Liquidity Risk Sovereign Risk And Sub Prime Crisis Finance Essay - Free Essay Example

Sample details Pages: 5 Words: 1486 Downloads: 8 Date added: 2017/06/26 Category Finance Essay Type Narrative essay Did you like this example? It is said that when the U.S. sneezes everyone catches a cold. This motto has never been truer than nowadays when the world economy is struggling with one of the biggest financial crises ever. Such a crisis happened after risky loans granted in the U.S. reached alarming proportions. The US financial sector entered a grave credit crisis after a strong speculation in the real estate industry. The situation worsened with the bankruptcy of world financial giants such as Lehman Brothers and AIG in 2008. At the center of the subprime crisis there is an excessive liquidity risk, the risk that the market would be unable to turn investments into money cheaply, quickly, and at a fairly predictable price. It is opportune to highlight that the rise of liquidity risk had its roots in two linked phenomenons. Firstly, commercial banks lost their typical function of collecting and converting savings into productive investments which would generate funding liquidity for investo rs. Secondly, the noteworthy development of the so-called Shadow Banking System, a innovative financial engineering used by financial institutions which rivaled a fragile banking system and, created easier credit conditions by avoiding public-sector backstops and regulation (Federal Reserve Bank of New York, 2010) Ever since the US government decreased the cost of money to foster its economy after the September 11, financial intermediaries have played a role that all investors took advantage of: to create new financial instruments to manage and hedge risk for instance counter-party and default risk in the case of CDS (Credit Default Swap), by using a traditional market such as credit. Banks converted long-term assets such as mortgages and loans into marketable securities exchanged and sold to capital market investors (securitization) (Langley, 2010, 78). This financial practice made investors double their money and became very popular. In fact, over the last decade innovative assets such as subprime mortgages-backed securities (MBS) increased from $52 billion in 2000 to over $507 billion in 2005 (Eerden, 2009, 130). However, when the US housing market experienced a fall due to rising loan-defaults of low-credit-rating borrowers (classified as subprime), the value of the underlying assets of MBS and other structured asset-backed securities such as CDO (Collateralized Debt Obligation) dropped dramatically over a short period causing heavy losses. CDS were the last straw. Given that they were new financial instruments which lacked of government regulations and schemes to determine their value, price movements and the speed at which investors could dispose of their assets changed rapidly. Thus liquidity risk rose since assets prices and loss-values were unpredictable. Uncertainty on loss exposure made these assets go for sale quickly and drained liquidity from the market by causing volatility and insolvency. Investors were clearly not interested in these assets anymore and this led to one of the main sources of liquidity crises (Nikolaou, 2009, 4): market incompleteness, a situation where there are no markets on which financial assets can be easily traded because of the lack of buyers and therefore the ability to hedge liquidity risk is very low. On the other hand, what contributed to boost liquidity risk was also the asymmetric information between CDO issuers and potential buyers. Due to a structured finance, CDO issuers were the only players who were able to analyze the value and risk level of the assets underlying CDOs (Beltran and Thomas, 2010, 21). Not only did buyers not have enough information and tools to explore the value of these innovative and structured securities, but they were also exposed to a mispricing risk, due to altered ratings from qualified agencies such as Moodys, Standard and Poors and Fitch which increased their profits by overrating the value and quality of CDOs. Although liquidity risk occurs in the banking sector of a country, it is intimately related to the governments risk such as sovereign risk. Unlike corporations, governments can discretionally issue laws and policies that allow them to break, within their jurisdictions, debt contracts. This happens by declaring default or restructuring unilaterally the contract terms (extending deadlines or modifying yields) on determined securities of the public debt. When the market experiences massive liquidity falls, governments represent the first line of defense through central banks which are required to intervene by ensuring large amounts of capital to lending institutions in order to meet their investors needs. During episodes such as the subprime crisis featured by illiquidity amongst financial institutions, governments make great efforts by using public spending and might run into debt with increasing fiscal liabilities and budget deficit (Arghyrou and Kontonikas, 2010, 6). Lenders may start fearing the possibility that a sove reign government, in which they invested, may default because of its incapacity to fund its debt and ask for massive international bail-outs as happened for bankrupted Greece. Increasing fears that the government would not be able to refinance the banking system raise what is called sovereign risk. Therefore liquidity risk is one of the main components that influence sovereign risk. Since investors bear higher risk due to potential defaults, they demanded higher yield premiums on sovereign bonds and this makes the debt even more expensive and the probabilities of default risk rise. This justifies the high 10-year bond yields that some peripheral EU countries at stake such as Ireland with 7.14 percent and Portugal with 6.11 percent are now facing (Financial Times, 2/11/2010) Furthermore, fluctuating exchange rates experienced over the last few years (e.g. UK currency), increased sovereign risk since the risk of collapse of financial markets caused by illiquidity hit a large market such as bond markets. In fact as Arghyrou and Kontonikas (2010, 3) state, the EMU debt crisis can be seen as a currency crisis in disguise Within the eurozone, one of the countries that has been little damaged by the liquidity crisis is Italy. Italy has traditionally been featured by a prudent credit system and an above-average saving propension. Therefore banks finance themselves by having recourse to clientele deposits as funding source. Furthermore, unlike the US, loans can only be granted to those with high credit ratings who prove to be able to meet their obligations. Moreover borrowers can obtain loans only if they meet the income requirement. Therefore it is right to speak of prime loans and not subprime loans. As soon as the liquidity shortfall became an insolvency crisis, the Italian Government, in agreement with the Central Bank, swiftly intervened by paying special attention at the undeserving institutions with the highest insolvency. In order to ensure liquidity in the financial system, the Government has introduced the so-called Tremonti Bonds, which are bonds issued by Italian banks and underwritten by the Italian Treasury with the aim of enhancing banks core equity capital and supporting the supply of credit towards families and businesses. In addition, as other EU central banks, the Italian Central bank has followed the new policies established by Basel and the European Union. According to Nout Wellink, chairman of the Basel Committee on banking supervision, global regulators will not finish their package of capital surcharges and other safety measures for banks deemed too big to fail until mid 2010-11 (Financial Times, 20/10/2010). Throughout the crisis the world regulators such as Central Banks, the European Central Bank (ECB), and Federal Reserve (FR) have been strongly committed to provide unlimited liquidity in the banking sector and guarantee non- insolvency crises. Furthermore, the ECB, in order to prevent the Euro-zone fro m potential defaults and give more peace of mind to investors, created a ÃÆ' ¢Ãƒ ¢Ã¢â€š ¬Ã… ¡Ãƒâ€šÃ‚ ¬750 billion fund for EMU countries that might be at stake within the next three years (Arghyrou and Kontonikas, 2010, 10). In order to support credit towards businesses and households, according to the 2009 ECB report, the monetary policy has been eased with unprecedented measures: unlimited liquidity provision at the key interest rate of 1 percent, extended the average deadline for refinancing operations, broadened the range of assets accepted as collateral which implies that banks will have access to central banks liquidity more easily. Moreover, the ECB and other central banks provided liquidity in other currencies such as US dollars. Overseas, the FR has responded with an aggressive monetary policy ever since August 2007 by reducing the federal fund rate from 5,25 percent to effectively zero (Federal Reserve, 5/2/2010). The illiquidity has been tackled with the implementat ion of two special liquidity schemes such as The Term Auction Facility and The Term Security Lending Facility. The first, designated for depositary institutions, consists of auctioning funds, such as collateralized short-term loans, to safe institutions. The second allows investors to exchange collateral with less risky assets such as Treasury securities. Over the last decade, developed countries lived well beyond their possibilities whilst until the end of the last century it was common to spend in accordance to income. However, in most recent years overspending became popular by recurring to loans in order not to make any renunciation. The economy based on real data, labor, and productivity has been replaced by a creative finance. The new financial engineering gave life to authentic monsters, such as financial intermediate practices mostly aimed at selling worthless and unmarketable tools whose usage has been too irresponsible. Don’t waste time! Our writers will create an original "Liquidity Risk Sovereign Risk And Sub Prime Crisis Finance Essay" essay for you Create order

An Analysis of Pablo Neruda’s The United Fruit Co. Essay

Pablo Neruda is from Chile and gives a voice to Latin America in his poetry (Bleiker 1129). â€Å"The United Fruit Co.,† the poem by Pablo Neruda that will be analyzed in this essay, is enriched with symbolism, metaphors, and allusions. These allusions have great emphasis to the Christian religion, but some allusions are used to evoke negative emotions towards the United States (Fernandez 1; Hawkins 42). Personification and imagery along with onomatopoeia and metonymy are also found in â€Å"The United Fruit Co.† Neruda’s use of these literary devices makes his messages of imperialism, Marxism, and consumerism understandable (Fernandez 4). In this essay each of these literary devices with its proper meaning will be further analyzed in the hope of†¦show more content†¦. . , Ford Motors, and the United Fruit Company† (Fernandez 3; line 4, 5, and 7). The corporations are imagery of â€Å"consumeristic propaganda† (Hawkins 43). In both writings the setting is at first a symbol of paradise until it is tainted with sin (Fernandez 2). The fruit the United States is interested in obtaining is the symbol of sin just like it is in the Bible and also results in life long labor metaphorically represented by Latin America’s exertion that only the United States’ capitalism is profiting from (Fernandez 2). â€Å"Awarded the laurels like Caesars† is also a biblical allusion correlating with the United States and their establishment of the â€Å"opà ©ra bouffe† as symbolism for the methods of government the United States supported in Latin America (Hawkins 42; line 17, 19). These leaders ended up being â€Å"puppets† of the United States inevitably allowing the United States to keep their profits â€Å"at the expense of Latin America† (Hawkins 42). When the United States, â€Å"rechristened their properties,† in line eleven, it is an allusion to a Christian baptism (Hawkins 42). Latin America has now been given the new identity of the â€Å"Banana Republics† serving as a metaphor for the exploitation Latin America will be put through under the propaganda of entering a modern democracy symbolized by the baptism just mentioned (Hawkins 42; line 12). This is especially true considering that the poem is a symbol for the United States’ journey of

Implement And Vehicle Transport Management -Myassignmenthelp.Com

Question: Discuss About The Implement And Vehicle Transport Management? Answer: Introduction Logistics and supply chain management is one of the most important things in the modern operations of the transport companies. It has become an essential part of the modern freight transport companies as well. The main objective of these companies is to transport various things through ships and exporting those things to other countries as well as importing. The goods are transported from one place to another. This is why the things have to be on time. There are several modes of transport like air, seas, cable, space and pipelines. This helps the trade between several kinds of people. This sets up the civilization in different locations and countries. If the companies make the transport properly, this will in turn be effective for the countries and cities as well. The intermodal companies take the pioneering role in these situations. This is why they have to set up their logistics and supply chain network strongly so that they can get success in their objectives. The cargo ships are used for the transport of the goods in this purpose. This helps the goods for faster transportation by all the means. However, in recent times, some problems and challenges have arisen that have to be tackled properly indeed. The logistics and supply chain has posed some problems in this regard. It is very important to overcome these issues for the smooth flow of the goods to their destinations. Nature of Intermodal companies As transportation by seas goes through several processes, it is the responsibility of the intermodal companies to carry out several processes before they can export these things to the other countries and locations (Liu et al. 2014). The intermodal companies take care of all the things in the modern import and export business. Freight transportation has gained a huge importance in the modern times as a part of the transportation. There have been some important things that are causing problems in the modern transportation system all over the world. Some of them are shortage of drivers, increase in demand of the exported goods, increase of the prices of the fuel (Liu et al. 2014). The governments in various countries have been giving an oversight on these things. All these things are important measures in various ways like the loading of the goods, pricing of the fuel and other things and others. All the people are looking for the solutions that could be effective in the better supply chain of the transportation (Seuring and Goldbach 2013). The freight transport or intermodal transport system has provided one stop solution for that only. The global economic expansion has become one of the most specific phenomenon in the modern society. It has become quite clear that the shippers should indulge in a clearer approach towards integrated shipping. The demands of the consumers are increasing so the service providers will have to increase their services as well. They have to provide their services faster to the consumers and the supply chain of the intermodal companies are taking a huge step in this (Seuring and Goldbach 2013). There are some advantages of operating in an intermodal company as well. This helps the companies to take the most advantages of the lower pricing rates, prices of the goods get flexible, the matter of loading and unloading the goods will be made flexible as well (Bhattacharya et al. 2014). The handling costs can be reduced in this context as well. The logistics management of the intermodal companies will provide the reliability and safety advantages to the consumers. Overview of the chosen organization The organization that has been chosen to discuss this paper is the Australian freight transport company Australian Container Freight Services (ACFS) (Auscfs.com 2018). This organization works in New South Wales. This company was founded in the year 2005 with the objective to provide the best services to the consumers. The parent organization of this company is Asciano Limited. They provide the freight services in cities like Melbourne, Sydney and Brisbane. Some of the services that this company provides are the stuffing and de-stuffing of the goods in the ports (Saeed 2013). They also deal in container handling and storage. Other services that they provide are in the cross docking, fill container load (FCL) and less container load (LCL) storage, FCL and LCL transport, free and bond storage facilities, consultancies that look after the cargo handling and supply chain implementation services (Auscfs.com 2018). They also provide the unpacking of the containers, warehouse package, cross decking and stock taking. This organization is located in the Port Botany in New South Wales (Allen, Browne and Cherrett 2012.). They have focused on the supply chain management that would enable them to get rid of all the challenges (Saeed 2013). They will look to provide the best services to their consumers and in a timely manner indeed. This will probably be helpful for the organizations in a big way. This will increase their reputation in the current market as well. ACFS is considered to be the largest Container Logistics operating team in the entire Australia (Auscfs.com 2018). At the beginning stage of the company, their aim was to be the most popular transport, warehousing and freight logistics companies. They have always opted for building a very strong customer base that includes the largest blue chip exporters and importers (Solomon 2014). The total number of employees in their organization is more than 500. The container freight station activities that are taking place in this context are largely inspired by the proper knowledge and experience in the warehousing, transport and freight sectors. They have also expanded their services to Fremantle in the year 2015 (Nichols, Street and Cereola 2012). Supply chain management of the organization The facilities that they provide are located in the port areas as a part of their extensive strategy (Christopher 2016). This will make the work faster and be effective in case of all the consumers. The container freight logistic service they provide to the customers is always in line with the needs of the customers and providing them the best services indeed. The company ACFS always provides the best world class services to their clients every time. They provide such efficient services by implementing their Warehouse Management System (WMS). The operational expectations of the consumers are met by the managers in the organization (Harris, Wang and Wang 2015). They use the technology in its full swing and look to utilize the advantages of the technological advancement in its full measure. The inventory control system is quite intuitive in various means. They have extended their own warehouse and managed their stocks properly in order to engage their clients. They have always created a proper customer link that has helped them to be able to plan all the things (Christopher 2016). They will be able to manage all the problems minutely and more accurately that will help them to get the best results. ACFS has created a special 3PL division that is operated by them as a specialty fleet that ranges in the capacity of the drop decks and Maxi Liner s. This can carry 68 Pallets per load. These things are very much important as ot maximizes the capacity and weight of the goods. This will minimize their costs per load in an effective manner (Harris, Wang and Wang 2015) This will be very much important to make maximum productivity by using minimum costs. These things are operated in the best ways by recruiting the best trained employees and training them for the best outcomes in favor of ACFS. Productivity is the primary focus and they put the most pressure on the efficiency of the employees (Melo, Graham and Brage-Ardao 2013). They want to improve the operational brilliance in the 3PL division of ACFS. This is why they have aimed to put more focus on the advancement of fleet management, increasing the productivity and efficiency. Intermodal freight transport has been one of the major inventions in the modern era. There are some ways in which the drivers of intermodal companies will look to enhance their business operations (Li, Negenborn and De Schutter 2015). These business operations are done by the ACFS as well. They use to do these things in the perfect manner as they carry out some important things in this context. Some of the features in their business operations are:- Freight analysis by intermodal companies This is a very important analysis that has to be done in order to gather an in depth knowledge for the best intermodal analysis. This analysis is not related to the price of the commodities like fuel and other things (Harris et al. 2012). They have looked to frame the different things like dock operations and requirements of equipments at the origin and different destinations. They have made a tally with all the details of the company and assessed whether it will be applicable for them at all. It is a definite thing that all the things will not have proper solution to the lanes of the intermodal organizations (Jiang et al. 2015). At this stage, a blueprint should be developed in order to make an outline for the intermodal providers to the intermodal lanes of the organizations. ACFS will look to utilize all its resources to focus on the betterment of the organization. Freight movement Another important scenario in the freight analysis is the freight movement. It has been regarded as one of the most important transportation systems in the entire world (Jiangping, Zhou and Shuai 2012). This is why ACFS has been trying to utilize the necessary resources that are present there. One of the main resources that is very much consistent in the improvement of the technology and its advancement. The intermodal companies must be able to apply the different technological tools in order to improve the operations. The companies must execute their planning properly so that they can use the resources properly. The organizations must focus on the development of the infrastructure. Companies must be able to incorporate all the technological tools in their operating versions and connect with their clients through the social media. The technology should be used in such a way that it should be easier to use the machines and deliver the products to the clients in a faster way. This will be helpful for the companies as well. ACFS has been trying to overcome all the odds so they can deliver the best services to their clients. Knowledge and skills in the new operational procedures The new operational procedures will be developed by ACFS to implement the various new things in order to improve its services. The new members who will be recruited in the organizations will need to improve their skills and their managerial knowledge as well. ACFS needs to optimize all the transport options. There are many managerial issues in the higher authorities. These issues will have to be sorted out in order to mitigate all the problems. Challenges and issues in current times There have been some challenges and issues that have surrounded in the freight transport industry. The intermodal companies have been trying their best to overcome the problems. All the clients and customers are looking for the environment friendly solutions for the transport industry. Some of the issues and challenges that ACFS is facing can be discussed in the following section. Smart transport solutions with sustainability The customers always look for the smart solutions in the transport industry. They want to get the best services in the environment friendly ways. The factor of sustainability is not given that much importance in this scenario (Ferrari 2014). A famous intermodal freight transport company like ACFS has been suffering from these problems as well. If the companies do not provide the smart solutions to these challenges, they will probably be facing more challenges in the future as well (Ferrari 2014). Inability to provide proper logistics support It is very important for ACFS to provide the proper logistics support to their customers. This helps to provide the best services and the products can reach to the customers on time very effectively (Allen, Browne and Cherrett 2012). If this does not happen, the trust factor on the services of the company will be hampered. ACFS will be looking to sustain the trust of the customers to a great deal indeed. Higher expectations on the levels of service The end users of the services if this industry always looks for the best services and they always expect the best services from the service providers of ACFS. The customers always look for the more integrated services in the IT systems from the ACFS authority. The supply chain has become more complex and dynamic. This is why the service providers will have to put in some extra effort indeed. The responsibility of the government The NSW government has some responsibilities as well to improve the services provided by the ACFS. The government officials have always delivered the best possible support from their end. They need to include more technologically enabled services from their end so that the customers of ACFS can be benefitted in a larger number. The government should also provide some important guidelines as they are one of the most influential stakeholders in the business operations (Taniguchi et al. 2014). They should not introduce some taxation rules that might harm the operations of the industry. Neither should they make new policies that are very much harmful for ACFS. They should always provide as the best supporting system to the ACFS. The NSW government should provide ACFS with all the relevant import and export guidelines and allow them with the foreign levies indeed. They should also help to provide the organization with the proper warehousing arrangements for the loading and unloading of th e loads (Taniguchi et al. 2014). Recommendations ACFS must improve their technology based systems. This will be very effective to make the things faster and communicate with all the clients very smoothly. They should make ways for better warehousing so they can ship their products in a natural and faster method. They should try to provide their best efforts to deliver the goods within the fixed time. They should connect with their clients through social media and know about their likes and dislikes (Tuten and Solomon 2017). They should make this transport mode safe for the stakeholders with whom they will be doing their business. The organization should look to implement all the necessary strategies in their operations so it will look to be more comprehensive and meet all the demands of the clients (Hitt, Ireland and Hoskisson 2012). Conclusion This paper can be concluded by saying that intermodal companies have been trying their best to get over all the problems that have been very much intrinsic in their operations. The logistics and supply chain management has been very effective in the mix of all the things of the chosen organization ACFS. This has been one of the most important organizations in the world regarding the transport industry. The freight transport industry has been the cause of concern in many of the business operations. It is mainly needed in the business operations that deal with the import and export. The chosen organization is ACFS that is situated in Australia. They also need the proper support from the NSW Government and the government should always introduce some necessary policies that should be useful in the operations of ACFS. The quality issues will have to be mitigated along with the other issues. This will be elemental for the improvement in all the sections of ACFS. References Allen, J., Browne, M. and Cherrett, T., 2012. Investigating relationships between road freight transport, facility location, logistics management and urban form.Journal of Transport Geography,24, pp.45-57. Allen, J., Browne, M. and Cherrett, T., 2012. Investigating relationships between road freight transport, facility location, logistics management and urban form.Journal of Transport Geography,24, pp.45-57. Auscfs.com. (2018).ACFS | Port Logistics. [online] Available at: https://www.auscfs.com/ [Accessed 22 Jan. 2018]. Bhattacharya, A., Kumar, S.A., Tiwari, M.K. and Talluri, S., 2014. An intermodal freight transport system for optimal supply chain logistics.Transportation research part C: Emerging technologies,38, pp.73-84. Christopher, M., 2016.Logistics supply chain management. Pearson UK. Ferrari, P., 2014. The dynamics of modal split for freight transport.Transportation Research Part E: Logistics and Transportation Review,70, pp.163-176. Harris, G.A., Anderson, M.D., Farrington, P.A., Schoening, N.C., Swain, J.J. and Sharma, N.S., 2012, August. Developing freight analysis zones at a state level: A cluster analysis approach. InJournal of the Transportation Research Forum(Vol. 49, No. 1). Harris, I., Wang, Y. and Wang, H., 2015. ICT in multimodal transport and technological trends: Unleashing potential for the future.International Journal of Production Economics,159, pp.88-103. Hitt, M.A., Ireland, R.D. and Hoskisson, R.E., 2012.Strategic management cases: competitiveness and globalization. Cengage Learning. Jiang, J., Lee, L.H., Chew, E.P. and Gan, C.C., 2015. Port connectivity study: An analysis framework from a global container liner shipping network perspective.Transportation Research Part E: Logistics and Transportation Review,73, pp.47-64. Jiangping, Z.H.O.U. and Shuai, D.A.I., 2012. Urban and metropolitan freight transportation: a quick review of existing models.Journal of Transportation Systems Engineering and Information Technology,12(4), pp.106-114. Li, L., Negenborn, R.R. and De Schutter, B., 2015. Intermodal freight transport planninga receding horizon control approach.Transportation Research Part C: Emerging Technologies,60, pp.77-95. Liu, Z., Meng, Q., Wang, S. and Sun, Z., 2014. Global intermodal liner shipping network design.Transportation Research Part E: Logistics and Transportation Review,61, pp.28-39. Melo, P.C., Graham, D.J. and Brage-Ardao, R., 2013. The productivity of transport infrastructure investment: A meta-analysis of empirical evidence.Regional Science and Urban Economics,43(5), pp.695-706. Nichols, N.B., Street, D.L. and Cereola, S.J., 2012. An analysis of the impact of adopting IFRS 8 on the segment disclosures of European blue chip companies.Journal of International Accounting, Auditing and Taxation,21(2), pp.79-105. Saeed, N., 2013. Cooperation among freight forwarders: Mode choice and intermodal freight transport.Research in Transportation Economics,42(1), pp.77-86. Seuring, S. and Goldbach, M. eds., 2013.Cost management in supply chains. Springer Science Business Media. Solomon, M.R., 2014.Consumer behavior: Buying, having, and being(Vol. 10). Upper Saddle River, NJ: Prentice Hall. Taniguchi, E., Imanishi, Y., Barber, R., James, J. and Debauche, W., 2014. Public sector governance to implement freight vehicle transport management.Procedia-Social and Behavioral Sciences,125, pp.345-357. Tuten, T.L. and Solomon, M.R., 2017.Social media marketing. Sage