I conclude that although the abuse of the profession by investment institutions aggravated the financial crisis, accounting cannot be said to be a root cause. Second, I look at the potential of accounting to help with the resolution of the financial crisis. I argue that by enhancing the accounting standards and acting to eliminate weaknesses therein, accounting can play a significant role in aiding the global economy to recover. Several allegations have been made against the accounting profession, accusing it of precipitating the financial crisis. Of these, I believe two in particular depict the role of accounting in the financial crisis, these being the effects of fair values and the overly complex (and thus allegedly detrimental) nature of financial reporting.
15. The debt debacle in the Euro zone. III. Conclusion J. A brief summary of main points on the 2007 recession.
A Tale of Two Bernankes A Tale of Two Bernankes Contents 1. Introduction 2 2. Bernanke on Japan 2 2.1 How Japanese faced the financial crisis 2 2.2 Bernanke’s Suggestions for Japan 4 3. Bernanke’s Monetary Policy in The Fed 8 3.1 Late 2000s Financial Crisis 8 3.2 The responses and policies adopted by US 9 3.3 Krugman’s Criticism on Bernanke 12 3.4 Lessons to be learned from the Previous Recessions in the United States 13 4. Final Thoughts 16 5.
Considered that the financial crisis has started from the USA, its effects were quickly and strongly felt beyond the country, too. The crisis is still a challenge for the Euro zone’s unity and its economic and financial stability. Since 2008 the unemployment there has been rising, many of the countries have a huge public and private debt. The economy in the Euro zone has been developing so bad that experts and economists doubt if the euro currency can survive. One of the Euro zone members which used to have one the most powerful economies on the continent is Italy.
Case Analysis: How to survive the Euro INTRODUCTION The situation that the case presents is the mismanagement of foreign exchange risk by Paul Bannerman of General Mills in Europe. The strategy chosen by Mr. Bannerman generated a long lasting concern due to the firm’s dominating liabilities in Euros leading to significant losses. On February 16th 2004, he has to explain to the U.S. CFO the reasoning behind his strategy and what he is estimating for the rest of the year. Mr. Bannerman considered that it was extremely difficult to predict the persistent dollar devaluation and that the financial analysis had not predicted all those events. 1.
The precise definition is that TBTF companies are certain financial institutions that are so large and so interconnected that their failure will have a disastrous effect throughout the economy. So, if the cost of a bailout is less than the cost of the failure to the economy, a government will provide assistance to prevent its failure. An important point is that "too big to fail" doesn't mean that a financial institution can’t fail, but that it can’t be allowed to do so. Why TBTF institutions appear? The advantages are obvious.
There are several issues to consider when comparing the financial ratios of a public company to the industry averages. It is important to allow for any material differences in accounting policies between the specific company and the industry norms. It is also important to determine whether ratios were calculated before or after adjustments were made to the balance sheet or income statement. (Atrill & McLaney, 1997) It is also extremely important that one make sure that the financial data was developed using comparable accounting methods, classification procedures, and valuation bases. I have chosen to analyze Branch Banking & Trusts financial ratios and compare them to industry averages.
‘The root cause of the financial crisis was shadow banking - investment banks, hedge funds and commercial bank trading desks. Future crises will be averted only if those institutions are more closely regulated.’ Critically discuss the role of the shadow banking sector in the credit crisis and analyse recent proposals for reform. Since the mid-1970s there has been a rapid growth of market in the financial system, with this financial system the “shadow bank” institutions played a particularly important role giving the world a sense of economic wealth with minimal risk factors. Shadow banks are infrastructures and practices which support financial transactions that occur beyond the reach of existing state sanctioned monitoring and regulation. It includes entities such as hedge funds, money market funds and structured investment vehicles.
On the other hand banks could not have predicted that there would be a global recession in 2008-2009 so of course they may have not prepared for the turnaround outcome or the “what ifs”. That’s where the egoism comes in this matter. In most cases, many banks are interested in not so much of the reward that the customer receives, but how much rewarding it will be for the bank itself, the more they get their customers to make investments the better the payoff is for the bank. Egoism involves self-interest and because of the greed that was shown as well as self-interest of many of the banks, it had led to the results of many banks being unsuccessful. Egoism is a negative trait to have in a business and will always lead to a
It reflects on how the country’s government spends efficiently as it is highly correlated to the economic growth. On the other hand, the government policy on budget deficit is also important in the political point of view of a country. In Malaysia, the government has been on budget deficit since 1999 until 2011. It is also budgeted that in 2012, the budget deficit will be 4.7% of GDP. According to the data from the Ministry of Finance, the highest budget deficit is in the year 2010 (ranging from year 1999 to 2011); 7% of GDP equivalent to USD 13.3 billion.