(asic.gov.au) · As the financial markets became mainstream and matured, the access to capital markets and their scrutiny have both increased. Along with the added volatility, the lending markets have seen similar risks as equity markets. With the increased speed of both financial information and market changes, the rating agencies are more important as a first step, as they are to be scrutinized for their ratings and the trend in their rating changes. (investopedia.com) · CRAs and their ratings played a critical role in the recent market turmoil. Unlike securities trading on deeper, more transparent markets, credit ratings have had an inordinate impact on the valuation and liquidity of subprime RMBSs and RMBS backed
Information Technology: Information is the lifeblood of every nation’s capital market because investors need information about investment opportunities and their corresponding risk levels. Deregulation: Deregulation of national capital markets has been instrumental in the expansion of the international capital market. The need for deregulation became apparent in the early 1970s, when heavily regulated markets in the largest countries were facing fierce competition from less regulated markets in smaller nations. Financial Instruments: Greater competition in the financial industry is creating the need to develop innovative financial instruments. One result of the need for new types of financial instruments is securitization.
When the demand for U.S. dollars increases, the value of the dollar will increase or appreciate (Stone 2008, pp. 685). As a result, U.S. products become more expensive for foriegners causing a reduction in exports and increasing imports. This not only effects the U.S. economy, but also affects the economies in other countries. Monetary policies influence and are influenced by international developments, including exchange rates, and based on these market conditions the U.S. government can make strategic changes to these policies to maintain the country’s economic stability (full employment, stable growth and price stability).
Evaluate the UK’s economic performance in recent decades from both a historical and international perspective The UK’s economic performance has been affected by several economic and financial events that have taken place worldwide. This can be explained due to the ever expanding world economy and globalisation. The UK economy follows a general trend which is known as the business cycle which has 4 different phases, upturn, boom, downturn and recession. These four phases coincide with global events and help to explain their occurrence. The first significant event in recent history which has affected the UK economy is the ‘Dotcom Bubble’.
China has been impacted on globalisation through international convergence, economic growth and the quality of life, trade investment and TNC’s, distribution of income and wealth, environmental consequences, financial markets, international business cycle and the implementation of government policies. International convergence refers to the increasing similarity of economic conditions in different countries. China as a transition economy, transitioning from a socialist economy to a market economy, has made many changes to converge with ‘western economies’. Changes include the joining of the WTO in 2001, the establishment of the stock exchange in 1995. FDI flows have also increased rapidly in recent years.
Examine the main factors that have accelerated globalisation Globalisation is the process by which people, their culture, money, goods and information can be transferred between different countries around the world with few or no barriers at speed. Globalisation presents countries, companies and individuals with numerous opportunities. There are many factors which have contributed to our increasingly globalised world. One example of this is the introduction of international organisations which bring people, money and information together to help accelerate globalisation. The Wold Bank offers money to poorer nations to help them improve and develop.
Decreasing the interest rate effectively increases consumer and businesses consumption. Lower interest rates also increase investments and net exports (Hubbard, 868). These increases push true GDP back in line with potential GDP and, as a result, production increases. This increase in production also increases the need for workers, ultimately increasing employment. Conclusion The Federal Reserve is a very powerful entity and has a large amount of influence on how our nation’s economy performs.
Both economics and politics experienced radical changes during the Early Republic period in America. Remarkably subtle but undoubtedly significant was the development of a recognizable middle class during the Early Republic. This revolution can be attributed to what Wood refers to as a “consumer revolution of immense importance” and through the pervasive spread of commerce. A newfound appreciation for domestically internal trade and the recognition of the significance of this internal trade increased prosperity and gave more people enthusiasm for business. The quantity of those involved in buying and selling increased exponentially and in response, the development of modern day concepts such as businessmen and entrepreneurs arose.
This will allow different parts of the world to enjoy merchandise that is specific to one country. Throughout the past it has been proven that by introducing industries’ and the use of globalization has strengthened a country’s economy. I am a pro economic globalization because I feel that we need to change the way of the past if nothing seems raise the economic standards. Hopefully we will be able to realize that economic globalization is working so we can help countries quickly and efficiently. Economic globalization has attracted much debate throughout society today.
Neoliberalism has shaped today’s economy. Neoliberalism came about during crisis in the 60's and 70's, it first gained momentum in the 80's, and gained total momentum in the 90's. Its objective was to create financial stability and help bring financial gains in the new competitive global market through privatization and investment. It gives economic power to private markets. Some tribute neoliberalism for the booming economy of the 90’s, while others maintain it is to blame for the 2008 recession.