If the Fed Had Bailed out Lehman Brothers, Would We Have Avoided the Great Recession

There is no doubt that the crisis of 2008 has shaped the existing economical landscape a lot. Leading to the bankruptcy of a number of companies, it made the U. S. entrepreneurships reconsider their policies and established only-the-strong-survive principle as the key strategy for the America companies in 2008.Advertising We will write a custom essay sample on If the Fed Had Bailed out Lehman Brothers, Would We Have Avoided the Great Recession? specifically for you for only $16.05 $11/page Learn More Although the U. S. Fed could have given a second chance to the famous Lehman Brothers Company by bailing the firm out, the chances were never taken. Hence, the Lehman Brothers have gone completely bankrupt. In a retrospective, however, the Lehman Brothers could have hardly been able to fight the financial crisis in 2008 efficiently even with the help of Federal Reserve, which means that in the case the company would have stayed afloat, they would have not be en able to offer people sufficient help anyway, being almost broke themselves. Taking a closer look at the financial situation in which the Lehman Brothers was in 2007, one must admit that the company was not doing well, according to what MacEwan and Miller say. Therefore, it is rather questionable that a loan from a bank could save the day; rather, it would serve as the means to keep the company afloat for a while, yet it would not make Lehman Brothers prosperous again. As MacEwan and Miller explain, Lehman Brothers, Bear Stearns, Citibank, and others all held large amounts of these assets on their books. So, as the housing bubble burst, as many homeowners failed to meet their mortgage payments, and as the value of CDOs and credit default swaps fell, many banks (including some of the largest banks) saw a sharp decline in the overall value of their assets. (MacEwan and Miller, 107) Hence, it can be considered that there was hardly any chance for the company to survive the crisis. Th e main problem of the Lehman Brothers was that the bank depended on the Fed much more than it was required. In its turn, the Federal Reserve followed the policy of the housing bubble (Fox), which can be defined as a run-up in the prices for housing enhanced by the certainty in future stability. Resulting in the rapid decline of the Federal Reserve’s progress, the given policy must have been considered the only legitimate course of actions in the situation when the economics was gripped by crisis. On the one hand, the given approach seems rather reasonable, given the fact that creating the housing bubble helps spread the belief in strong economic system among the population.Advertising Looking for essay on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More On the other hand, the downside of the give strategy is that, while people believe that the crisis will not last long, the poor state of economics and the rapid incr ease in price for housing will finally lead to a financial collapse. According to what Friedman, Moseley and Sturr claim, The housing bubble was in part generated by the Federal Reserve maintaining low interest rates. Easy money meant readily obtainable loans and, at least in the short run, low monthly payments. Also, Fed Chairman Alan Greenspan denied the housing bubble’s existence — not fraud exactly, but deception that kept the bubble going. (Friedman, Moseley and Sturr 133-134) Taking into account the given information, one must admit that the Lehman Brothers’ impact on the financial situation within the state was rather small. Because of the scale of the crisis, it was quite doubtful that the bank would handle the complexities within its own structure and policies, not to mention having a tangible effect on the state economy. Hence, it can be concluded that even if the Fed bailed the Lehman Brothers out, the housing bubble would have ultimately led to the f inancial instability. The Great Recession seems to have been spawned not by the inability for entrepreneurships to get investments, but from the existing housing policy. In addition, the critical state of affairs in the sphere of finance and economics in the USA should be mentioned: â€Å"It has become commonplace to describe the current financial crisis as the most serious since the Great Depression† (Friedman, Moseley and Sturr 135). It can be alleged that the economical situation in which the USA was trapped in 2008 was quite close to the one of the 1929, known as the Great depression: â€Å"So we reap the whirlwind with a market collapse building to Great Depression levels. Once again, we learn history’s lesson from direct experience: capitalist financial markets cannot be trusted. It is time to either reregulate or move beyond† (Fridman, Moseley and Sturr 132). Naturally, the fact that the U. S. economics was collapsing did not improve the Lehman Brothers s ituation. Judging by the above-mentioned, one must admit that the USA economics was way too unstable for the Federal Reserve to take risks by giving the loan to the company which could have been broken by the end of the crisis (Palley). When considering the reasons behind the decision of the Federal Reserve to refuse to give the Lehman Brothers the loan which the company needed, one must admit that the Fed was impacted by the problems within. The fact that the Fed was suffering from the crisis was the main reason, while the fact that the Lehman Brothers lacked trustworthiness happened to be the pivoting point in Federal Reserve strategy.Advertising We will write a custom essay sample on If the Fed Had Bailed out Lehman Brothers, Would We Have Avoided the Great Recession? specifically for you for only $16.05 $11/page Learn More To Lehman Brothers’ credit, one must mention that the company did have certain opportunities to improve their financial s ituation with the help of the Federal Reserve’s investments. According to the existing evidence, there have been several attempts to bring the company back to life, along with the endeavors of Bear Sterns: â€Å"The precedent for preventing the failure of a large financial institution, initiated with Bear Stearns, now appeared to be reinforced by the Fannie Mae and Freddie Macactions† (MacEwan and Miller 110). Still, no matter how sad this can seem, the given approach has had little effect: â€Å"Yet, while the precedent seemed very clear on September 7, the federal authorities failed to follow it a few days later when Lehman Brothers, the nation’s fourth largest investment bank, moved toward collapse† (MacEwan and Miller 110). Fighting against the odds, Lehman Brothers tried its best to stay afloat. It must be admitted, however, that at that point, the company could hardly have any impact on the economical state of affairs within the country. Judging by the fact that the Lehman Brothers could not handle its own financial issues, it is hardly believable that the company could have had any effect on the financial processes. Hence, even if the Federal Reserve offered the bank the required loan, the collapsing Lehman Brothers would not have been able to save the day. Therefore, it is clear that even with Lehman Brothers receiving the help of the Fed the outcomes of the crisis would have still been deplorable. Although it is quite questionable whether the company would have had the power to adjust to the situation which the U.S. market faced in 2009, it would still have taken too much time to adjust to the changes in the economics. Hence, Lehman Brothers would not have been able to offer people a full range of their services. Even though Lehman Brothers had already lent a considerable amount of money from the Federal Reserve Bank, the former would have been able to pay the bank back with the revenues which they would have obtained from the future financial operations. However, the Fed did not trust with the company that had already been in debt by the point at which the crisis peaked. Therefore, it seems that there is no one to blame in the given situation; it was Federal Reserve to decide whether to trust Lehman Brothers, and the bank’s decision is not to be judged by anyone except its members.Advertising Looking for essay on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More In addition, the fact that the company was facing its own crisis is worth bringing up as an argument that the Federal Reserve would have only postponed the process of the company’s regress. Even if Fed had provided the required amount of loan money, Lehman Brothers would have already been dead and gone by now, which means that the recession would have been in progress even if the Lehman Brothers still provided their services. Works Cited Fox, Justin. â€Å"A Random Walk from Paul Samuelson to Paul Samuelson.† The myth  of the Rational Market: A History of Risk, Reward and Delusion of Wall Street. Ed. Justin Fox. New York, NY: Harper Collins Publishers, 2009. 60-74. Print. Friedman, Gerald, Fred Moseley and Chris Sturr. The Economic Crisis Reader:  Dollars and Sense. Armonk, NY: M. E. Sharpe, 2011. Print. MacEwan, Arthur, and John A. Miller. â€Å"The Emergence of Crisis in the United States.†Economic Collapse, Economic Change: Getting to the Roots of the Cri sis. Ed. Arthur MacEwan and John A. Miller. Armonk, NY: M. E. Sharpe. 65-117. Print. MacEwan, Arthur, and John A. Miller. â€Å"Globalization and Instability.† Economic  Collapse, Economic Change: Getting to the Roots of the Crisis. Ed. Arthur MacEwan and John A. Miller. Armonk, NY: M. E. Sharpe. 119-159. Print. Palley, Thomas I. From the Financial Crisis to Stagnation: The Destruction of Shared  Prosperity and the Role of Economics. Cambridge, UK: Cambridge University Press, 2012. This essay on If the Fed Had Bailed out Lehman Brothers, Would We Have Avoided the Great Recession? was written and submitted by user Trace C. to help you with your own studies. You are free to use it for research and reference purposes in order to write your own paper; however, you must cite it accordingly. You can donate your paper here.

Free Essays on WWI

The Great War World War I was the boiling point of years of rumblings under the surface between the great powers of Europe. In the end, it cost $332 billion, ten million lives, and twenty million wounded, with an entire generation in Europe and Russia wiped out (Paxson 5). Those figures do not even take into account those who were mentally scarred for life. Out of the war came a Europe that was based on the principles of self-determination and national unity. The largest and most prominent consequence was the revolution in Russia, yet there were also major developments in the Balkans in southern Europe with Austria-Hungary and drastic changes in international relations. Russia had been primed for a revolution since the days even before the Great War. After the not so successful revolution of 1905, the tsar still kept power over the bureaucracy and the army; he also had the power of veto over the legislative body, the Duma. Tsar, Nicholas II, ruled the Russian Empire as an absolute monarch. However, following the loss of the war with Japan in 1905, serious disturbances took place in St. Petersburg and Nicholas was persuaded to accept a reduction in his power. In March, 1905, he announced plans to form a Russian Parliament called the State Duma. As this was only a consultative body, many Russians felt that this reform did not go far enough and over the next few years the country remained unstable (www.worldwari.com). The War merely acted as a catalyst and a means for the Soviets, under Lenin, to take control. Always considered a Great Power based on their outwardly appearance of size and numbers, Russia was actually a fragile, backwards nation ma king revolution inevitable. World War I exposed the weakness of the peasant-dependant nation of Russia. Russia had been considered a world power ever since the days of Napoleon, with huge numbers of citizens and immense amounts of land. â€Å"Inside, Russia remained the weak, depe... Free Essays on WWI Free Essays on WWI The protracted, horrific carnage executed during the First World War forever changed the course of events and mentality of the twentieth century. The war was expected to last for weeks or for months, like all previous wars had lasted; however this war had devolved into a prolonged stalemate where millions upon millions of lives were lost. Why this war took place is not an easy an easy question. Many believe that the war had started because of the murder of Prince Archduke Franz Ferdinand and his wife, Duchess Sophie von Chotkova. Many are under the false assumption that this alone was what the primary reason as to why the war had broken out. It is safe to believe that this event was in fact something that fed fuel to a fire that was burning due to other more serious issues as it sort of worked as a catalyst in the beginning. In order to better understand WWI and the reasons behind it taking place, an accurate account of the circumstances leading to war requires a concise analy sis of several key areas some going as far back as the 1800’s. Four of the major reasons that pressed the great powers to this explosive war were nationalism, militarism, imperialism and formation and systems of alliances. Nationalism, as defined in the Encarta online dictionary means, â€Å"the desire to achieve political independence, especially by a country under foreign control or by a people with a separate identity and culture but no state of their own.† The love and support of one's country, is something that has existed throughout time. However, in this time period, it played a major role in the outbreak of one of the most famous and deadliest wars in history. The nationalistic pride that existed with various nations, made the possibilities of peace between rival powers all the less probable. In ninetieth and twentieth centuries, especially after the French Revolution nationalism was becoming a powerful force in Europe. The belief tha... Free Essays on WWI During World War One, the role of airplanes and how they were used changed greatly. At first planes were only used for sport, but people started realize that not only could airplanes be useful but they could even influence an outcome of the war greatly. Soon the war was filled with blimps, planes, and tethered balloons. By the end of the war, planes became a symbol of fear, but they were not always treated with such respect. In the time leading up to the war, the general feeling about planes was, they were a sneaky, unfair tactic that should not be used in warfare. During The 1899 Hague Peace Conference it was put on record that the dropping or shooting of any projectiles or explosives from the air during a time of war was forbidden and was considered a crime of war. It was also decided that airplanes could only be used for reconnaissance or spying missions. Even by the beginning of the war in 1912, the use of planes in war was still prohibited by the War Office. Shortly thereafter this changed, people awakened to the possibilities of air warfare. The world soon started to realize the effectiveness of planes in war and how the control of the skies could influence the outcome. Although the French were the first to have a working, conscripting air force and to license fliers, their trust in airplanes still was not up to par. Their lack of trust was justified, for the planes had no armaments, too many wires, and no reliable motor. Soon all countries in the war effort had their own little air force, built hangers, and started to train pilots. The first bombing occurred in November 1911. Although the first bomb was dropped by the Italians, soon all countries were involved in bombing raids. It was followed by the first aerial dogfight in 1912. This consisted of a primitive exchange of pistol fire between British and German planes. The United States ultimately was slower than France and Germany to develop an air force. O... Free Essays on WWI The Historian John Lukacs has written that WWI and WWII are two halves of the same coin. Discuss. The war that began in 1914 as a war to end all wars actually ended in 1945. World War Two was the child of World War One. The word treaty is defined in Webster’s dictionary as â€Å"negotiation; agreement between two or more nations†. At Versailles in 1919 there were no negotiations other than between the â€Å"victors†. The German delegation was told of the terms of the agreement only a few weeks prior to the signing of the document. They were given the choice of either sign the document or prepare to be invaded by Allied forces. The â€Å"Surrender† of Versailles was signed June 28, 1919 in the same railroad car where the Germans had celebrated the victory over the French in the Franco-Prussian War. The terms of the document signed at Versailles left Germany degraded, weak and embarrassed. They were unable to defend themselves as their once powerful army was all but destroyed. Much of their territory was annexed by neighboring states eager to take revenge for long past quarrels. And the huge burden of the War Guilt Class, which blamed Germany for the epidemic of war, made it a certainty that the German economy would eventually collapse. The new German government now had to take full responsibility for paying for the damages to the triumphant Allied countries. To complete the humiliation of Germany when the League of Nations was founded Germany was not allowed to become a member. This action effectively cut off Germany from the rest of Europe. The German people felt as if they were being treated quite unjustly for the decisions of the Kaiser’s government in 1914. The terms of the Versailles document that France, Britain and the United States felt so reasonable, left the average German feeling very angry. Lloyd George of Britain, Clemenceau of France and Wilson of the United States each had very different ideas on how to... Free Essays on WWI Wilson declares U.S. neutrality August 4, 1914 Washington, D.C. Reflecting strong public opinion, he states that U.S. will not join the war. However the U.S. change from neutrality to war in 1917, which some believe had many hidden reasons that violated the traditional values of the nation. Those values include freedom, public safety, life, liberty and the pursuit of happiness. One idea that proves that statement wrong is how long the U.S. took to go into the war. Figuring the war began in 1914 and the U.S. went to war in April of 1917, that shows that America took time thinking about going to war. America had patience before changing the stand in neutrality. Submarines threatened American merchant ships in addition Germany offered Mexico a deal. The offered deal was if Mexico joined Germany, Germany would help Mexico get New Mexico, Texas and Arizona, which is land that Mexico once had. Although America changed from neutrality to war, the reasons did have a strong ground and instead of violating the values they were protecting them. Another idea is the face that war is not a peaceful time, but in fighting WWI the U.S. got to keep the traditional American values, one of those values being freedom, and not have to worry about dictatorship. If Germany won the war, they would continue to conquer more land and may eventually have conquered the U.S. . â€Å"Our subject†¦is to vindicate the principles of peace and justice in the life of the world†¦Neutrality is no longer feasible or desirable where the peace of the world is involved and the freedom of its peoples†¦ The world must be made safe for democracy.†... Free Essays on WwI The Great War World War I was the boiling point of years of rumblings under the surface between the great powers of Europe. In the end, it cost $332 billion, ten million lives, and twenty million wounded, with an entire generation in Europe and Russia wiped out (Paxson 5). Those figures do not even take into account those who were mentally scarred for life. Out of the war came a Europe that was based on the principles of self-determination and national unity. The largest and most prominent consequence was the revolution in Russia, yet there were also major developments in the Balkans in southern Europe with Austria-Hungary and drastic changes in international relations. Russia had been primed for a revolution since the days even before the Great War. After the not so successful revolution of 1905, the tsar still kept power over the bureaucracy and the army; he also had the power of veto over the legislative body, the Duma. Tsar, Nicholas II, ruled the Russian Empire as an absolute monarch. However, following the loss of the war with Japan in 1905, serious disturbances took place in St. Petersburg and Nicholas was persuaded to accept a reduction in his power. In March, 1905, he announced plans to form a Russian Parliament called the State Duma. As this was only a consultative body, many Russians felt that this reform did not go far enough and over the next few years the country remained unstable (www.worldwari.com). The War merely acted as a catalyst and a means for the Soviets, under Lenin, to take control. Always considered a Great Power based on their outwardly appearance of size and numbers, Russia was actually a fragile, backwards nation ma king revolution inevitable. World War I exposed the weakness of the peasant-dependant nation of Russia. Russia had been considered a world power ever since the days of Napoleon, with huge numbers of citizens and immense amounts of land. â€Å"Inside, Russia remained the weak, depe...

Management Accounting - World Class Manufacturing Essay

Management Accounting - World Class Manufacturing - Essay Example Current trends emphasize world class manufacturing (WCM) which highlights maximum manufacturing efficiency in businesses, and customer and workforce satisfaction. WCM is regarded as "manufacturing systems which demonstrates best industry practice( World Class Manufacturing)." Accordingly, a world class manufacturer is a firm which displays excellence in key competitive points like quality, price, delivery speed, delivery reliability, flexibility and innovation. Its main features is the utilization of a total quality management (TQM) approach, highly flexible and motivated workforce, Just-in-Time (JIT) manufacturing philosophy, and the pursuit of satisfying customers at a global level. Consistent with the goal of a world class manufacturer, TQM denotes a set of management practices within the organization which are implemented to ensure the quality of products and services offered. The primary goal of TQM is the production of commodities which consistently meets or even exceeds customer requirements. This feature of world class manufacturing emphasizes process measurement and controls to pursue continuous improvement (John Stark Associates 2000). However, TQM does not just involve the production system or processes of the company but embraces the whole operation of a manufacturing business. Implementing TQM involves modifying the whole organization as it has strong bearing on the culture, attitude, and organization of the company. TQM culture requires the unmatched quality in all aspects of the company's operations "with things being done right first time, and defects and waste eradicated from operations (John Stark Associates 2000)." Important aspects of TQM incl ude customer-driven quality, top management leadership and commitment, continuous improvement, fast response, actions based on facts, employee participation, and a TQM culture (John Stark Associates 2000). A flexible and highly motivated workforce is another essential feature of WCM. As discussed above, WCM as opposed to the traditional manufacturing implements a totally innovative approach in operations which has a huge impact on employees. WCM needs a flexible workforce as these employees will not handle production in the traditional assembly line. WCM often requires teams which work together to finish an output. Specialization of jobs is often displaced in WCM replaced by "job enrichment." This new approach is intended to eliminate boredom and lessen employee dissatisfaction. Job enrichment is geared to "expand the scope of the job with a greater variety of tasks, vertical in nature, that require self-sufficiency (Mione 2005)." Thus, in WCM it is imperative that employees are flexible to take on a more responsibilities. Motivation is also increased as jobs are "enriched" and employees become are empowered. Motivation, in turn is a great factor in the success of WCM. In this new manu facturing approach, employees need to be motivated to excel in their job to produce the best job results. A highly flexible and motivated workforce results into a high quality product which is the main goal of WCM. JIT is a manufacturing philosophy which aims to