Banking Sector Fragility Causes

Banking Sector Fragility Causes Discuss factors which have decisively contributed to the fragility of the contemporary banking sectors, as revealed in the form of the recent global financial crisis. Prepared by: Ivan Gnatiuk 37193 Artem Zaiets 36981 Mark Pohodin 37141 Introduction Firstly, crisis was originally started in US where it was a result of provided social policy. In particular, government allowed, even insisted, on distribution of house mortgages not only among wealthy part of society but also among poor one(so called NINJAs No Income, No Job, no Assets). Second part of this policy was an allowance on sell of sets or securitized bundles of mortgages among banks. Market at that time was at the expansion at that time i.e. expectations were positive and market accepted securitized sets of mortgage loans they spread not only among US but also around the whole world. In detail, banks became holders of risky assets in a large quantity that give good return during the expansion but become sources of risk during recession. Second important factor was an asymmetry in information i.e. banks who sold this bundles known all about their debtors and buyer of securitized bundle has no idea about quality or ability to pay of debtors in this bundle. Thus, mortgage b undles were spread around the world with no information about ability of money return just before market fall i.e. with a change in liquidity to very low as a result of negative expectations and following mistrust of banks with respect to each other. As a result, bundles lost their value because of that fact that opportunity of repayment thus value was very low thus collected debt obligations become a worthless and cold be just deleted form asset list of bank they currently situated. Therefore, many not only American but also European banks, pension founds and even insurance companies suffered of recent financial crisis. Moreover, interdependence in euro area only strengthened an effect. Firstly, securitization is a methodology where mortgages and loans with a different maturity collected into large sets for further sell on the market. The problem of such a way operation provision is an asymmetry in information i.e. only seller know what percent of credits are trustful and have a large opportunity of repayment in the future. In contrast, now, Federal Reserve has a regulation that require keeping a fraction of loans i.e. not to sell all loans given on the financial market that intense banks to be more careful with their debtors. Main reason of fall was an unpredicted unification of two factors. These factors were fall of housing market not only in one particular city or area but it spreading among the whole country with further fall of financial markets. This effect was accelerated by interdependence of banking system. For example, complicated structure of interbank loans such as credit-default swaps where in case third party default seller agreed to compensate buyer. Fall of such a large bank as Lechman Brothers created not only panic among creditors but also mistrust among banks. It was one of the most hitting factors. Banks started to keep a large amount of cash. In such situation banking system become ineffective and only damage economy; collecting cash and decreasing overall liquidity i.e. banks become a cash collectors and only reduce money multiplier. When money demand is inelastic, increase in money supply does not have an effect on liquidity i.e. monetary policy become ineffective i.e. at some point holding of cash become more profitable than any other investment. Thus, central bank loose quantitative instrument of market control. Banks start to buy safe government bounds with aim of protection of their capital and limit their credit distribution to reduce risk of not repayment of credits given. The volatility of banks In particular, banks play a very important role in determining the crisis. Problems encountered banks were due to great mistrust by customers. That is, the customer confidence in banks declined and that had a great influence on bank returns and stock prices. Stocks are more risky, which in term increase banks stock volatility. In finance, volatility refers to the standard deviation of continuously compounded by the return of a financial instrument for a certain period of time horizon. Thus, the return fluctuates over time and, therefore, an important determinant for the price of the shares. This is because the volatility shows the standard deviation of stock returns and depends on the risk of these stocks to hold. As a result, an increase in volatility leads to lower stock prices and vice versa. According to Choi et al. (1992)xi the interest rate variable is important for the valuation of common stocks of financial institutions because the returns and costs of financial institutions are directly dependent on interest rates. Moreover they mention a model which states that three different shocks affect bank’s profit during a given period namely; interest rate, exchange rate and default shocks. Since these three factors have a great influence on the profits of banks, it has also a great influence on its volatility of stocks. The interest rate directly has a great influence on the volatility. Profits of banks are determined by the interest rate. As mentioned, the revenues banks obtain are the interest payments of customers. The costs are the payments made to the customers. So an increase in the interest rate the banks gain will increase the banks’ profits and thus make those banks’ stocks more attractive. Investors can get more dividends on investment but al so can earn money by buying low and selling high. So when a bank is doing well, stocks prices will increase and that results in a saver investment. This causes a decrease in the volatility of those stocks. So an increase in the interest rate, at which banks lend, leads to a decline in the stock volatility and on the contrary. The interest rate at which banks ‘borrow’ has another influence on its stocks. A growth in that interest rate will rise banks costs, and thus decrease the banks’ profits. That 13 make the stocks less attractive and causes a decline in its prices. So the growth of that interest rate causes an increase in banks stock volatility and vice versa. Grammatikos et al. (1986)xii investigated the portfolio returns and risk associated with the aggregate foreign currency position of U.S. banks. They found that banks have imperfectly hedged their overall assert position in individual foreign currencies and exposed themselves to exchange rate risk. This f act suggests that exchange rate risk may importantly affect bank stock returns. Thus, it also affects the volatility. To make business internationally you always need to convert your money. That is why it is especially for banks an important factor. Companies dà Ã‚ ¾ business with other corporations internationally via banks. Banks hold the foreign currency which investors and companies have to buy in order to invest or do business internationally. Moreover the exchange rate defines also in which country it is attractive to do investments. For example, when the exchange rate is low for Europeans so that the euro/dollar is low, it is attractive for Europeans to make investments in America. It is advantage for European banks because European investors are now buying dollars from the bank. Since investors have to pay fees for that and banks have more money to lend out, the profits are growing which means that the volatility is decline. So an increase in the exchange rate decreases th e volatility. Default shocks are according to Choi et al. the last determinant of the banks profit and thus banks stock volatility. Default occurs when a debtor has not met his or her legal obligations according to the debt contract. This can be that he has not made a scheduled payment, or has violated a loan condition of the debt contract. A default is the failure to pay back a loan. Default may appear if the debtor is either unwilling or unable to pay their debt. This can appear with all debt obligations including bonds, mortgages, loans, and promissory notes. So it is an important factor in the banking industry. When huge amount of customers default, the banks have a high bad debt expense. This leads to an increase in the volatility. Furthermore if the risk of default rises, the interest rate rises as well because banks want to be compensated for this risk. As we have seen, an increase in the interest rate means a decline in volatility. So shocks in default mean shocks in volatil ity. This can be either up or down. When we take a closer look at the determinants of the volatility of banks stocks, we can see that it all depends on the state of the economy. When the economy is healthy, there are a lot of 14 actions in the markets as well as in the banking market. Corporations are investing a lot and thus are borrowing from banks; the housing market is doing well which means a lot of mortgage loan for banks. Overall there is a huge amount of business for banks which means that banks are doing well and thus stock prices are increasing, which indicates low volatility. On the contrary, during economic crises it is the other way around which we will see in the next part. Banks volatility in crisis During economic crises, we have seen that the economy in general is depreciating, during these years banks carry a lot of risk that customers are going to default. That is, the risk of having a lot of bad debt expanses rises. That risk causes fluctuation in the volatility of banks. During the last financial crisis, the housing market collapsed which caused a lot of default on mortgage loan. Because of the rise of default the interest rate is increasing and the currency is becoming cheaper. The three factors that affecting the volatility of banks according to Choi et al. were all affected during the last financial crisis, which caused increase in the volatility of banks. Moreover during banking panics, the volatility also increases. A banking panic means a bank run that appears when a huge number of customers withdraw their deposits because they think that the bank is, or might become, bankrupt. As amount of people who withdraw their deposits increases, the likelihood of default incre ases, and this leads to further withdrawals. This can destabilize the bank and finally lead to bankruptcy. So the bank carriesuncountable amounts of risk at that time. Because of that risk, investors are not willing to buy stocks of that bank and investors holding the stock already, want to sell their stocks. As a result the price of its stocks will decline and eventually be very low. Therefore the volatility will be very high. To sum it up, we have seen that the major determinants of the banks stock volatility are the interest rate, the exchange rate and the default shocks. More importantly, these three factors are all indicators of the state of the economy. When the economy is doing well, the factors influence the volatility negatively. However during financial crises and banking panics, the volatility will rise. So the volatility of banks’ stocks is affected by the health of the economy, which is indicated by the three factors mentioned. Globalization, as important crisis factor In this part we would like to reference such sector of banking as regional instability. Since the beginning of 21st century, the fragility of singular unit of the banking system was determined as a factor that affects only this particular institute. With increased globalization and technological progress, we have faced the new problem, which is a result of our own actions. Everyone loves traveling, but no-one likes to have big amounts of cash, casually lying in their pockets. This is the reason why we use plastic cards. Little do we think that they are a result of hard work and complicated connections between thousands of institutions. Such companies as Visa and MasterCard are offering us freedom of movement, in some way, and since the 90-th they grant us wide range of possibilities which we would never have in other way. We should state that both Visa and MasterCard, went public just recently before financial crisis, in October and may of 2006. This simply means that they became big enough, that there were a need of external financing, so the companies can expand even faster and bring their services to broader audience. The process of globalization brings us to the point of time, when there will be no more ways of globalizing without bringing any harm to economy of the world or even humans. Willing to expand, â€Å"systems† will fight over for the customer. Thus is when we meet the term that was implemented just recently – â€Å"reverse globalization† In the face of great economic risks, a lot of countries have started to implement the policy of protectionism. For example, in 2013, more than 2000 trade restrictions had been implemented by different governments, including United States and China. Another problem is that most companies which have their manufacturing powers abroad, mainly in china, report that their departments there are getting even more profitable. So we see the creation of the link between such countries. If one of them will be affected by the stroke, other one is going to feel the result as well. Banks are also taking part in such policy, or at least they used to. Since 1995 we can observe the steady trend to an increase in number of the foreign banks, from 780 to more then 1300, in 2007. The amount of new foreign banks, entering the market in OECD countries, peaked in 2007 at 132 in a year. The financial crisis dramatically reduced the number banks, up to the point when for the first time, since 1995, net exit of banks appeared to be bigger than net entrance. With the peak number being 1350, in 2009, it has been reduced to 1272 in 2013. Though this impact was intense, we can see even more radical change in the number of domestic banks. Here the number of facilities fell from 2704 to 2384, in 2007 and 2013 respectively, increasing market share of foreign banks up to 35%, from around 33% previously. The most interesting effect crisis had on banks of emerging and developing countries. Firstly, the amount of banks there didn`t decrease, but rose by 30. Also significant amount of banks that have been opened in European countries, had an actual headquarters in developing country. So, in regards to regional economy, European banks had the greatest reduction, as 29 foreign banks left the market. Nevertheless, we had an increase of such in Sub-Saharah Africa, where it peaked on the mark of additional 31 bank. The trend of developed countries being in lead, by an annual net entry, had been changed, when emerging and developing countries took this spot, even though developed countries are still shoving positive rates in all years after, except 2013. Concluding this point, we can assume that increasing amount of banks is not useful for overall health of world economy. Also such actions on the behalf of new banks can create issues for regional economies, as they tend to accumulate resources from citizens and not being effective as allocating institute. Such point leads us to the point that banks, as institutes which are supposed to be an effective tool for cash flows allocation, can be harmful for small regional economics. They create risks of collapsing and creating systematical problems, through connections between small banks and systems of such institutions. Finalizing all the information above, we would like to mention that banks, as fiscal institutions, are a source of great possibilities, but they may create bigger problems. Analyzing such data we see that market economy is self-efficient in some respect. It naturally clears itself during each crisis peaks. The problem is that banks link different economies, some of which are better and some are not that healthy. That just means that some links must be destroyed and thus operations of such banks are not necessary. In future risks of crisis fluctuations will be higher, as there will be even more banks to create harder connections, and thus world economy will suffer from those â€Å"small depressions† even harder with each next starting its action. Conclusion To sum it all up, from our research we have seen that crisis of 2007-2008 show us the fragility’s of banking system and the factors, which have decisively contributed to the fragility of banking sectors. We saw that some strengths of banking system in light of global financial crisis become fragilities. Banks volatility increased over the time period of a crisis especially during the last financial crisis. We can say that the volatility of banks increased during the financial crisis of 2008 and that the main driver is the GDP growth rate and that the less important drivers are the interest rate the exchange rate. In addition, we can say that increasing amount of banks is not useful for overall health of world economy. Also such actions on the behalf of new banks can create issues for regional economies. Bibliography Launch of 2013 Depth Index of Globalization: http://www.iese.edu/en/about-iese/news-media/news/2013/november/launch-of-2013-depth-index-of-globalization/ Why globalization is going into reverse, by Carol Matlack: http://www.bloomberg.com/bw/articles/2013-11-25/why-globalization-is-going-into-reverse Rising Costs, Protectionism Hit U.S. Companies in China, Says Survey: http://www.bloomberg.com/bw/articles/2013-10-10/rising-costs-protectionism-hit-u-dot-s-dot-companies-in-china-says-survey The Impact of the Global Financial Crisis on Banking Globalization; by Stijn Claessens and Neeltje van Horen, October 2014: http://www.imf.org/external/pubs/ft/wp/2014/wp14197.pdf http://www.nber.org/papers/w4532 http://www.ft.com/cms/s/0/842a1f88-d41c-11e4-99bd-00144feab7de.html#axzz3XyHF1cLC http://www.bloomberg.com/news/articles/2015-01-15/good-volatility-eludes-banks-trading-revenue-hits-3year-low http://www.voxeu.org/article/high-volatility-breeds-high-correlation-new-analysis-european-bank-stock-prices Business Cycles, Financial Crises, and Stock Volatility, by G. William Schwert, 1989:http://www.nber.org/papers/w2957.pdf http://geomar-search.kobv.de/authorSearch.do;jsessionid=54AC3C46B1787F442C4032CE1265C4A1?query=Kopecky%2C+K.+J.plv=2 Stock volatility and the crash of ’87, byG.W. Schwert, 1990: https://ideas.repec.org/p/nbr/nberwo/2954.html The Financial and economic crisis of2008-2009 and developing countries Edited by Sebastian Dullien Detlef J. Kotte Alejandro Mà ¡rquez Jan Priewe:  http://unctad.org/en/Docs/gdsmdp20101_en.pdf

Reunion by John Cheever :: English Literature Essays

Reunion, by John Cheever, is a story told through the eyes of a young boy, Charlie, who is recalling a meeting with his father who he hasn’t seen for more than three years. It is set in New York where Charlie’s father lives. He meets up with his father during a stop over between trains. In the first paragraph we are introduced to Charlie and his father. Charlie is very much looking forward to meeting his father who he hasn’t seen since his parents divorced three years before. â€Å"He was a stranger to me†, shows that Charlie is anxious about his upcoming meeting with his father. But he then goes on to say â€Å"But as soon as I saw him I felt he was my father†. This then implies to the reader that Charlie is a little more relaxed when he sees his father. This sentence is so powerful because of its use of the word ‘father’. The strong connotations, which are related to this word, express the relationship between the two characters. At this stage of the story we are compelled to feel a little bit sorry for Charlie who has been separated from his father. Charlie’s father is also introduced in the first paragraph. He, who is never given a name during the story, forms the image in the reader’s mind of a high-flying businessman. Cheever relays this image with the use of formal language during the communications between Charlie and his father, â€Å"His secretary wrote to say that he would meet me at the information booth at noon†. This in contrast to the less formal style of writing used when Charlie is involved, â€Å"at 12 o’clock sharp I saw him coming†. That last quote also shows that his father is punctual which strengthens the businessman stereotype we have already placed him in. Early on we are lead to believe that Charlie and his father are happy to see each other and have a good relationship with quotes such as, â€Å"I was terribly happy to see him again† and â€Å" Hi Charlie, Hi boy!† But these attitudes towards father and son are short lived. Towards the end of the first paragraph we begin to get more of an insight into what Charlie’s father is really like. The first example of this is â€Å"I’d like to take you up to my club, but it’s in the Sixties, and if you have to catch an early train I guess we’d better get something around here†.

The Great Gatsby :: essays research papers

  Ã‚  Ã‚  Ã‚  Ã‚  In the novel The Great Gatsby by F. Scott Fitzgerald, the characters Jay Gatsby and Daisy Buchanan are said to be in love, but in reality, this seems to be a misconception. In this novel, Fitzgerald portrays the themes of love, lust, and obsession through the characters of Jay Gatsby and Daisy Buchanan, who confuse lust and obsession with love. By the end of the novel however, Jay Gatsby is denied his â€Å"love† and sacrifices his life for a woman who never gives him a second thought.   Ã‚  Ã‚  Ã‚  Ã‚  Jay Gatsby was a wealthy businessman who gained his money through the illegal practice of bootlegging. Gatsby’s love interest, Daisy Buchanan, was a materialistic woman who was married to the domineering Tom Buchanan. She seemed to care for nothing more than money. Gatsby was in love with Daisy, and went to all lengths to win her over. Gatsby’s only motivation for obtaining all of the money that he did was to become appealing to Daisy. Since Daisy was married, the idea of love between Gatsby and Daisy was forbidden. This very concept made the relationship all the more desirable. Gatsby becomes obsessed with his relationship with Daisy to the point that he was delusional. His only objective was to win Daisy back.   Ã‚  Ã‚  Ã‚  Ã‚  When Tom learns of Gatsby and Daisy’s secret affair, he is outraged. Tom thought that to love someone, you had to have complete dominance over them. When he realized that he had lost control of Daisy, he panicked but because he senses that Daisy does not love him anymore and, therefore, he cannot control her.   Ã‚  Ã‚  Ã‚  Ã‚  Lust can completely overpower a person until they become controlled by it. By the end of this book, Gatsby becomes obsessed with his lust for Daisy. He wanted so much to have her, this she consumed every aspect of his life. He thought that he could turn back the hands of time and make Daisy love him again, but this proved to be simply impossible. Daisy was not willing to risk her social status for love, proving the of money and power was more important to her than love.

Chechnya and its People Essay examples -- War Europe Essays

Chechnya and its People The ongoing civil war between the semi-autonomous republic of Chechnya and Russia has dramatically caught the attention of the world – a world that perceives the conflict primarily through the distorted lens of Russian propaganda, and the contradicting images of Chechen suffering on the independent media. If the West seems impartial or even indifferent to the Chechen conflict, it is because there is little understanding of this people, of their struggle, or of the vast complexities of the greater North Caucasian region in which the Chechens are a part. This lack of understanding extends to the hazy Western perception of the role of Islam in Chechen society. The broad generalizations that have been made by those in the media, by aid organizations, by the Russians, by Islamic groups, and by those in the American government are all politicized oversimplifications which seek to bring the core of the conflict to its lowest common denominator. Many of the claims revolve around Islam ; yet, few bother to take into account the greater character of Chechen society, or of the broader historical scope of change that Islam has followed in Chechnya. Often, Islam has changed in response to a Russian stimulus, but many of the Russian actions and reasons in this conflict are well documented. This study aims to analyze the Chechen role in the civil war – and the role of Islam in Chechnya – as opposed to the Russian role, which has been analyzed many times over. The North Caucasus It is difficult for Englishmen to take an intelligent interest in the internal affairs of Russia, owing to the vast number of problems involved, all of which depend upon varying local circumstances, and because comparatively few of us, ev... ...i International Magazine. 16 Oct. 2003 18. Menon, Rajan. â€Å"After Empire: Russia and the Southern ‘Near Abroad.’† The New Russian Foreign Policy. Ed. Micheal Mandelbaum. New York: Council on Foreign Relations, 1998. 100-167 19. Chechnya : Tombstone of Russian Power 20. Islam in Chechnya. 13 March 1998 Univ. of California, Berkeley. 15 Oct. 2003 21. Kagarlitsky, Boris. Russia Under Yeltsin and Putin. London: Pluto Press, 2002. 22. Russia Under Yeltsin and Putin 23. Russia : Islamic Countries Unlikely to Help Chechnya. 19 Nov. 1999 Radio Free Europe, 19 Oct. 2003 24. Kagarlitsky, Boris. Russia Under Yeltsin and Putin. London: Pluto Press, 2002.

Advantages and Disadvantages of Fiber Optics

**Solvency** Not capable with current resources and timeframe to solve takes too long Fainberg, 2012 Max. BTOP Program Officer â€Å"Broadband Construction Season. † Home Page | NTIA. N. p. , 19 Oct. 2012. Web. 20 Mar. 2013. . Broadband is a world of extremes: it takes heavy-duty, 10-ton equipment to install fiber strands that are as small as a human hair. It takes months and years of hot, sweaty, dust-filled workdays to build a network that will provide massive amounts of data to end users at speeds measured in millionths of a second.It takes hundreds of man-hours, at a pace of 1000 feet per day to install the fiber that will connect our schools and hospitals with resources on the other side of the planet with just the click of a mouse. Plan can’t solve alone Free Press Reports, 2009 Wired Less: Disconnected in Urban America. Washington D. C. : Free Press, 2009. Print. For many urban residents, high-speed Internet services, which typically  ¶ cost $40 to $60 per mont h, are simply too pricey. Compounding the  ¶ Internet access problem, many people are unable to afford a computer or  ¶ lack the skills to navigate the Web. And just like their rural counterparts, some urban areas have been redlined  ¶ by Internet service providers that refuse to offer service to communities  ¶ that may not provide as large a financial return.  ¶ Many urban residents are locked out, unable to participate fully in the  ¶ digital era. They’re prevented from applying for jobs, telecommuting,  ¶ taking online classes or even finishing their homework. It’s becoming  ¶ increasingly clear that Internet connectivity is key to a sound economy and  ¶ could assist those hit hardest by the economic downturn. Fiber-Optics are too vulnerable, delays solvency Seibert, 2009Paul. â€Å"The Advantages and Disadvantages of Fiber Optics | Hub Tech Insider. † Hub Tech Insider | Technology Trends in and around Boston and Beyond. Word Press, 4 June 2 009. Web. 23 Mar. 2013. . Fiber is a small and compact cable, and it is highly susceptible to becoming cut or damaged during installation or construction activities. Because railroads often provide rights-of-way for fiber optic installation, railroad car derailments pose a significant cable damage threat, and these events can disrupt service to large groups of people, as fiber optic cables can provide tremendous data transmission capabilities.Because of this, when fiber optic cabling is chosen as the transmission medium, it is necessary to address restoration, backup and survivability. **Executive Order Turns** Totalitarianism Turn Executive orders are instruments of totalitarianism Mayer, 2001 (Kenneth, Professor at the University of Wisconsin-Madison, Princeton University Press, â€Å"With the Stroke of a Pen†, 2001, http://press. princeton. edu/chapters/s7095. pdf, Accessed 7/23/2012) Observers who are even less sympathetic cast executive orders in analtogether sinister li ght, seeing in them evidence of a broad conspiracyto create a presidential dictatorship.The common theme of these com-plaints is that the executive order is an example of unaccountable power and a way of evading both public opinion and constitutional constraints. In the more extreme manifestations, executive orders are portrayed as an instrument of secret government and totalitarianism. Thepresident says â€Å"Do this! Do that! † and not only is it done, but the government, the economy, and individual freedom are crushed under the yokeof executive decree.Truman is said to have issued a top-secret executive order in 1947 to create a special government commission to investigate the alleged flyingsaucer crash in Roswell, New Mexico (the air force says no such orderexists, but not surprisingly the proponents of the UFO-order theory don’tbelieve it). 36 When John F. Kennedy issued a series of executive orders authorizing federal agencies to prepare studies of how they would respond to national emergencies, some saw this as evidence that the government was getting ready to take over the economy and establish totalitarian regime. 37 The Justice Department in 1963 complained of an â€Å"organized campaign to mislead the public† about these orders. The department had presumably grown tired of responding to members of Congress, who referred letters from constituents expressing outrage and alarm over the dictatorship that was right around the corner. 38 Conflict Turn Presidential funding approval without Congressional agreement causes inter-branch conflict Rosen 98 Colonel Richard, Judge Advocate General's Corps, United States Army, â€Å"Funding â€Å"Non-Traditional† Military Operations: The Alluring Myth Of A Presidential Power Of The Purse† Military Law Review 155 Mil. L. Rev. 1, Lexis] Finally, if a situation is sufficiently grave and an operation is essential to national security, the President has the raw, physical power–b ut not the legal authority–to spend public funds without congressional approval, after which he or she can either seek congressional approbation or attempt to weather the resulting political storm.To the President's immediate advantage is the fact that the only sure means of directly stopping such unconstitutional conduct is impeachment. 703 Congress could, however, [*149] certainly make a President's life miserable through other means, such as denying requested legislation or appropriations, delaying confirmation of presidential appointments, and conducting public investigations into the President's actions. Interbranch battles hold up agency action – major delays on implementation- the impact is no solvency Cooper 2 Phillip, Professor of Public Administration @ Portland State University, By Order of the President: The Use and Abuse of Executive Direct Action† 232-233] A president who is focused on the short-term, internal view of a possible decision may elect a power management approach. The emphasis is on efficient, effective, prompt, and controlled action within the executive branch. This is an increasingly common approach employed by new administrations; certainly it has been by Reagan and his successors.Whether spoken or unspoken, the tendency to adopt a power management perspective as the base for the use of presidential direct action tools may grow from an assumption that alternative approaches will simply not work or not work rapidly enough because of recalcitrant administrative agencies or opposition by other institutional players inside or outside the Beltway. The executive orders on rulemaking issued by presidents Carter, Reagan, Bush, and Clinton and the Bush memoranda on the rulemaking moratorium are clear examples of this approach.The tendency to use this approach may also stem from the idea that the situation confronting the White House is a real or a perceived emergency in which the executive branch must be mobilized for ac tion. Another tendency is to use this type of approach in national security matters where the White House holds the view that time is of the essence and a particular window of opportunity exists that must be seized. This kind of action is common in the use of national security directives.Control of sensitive materials, personnel practices, or communications is often the focus of this kind of activity. Another feature of the power management approach is the attempt to use the policies of the executive branch to make a wider political point. Certainly the Reagan administration's Drug Free Workplace order is an example, as are many of the Clinton-era orders and memoranda associated with the reinventing government initiative.Still, the power management approach presents many of the dangers and challenges of the various types of instruments. The costs can be high, and the damage both within government and to people outside it can be significant. The rulemaking orders have tied administra tive agencies up in knots for years and have trapped them in a cross fire between the Congress that adopted statutes requiring regulations to be issued and presidents who tried to measure their success by the number of rulemaking processes they could block.Reagan's NSD 84 and other related directives seeking to impose dramatically intensified controls on access to information and control over communication during and after government employment incited a mini rebellion even among a number of cabinet level officials and conveyed a sense of the tenor of leadership being exercised in the executive branch that drew fire from many sources. The Clinton ethics order was meant to make a very public and political point, but it was one of the factors contributing to the administration's inability to staff many of its key positions for months.Tyranny Turn Executive orders are bad, cause tyranny and a loss in democracy Kissinger 92, Henry, Nobel Peace Prize Laureate, 3/21/08,[â€Å"Executive T yranny,† http://www. cassiopaea. org/cass/exec_tyranny. htm / With the unearthing of old and newly improved executive orders recently we come to realise that this has been an ideological strategy that was designed long before the present U. S. administration. We are seeing the death throes of the US constitution and any semblance of democracy that may have initially existed with the founding fathers.It seems inevitable that the U. S. will become the epitome of a totalitarian rule with a further mandate to build on its already established cultural â€Å"McDonaldization† and geopolitical destruction of the planet. The above words from Kissinger giving a speech at the 1992 Bilderberg meeting in Evian, France, was recorded by a Swiss delegate, no doubt much to the chagrin of this â€Å"elder statesman†, who was unaware of the taping. The barely disguised contempt for humanity is only too familiar within the ranks of the â€Å"Elite†, and this man is particular ly active at the moment.No doubt he is seeing the beginnings of a Faustian pay-off for services rendered. I dread to think what misanthropic propaganda he is peddling behind the closed doors of conferences and special â€Å"interest groups† in 2003. The impact is value to life – moral side constraint Petro, 1974 Wake Forest Professor in Toledo Law Review, (Sylvester, Spring, page 480) However, one may still insist, echoing Ernest Hemingway – â€Å"I believe in only one thing: liberty. † And it is always well to bear in mind David Hume's observation: â€Å"It is seldom that liberty of any kind is lost all at once. Thus, it is unacceptable to say that the invasion of one aspect of freedom is of no import because there have been invasions of so many other aspects. That road leads to chaos, tyranny, despotism, and the end of all human aspiration. Ask Solzhenitsyn. Ask Milovan Dijas. In sum, if one believed in freedom as a supreme value and the proper orderin g principle for any society aiming to maximize spiritual and material welfare, then every invasion of freedom must be emphatically identified and resisted with undying spirit.

Positive Organizational Scholarship Essay

Positive organizational scholarship is an emerging discipline in organizational behavior and is about positivity in organization. The need for it emerged to bridge the gap between moral and rational objectives. It is not a new science, it is the new way of looking at things, it’s like you have just changed your glasses. In today’s world, society is facing extremely tough challenges in the form of global warming, natural disasters, economic recession, unprecedented homelessness, terrorism and the draining continuation of war. So at this moment of extreme negative happenings and uncertainty, what is needed to be emphasized and brought up is positive. With all this sadness and horror, where in the world does a science based on testing happiness, wellbeing, personal growth and ‘the good life’ ? t into the modern-day agenda? So, Positive psychology; is the study of topics such as happiness, optimism, personal growth and subjective well being. It promotes the factors that allow the groups and communities to thrive or flourish. At the current stage in this world of negativity, positive psychology focuses on positive experiences at three time points a) past centering contentment; b) present focusing current happiness c) future including optimism and hope. We should know that what a good life is ? Aristotle and Plato used to believe that when people carried out a virtuous life they would become authentically happy. The happiness are of two types in positive psychology according to Seligman, one is hedonic happiness which is high level of positive affect and low levels of negative effect, in addition to high subjective life satisfaction. See more: how to start a scholarship essay Other is eudemonic wellbeing which focuses more on creation of meaning and purpose in life. (Hefferon & Boniwell, 2011) A science of positive subjective experience, positive individual traits, and positive institutions promises to improve quality of life and prevent the pathologies that arise when life is barren and meaningless. The model of Seligman of Positive psychology is divided into three parts: The pleasurable life, the good life, and the meaningful life. The â€Å"pleasurable life† is about things like shopping, eating, drugging, meaningless sex, etc. The research is finding that having more pleasures does not increase life satisfaction. The â€Å"good life† as defined by Seligman is about understanding and using one’s core strengths/virtues in work and love and play. He, in conjunction with Chris Peterson, developed a VIA Signature Strengths Survey found that Having a life of high absorption does correlate to life satisfaction measures according to Seligman. Lastly, the â€Å"meaningful life† is when a person uses his/her strengths for the purpose of something larger than him/herself. Choosing to live a life of faith, purpose, meaning, correlates to life satisfaction measures. Marty also sees this aspect of his model directly related to Positive Institutions—those organizations that promote positive character development and/or meaning. He’s mostly focused on non-profits and religious organizations but others are applying it to for-profit organizations. (Seligman & Csikszentmihalyi, 2000) An approach that is positive to selection, development, and management of human resources in organizations has been emphasized by both scholars and professionals over the years. A wide variety of positively oriented high-performance work practices in placement, compensation, and motivation and their underlying strategies, structures, and cultures have also been extensively studied and supported for their contributions to organizational performance and competitiveness. Research and consulting by the Gallup Organization also supports the importance of positive, strength-based organizational cultures and human resource practices . (Buckingham & Clifton, 2001). For example, factors such as effective selection and placement practices that capitalize on employees’ talents, clear and aligned goals and expectations, social support and recognition, and opportunities for growth, development, and self actualization have been found to significantly contribute to employee engagement, customer satisfaction, and ultimately organizational profitability and growth(Harter, Schmidt, & Keynes, 2003) On the academic side, the positive organizational scholarship or POS movement has been instrumental in providing macro-level scholars with a conceptual framework for organizing and integrating their research on positive organizations (Cameron et al. , 2003). Positive refers to the elevating processes and outcomes in organizations. Organizational refers to the interpersonal and structural dynamics activated in and through organizations, specifically taking into account the context in which positive phenomena occur. Scholarship refers to the scientific, theoretically derived, and rigorous investigation of that which is positive in organizational setting. (KIM S. CAMERON & CAZA, 2004). Positive organizational scholarship (POS) is considered an alternative approach to studying organizations; it is argued that POS plays a critical theory role in contemporary organizational scholarship. By using essays on critical theory in organizational science to consider POS research, and drawing from the principles of Gestalt psychology, it is argued that the important distinctions between POS and traditional organizational scholarship lie in POS’s emphasis on positive processes, on value transparency, and on extending the range of what constitutes a positive organizational outcome. In doing so, it is concluded that the primary contribution of POS is that it offers an alternative to the deficit model that shapes the design and conduct of organizational research. (Caza. & Caza. , 2008) There are several reasons that exist for the neglect of positive phenomena in organizational science. They include a) Lack of valid and reliable measuring devices b) the association of positivity with uncritical science c) the fact that negative events have greater impact on people than positive events(Baumeister, Bratslavsky, Finkenauer, & Vohs, 2001) The first reason for the neglect towards POS concerning measurement and instrumentation, most positively focused at work up to now has been at the psychological level. For example only surveys had been used up till now for finding out anything related to it. Most scholarly work in POS has been conceptual and definitional rather than empirical. Little empirical work has been published. (Cameron, Dutton, & Quinn, 2003). The article by Losada and Heaphy uses a model to estimate team effectiveness. Communication patterns in 60 top management teams were observed and coded in day long strategic planning sessions. The ratio of positive to negative communication was ranging among high, medium and low performing teams. Positive teams performed significantly better Similarly Cameron, Bright and Caza’s study in which they surveyed organizations across a number of industry types, and eventually they found out that the organizations scoring higher on virtuousness had a better performance than the other ones. The second reason to the neglect towards POS is that the topics related to it have sometimes been associated with non scholarly prescriptions. Hope and optimism for example have been interpreted as wishful thinking. POS uses the word scholarship to identify its scientific and theoretical foundations. It is committed to documenting, measuring, and explaining usually positive human experiences in organizations. The third reason for the dearth of POS illustrated by Baumeisteret et al’s concluded that the events that are negative for example losing money or receiving criticism will always have a greater impact on the individual than the positive events such as winning money or receiving praise. Many good events can overcome the psychological effects of a single bad one. In case the numbers of good and bad events are equal then the psychological effects of bad ones always outweigh the good ones. This tells us that the neglect of problems and challenges might threaten the survival of individual. And the neglect of positive might only result into regret or disappointment. (KIM S.  CAMERON & CAZA, 2004) Identifying the factors that lead to joy and happiness, hope and faith, and â€Å"what makes life worth living† represents a shift from reparative psychology to a psychology of positive experience. Similarly, Positive organizational scholarship examines the positive side of organizational performance. It investigates positive deviance, or the ways in which organizations and their members flourish and prosper in especially humane and extraordinary ways. It investigates virtuous elements in organizations such as compassion, forgiveness, dignity, respectful encounters, optimism and positive effect, integrity, and wisdom. This emphasis parallels a new movement in psychology that is shifting from the traditional focus on illness and pathology (e. g.  , deviancy, abnormality, and therapy) toward a positive psychology that focuses on human strengths and virtues. (Dinnah Pladott, 2003) Pos is concerned with understanding the integration of positive and negative conditions. Positive Organizational Scholarship (POS) and Positive Psychology are focused on understanding the conditions and processes that explain flourishing. What differentiates POS is an explicit interest in understanding and explaining flourishing in organizational contexts (including individuals, groups, units and whole organizations). Flourishing refers to being in an optimal range of human functioning and is indicated at the individual level by goodness, generatively, growth and resilience. At  the collective level of groups and organizations, flourishing may be indicated by creativity, innovation, growth, resilience, thriving virtuousness or other markers that a collective is healthy and is performing in an â€Å"above normal† or positively deviant range. POS also focuses on the development of individual, group and collective strengths that represent forms of individual and collective excellence. POS unites existing domains of organizational inquiry focused on flourishing. This includes work on flourishing indicators such as creativity, engagement, flow, growth, health and well-being, as well as contributors to flourishing that consider features of the organization, group and job contexts.

Internal External Strategies Essay

Tradeoffs between an internal and external growth strategy goes together in an organization. The internal organization which focuses on the internal growth of the firm look upon the comforts for the internal people and the facilities are provided internally for the employees. The employees are boosted up and they are encouraged from giving them bonus, over time etc. the internal growth of an organization helps it to groom itself completely but this sets a backward area. The internal growth comprises on the employees moral, the expansion of the organization, more opportunities are overwhelmed for the employees and they are trained in such a manner that they become sharp and confident and boast them in an orderly manner. As a result only the internal growth is focused and the external has to go through a tough time as the only focus becomes the internal growth and the cost is ignored. The production cost gets higher and the demand is affected which leads to a decrease in the sale of goods in the market (Clare & Stutely, 1995). On the other hand when the external growth is focused the budget and the cost are kept in view and the people are mainly focused on the output in the market. Cost cutting is observed and this even leads to the suspension of employees from their job. The cost of the product is kept in view and then decisions are taken to avoid any kind of disturbance in the demand of the product. This creates misconception among the employees and the owners and a huge gap is created among relations. Employees are not focused and not considered for increment. These are the tradeoffs between external and internal growth strategy (Triant, 2006). In international strategy external growth is focused as it is more profitable for them. In international trade only the cost and the demand is focused. Profit is only the motive of the international traders and therefore external trade strategy is the best approach.