affected the ability, and the willingness, of mortgage owners to meet their payments. In some cases, house-owners with ARMs simply could not face the rise in their payments resulting from the steep rise in the Fed funds rate. As house prices fell, the options of either selling the property or re-financing the mortgage also diminished. This unfortunate position was exacerbated by the decline in the net savings rate, which meant homeowners had fewer financial reserves to help themselves. In other cases, there existed an incentive to voluntarily foreclose where the value of the house (and future gains associated with a stronger credit rating) was smaller than the value of the outstanding mortgage because of generous foreclosure legislation The rise in interest rates and fall in property values had a particularly damaging impact on those with ARMs. Consequently, 2007 and 2008 saw significant rises in delinquency and foreclosures. Serious mortgage delinquency rates rose in both the prime a nd subprime markets, although the latters rise from just over 6% in 2006 to 18% in 2008 was particularly salient. The number of properties subject to foreclosure filings rose by 79% in 2006 to reach 1.3m in 2007, and increased by a further 81% to 2.3m in 2008 (a 225% increase on 2006). The expansion of credit to risky borrowers in the US extended beyond the housing market. Although mortgages were the largest single component, the value of non-mortgage asset-backed loans also grew considerably; accordingly, the issuance of asset-backed securities. (ABSs) quadrupled from 2001 to reach $1.3tr in 2006. These ABSs had gone through the same securitisation process as mortgage-backed securities (see below) and were thus equally vulnerable to collapses in the value of their underlying assets  [7]  . The role of the financial industry The web of financial instruments The problems that arose from the housing bubble multiplied exponentially because of the manner in which they were re-packaged and distributed to the global financial markets. Complex innovations designed to maximise efficiency and profits by allocating risk to those happiest to bear it revolutionised finance in the mid 1990s. 67 The genesis of mortgage loans generally followed an intricate process where the initial loans were passed through a number of agents, and ended up scattered across financial markets  [8]  . The securitization process At the first stage in the process a household buys a mortgage from a mortgage lender. A rate of interest, fixed or variable, is agreed to be paid to the mortgage lender over a given period of time. The long-term interest rate is assessed on the basis of their credit history and score, and is greater where the risk of default is believed to be higher. At stage 2, the mortgage lender relieves himself of the risk of default by selling the mortgage on to a mortgage banker. Traditionally, mortgage bankers like Fannie and Freddie would issue bonds to purchase mortgages and sell the loans in parcels to the market. However, the innovative new financial process saw the mortgage banker in turn sell the mortgage on for a profit to an investment banker. This third stage may not occur where a mortgage bank also served the function of an investment bank as was the case with Fannie and Freddie. Diagram 1 provides an overview of the process. Overview of the financial process Household mortgageStage 1 Mortgage LenderStage 2 Mortgage BankerStage 3 InvestmentBanker/Underwriter-Stage 4 Credit Rating AgencyStage 5 Investor- Insurer Stage 6 At the fourth stage, the investment banker collects a large number of mortgages (or structured mortgage-based financial products) that it underwrites for the purpose of creating a security it can sell to investors. Using complicated financial instruments, investment bankers would pool together a large number (usually between 1,000 and 25,000) of mortgages into a security known as a mortgage-backed security (MBS) or a collateralised debt obligation (CDO) where the security could contain different types of assets including mortgages as collateral. By pooling together large numbers of assets, these securities dramatically reduced the risk of total default although maintained the same expected return (and risk-neutral credit spread ). Even where defaults occurred the owner would still receive returns from the acquired collateral (usually the house itself). A host of more complicated synthetic products such as CDO-squared were backed by the original securities, and were sold in a simila r manner. The MBSs and CDOs varied in composition and form but yielded returns either cash flows over time or market value depending upon their risk profiles It is at stage 5 where the risk profile was generally calculated: credit rating agencies (CRAs) would make their risk assessment of these assets and their different tranches, and this would price the security offered to the market by the investment banks but would also serve to inform risk-weighted capital requirements under the Basel II capital framework. Given that 80% of subprime MBSs were rated AAA (the highest credit rating level) and 95% at a least grade A, the securities appeared to be highly attractive investments, liable to offer generous returns which could be marked as low-risk assets on a firms balance sheet. Once rated, the securities were either kept by investment banks as investments or collateral or parcelled off and purchased by investors including other banks, hedge funds and pension funds, as part of t heir asset portfolios  [9]  . The issuer would also receive a fee for managing the asset. Economist Markus Brunnermeier finds that pension funds generally purchased the safest tranches, hedge funds purchased riskier portions and the issuer retained the riskiest tranches for monitoring purposes. Selling such a security can benefit the issuer by providing cheap and diverse financing and removing risky assets from the balance sheet. The use of credit derivatives Banks needed to manage their risk and to meet their Basel capital requirements. Consequently, they sought protection against the riskiest securities issued in stage. This came in the form of a financial derivative called a credit default swap (CDS) which, in return for a fraction of the potentially large return, insured the holder of the MBS or CDO against the risk of default. The existence of naked CDSs CDS contracts where neither party actually held the underlying asset created fertile ground for speculation on a firms future creditworthiness as well as risk management. Insurance firms like AIG could make as many CDSs as they wished given that the market was unregulated. The Commodity Futures Modernization Act of 2000 specified that CDSs were not defined as insurance, securities or futures contracts (and therefore went unregulated). As long as the insurer remained AAA-rated, they did not need to put up any collateral; moreover, CDSs could be posted as profits immediately usi ng default probabilities based on recent experience. Given that the CDS market contained considerable speculation upon the outcomes of the insurance/swap contracts, this ensured that derivatives traders across the world spread risks across an even broader spectrum of investors. Broadening the appeal of the process The process quickly grew in popularity as it promised significant profits at each stage. It is pertinent to note that throughout this chain each actor is betting on the same favourable outcome. Opportunities for involvement were magnified by a number of factors. In April 2004, a ruling by the Securities and Exchange Commission (SEC) permitted large investment banks to borrow more, and thereby allowing them to purchase and sell on more of the MBSs which were believed to offer excellent low-risk returns. This saw the investment banks raise their leverage ratios from the traditional level of approximately 12 dollars ofdebt for every 1 dollar of equity as high as 40 to 1 . In conjunction, investors began adopting a more complacent approach to risk, having seen the Fed respond to previous asset bubbles by supporting liquidity injections. In the words of then President Bush, Wall Street got drunk. Riskier prospects were particularly attractive at a time when bond yields had been driven down by low interest rates and the significant investment by China, among others, in US Treasury bonds. Moreover, mortgage brokers knew that the issuers of securities could sell almost any mortgage on the market, and accordingly this encouraged lenders to provide more loans. Lehman Brothers, for example, appeared to encourage generous lending standards and fraudulent activity at the mortgage lending firms (such as First Alliance) it had acquired. This cycle ensured that the market in MBSs, CDOs and CDSs reached vast proportions by 2007 MBSs valued at more than $2tr were issued into the bond market; CDOs were issued to the value of $521bn; although 90% of the CDS m arket was based on speculative bets, its notional value 88 soared to $62tr by December 2007. The housing crash and the finance industry  [10] As the bubble burst, two key features endangered the returns from mortgage-backed assets: first, default meant that a large cash flow was halted; second, the housing collateral on which this was based saw a significant depreciation. Although the collapse of the subprime market cost the economy more than $1tr, the damage was greatly magnified by the web of financial instruments constructed around it or the chain reaction as US Treasury Secretary Henry Paulson described it. Underpinning the complex financial instruments were a number of problems that broadened the collapse of the housing market to the financial sector as a whole. First, the formal and informal risk analysis underpinning the actions of each of the actors in Diagram 1 failed to accommodate the collapse of the housing bubble. Many models failed to integrate common shocks, and paid too little attention to unlikely but highlycostly tail risks. Moreover, the formal statistical models used in the banks, CRAs, insurance firms and regulators made predictions which relied upon historical housing data generally only going back as far as two decades and which failed to reflect the relaxation of credit standards. Second, the credit ratings recommended by the CRAs may have suffered from inadequate risk analysis, conflicts of interests and a lack of competition. Third, the regulatory bodies failed to effectively oversee such activity and detect risks to the system. Many large, and systemically important, institutions had substantially increased their leverage both on and off their balance sheets. As leverage ratios reached50 in some cases, the potential losses associated with even a small fall in asset values increased dramatically. The new dynamic was particularly marked among the five large US investment banks following the SECs 2004 rule change, and especially so at Bear Stearns where its leverage ratio reached 40 to 1  [11]  . The financial crisis quickly spread to affect the US and world s real economy. Whether or not financial losses and uncertainty induced an irrational fear of further defaults (or hysteresis, in economic terminology), suspicion of financial firms ensured that interbank lending rates soared. In addition, banks and hedge funds experienced runs from depositors seeking to redeem their investments; this, in turn, required financial institutions to de-leverage further. Banks, without knowing the value of their assets, became uncertain of their lending capacities and became increasingly reluctant to make loans to institutions of uncertain creditworthiness. Firms that had used MBSs and CDOs as collateral for asset-backed commercial paper essentially a short-term loan agreement engaged in by banks and corporations could no longer receive the necessary loans as interest rate spreads spiked. Following the failure of the seemingly impregnable Lehman and AIG, money markets became highly conservative in their short-term lending. Consequently, a credit crisis developed which damaged firms in the real sector which relied upon loans for credit as well as financial firms needing large loans to increase their liquidity  [12]  . CHAPTER 2 POLICY RESPONSE FOR FINANACIAL CRISIS Severity of the 2008-2009 Recession The 2008-2009 recession was long and deep, and according to several indicators was the most severe economic contraction since the 1930s (but still much less severe than the Great Depression) . The slowdown of economic activity was moderate through the first half of 2008, but at that point the weakening economy was overtaken by a major financial crisis that would exacerbate the economic weakness and accelerate the decline. When the fall of economic activity finally bottomed out in the second half of 2009, real gross domestic product (GDP) had contracted by approximately 5.1%, or by about $680 billion. At this point the output gap-the difference between what the economy could produce and what it actually produced-widened to an estimated 8.1%. The decline in economic activity was much sharper than in the nine previous post-war recessions, in which the fall of real GDP averaged about 2.0% and the output gap increased to near 4.0%. However, the recent decline falls well short of the experience during the Great Depression, when real GDP decreased by 30% and the output gap probably exceeded 40%. As output decreased the unemployment rate increased, rising from 4.6% in 2007 to a peak of 10.1% in October 2009, and remaining only slightly below that high into 2011. The U.S. unemployment rate has not been at this level since 1982, when in the aftermath of the 1981 recession it reached 10.8%, the highest rate of the post-war period. (During the Great epression the unemployment rate reached 25%.) This rise in the unemployment rate translates to about 7 million persons put out of work during the recession. Another 8.5 million workers have been pushed involuntarily into part-time employment. The recession was intertwined with a major financial crisis that exacerbated the negative effects on the economy. Falling stock and house prices led to a large decline in household wealth (net worth), which plummeted by more than $12 trillion or about 20% during 2008 and 2009. I n addition, the financial panic led to an explosion of risk premiums (i.e., compensation to investors for accepting extra risk over relatively risk-free investments such as U.S. Treasury securities) that froze the flow of credit to the economy, crimping credit-supported spending by consumers, such as for automobiles, as well as business spending on new plant and equipment. The negative shocks the economy received in 2008 and 2009 were, arguably, more severe than what occurred in 1929. However, unlike in 1929, the severe negative impulses did not turn a recession into a depression, arguably because timely and sizable policy responses by the government helped to support aggregate spending and stabilize the financial system.6 That stimulative economic policies would have this beneficial effect on a collapsing economy is consistent with standard macroeconomic theory, but without the counterfactual of the economys path in the absence of these policies, it is difficult to establish wit h precision how effective these policies were  [13]  . Policy Responses to the Financial Crisis and Recession Both monetary and fiscal policies as well as some extraordinary measures were applied to counter the economic decline. This policy response is thought to have forestalled a more severe economic contraction, helping to turn the economy into the incipient economic recovery by mid-2009. These policies are likely continuing to stimulate economic activity into 2014 Monetary Policy Actions To bolster the liquidity of the financial system and stimulate the economy, during 2008 and 2009 the Federal Reserve (Fed) aggressively applied conventional monetary stimulus by lowering the federal funds rate to near zero and boldly expanding its lender of last resort role, creating new lending programs to better channel needed liquidity to the financial system and induce greater confidence among lenders. Following the worsening of the financial crisis in September 2008, the Fed grew its balance sheet by lending to the financial system. Between September and November 2008, the Feds balance sheet more than doubled, increasing from under $1 trillion to more than $2 trillion. By the beginning of 2009, demand for loans from the Fed was falling as financial conditions normalized. Had the Fed done nothing to offset the fall in lending, the balance sheet would have shrunk by a commensurate amount, and the stimulus that it had added to the economy would have been withdrawn. In the spri ng of 2009, the Fed judged that the economy, which remained in a recession, still needed stimulus. On March 18, 2009, the Fed announced a commitment to purchase $300 billion of Treasury securities, $200 billion of Agency debt (later revised to $175 billion), and $1.25 trillion of Agency mortgage-backed securities. The Feds planned purchases of Treasury securities were completed by the fall of 2009 and planned Agency purchases were completed by the spring of 2010. At this point, the Feds balance sheet stood at just above  [14]  . Fiscal Policy Actions Congress and the Bush Administration enacted the Economic Stimulus Act of 2008 (P.L. 110-185). This act was a $120 billion package that provided tax rebates to households and accelerated depreciation rules for business. Congress and the Obama Administration passed the American Recovery and Reinvestment Act of 2009 (ARRA; P.L. 111-5). This was a $787 billion package with $286 billion of tax cuts and $501 billion of spending increases that relative to what would have happened without ARRA is estimated to have raised real GDP between 1.5% and 4.2% in 2010 but will increase real GDP by a smaller amount in 2011 and an even smaller amount in 2012. In terms of extraordinary measures, Congress and the Bush Administration passed the Emergency Economic Stabilization Act of 2008 (P.L. 110-343), creating the Troubled Asset Relief Program (TARP). TARP authorized the Treasury to use up to $700 billion to directly bolster the capital position of banks or to remove troubled assets from bank bal ance sheets. Congress was an active participant in the emergence of these policy responses and has an ongoing interest in macroeconomic conditions. Current macroeconomic concerns include whether the economy is in a sustained recovery, rapidly reducing unemployment, speeding a return to normal output and employment growth, and addressing governments long-term debt problem  [15]  . Is Sustained Economic Recovery Underway? Evidence indicates that the economy, as measured by real GDP growth, began to recover in mid-2009. However, the pace of growth has been slow and uneven with a pronounced deceleration evident during 2011. During 2009 and 2010, growth had been sustained by transitory factors, such as fiscal stimulus and the rebuilding of inventories by business. Economic growth in 2010 showed signs of being generated by more sustainable forces, but the strength of those forces continues to be uneven, and a slowing of growth during 2011 prompted concern about the recoverys sustainability. The economy began to recover in mid-2009. For the remainder of 2009 and through 2010, real GDP (i.e., GDP adjusted for inflation) increased at an annualized rate of 3.0%. However, during 2011 growth slowed to 1.6% and in the first quarter of 2012 that pace improved only slightly to 2.2%. In comparison to previous economic recoveries, growth at 3.0% is relatively weak, but is fast enough to at least make slow progr ess at reducing the large output gap and at reducing unemployment. However, growth at less than a 2% annual rate may not be fast enough to close the output gap and keep the unemployment rate from rising. Through 2010, much of the economys upward momentum was sustained by the transitory factors of inventory increases and fiscal stimulus. Sustainable recovery would depend on more enduring sources of demand, such as consumers spending and businesses reviving, and providing momentum to the recovery. While business investment spending has been relatively brisk during the recovery, consumer spending was relatively tepid in 2011. Weak consumer spending along with the rapidly fading effects of fiscal stimulus and weaker growth in Europe raises concern about the sustainability of U.S. economic recovery in 2012  [16]  . Credit conditions have improved, making getting loans easier for consumers and businesses, loosening a constraint on many types of credit supported expenditures. The Fe ds survey of senior loan officers indicates that, on net, bank lending standards and terms continued to ease during 2011 and that the demand for commercial and industrial loans had increased. Manufacturing activity is increasing. Through March 2012, output had increased 3.8% over a year earlier and capacity utilization has risen from a low of 65% in mid-2009 to 77.8%. (A capacity utilization rate of 80% 85% would be typical for a fully recovered economy.) Since mid-2009, non-farm payroll employment has increased by about 3.1 million jobs. Monthly gains have been consistently positive since late 2010, but often not at a scale characteristic of a strong recovery. Recent months have seen employment gains steadily falling, down from 275,000 workers in January 2012 to 115,000 workers in April 2012. The stock market has rebounded and interest rate spreads on corporate bonds have narrowed. The Dow Jones stock index had plunged to near 6500 in March 2009 but through April 2012 had regained about 90% of its lost capitalization. Spreads on investment grade corporate bonds, a measure of the lenders perception of risk and creditworthiness of borrowers, have fallen from a high of 600 basis points in December 2008 to less than 100 basis points in 2012. China, Asias other emerging economies, and Latin America are growing rapidly, which is transmitting a positive growth impulse to the United States by boosting demand for U.S. exports. Also the dollar is very competitive from a historical perspective, adding support to U.S. exports  [17]  . On the other hand, significant economic weakness remains evident. In the third quarter of 2011, the economy had regained its prerecession level of output. But it took 15 quarters to accomplish this as compared to 5 quarters on average in previous post-war recoveries. However, since potential GDP has also continued to grow, the output gap over this time period has only narrowed from about 8.1% to 6.1%. Consumer spen ding, the usual engine of a strong economic recovery, remains tepid, generally slowed by households ongoing need to rebuild substantial net worth lost during the housing crisis and the recession, continued high unemployment and underemployment, and a surge in energy prices in the first half of 2012. Employment conditions remain weak. The unemployment rate, which had peaked at 10.1% in October of 2009, has only fallen to 8.1% in April 2012. However, much of this improvement occurred during 2010, with essentially no net improvement during 2011, because economic growth in 2011 was only just fast enough to keep the unemployment rate from rising. This high rate of unemployment after more than two years of economic recovery is unusual and a source of concern. Also some of the fall of the unemployment rate does not reflect people finding jobs, rather it is caused by discouraged workers leaving the labor force. Another measure of labor market conditions, the employment to population rati o, which is not affected by changes in labor force participation, shows a labor market that is essentially treading water. During the recession that ratio fell from 63% to 58%, and it has remained near that low through nearly three years of economic recovery. The housing market remains depressed. Mortgage loan foreclosures continue to rise, house prices are still falling in many regions, and millions of mortgage holders are under-water, with the market value of their house below the amount of their mortgage. Beyond the direct effect on economic activity through lower rates of new construction, housing market weakness has a strong negative indirect effect on the balance sheets of households and banks. The sharp fall in household net worth caused by the fall of house prices has been an important factor dampening current consumer spending and the pace of overall economic recovery. Growth in the Euro area has been weak and fiscal austerity measures to stem the growth of public deb t have likely pushed the region back into recession, slowing growth there further. Slower growth in Europe, a major U.S. export market, will likely transmit a contractionary impulse to the United States, which could slow the pace of the U.S. recovery  [18]  . The Shape of Economic Recovery In the typical post-war business cycle, lower than normal growth of aggregate demand during the recession is quickly followed by a recovery period with above normal growth of spending, perhaps spurred by some degree of monetary and fiscal stimulus. The degree of acceleration of growth in the first two to three years of recovery has varied across post-war business cycles, but has been at an annual pace in a range of 4% to 8%.This above normal growth brings the economy back more quickly to the pre-recession growth path and speeds up the reentry of the unemployed to the workforce. Once the level of aggregate demand approaches the level of potential GDP (or full employment), the economy returns to its pre-recession growth path, where the growth of aggregate spending is slower because it is constrained by the growth of aggregate supply, which in recent years is estimated to have been at an annual pace of near 3.0%. (A subsequent section of the report looks more closely at aggregate s upply.) There is concern, however, that this time the U.S. economy, without supporting stimulus from policy actions, will either not return to its pre-recession growth path, perhaps remain permanently below it, or return to the pre-crisis path but at a slower than normal pace, or worse, dip into a second recession. Below normal growth would almost certainly translate into below normal recovery of employment, whereas a second round of recession could increase the already high unemployment rate. The next sections of this report discuss problems on the supply side and the demand side of the economy that could lead to a weaker than normal recovery  [19]  . CHAPTER3 IMPACT ON INDIAN ECONOMY Impact of the international crisis on the Indian financial system It would have been hard, even a few months prior to the collapse of Lehman Brothers, to anticipate the impact that the global financial crisis would have on the Indian economy. This is because the Indian banking system did not have any direct exposure to sub prime mortgage assets or any significant exposure to the failed institutions, and the recent growth had been driven predominantly by domestic consumption and investment. And yet, the extent to which the global crisis impacted India was dismaying, spreading through all channels the financial channel, the real channel and the confidence channel. The reason why India was hit by the crisis was because of its rapid and growing integration into the global economy. Under the impact of external demand shock, there was a moderation in growth in the second half of 2008-09 compared to the robust growth of 8.8% per annum in the preceding five years. The deceleration was more noticeable in the negative growth in industrial output in Q4 2008-09 the first decline since the 1990s. The transmission of external demand shock was severe on export growth, which deteriorated from a peak rate of about 40% in Q2 2008-09 to (-)22 per cent in Q4, ie the first contraction since 2001-02. Simultaneously, domestic aggregate demand also moderated due to a sharp deceleration in the growth of private consumption demand  [20]  . With regard to financial markets, India witnessed a reversal of capital inflows following the collapse of Lehman Brothers. Due to a heavy sell-off by foreign institutional investors (FIIs) there was a significant downward movement in the domestic stock markets. The withdrawal by FIIs and the reduced access of Indian entities to external funds exerted significant pressure on dollar liquidity in the domestic foreign exchange (FX) market. This created adverse expectations on the balance of payments (BOP) outlook, leading to downward pressure on the Indian rupee and increased FX market volatility. While th e banking system was sound and well capitalised, some segments of the financial system such as mutual funds (MFs) and non-banking financial companies (NBFCs) came under pressure due to reduced foreign funding and a subdued capital market. Moreover, the demand for bank credit increased due to the drying up of external sources. Against this backdrop, the Reserve Bank of India stepped in with liquidity-supplying measures both in the rupee and in foreign currency and the government implemented fiscal stimulus measures, a more detailed account of which is given below  [21]  . Indias balance of payments in 2008-09 captured the spread of the global crisis to India (see Table 1). The current account deficit during 2008-09 shot up to 2.6 percent of GDP from 1.5 percent of GDP in 2007-08 (Table 1). And this is the highest level of current account deficit for India since 1990-91 (Chart 1). The capital account surplus dropped from a record high of 9.3 percent of GDP in 2007-08 to 0.9 p ercent of GDP. And this is lowest level of capital account surplus since 1981-82. The year ended with a decline in reserves of US$ 20.1 billion (inclusive of valuation changes) against a record rise in reserves of US$ 92.2 billion for 2007-08. Impact of the global financial crisis on different markets 1. local money markets, Although the direct impact of the sub prime crisis both on Indian banks and on the financial sector was almost negligible because of their limited exposure to the troubled assets, the prudential policies put in place by the Reserve Bank and the relatively low presence of foreign banks in the Indian banking sector, there was a sudden change in the external environment following the failure of Lehman Brothers in mid-September 2008. The knock-on effects of the global financial crisis manifested themselves not only as reversals in capital inflows but also in adverse market expectations, causing a sharp correction in asset prices on the back of sell-offs in the equity market by FIIs and exchange rate pressures  [22]  . The withdrawal of funds from the Indian equity markets, as in the case of other emerging market economies (EMEs) and the reduced access of Indian entities to international market funds exerted significant pressure on dollar liquidity in the domestic FX market. With a view to maintaining orderly conditions in the FX market which had become very volatile, the Reserve Bank scaled up its intervention operations, particularly in October 2008. However, the FX market remained orderly in 2009-10 with the rupee exhibiting a two-way movement against major currencies. Indian financial markets, particularly banks, have continued to function normally. However, the cumulative effect of the Reserve Banks operations in the FX market as well as transient local factors such as the build-up in government balances following quarterly advance tax payments had an adverse impact on domestic liquidity conditions in September and October 2008. Consequently, in the money market the call money rate breached the upper bound of the informal Liquidity Adjustment Facility (LAF) corridor during mid-September-October 2008. However, as a result of the slew of measures initiated by the Reserve Bank (referred to in detail below) the money market rates declined and have re mained below the upper bound of the LAF corridor since November 2008. In the current financial year, the call rate has thus far hovered around the lower bound of the informal LAF corridor. The indirect impact of the global financial turmoil was also evident in the activity in the certificate of deposit (CD) market. The outstanding amount of CDs issued by scheduled commercial banks (SCBs), after increasing between March and September 2008, declined thereafter until December 2008 as the global financial market turmoil intensified. With the easing of liquidity conditions, the CD volumes picked up in the last quarter of 2008-09. The weighted average discount rate (WADR) of CDs, which had increased with the tightening of liquidity conditions, started declining from December 2008 onwards. Commercial paper market developments were similar. As explained above, the rates in the unsecured (call) market went above the LAF corridor from mid-September to October 2008 as a consequence of th e liquidity pressure in the domestic market. The rates in the collateralised money market (Collateralised Borrowing and Lending Obligation (CBLO) and repo markets) moved in tandem but remained below the call rate  [23]  . 2.Repo Market The Indian repo markets were broadly unaffected by the global financial crisis. Currently, only government securities are permitted for repo and a select set of participants (regulated entities) is permitted to participate in repos. All repo transactions are novated by the Clearing Corporation of India and settled on a guaranteed basis. The interbank repo markets continued to function, without freezing, during the period of global financial turmoil. During the period June-October 2008, the repo volumes fell marginally but subsequently recovered. There was no incidence of settlement failure during the global financial crisis. 3.Money Market The total volume in the money market segments decreased during September and October 2008. In October 2008, the decrease was more pronounced in the collateralised segment compared to the uncollateralised segment. The volume in the call market actually increased in October 2008. Moreover, the average daily amount of liquidity injected into the banking system through the LAF increased substantially during September and October 2008. The total money market average daily volume increased after December 2008 and was around Indian rupee (INR) 800 billion in March 2009 and around INR 900 billion in October 2009. 4.Security market The Indian government securities markets have been broadly insulated from the global financial crisis. There has been no incidence of settlement failure or default. The muted impact of the global crisis on the Indian government securities markets can be attributed, nter alia, to the calibrated opening of the markets to foreign players. Internationally, it has been observed that capital flows to EMEs dried up during the crisis period on account of the flight to safety, despite the interest rate differentials. In the Indian context, however, the investment limits for FIIs in the Indian government securities markets have been put in place to contain the volatility and are being revised in a calibrated manner, taking into consideration macroeconomic factors. Currently, the investment limit for FIIs is USD 5 billion and its utilisation is about 62.60% (as of 9 October 2009).The yields began to firm up in March 2008, tracking the policy rates in the wake of inflationary pressures and the benchmark 10-year yield reached a peak of 9.48% in mid-July 2008 (see the chart below). The failure of Lehman Brothers and the subsequent global developments followed by sharp reductions in policy rates (the repo rate was reduced from 9.00% to 4.75% during the period October 2008-April 2009 and the reverse repo rate was reduced from 6.00% to 3.25% during the period December 2008-April 2009) resulted in a softening of government security yields coupled with higher turnover in the secondary market. However, the increased borrowing requirements by the central and state governments on account of various countercyclical fiscal measures taken to stimulate the economy resulted in a huge supply of government securities impacting on the interest rates. The benchmark 10-year yield, which had touched a low of 5.27% on 31 December 2008, rose to around 7.41% during early September 2009 on account of concerns over excess supply and inflationary expectations  [24]  . CHAPTER 4 INDIAS TCTICS FOR FACING THIS CRISIS The Reserve Bank subsequently employed a combination of measures involving monetary easing and the use of innovative debt management tools such as synchronising the Market Stabilisation Scheme (MSS) buyback auctions and open market purchases with the governments normal market borrowings and de-sequestering of MSS balances. By appropriately timing the release of liquidity to the financial system to coincide with the auctions of government securities, the Reserve Bank ensured a relatively smooth conduct of the governments market borrowing programme, resulting in a decline in the cost of borrowings during 2008-09 for the first time in five years  [25]  . In 2008-09, the Indian rupee, with significant intra year variation, generally depreciated against major currencies except the pound sterling on account of the widening of trade and current account deficits as well as capital outflows. The rupee exhibited greater two-way movements in 2008-09. For example, it moved between INR 3 9.89 and INR 52.09 per US dollar. The FX market remained orderly during 2009-10, with the rupee exhibiting a two-way movement against major currencies. In the current financial year, the rupee appreciated by 9.7% against the US dollar and 2.6% against the Japanese yen, whereas it depreciated by 5.7% against the pound sterling and 3.2% against the euro. In terms of the real exchange rate, the six-currency trade-based real effective exchange rate (REER) (1993-94 = 100) moved up from 96.3 at end-March 2009 to 104.2 by 23 October 2009  [26]  . Following the intensification of the global financial crisis in September 2008, the Reserve Bank implemented both conventional and unconventional policy measures in order to proactively mitigate the adverse impact of the global financial crisis on the Indian economy  [27]  . The thrust of the various policy initiatives by the Reserve Bank since September 2008 has been on providing ample rupee liquidity, ensuring comfortable dol lar liquidity and maintaining a market environment conducive to the continued flow of credit to productive sectors. For this purpose, the Reserve Bank used a variety of instruments at its command such as the repo and reverse repo rates, the cash reserve ratio (CRR), the statutory liquidity ratio (SLR), open market operations, including the liquidity adjustment facility (LAF), the MSS, special market operations and sector-specific liquidity facilities. In addition, the Reserve Bank used prudential tools to modulate the flow of credit to certain sectors consistent with financial stability. The availability of multiple instruments and the flexible use of those instruments in the implementation of monetary policy enabled the Reserve Bank to modulate the liquidity and interest rate conditions amid uncertain global macroeconomic conditions. When the global markets became dysfunctional in September 2008, the macro financial conditions remained exceptionally challenging from the standpoi nt of the implementation of the Reserve Banks policies, as it had to respond to multiple challenges, from containing inflation in the second half of 2008 to containing the deceleration in growth, preserving the soundness of banks and financial institutions, ensuring the normal functioning of the credit market and maintaining orderly conditions in the financial markets in the first half of 2009. The Reserve Bank was able to restore normalcy in the financial markets over a short period of time through its liquidity operations in both domestic and foreign currency. The evolving policy stance was increasingly conditioned by the need to preserve financial stability while arresting the moderation in the growth momentum. The Reserve Bank acted aggressively and pre-emptively on monetary policy accommodation, both through interest rate cuts and a reduction in reserve requirements in terms of both magnitude and pace  [28]  . The policy repo rate under the liquidity adjustment facili ty (LAF) was reduced from 9.0% to 4.75%. The policy reverse repo rate under the LAF was reduced from 6.0% to 3.25%. With receding inflationary pressures and the possibility of the global crisis affecting Indias growth prospects looming on the horizon, the Reserve Bank switched to an accommodative stance in mid-October 2008 when it reduced the CRR by 250 basis points from 9% to 6.5%. Between 11 October 2008 and 5 March 2009, the CRR was reduced by a cumulative 400 basis points to 5.0%. The statutory liquidity ratio (SLR), a legal obligation on banks to invest a certain proportion of their liabilities in specified financial assets including cash, gold and government securities (under Section 24 of the Banking Regulation Act 1949), was one of the instruments used during the crisis to modulate the liquidity conditions in the economy. Variation of the SLR has an impact on the growth of money and credit in the economy through the government debt market. Accordingly, on 1 November 2008, the SLR was reduced to 24% of net demand and time liabilities (NDTL) with Effect from the fortnight beginning 8 November 2008. The liquidity situation remained comfortable from mid-November 2008 onwards, as reflected in the daily surplus being placed by banks in the LAF window of the Reserve Bank. In view of this, the SLR was restored to 25% of NDTL with effect from the fortnight beginning 7 November 2009  [29]  . The key policy initiatives taken by the Reserve Bank in response to the Developments after September 2008 to improve the availability of FX liquidity included the selling of US dollars in the market by the Reserve Bank, the opening of a new FX swap facility for banks and the raising of interest rate ceilings on non- resident repatriable deposits to attract larger inflows. A cumulative increase of 175 basis points in the interest rate ceilings on each of the aforesaid term deposits was affected between mid-September and November 2008. Banks were permitte d to borrow funds from their overseas branches and Correspondent banks to a maximum of 50% of their unimpaired Tier 1 capital or US$ 10 million, whichever was higher. The systemically important non-deposit- taking non-banking financial companies (NBFC-ND-SI) and housing finance companies (HFCs) were permitted to raise short-term foreign currency borrowings. The ceiling rate on export credit in foreign currency was raised by 250 basis points to Libor+350 basis points on 5 February 2009. Correspondingly, the ceiling interest rate on the lines of credit from overseas banks was also increased by 75 basis points to six-month Libor/euro Libor/Euribor+150 basis points. The policy on the premature buyback of foreign currency convertible bonds (FCCBs) was liberalised in December 2008, recognising the benefits accruing to Indian companies as well as to the economy on account of the depressed global markets. Under this scheme, the buyback of FCCBs by Indian companies was allowed under both the approval and the automatic routes, provided that the buyback was financed by foreign currency resources held in India or abroad and/or by fresh external commercial borrowings (ECBs) raised in conformity with the extant ECB norms and by internal accruals. Considering the continuing tightness of credit spreads in the international markets, the all-in-cost ceilings for different maturities were increased in respect of ECBs (150 to 250 basis points) as well as trade credit (75 to 150 basis points).Furthermore, the all-in-cost ceiling for ECBs under the approval route was dispensed with, initially until 30 June 2009, and later extended until 31 December 2009  [30]  . Measures were also initiated to safeguard the interests of Indias export sector which was affected by the global economic recession. The period of realisation and repatriation to India of the amount representing the full export value of goods or software exported was enhanced from six months to 12 mont hs from the date of export, subject to review after one year. Similarly, as a relief measure to importers, the limit for the direct receipt of import bills/documents from overseas suppliers was enhanced from US$ 100,000 to US$ 300,000 in the case of imports of rough diamonds and rough precious and semi-precious stones by non-status holder exporters, enabling them to reduce transaction costs  [31]  . Economic Recovery From all accounts, except for the agricultural sector initially as noted above, economic recovery seems to be well underway. Economic growth stood at 8.6 percent during fiscal year 2010-11 per the advance estimates of CSO released on February 7, 2011. GDP growth for 2009-10 per quick estimates of January 31, 2011 was placed at 8 percent. The recovery in GDP growth for 2009-10, as indicated in the estimates, was broad based. Seven out of eight sectors/sub-sectors show a growth rate of 6.5 percent or higher. The exception, as anticipated, is agriculture and allied sectors where the growth rate needs to higher and sustainable over time. Sectors including mining and quarrying; manufacturing; and electricity, gas and water supply have significantly improved their growth rates at over 8 percent in comparison with 2008-09. When compared to countries across the world, India stands out as one of the best performing economies. Although there was a clear moderation in growth from 9 percent levels to 7+ percent soon after the crisis hit, in 2010-11, at 8.6 percent, GDP growth in nearing the pre-crisis levels and this pace makes India the fastest growing major economy after China. In order for Indias growth to be much more inclusive than what it has been, much higher level of public spending is needed in sectors, such as health and education along with the implementation of sectoral reforms so as to ensure timely and efficient service delivery. Plan allocations for 2010-11 for the social sectors have been stepped up, as can be seen from the figures below, this process however needs to be strengthened and sustained over time. As expected, the measures undertaken by government of India to counter the effects of the global meltdown on the Indian economy have resulted in shortfall in revenues and substantial increases in government expenditures, leading to deviation from the fiscal consolidation path mandated under the Fiscal Responsibility and Budget Management (FRB M) Act. The gross tax to GDP ratio which increased to an all time high of 12 percent in 2007-08, thanks to the conomy riding on a high growth trajectory, has steadily declined to 10.9 percent in 2008-09 and 10.3 per cent in 2009-10 due to moderation in growth and reduction in tax/duty rates. At the same time, total expenditure as percentage of GDP has increased from 14.4 percent in 2007-08 to 15.9 percent in 2008-09 and 16.6 percent in 2009-10. The fiscal expansion in the last 2 years has resulted in higher fiscal deficit of 6 percent of GDP in 2008-09 and 6.7 percent in 2009-10. Moreover, the revenue deficit as percentage ofGDP has worsened to 4.5 percent and 5.3 percent in 2008-09 and 2009-10 respectively. The revenue deficit and fiscal deficit in 2009-2010 are higher than the targets set under the FRBM Act and Rules. the deviation from the mandate under FRBM Act and Rules was resorted to with the objective of keeping the economy on a high growth trajectory amidst global slo wdown by creating demand through increased public expenditures in identified sectors. While the intent of the government, it says is to bring the fiscal deficit under control with institutional reform measures encompassing all aspects of fiscal management such as subsidies, taxes, disinvestment and other expenditures as indicated in the Budget 2009-10, there is unfortunately no movement on any of these fronts, Considering the current inflationary strains, the as yet excessive pre-emption of the communitys savings by the government, the potential for crowding out the requirements of the enterprise sector, and rising interest payments on government debt, it is extremely essential to reduce the fiscal deficit, and more aggressively, mainly by lowering the revenue deficit. Correction of these deficits would, inter alia, require considerable refocusing and reduction of large hidden subsidies associated with under-pricing in crucial areas, such as power, irrigation, and urban transport . Food and fertilizer subsidies are other major areas of expenditure control. Be that as it may, the process of fiscal consolidation needs to be accelerated through more qualitative adjustments to reduce government dissavings and ameliorate price pressures. The step-up in Indias growth rate over much of the last two decades was primarily due to the structural changes in industrial, trade and financial areas, among others, over the 1990s as the reforms in these sectors were wide and deep and hence contributed significantly to higher productivity of the economy. Indeed, there is potential for still higher growth on a sustained basis of 9+ percent in the years ahead, but among other things, this would require the following: Revival and a vigorous pursuit of economic reforms at the center and in the states; A major effort at raising the rate of domestic savings, especially by reducing government dissavings at the central and state levels through cuts in, and refocusing of, expl icit and implicit subsidies, stricter control over non-developmental expenditures, improvements in the tax ratio through stronger tax enforcement, and strengthening incentives for savings; Larger investments in, and bett