International Financial Management’s Homework Name: Juan Maridueña Chan The documentary Inside Job This is a documentary about the 2008 financial crisis directed by Charles Ferguson. Ferguson has said it is about "the systemic corruption of the United States by the financial services industry and the consequences of that corruption." Through extensive research and interviews with respected financial experts, politicians and journalists, "Inside Job" explains the rise of a dishonest industry and unveils the corrosive relationships which have corrupted politics, the regulatory rules and scholars. The documentary focuses on changes in the financial industry in the past decades that have led to the crisis, the political movement toward deregulation, and how developments in areas such as complex financial derivatives market allowed large increases in financial risk taken by allowing circumvent regulations that were intended to control systemic risk. Also indicates that these conflicts regarding the risk rating agency as well as academics that are paid as consultants without informing you in your trials, obscuring and exacerbating the situation that led to the crisis.
During an investigation there were many questionable accounting transactions that were brought up, such as large executive bonuses as well as many loans for large amounts of money that were later forgiven without repayment. Kozlowski and Swartz were sentenced to 8 – 25 years in prison ("Investopedia", 2014). Then a lawsuit against Tyco cost the company $2.92 billion in repayment to its investors ("Investopedia", 2014). The biggest issue here was allowing for a CEO and CFO to have too much access to funds. A protocol should be in place that when a sale of stocks is made and no one authorized it then a full audit should take place from a third party or if a loan is going to be made then more then just the CEO and CFO’s approval needs to be given.
These scandals cost investors billions of dollars when the share prices of affected companies collapsed, and shook the publics’ faith in the security markets. When examining the SOX act you can see that since 2002 many things have changed in the past eight years. Corporate governance is one of many things that have changed; Public companies must now have a totally separate audit committee composed of entirely independent directors and must contain one financial expert. Security fraud now has much more extreme punishments for those who commit or conspire to commit fraud. Since the introduction of SOX auditors of public companies must keep documentation of an audit for seven years, destruction of any documentation or evidence that someone has committed fraud is now punishable by jail time and fine.
The stock market crashed rapidly, and took a big hit to the U.S. economy. Many investors put almost all their money into the stock markets. This made the Great Depression. On January 7th, 1953 Herbert Hoover sent a message out to the world and said please take out all of your money before you go broke and start working again. And before you go broke and don’t know what to do with your life.
Few saw this devastation coming. The Mortgage Foreclosure Crisis was arguably the most significant for the economy since the Great Depression. It forced millions to lose everything they have and have to live in lower standards than ever before. Criminal acts have skyrocketed due to desperate Americans having nowhere else to turn to but illegal lifestyles. The Mortgage Foreclosure Crisis has set back our economy and the lifestyle of the average American has changed astonishingly
Many eager businessmen with a few extra dollars invested in the railroad and real estate businesses, and soon this gave way to massive over speculation. Over the next few years, 89 of the country’s 364 railroads went bankrupt, over 15,000 businesses failed, and unemployment skyrocketed to 14%. Eventually, the economy managed to get itself back on its feet, and by the 1880s the country was back to normal. The government passed a number of reformative protective tariffs which were meant to ensure that nothing like the panic would ever happen again. Unfortunately, it did.
14 February 2012 Double Taxation Hit Small Business In an economy where employers are laying off employees in unheard of numbers and the unemployment numbers are dancing around records levels a new government debacle is plaguing America’s business; and there seems to be no end in sight. Unemployment benefits and taxes are hitting businesses twice. The majority of unemployment benefits are paid by business. With the increasing number of unemployment claims most states’ benefits funds were exhausted shortly after the start of the recession. Resulting in the asking for Federal funds to help cover benefit payments; because of this many states are having trouble in repaying the interest owed to the Federal government.
These institutions borrowed billions of dollars to purchase companies they weren’t experts in, allowed no money down mortgages, and used financial devices to calculate exactly how much they could lose if things went wrong so they needed little money on hand in reserve. However, in 2007 and 2008 when interest rates began to rise, asset prices fell, and borrowers couldn’t pay off debts the “Dumb Money era” crashed and burned and took the American economy down with it. The government and taxpayers are now responsible for paying off the $700 billion bank and financial institution bailout, along with many companies needing to shut down and lay off thousands of workers as well. Alan Greenspan appeared before congress in 2009 to discuss that after reevaluating his theories on which the “Dumb Money” era was based on (low interest rates, unregulated markets, and the ability to use debt instruments to manage risk) he found an error in his judgment. Gross believes that if we continue to listen to people like Alan Greenspan, another “Dumb Money” age may
Watergate captivated Americans and kept them wondering what the truth behind the Presidential scandal was. It took several years for President Nixon to be finally connected with and implicated as being part and behind the largest political scandal in history. On threat of impeachment, President Nixon finally decided to resign has President of the United States. The Watergate scandal went down in history as one of the largest Presidential and political scandals of all time.
John Perkins Confessions of an Economic Hit Man Confessions of an Economic Hit Man Author: John Perkins Concise summary below Buy This Book About John Perkins: John Perkins was for many years one of the world's top economists. He worked directly with the heads of the World Bank, IMF, and other global financial institutions. He quit his work about 20 years ago because morally and ethically, he felt it was wrong to play such a key role in creating world empire at the expense of the less advantaged around the world. After being persuaded and even bribed not to write a book about his experiences, Perkins states, "When 9/11 struck, I had a change of heart." The book, Confessions of an Economic Hitman, spent many weeks on amazon.com's