Ethics and Diversity Essay Example | Topics and Well Written Essays - 1500 words

Morals and Diversity - Essay Example Before that, the entirety of the Equal Pay Act (1970), the Sex Discrimination Act (1975), the Race Relations Act (1976) and the Race Relations Amendment Act (2000), looked to guarantee against both immediate and backhanded segregation in the arrangement of products and ventures and inside the work environment. From the lawful point of view, in this manner, assorted variety is compulsory. Lawmaking body and guidelines aside, the inquiry is whether firms have a moral obligation to grasp workforce decent variety and to guarantee that they have an assorted workforce. While a few researchers have contended that workforce decent variety can't be characterized as a moral commitment to the extent that it could prompt the recruiting of less qualified up-and-comers essentially in light of their race, religion, or ethnicity, among others (Darr, 2002), different researchers keep up that it is a moral commitment (Ludlum and Mascaloinov, 2004). Pending the introduction of a short comprehension of the ramifications of assorted variety and an audit of the contention against it as a moral commitment, the current exploration will contend for workforce decent variety as a moral duty towards which all organizations must aim. The idea of decent variety is a comprehensive one and, alludes to the collectivity of human contrasts and similitudes along a given measurement (Cox, 1993). In accordance with a workforce, Caudron and Hayes (1997) keep up that the two measurements and proportions of decent variety incorporate financial and psychographic attributes, race, social and ethnic legacy, religion and conviction frameworks, sex and sexual inclinations and, age. Other noteworthy measurements and proportions of decent variety, albeit lesser acknowledged and investigated corresponding to intra-hierarchical relations and elements, are political affiliations and financial and practical foundations (Gordon, 1995; Caudron and Hayes, 1997; Stockdale and Crosby, 2003; Gardenswartz , 2003; Barak, 2005). Contending the above definition to be ridiculously far reaching, a few analysts have required an increasingly exact spotlight on a specific arrangement of assorted variety measurements and measures. These are race, culture, sexual orientation, religion, and ethnicity. Surely, by growing the boundaries of decent variety to incorporate age and sexual inclinations, consideration has been avoided from the more original of the assorted variety classifications, boss among which are race and ethnicity (Cox, Lobel and McLeod, 1991; Polzer, Milton and Swann, 2002; Arrendondo, 2004; Squires, 2005; Ocon, 2006). It is corresponding to the more fundamental of these distinctions that researchers have contended the morals of their execution. 3 Suspect Ethics As prior noticed a few researchers have questioned the morals of workforce assorted variety and battle that its distinguishing proof as a goal repudiates a company's moral commitment to recruit representatives based on legitimacy, capabilities and potential. The previously mentioned rules for applicant choice is out and out a moral commitment which firms owe their partners, work competitors, society and the economy everywhere (Mujtaba, 2006). According to the expressed contention, firms owe their partners, also the economies inside which they work, an obligation to act as per best practices rules. It further owes work competitors a moral obligation to recognize the more praiseworthy and qualified among them. At the point when decent variety turns into the target, up-and-comers are not chosen by merit and,

Analysis of market and arrangement of production Essay

Examination of market and course of action of creation - Essay Example ated that the oil and gas fluid yield will remain close to 3.54 mn b/d continuously 2011 however the nation has siphoned about 3.67 mn b/d a year ago. Oil utilization in China is relied upon to increment by 28% by 2011. Along these lines the import of oil is relied upon to be 5.85 mn b/d by 2011. The general business condition for oil and gas is modestly appealing from a local point of view on the grounds that political hazard is overpowered by a solid and continuing development of interest for vitality. There is a positive save for worldwide oil and gas organizations to partake in this serious market. Financial hazard is moderate and administrative standards are set to gain ground. China is a significant country in Asia for long, medium and transient oil and gas development and request that pulls in vitality part financial specialists (The China Oil and Gas Report 2008.) The Chinese oil and gas showcase conducts exercises of capacity, refining, investigation, creation, transportation, improvement and advertising (King,2008). With enlarged power for greater oil fabricate and new premise of vitality, chances to spend in oil and gas business are developing. Uncovering of new wellsprings of oil and gas just as people anxious to risk their money is basic to the oil and gas industry. Oil organizations are in need of lenders to finance investigate, for the development of new advances, and the chase of new sources (Richards) China is currently a net merchant of oil. It devours almost 5,000,000 barrels of oil for each day. Out of this necessity, 33% is imported. It is normal that China will devour 7,000,000 barrels for every day constantly 2020. taking into account the previously mentioned gauges government supported gatherings have begun working for concocting goals around there. One of the fundamental plans figured is in the zone of showcasing oil and gas items (PETROCHEMICALS, CHEMICALS, OIL and GAS INDUSTRYWORKING GROUP.) The estimating gadget has been correspondingly proceeding towards semi changed bazaar esteem

Academic Research Paper Writing Online

Academic Research Paper Writing OnlineAcademic research paper writing online will be an excellent method for you to take advantage of. You will be able to finish your work at home, and you won't have to travel all the way to a local college campus to get your paper completed. There are many individuals who do this type of research and make use of the online methods to accomplish this.It is quite important for you to ensure that you have all of the information that you need before you begin your research. You should think about the scope of the project you are attempting to do and determine if it is all you can handle. If you find yourself unable to complete your entire assignment, you may want to consider moving on to the next paper or you may need to move to another subject.The internet provides you with numerous websites that offer you the opportunity to complete your academic research paper writing online. There are many people who take advantage of this type of method to get thei r assignments completed. In fact, there are many who use this type of research paper writing online to get out of a jam, when they need to complete an assignment and then find out that the job they were working on has been canceled.One of the reasons that you want to make sure that you have the information on hand is because you will want to make sure that you are able to complete your research effectively. When you begin your research, you may discover that you are in need of a few extra pieces of information that you can find and this can help you complete your assignment. Having the extra bits of information on hand will allow you to get the information that you need without having to leave your current work.As you look for academic research paper writing online, you should determine which websites are free of charge and which ones require you to pay a small fee. The websites that are free should offer you information that you can use on your homework that you have already comple ted. If the website requires you to pay to be able to use their website, then it may not be suitable for you to use.There are many websites that charge a fee for their services, but they may not be able to offer you as much information as other sites. You may be able to find sites that provide you with great information and even exclusive tips and advice. There are some sites that can provide you with information that you can use right away on your homework.Academic research paper writing online is usually used by individuals who need to continue doing research on a regular basis. Sometimes individuals need to look up a certain amount of information to complete a specific job that they are doing. In addition, they may be needed to present information during their job and this may be done by taking advantage of this type of site.If you use this method to complete your work, you will be sure to have a lot of extra information at your disposal to use on your own research. It will also provide you with more time to relax and spend with your family. It will also allow you to complete more work on your own time and without having to worry about commuting back and forth to school.

Brighter Cleaning Company Marketing Plan Free Essay Example, 2250 words

It is evidently clear from the discussion that after products and services have been developed, the final step before releasing to the market for the customers to buy is pricing. Favorable prices are known to be effectively competitive strategies for businesses, who are often striving to create and consolidate their market share. Myers explained that pricing can simply be described as the process by which businesses use in determining what they receive in exchange for the goods and services that they create. Some of the factors that determine the pricing process for the products manufactured include competition, company brand, manufacturing costs as well as the quality standards that have been followed in the manufacture of those goods and services. Pricing for a business goods is an essential component of the marketing mix, making part of the 4ps, with the others being the place, product, and promotion. Among these marketing mix elements, the price is the only one that generates in come, with the rest being centered on costs. However, it is important to realize that the other 4ps play a big role in reducing price elasticity, thus enabling price increases that drive the profits and revenues of the business to great heights. We will write a custom essay sample on Brighter Cleaning Company Marketing Plan or any topic specifically for you Only $17.96 $11.86/page The process of effective distribution is managed by both direct and indirect means, where intermediaries play a crucial role. A business needs to ensure that it examines the costs involved in managing a successful distribution process such that if indirect means seem to be costly, then it can opt for direct means. Distribution plays a big role in the business because it helps to deliver the level of satisfaction, which is needed for the goods and services and services that are made by the business. The distribution process, when effectively managed enables producers to produce new goods when the other has been delivered to the consumers.

Comparing Mills Representative Government and Lockes...

Even though academic study has frequently engaged with the question as to what form of government is ideal and what should be the goal of the government , there cannot be one absolute answer to this question , not merely because there has been no consensus among the scholarly community but because these questions cannot be detached from the polities which will bear the implications of the answer. Hence , it is pertinent that they must be looked at in a particular context. Mill argues for a representative government where sovereignty is vested in the aggregate of the community while Locke advocates majoritarian rule where legislative is supreme, though he prescribes certain limitations on it, and is coupled with a powerful executive. At the†¦show more content†¦This , I believe will rob people of their right to decide for themselves what values they want to pursue and be in opposition with individual liberty, which Mill itself is a proponent . Hence, the government will work towards a predetermined goal but the way to go about it might result in promoting certain framework or ideologies which would result in the production of a homogenous people. Critics say that it gives the state unnecessary power and people must have a right to a democratic say in their government, even if their exercising of such rights leads to worse outcomes than might have been obtained. But it is often refuted that since the government will be truly representative, and people must have wisely chosen good representatives , all the policies that they advocate will be justified and supported. If we only talk public space this argument holds strong ground , but to improve the masses the government might have to step upon the private sphere of society which will inhibit individualism and might entice averse reactions. The state may even step outside its mandate and make give directions to other institutions like the education or healthcare systems which are privately administered , so that they follow a certain framework which the state thinks will better the people. The danger in this is that it might result in

The X Men Secretary A Dual Synthesis Of Real Historical...

My character, the X-Men Secretary, was a dual synthesis of real historical figures John Tyndall and Thomas Hirst. My character rose up from rather humble beginnings; he was raised a Catholic on a farm in Ireland, the sixth of eight surviving children, and attended public school (Driscoll, et al.). The Secretary tirelessly educated himself in the sciences during his time as a surveyor and mining engineer. When he finally decided to obtain a formal education, the English-Anglican doors of Cambridge and Oxford were closed to him because, though he had not practiced religion since his youth, he was an Irish Catholic on paper. As a result, he moved to Germany to complete a doctorate in physics in just under two years. The Secretary caught the attention of Sir Edward Sabine as a result of his research on magnetism - fictional work modeled after John Tyndall’s - and was recognized and helped to secure a position in the Royal Society. This session was my character’s â€Å"final year of a three year term as member of the Royal Society Council† with the position of secretary (Driscoll, et al.). This position gave my character â€Å"considerable power† as I worked with the A-Men Secretary and General Sabine to map out agendas for every game session, an ability which both the General and myself used to our advantage a number of times (Driscoll, et al.). We would set the agenda and ask if the others had any qualms with it, and several times we shifted speeches into more favorable time slots based

The United Kingdom Constitution

Question: Describe about the advantages of a written constitution far outweigh the disadvantages and the United Kingdom constitution should now be codified? Answer: At present there is no written constitution in the United Kingdom and in its place, there is a collection of laws and customs through which the political system of the country is governed. The UK and Israel are the only two democracies of the world where a written constitution is not present. The Constitution can be described as a set of rules to which the actions of the government are controlled in order to make sure that these actions are lawful. Therefore, it implies something that is much more significant than the idea of legality according to which, it is required that the official conduct should be according to prefixed rules. At the same time, it is also important that a constitution has the capacity to vary with the society. In the present assignment, the statement has been considered according to which the advantages of the written Constitution are much more than its disadvantages and therefore, it is time that the constitution of the UK should be codified. One major argument that needs to be considered in this regard is the fact that by enshrining the constitutional laws and customs in a document, clarity can be achieved for those who are working within the system and it will also be easier for the persons who want to scrutinise it. One more argument that is generally given in support of the need for having a written constitution is that of checks and balances. At present, it is considered that the judiciary is in a good Position regarding its ability to act as a check against the actions of the Parliament. Therefore it is argued that this power of the judiciary can be increased by a written constitution. It is believed by a large number of people that in case of party enjoys majority in the House of Commons; such political party is in a position to change the Constitution. An example in this regard can be given of the reforms introduced by former Prime Minister Tony Blair regarding the House of Lords. As a result of the majority, he succeeded in completely changing half of the legislature without any referendum or other means through which consensus can be checked. In such a case, a written constitution would certainly have acted as a safeguard because it makes it difficult to change. For example, for this purpose, either 2/3 majority is required in both houses or such changes need to be passed by referendum. Another argument that is generally given in favor of written constitution is the protection from extremists. It is claimed that a written constitution may offer protection in case an extremist comes to power and wishes to disregard the democratic procedures. It is also claimed t hat without the written constitution, there is no Bill of Rights in the UK that can protect the citizens from the actions of an over powerful government. Although the Human Rights Act is present in this regard but it provides the protection because the judges can only give a ruling that the new legislations are noncompliant with the Act and at the same time, if it so wishes, the government can even ignore these rulings. At the same time, it is also easy to amend the Human Rights Act and for this purpose only a simple majority is required in both the Houses. On the other hand, this fact cannot be denied that the United Kingdom has been able to survive very well without a written Constitution. The public is not looking for a written Constitution because the conventions governing the political procedure are well understood by it. At the same time, there is another perspective from which this issue can be considered and it lies in the doctrine of the sovereignty of the Parliament. According to this doctrine, Parliament is considered as supreme and only the Parliament has the power to make or break the laws. However the Parliament cannot bind its successors or at the same time the Parliament cannot be bound by its predecessors. If the notion of a written constitution is adopted by the UK, this doctrine may become totally irrelevant and it may not be in a position to execute itself as it did in the past due to the reason that the judges rule upon the written constitutions. In the United Kingdom, the judges are unelected and as a result, it is undemocratic to take away the power from the elected representatives of the people and give the same to the judges who sometimes tend to be reactionary. Flexibility is one of the most prominent benefits provided by the present system. If the government has the political mandate, the Constitution can be reformed by the government for example, as was done in the case of the House of Lords. On the other hand, if a two third majority was required in both the Houses, it was possible that such a measure may not have been passed. At this point, it also needs to be noted that in countries like the US where a written constitution is present, it is almost impossible to change the Constitution. The question arises in this regard at how we can become sure of the fact that what is best for the country at present will also remain the best for the country for the coming years also. UK is a unitary state and the Parliament at Westminster is the only body that can legislate for the country and all the laws in the UK including the law related with the Constitution can be enacted, amended or repealed by the Queen in Parliament. No specific procedure ha s been prescribed for changing the law and even the most significant laws can be changed with the help of single majority. This means that the decision-making process has not been muted in any way as a result of the previous legislation. Apart from these obvious points, it is also a fact that having an unwritten constitution has caused concern in the United Kingdom as there is no single document that stands alone but this fact also makes the position unique in itself. The position has somehow managed to operate effectively and proved itself to be an enduring system of governance. Although concerns have been raised from time to time, the nature of unwritten Constitution has effectively ironed out these concerns and has been working quite efficiently. The unwritten constitution of the United Kingdom is partly based on the Acts of Parliament and also on judicial decisions as well as on political practice and on the detailed procedures that have been established by different organs of government to perform their own tasks. In this way, the unwritten constitution of the United Kingdom provides a comprehensive and complex system of governance which has worked well in the United Kingdom. It can also be argued in this regard that it is not necessary that by adopting a written constitution, the current flexibility may be lost altogether. However it is not possible for the written Constitution to contain all the detailed rules on which the government depends. At this way, a written constitution generally evolves a wide range of customary rules and practices that are usually easier to change that they changed the constitution itself and at the same time, the constant evolution of these rules and practices also reduce the requirement for fo rmal amendment in the written Constitution. But the same thing is already happening in the United Kingdom where the Constitution is evolving with time in order to fulfill the demands of the people. Therefore as mentioned above, each constitution varies with the society. United Kingdom has long established doctrines and principles that are embedded in the minds of the people. It has resulted in the creation of the present society and despite several obstacles (that are present in case of credit and as well as the unwritten constitution), it has succeeded in developing one of the finest legal systems of the world and at the same time an excellent system of governance. There are a lot of people who believe that the system of unwritten constitution is working well in the country. It has been created over a long time and it has also seen the country grow into its present form. The present system has been developed on the basis of not only the great events but also on the great minds of the region which have given it a distinct flavor of pride. There is nothing of its kind and certainly the system is functional. Therefore, why should we tried to fix something that is not broken. Bibliography Bruce Ackerman, 2007 , The Living Constitution, Harvard Law Review, 7, vol. 120, May Said Amir Arjomand (ed.), 2007, Constitutional and Political Reconstruction (Leiden: Brill) Hiranmay Bagchi, 1969, Inside Major Constitutions: An analytical, comparative, critical and selective treaties on five Constitutions American, British, Indian, Soviet and Swiss (Calcutta: World Press) Sir John Baker, 2009, Our Unwritten Constitution, Maccabaean Lecture in Jurisprudence, British Academy Tony Benn and Andrew Hood, 1993, Common Sense: A New Constitution for Britain (London: Hutchinson) Tom Bingham, 2001, The Rule of Law (London: Allen Lane) Vernon Bogdanor, 1999, Devolution in the United Kingdom (Oxford: Oxford University Press) Vernon Bogdanor, Stephen Hockman QC et al., 2010, Towards a Codified Constitution, Justice Vernon Bogdanor, Tarunabh Khaitan and Steven Vogenauer, 2007, Should Britain Have a Written Constitution?, The Political Quarterly, Vol. 78, Issue 4 Rodney Brazier, 2008, Constitutional Reform: Reshaping the British Political System (Oxford: Oxford University Press) Beau Breslin, 2009, From Words to Worlds: Exploring constitutional functionality (Baltimore: The Johns Hopkins University Press) Chris Bryant (ed.), 2007, Towards a new constitutional settlement (The Smith Institute) Russell Deacon and Alan Sandry, 2007, Devolution in the United Kingdom (Edinburgh: Edinburgh University Press)

Air Pollution in the Los Angeles Basin Essay Example

Air Pollution in the Los Angeles Basin Essay Example Air Pollution in the Los Angeles Basin Paper Air Pollution in the Los Angeles Basin Paper 2010). In addition, acid rain will accelerate the decay of building materials and paints, including irreplaceable buildings, statues, and sculptures that are part of LASS cultural heritage. On a larger scale, changes in atmosphere composition are contributing to ozone depletion and global climate change. Ozone in the stratosphere protects us from dangerous LIVE radiation, but ozone close to the Earth is toxic to both animals and plants (Apollonian, Hugh, Chorea, camp; Seek-Woo, 201 1). People exposed to ozone develop respiratory symptoms resulting in lose of some lung function. As air levels worsen, ozone will become more abundant in the air we breathe. It is shown that areas of ozone depletion are now roughly two to three times larger than past measurements (Apollonian et al. , 201 1). Holes in the ozone layer will continue to expand with the buildup of air pollutants and will ultimately trigger an increase in global climate change. Los Angles has one of the worst reputations for air pollution, but how does it compare to other cities in the Unites States? There is a prominent correlation between highly populated areas and high air pollution levels. During the late sasss and early 1 asss, immigration in America was extremely high. Immigrants came looking for cheap housing and a job. Most found work in highly industrious areas like New York City, Chicago, and Los Angles. With an abundance Of cheap labor, industries grew and multiplied populating the cities where they were located. Today, unsurprisingly, the cities with the highest populations have the most concerning problems of air pollution. The most populated cities, in ascending order, are New York City, Los Angles, Chicago, Houston, Phoenix, and Philadelphia (Most Populated Cities in US, 2011). However, LA has the most serious ozone problem in the united States (Los Angles; Traffic and Smog, 1994). Many would assume New York City to have the worst air pollution levels, but the colder climate and northern geographic location help to clear out smog and rid the area of lingering pollutants. Although cities like Chicago and Houston have a higher level of anthropogenic sulfur dioxide and nitrogen oxide emissions, researchers conclude the high level of ozone makes LA the city with the worst overall air pollution report in the USA (Quo-Jean teal. , 2010). If LA has the worst air pollution in the USA, how does it compare to other cities around the world? Same as in the US, cities with the highest populations tend to have Geiger levels of chemicals and greenhouse gases in the air. Chow (2004) uses the term megabits as a classification for cities with extremely large populations and correspondingly high pollution levels. LA is classified as a megabits but is ranked twelfth after cities like Tokyo, Mexico City, Iambi, and Shanghai. The article Los Angles; Traffic and Smog (1994) declares Mexico City to be the only city with higher ozone levels than LA. Also, urban European cities experience a greater number of problems with nitrogen oxide, which intensify as you move south. Athens is a main concern in this area (Pearson, 2001). After completion of full air pollution reports, LAs air composition is better than that of eight other megabits. Delhi, India comes in first followed by Kola, India and Jakarta, Indonesia (Chow, 2004). Although many interest groups and people are concerned with the air pollution in LA, the plethora of challenges for improving air quality makes it difficult to take effective action. As made evident in cities around the world, the common factor for places with high pollution is high population. This cites a major challenge for reducing air pollution since LAs population continues to expand. LA has experienced an eleven percent increase in population since 1990 and a five percent increase since 2000 (Los Angles Population Growth Statistics, 2012). If this pattern persists, decreasing the population in LA will not be an adequate solution to fix air quality. Another challenge for reducing air pollution in LA is the lack of public transportation made available to citizens. Los Angles developed with almost no public transportation network. Consequently, the residents must rely on personal motor vehicles for almost all transportation (Los Angles; Traffic and Smog, 1994). The unman to vehicle ratio is over one to one, which is extremely high compared to other places. A majority of chemicals in the LA air are released from motor vehicles as a result. Little usage of public transportation is a key reason why LAs air pollution is worse than other cities with a similar population. The creation Of a new, efficient public transportation network would reduce the need for personal motor vehicles and therefore decrease air pollution. In order to effectively improve air quality, government action would be needed. There have been past attempts to by both national and local governments to jugulate this crisis. The formation of the South Coast Air Quality Management District (SCAMMED) in the early sasss sought to create air pollution controls. After developing a consistent set of regulations for the four-county area, SCAMMED adopted several significant emission-reductions measures, including rules to control man-made dust and reduce nitrogen oxides from power plants by 90% (Fiftieth Anniversary of Smog War, 1997). SCAMMED now monitors air quality at thirty-seven stations distributed throughout the basin (Chow, 2004). The Clean Air Act of 1990 is another government attempt to reduce air elution. The emission controls of the three-tier plan represent the most severe air quality management requirements ever proposed for any city (Los Angles; Traffic and Smog, 1994). The law encourages the use of market- based principles and other innovative approaches, and provides a framework from which alternative clean fuels will be used. The law promotes the use of clean low sulfur coal and natural gas. In addition, an acid rain program that gives utilities flexibility to obtain needed emission reductions Was created to encourage customers to conserve energy (Clean Air Act Amendment, 1990). Overall, the law has caused a decline in ambient concentrations of particulate matter. However, many question its effectiveness since there have been only minimal changes in LAs air composition after twenty years of its implementation. With stronger enforcement of The Clean Air Act of 1 990 and efforts by the SCAMMED, the LA Basin will have a cleaner and clearer future. Development of renewable energy sources and cleaner technology will also contribute to a promising future for LA air quality. Over the past decade or so, tech oenology for the utilization of renewable resources has been materialized and put to use around the world. Southern California alone has dozens of projects in production (Renewable Energy, 2009). The landscape and location of Southern California create an ideal environment for solar and wind farms. Nearby deserts provide flat land and high-intensity sunrays perfect for solar panel technology, while coastal winds can be captured and converted to energy by wind turbines. The growing popularity of hybrid and low-emission vehicles will also help to reduce chemicals in the atmosphere. Recent productions of different hybrid and low-emission vehicle models, like the Ionians Leaf or Chevy Volt, are making these types of vehicles more angle and appealing to the public. Also, the SCAMMED is co-sharing the project cost with a number of industries to develop a way to use H2O instead of gasoline, as well as compare different fueling strategies and H2O production methods (Chow, 2004). With the use of renewable the SCAMMED intends to advance the technology, improve competition, gain experience, and, therefore, reduce the costs to accelerate centralization (Chow, 2004). These exciting advancements in the technology and use of renewable resources provide an approach to reduce our reliance on fossil fuels and lessen the amount of greenhouse gases being released into the air. Along with the use of modern technologies, passage of stricter legislation concerning emissions into the environment will help boost the air quality in LA. Economic instruments such as emission taxes and emission trading Will utilize the power of the market to encourage use of cleaner technology and fuels (Quo-Jean et al. , 2010). A market-based system will produce methods to reduce greenhouse emissions through use of the polluter pays concept (Chow, 2004). Constructing legislation of this kind will force citizens and corporations to cooperate and contribute in the effort to revivalist the atmosphere of the LA Basin. Los Angles plays host to millions of tourist year round coming to visit famous LA attractions, get a taste of Hollywood glamour, or to see the beauty of California. Travelers can find these experiences, however, few anticipate the reality of extremely poor air quality conditions. When in fact, LA has the worst air pollution reports of any city in the country. If citizens cooperate with government policies and reduce dependence on fossil fuels, levels of greenhouse gas emissions in the Los Angles Basin will diminish overtime.

$1.67 Billion Typo - Forgiven

$1.67 Billion Typo - Forgiven Image via Wikipedia Ive always thought that typos, so long as they are few and far between, are less egregious errors than misspellings and other errors that stem from lack of knowledge. Apparently a U.S. Seventh Circuit Court of Appeals judge agrees that people and multi-billion dollar companies who make typos should be given a second chance: Verizon $1.67 bln typo can be fixed: court I imagine my own typos and yours wont have such monumental consequences. Our readers are our judges, and we can only hope they have the same understanding as our nations highest courts. That said, if you are applying for jobs, your resume and cover letter are not the most ideal places to err. Make sure to read, re-read, and re-read again. There’s no need to risk judgment from a hiring manager that costs you a job. For editing help, contact The Essay Expert.

Skin cancer Research Paper Example | Topics and Well Written Essays - 1750 words

Skin cancer - Research Paper Example This increase has been linked to increasing solar radiation exposure associated with tanning behaviors. The use of artificial tanning beds has also been implicated. Skin cancers can present as any kind of skin lesion such as an ulcer or lump, and can therefore be mistaken by the patient as a benign process. This often leads to a delay in presentation until the cancer has reached an advanced stage. Considering the significance of skin cancer and the significant research interest surrounding the strength of association between light exposure and skin cancer, this literature review has been conducted to discuss what is known by the medical community today about skin cancers. Objectives The objectives of this review are to discuss the etiology, risk factors, diagnosis, and treatment of skin cancers. Discussion Epidemiology The incidence of skin cancers, both melanomas and non-melanomas, has risen over the past 3 decades. Some experts proclaim that we are experiencing a ‘record†™ number of newly diagnosed skin cancers (Riker, Zea and Trinh). Melanoma is the 6th most common fatal malignancy in the United States (Riker, Zea and Trinh). The young women demographic group, in particular, has the highest increase in cancer incidence noted (Woo and Eide). Melanoma is the second most common cancer in women 20 to 29 year old (Riker, Zea and Trinh). Studies show no link between sex hormones and melanoma risk (Coelho and Hearing), and young women are the most common users of indoor tanning beds (Woo and Eide). Therefore, this high cancer rate in young women is likely a reflection of the contribution of tanning beds to skin cancer incidence. Skin melanoma is a rare cancer compared to basal and squamous cell skin cancers, however it is associated with a much higher rate of metastases and mortality, and occurs more commonly in whites than other races (Society). Risk factors and Pathophysiology The ultraviolet (UV) component of solar radiation has traditionally been co nsidered an important ‘carcinogen’ for skin cancer. In the past few decades, the emergence of indoor tanning booths has emerged as another source of UV radiation exposure. Ultraviolet light has 3 components – UVA, UVB and UVC. UVB is the most strongly carcinogenic component, which also enhances vitamin D production in the skin (Coelho and Hearing). UVA is less carcinogenic, and UVC not at all. UV-induced DNA damage in keratinocytes can lead to pre-malignant changes in the skin such as actinic keratosis, solar lentigo, and dermatoheliosis. These lesions can, in time, develop into frank cancers (Stulberg, Crandell and Fawcett). The tanning industry, which is evidently responsible at least in part for the sharp rise in skin cancers, remains as a multi-billion dollar industry worldwide (Riker, Zea and Trinh). About 1 million American women use tanning beds regularly of which 70% are females between 16 to 45 years old. The number that uses excessive sun exposure for t anning is not known. Tanning beds were initially proclaimed to be non-carcinogenic as they emit mostly UVA. Also, the tanning UV exposure was considered beneficial for promoting vitamin D production in the skin. Eventually, however, studies demonstrated that tanning beds overall provided more UV radiation than the summer sun exposure. Fluorescent sunlamps were shown to provide up to 4 times as much UV radiation than

Effect of Gender Imbalance on Women's Status in the Colonail Period in Essay

Effect of Gender Imbalance on Women's Status in the Colonail Period in New France - Essay Example It is no different in the history of women’s status in Canada or ‘New France’. Gender imbalance in the colonial times put women in an ambivalent position of being valued as well as rejected if they do not come up to men’s expectations. This paper drew much information from cases published from the colonial era as primary sources as well as the works of Peter N. Moogk, Sylvia Van Kirk and Saliha Belmessous, historians who chronicled the culture of New France in Canada during the colonial times as secondary sources. It focused on how the gender imbalance at that time affected the status of women. During the colonial period in what has come to be known as New France, gender balance was askew in terms of number, as it was recounted by Belmessous1 that only 1,772 women emigrated to Canada as compared to 12,621 men, between the years 1608 and 1699. This sexual imbalance continued on till the end of the century. It is due to this lack of women that French colonial officers encouraged native Amerindian women to join the convent for their education to form them into proper ladies and be married off to French settlers instead of native men. It also implied that the convent-bred women had a great influence on the French men to be more cultured. Van Kirk2 explained that intermarriages, also known as â€Å"miscegenation† between French colonizers and the native Amerindians failed because of differing motives of the two cultures. The French Jesuits who encouraged native women to join the Ursuline convent admitted that they wanted the native women to be indoctrinated with their culture. One Jesuit offered that the intermarriage’s purposes were: â€Å"to make them like us, to give them the knowledge of the true God, . . . and that the marriages . . . were to be stable and perpetual.†3 This meant that native women should be Christianized and introduced to a gender-role that included spinning, sewing, knitting, taking care of anima ls, etc. that made them acceptable to their French mates. Native Huron chiefs believed the idea of intermarriage was favourable to them because the French traders make good Hurons, but questioned the French officials about bride price and their women’s right to property and divorce which were part and parcel of their own culture.4 These chiefs were made to understand that the native women would benefit much from such marriages through the teachings of the Ursuline nuns. However, only a small number of the native women were transformed and not many were interested in being successfully converted, so they were not considered acceptable as â€Å"founding mothers of New France† 5. The reverse of Native men â€Å"marrying out† to French women were looked down upon, as it was considered marrying beneath themselves. This is because a woman who married into an Indian tribe became an Indian herself and renounced her original culture. On the other hand, an Indian woman wh o married a foreigner legally ceased to be an Indian, losing all her rights to Indian status as well as her children.6 Thus, by the mid-nineteenth century, intermarriage became a usual practice of colonization and became a way of removing Aboriginal/Indian women from their own native cultures. Governor Vaudreuil7 justified his hostility against the intermarriage of French men and Amerindian women in saying that it divided the French men as they were integrated into their Amerindian wives’ clans. There was a great possibility that such action involved intertribal feuds and could have pitted the French

Diversity at Barclays Bank Essay Example for Free

Diversity at Barclays Bank Essay There are four top leading Banks in UK, Barclays Bank is one of the leading banks. Barclays Bank considers honest prompting an atmosphere or environment where diversity is highly respected and accepted. Diversity as defined by (Dictionary, 2009) is said to be the reality or standard of being diverse (Rajan Amin, 2003) Says diversity contains personal individuality explained by age, ethnicity, gender, disability, religion, sexual position. These differences are established and guarded by law. Diversity in workplace can also be viewed has the difference in qualities and attributes in people working in an organisation. Diversity in workplace can have positive influence in efficient and smooth running of an organisation and can cause chaos between the employees if not administered properly. In 1963 Late President of USA, John Kennedy met with the Americans leaders to discuss about (Drachsler, 2013) the Title VII of the Civil Rights Act which was made law on June 19 of 1964 to focus on Equal opportunity commission and affirmative action and policies, which made the organisations, focus more on just complying on legislation imposed by law, it moved to another stage during the early 1980s to incorporate minors and women into workforce in the late 1980s it moved from just complying to rules and regulations and focuses more on business survival. In the late 1990s there is much shift from complying to laws and to focus on incorporating women and minors into workforce to including everyone in the workforce to know the differences in each employee in the workforce and to be sensitised about the needs and distinctions of others. Now in this century Diversity has shifted attention to inclusion and diversity to increase the efficiency, profitability, wide scope and all factors that can lead to business success. There are two types of workforce diversity Surface level diversity and deep level diversity 1. Surface level diversity as defined by (Kenneth Price H, 2002) as distinctions to each of more members of a team in an overt demographic feature. It is also said to be the different features in workforce that can be seen and observed such Age, Gender, Religion, and Ethnicity. Marital status was also listed as an factors to be considered as a surface level diversity and all these aforementioned examples of surface level diversity  are quantifiable 2. Deep level diversity is defined as distinctions between values, personality and preferences in work. It also defined by (Kenneth Price H, 2002) as the predetermined distinctions among members of a team’ personalities included psychological characteristics, values and attitudes. They factors here can only be felt and cannot be seen they are qualified they cannot be quantified. There are benefits derived from workforce diversity, In Employee management they make good utilization of talents, improved quality of team problem- solving efforts and strength to attract and retain employee’s organisations benefits. In Strategic problem solving skills such as prospective to improve sales volume and to increase market capital base of the organisation, good ethical behaviours ( knowing the right thing to do) . In Organisational Operation they derive good team spirit among the employees, good problem solving strength and lowering cost that is connected to absenteeism and law suit s. Diversity is a two edged sword (Chrobot-Mason, 2013) which means it has positive and negative advantage. There are challenges to workforce diversity such as communication in multicultural environments has mentioned by (Fatima Oliviera, july 2013) and diversity involves not only how employees see themselves but how they see others. That insight affects the way they interact. (Sreedhar, 2011) Highlighted that there is need for professionals in human resource department to consider and administer effectively with issues of change, communication and adaptability. (CHUA, 2013) Also discussed that as organisations become more culturally diverse, conflicts and tensions are bound to happen among employees or people that are from different cultural backgrounds. With all these above mentioned merits and demerits I think diversity is the management of differences in employees effectively and eliminating conflicts that might arise afterwards. Barclays has the believe that to be among the first four leading banks in the world they need a rock solid diversity and inclusion strategy programme and policy to be in place to give them a huge advantage among their rivals in the banking sector . They started by knowing that the foundation of their success is in the talented people they employ, whatsoever lifestyle, age, personality, religion, race, disability, gender or sexual orientation. Barclays focuses on six principal areas of diversity; Gender- is the most important of Barclays diversity and inclusion policy, promoted by the Barclays executive diversity group and it was aimed at increasing the number of women in the senior roles by doing all that is possible to make women in the organisation fulfil their career potential with Barclays increasing female portrayal to at least 20% by the end of last year and rising more to more than 25% by 2015 at the board level. Recruiting is based on merit, and gender diversity is considered seriously when exerting talents across the globe, from the future leader programmes to the most senior recruit and they do make sure that all those that provide recruitment support, supports the vision to lure in diverse candidates around the world. However, other banks all over the globe have innovated Women’s Initiative Networks but the Barclays Women of the year award identifies talented personal and Professional attainment from female employees globally, as well as identifying male em ployee who champion and be of support to female career development. Disability Barclays has shown commitment to being a disability self- assured organisation. Their aim is to lure more highly expertise people, aid disabilities or health defect by making available the equipment and accommodation that enable their employee to be outstanding. Awareness of employee with disability is giving the Bank to recognise modern ways of making products, service and facilities available to everyone an illustration the organisation run disability listening groups, the forum provides staffs with disability with the chance to meet with high level employee and give materials into calculated transformation to improve the working society. Generational diversity Recognising generational diversity in workplace adds cognitive capital to Barclays bank, which promotes revolutions for employees, clients and the customers of the Bank. Barclays bank manages this by supporting the recruitment process and holding firm an age diverse workforce. Creating a workforce with no age limit on each vacant position at Barclays is set as a goal achievable. Merit is the criteria for any elevation; elevation is open to all employees through a yearly achievement and development review  procedure. They are among just few organisations that have taken the proactive measures to include multigenerational diverse workforce into the employee working tactics, the age employees also believes that skill, strength, capability and accomplishment are the backbone of all good performances, which is making the bank one of the leading banks in the world. Sexual Orientation Barclays has good records to encourage their Lesbian, gay, bisexual, transgendered employees, customers and clients and the Bank have been known worldwide by numerous external establishments, Human Rights Campaign in the US are included. Barclays was at the stonewall workplace equality index (WEI) controlled by the United kingdom’s chief Lesbian Gay Bisexual charity, and they were ranked number three in year 2011 in acknowledgment of the work been done to make sure their workplace, products and services are included. They achieved 100 percent in the 2011 Human Rights campaign corporate equality index in the USA and it 95percent in the UK. Multiculturalism This is a very important tool for organisations in the current global business world, Barclays works with a great cultural diversity sense. Barclays Employees are from all around the globe, the employees throughout the Barclays around the world set a footmark to make up a constantly changing pattern of nationalities, cultures and heritage. The distinctive approaches are immeasurable in making sure the organisation comprehend what the need of their customers and clients all around the world is, and with that they provide expert products and services to meet the needs. More to this is the Cultural Awareness Employee network which brings together employees within all Barclays to make sure the bank continue to find up to date method to examine the world with the motive of evaluating and leveraging differences. CONCLUSION Globalisation has made businesses to see diversity has a must do thing, to be successful in modern day business, diversity in workplace should not be treated as complying to law and regulations, it is now a thing of inclusion  and diversity to increase the efficiency, profitability, wide scope and all factors that can lead to business success. For Barclays Bank, Diversity and inclusion is much more than just complying with the law. It means stating and having an active policy in place to make the very best of their diverse staff to serve the clients, customers and benefit their employee to make them retain the height they are in the business world. RECOMMENDATION Having observed all the analysis of diversity and inclusion it is therefore suggested that the following be done to enjoy more benefits of diversity Minimise inequalities among employee to reduce conflicts among the employee. Training and re training programme on human relation should be put in place for employee to enable the employee to know how best to interact among their contemporary. Change is constant so therefore diversity policies and procedures guide lines should be amended yearly. Bibliography Chrobot-Mason, D. A. N. P., 2013. The psychological benefits of creating an affirming climate for workplace diversity. Professiona and management development training, 38(1059-6011), p. 31. CHUA, R. Y. J., 2013. The costs of ambient cultural disharmony: Indirect intercultural Conflicts in social environment undermine creativity. Academy of Management Journal, 56(0001-4273), p. 33. Dictionary, A. H., 2009. Mifflin Houghton. [Online] Available at: http://www.eref-trade.hmco.com/ [Accessed 21 01 2014]. Drachsler, D. A., 2013. Supreme court sets high bar for Title vii retaliation claims.. Labour law journal, 64(4-0023-6586), p. 6. Fatima Oliviera, M. d., july 2013. Multicultural Environments and Thier Challenges to Crisis Communication. Business In Communication , 50(0021- 9436). Kenneth Price H, D. H. A. J. G. H. A. F. T., 2002. TIME, TEAMS, AND TASK PERFORMANCE: CHANGING EFFECTS OF SURFACE- AND DEEP-LEVEL DIVERSITY ON GROUP FUNCTIONING. Academy of Management Journal, 45(5), pp. 1029-1045. Rajan Amin, H. S., 2003. The business impact of diversity. Business Source Premier, Issue 0959-5848, p. 1471 Words. Sreedhar, U., 2011. Workforce Diversity and HR Challenges. OB and HRM Department, IBS, Bangalore (Karnataka), INDIA, 4(0974-2611), pp. p33-36.

Women of The Color Purple Essay -- essays research papers

In the novel, The Color Purple, there are three main characters who demonstrate meaningful traits of women. Celie, the main character, is the most important of the three. She is influenced by other characters in the novel and is inspired to let herself seek their virtues. Celie's two friends, Shug and Sofia, are both strong women who teach Celie how to achieve the happiness she desires.   Ã‚  Ã‚  Ã‚  Ã‚  Sofia is a woman with authority in her life. Her life has been a constant struggle and can no longer endure conflict. She is strong physically and that gives her confidence in herself. The only opinion of any value to her is her own. Sofia is very upset with Celie when she tells Harpo to beat her and she reveals to Celie details of her painful past. 'All my life I had to fight. I had to fight my daddy. I had to fight my brothers. I had to fight my cousins and my uncles. But I never thought I'd have to fight in my own house. I loves Harpo. God knows I do. But I'll kill him dead before I let him beat me.'; (42). Sofia can no longer tolerate this kind of abuse and she thought that when she married Harpo she had finally escaped it.   Ã‚  Ã‚  Ã‚  Ã‚  Later Celie admits that she told Harpo to beat her because she is jealous of Sofia. Celie is jealous because Sofia can fight back and she knows she can't. Sofia tells Celie how she feels sorry for her because Celie reminds her of her mother and how she never could stand up against her father. Just seeing Sofi...

Europe Economic Crisis

ISSN 0379-0991 Economic Crisis in Europe: Causes, Consequences and Responses EUROPEAN ECONOMY 7|2009 EUROPEAN COMMISSION The European Economy series contains important reports and communications from the Commission to the Council and the Parliament on the economic situation and developments, such as the Economic forecasts, the annual EU economy review and the Public ? nances in EMU report. Subscription terms are shown on the back cover and details on how to obtain the list of sales agents are shown on the inside back cover.Unless otherwise indicated, the texts are published under the responsibility of the Directorate-General for Economic and Financial Affairs of the European Commission, BU24, B-1049 Brussels, to which enquiries other than those related to sales and subscriptions should be addressed. LEGAL NOTICE Neither the European Commission nor any person acting on its behalf may be held responsible for the use which may be made of the information contained in this publication, or for any errors which, despite careful preparation and checking, may appear.More information on the European Union is available on the Internet (http://europa. eu). Cataloguing data can be found at the end of this publication. Luxembourg: Of? ce for Of? cial Publications of the European Communities, 2009 ISBN 978-92-79-11368-0 doi 10. 2765/845 40  © European Communities, 2009 Reproduction is authorised provided the source is acknowledged. Printed in Luxembourg European Commission Directorate-General for Economic and Financial Affairs Economic Crisis in Europe: Causes, Consequences and ResponsesEUROPEAN ECONOMY 7/2009 FOREWORD The European economy is in the midst of the deepest recession since the 1930s, with real GDP projected to shrink by some 4% in 2009, the sharpest contraction in the history of the European Union. Although signs of improvement have appeared recently, recovery remains uncertain and fragile. The EU’s response to the downturn has been swift and decisive. A side from intervention to stabilise, restore and reform the banking sector, the European Economic Recovery Plan (EERP) was launched in December 2008.The objective of the EERP is to restore confidence and bolster demand through a coordinated injection of purchasing power into the economy complemented by strategic investments and measures to shore up business and labour markets. The overall fiscal stimulus, including the effects of automatic stabilisers, amounts to 5% of GDP in the EU. According to the Commission's analysis, unless policies take up the new challenges, potential GDP in the EU could fall to a permanently lower trajectory, due to several factors. First, protracted spells of unemployment in the workforce tend to lead to a permanent loss of skills.Second, the stock of equipment and infrastructure will decrease and become obsolete due to lower investment. Third, innovation may be hampered as spending on research and development is one of the first outlays that businesses cu t back on during a recession. Member States have implemented a range of measures to provide temporary support to labour markets, boost investment in public infrastructure and support companies. To ensure that the recovery takes hold and to maintain the EU’s growth potential in the long-run, the focus must increasingly shift from short-term demand management to supply-side structural measures.Failing to do so could impede the restructuring process or create harmful distortions to the Internal Market. Moreover, while clearly necessary, the bold fiscal stimulus comes at a cost. On the current course, public debt in the euro area is projected to reach 100% of GDP by 2014. The Stability and Growth Pact provides the flexibility for the necessary fiscal stimulus in this severe downturn, but consolidation is inevitable once the recovery takes hold and the risk of an economic relapse has diminished sufficiently.While respecting obligations under the Treaty and the Stability and Growth Pact, a differentiated approach across countries is appropriate, taking into account the pace of recovery, fiscal positions and debt levels, as well as the projected costs of ageing, external imbalances and risks in the financial sector. Preparing exit strategies now, not only for fiscal stimulus, but also for government support for the financial sector and hard-hit industries, will enhance the effectiveness of these measures in the short term, as this depends upon clarity regarding the pace with which such measures will be withdrawn.Since financial markets, businesses and consumers are forward-looking, expectations are factored into decision making today. The precise timing of exit strategies will depend on the strength of the recovery, the exposure of Member States to the crisis and prevailing internal and external imbalances. Part of the fiscal stimulus stemming from the EERP will taper off in 2011, but needs to be followed up by sizeable fiscal consolidation in following years to reverse the unsustainable debt build-up.In the financial sector, government guarantees and holdings in financial institutions will need to be gradually unwound as the private sector gains strength, while carefully balancing financial stability with competitiveness considerations. Close coordination will be important. ‘Vertical’ coordination between the various strands of economic policy (fiscal, structural, financial) will ensure that the withdrawal of government measures is properly sequenced — an important consideration as turning points may differ across policy areas. Horizontal’ coordination between Member States will help them to avoid or manage cross-border economic spillover effects, to benefit from shared learning and to leverage relationships with the outside world. Moreover, within the euro area, close coordination will ensure that Member States’ growth trajectories do not diverge as the economy recovers. Addressing the underlying cause s of diverging competitiveness must be an integral part of any exit strategy.The exit strategy should also ensure that Europe maintains its place at the frontier of the low-carbon revolution by investing in renewable energies, low carbon technologies and â€Å"green† infrastructure. The aim of this study is to provide the analytical underpinning of such a coordinated exit strategy. Marco Buti Director-General, DG Economic and Financial Affairs, European Commission ABBREVIATIONS AND SYMBOLS USED Member States BE BG CZ DK DE EE EL ES FR IE IT CY LV LT LU HU MT NL AT PL PT RO SI SK FI SE UK EA-16 EU-10 EU-15 EU-25 EU-27 Currencies EUR BGN CZK DKK EEK GBP HUF JPY LTL LVL PLN RON SEKBelgium Bulgaria Czech Republic Denmark Germany Estonia Greece Spain France Ireland Italy Cyprus Latvia Lithuania Luxembourg Hungary Malta The Netherlands Austria Poland Portugal Romania Slovenia Slovakia Finland Sweden United Kingdom European Union, Member States having adopted the single currency (BE , DE, EL, SI, SK, ES, FR, IE, IT, CY, LU, MT, NL, AT, PT and FI) European Union Member States that joined the EU on 1 May 2004 (CZ, EE, CY, LT, LV, HU, MT, PL, SI, SK) European Union, 15 Member States before 1 May 2004 (BE, DK, DE, EL, ES, FR, IE, IT, LU, NL, AT, PT, FI, SE and UK) European Union, 25 Member States before 1 January 2007 European Union, 27 Member States euro New Bulgarian lev Czech koruna Danish krone Estonian kroon Pound sterling Hungarian forint Japanese yen Lithuanian litas Latvian lats New Polish zloty New Romanian leu Swedish krona iv SKK USD Slovak koruna US dollar Other abbreviations BEPG Broad Economic Policy Guidelines CESR Committee of European Securities Regulators EA Euro area ECB European Central Bank ECOFIN European Council of Economics and Finance Ministers EDP Excessive deficit procedure EMU Economic and monetary union ERM II Exchange Rate Mechanism, mark II ESCB European System of Central Banks Eurostat Statistical Office of the European Communities F DI Foreign direct investment GDP Gross domestic product GDPpc Gross Domestic Product per capita GLS Generalised least squares HICP Harmonised index of consumer prices HP Hodrick-Prescott filterICT Information and communications technology IP Industrial Production MiFID Market in Financial Instruments Directive NAWRU Non accelerating wage inflation rate of unemployment NEER Nominal effective exchange rate NMS New Member States OCA Optimum currency area OLS Ordinary least squares R Research and development RAMS Recently Acceded Member States REER Real effective exchange rate SGP Stability and Growth Pact TFP Total factor productivity ULC Unit labour costs VA Value added VAT Value added tax v ACKNOWLEDGEMENTS This special edition of the EU Economy: 2009 Review â€Å"Economic Crisis in Europe: Causes, Consequences and Responses† was prepared under the responsibility of Marco Buti, Director-General for Economic and Financial Affairs, and Istvan P. Szekely, Director for Economic St udies and Research. Paul van den Noord, Adviser in the Directorate for Economic Studies and Research, served as the global editor of the report.The report has drawn on substantive contributions by Ronald Albers, Alfonso Arpaia, Uwe Bower, Declan Costello, Jan in ‘t Veld, Lars Jonung, Gabor Koltay, Willem Kooi, Gert-Jan Koopman, Martin Hradisky, Julia Lendvai, Mauro Griorgo Marrano, Gilles Mourre, Michal Narozny, Moises Orellana Pena, Dario Paternoster, Lucio Pench, Stephanie Riso, Werner Roger, Eric Ruscher, Alessandra Tucci, Alessandro Turrini, Lukas Vogel and Guntram Wolff. The report benefited from extensive comments by John Berrigan, Daniel Daco, Oliver Dieckmann, Reinhard Felke, Vitor Gaspar, Lars Jonung, Sven Langedijk, Mary McCarthy, Matthias Mors, Andre Sapir, Massimo Suardi, Istvan P. Szekely, Alessandro Turrini, Michael Thiel and David Vergara. Statistical assistance was provided by Adam Kowalski, Daniela Porubska and Christopher Smyth. Adam Kowalski and Greta Haems were responsible for the lay-out of the report.Comments on the report would be gratefully received and should be sent, by mail or e-mail, to: Paul van den Noord European Commission Directorate-General for Economic and Financial Affairs Directorate for Economic Studies and Research Office BU-1 05-189 B-1049 Brussels E-mail: paul. [email  protected] europa. eu vi CONTENTS Executive Summary 1. 2. 3. A crisis of historic proportions Vast policy challenges A strong call on EU coordination 1 1 1 5 Part I: Anatomy of the crisis 1. Root causes of the crisis 1. 1. 1. 2. 1. 3. Introduction A chronology of the main events Global forces behind the crisis Introduction Great crises in the past The policy response then and now Lessons from the past 7 8 8 9 10 2. The crisis from a historical perspective 2. 1. 2. 2. 2. 3. 2. 4. 14 14 14 18 20 Part II: Economic consequences of the crisis 1. Impact on actual and potential growth 1. 1. 1. 2. 1. 3. 1. 4.Introduction The impact on economic activity A s ymmetric shock with asymmetric implications The impact of the crisis on potential growth Introduction Recent developments Labour market expectations A comparison with recent recessions Introduction Tracking developments in fiscal deficits Tracking public debt developments Fiscal stress and sovereign risk spreads Introduction Sources of global imbalances Global imbalances since the crisis Implications for the EU economy 23 24 24 24 27 30 2. Impact on labour market and employment 2. 1. 2. 2. 2. 3. 2. 4. 35 35 35 37 38 3. Impact on budgetary positions 3. 1. 3. 2. 3. 3. 3. 4. 41 41 41 43 44 4. Impact on global imbalances 4. 1. 4. 2. 4. 3. 4. 4. 46 46 46 48 50 Part III:Policy responses 1. A primer on financial crisis policies 1. 1. 1. 2. 1. 3. Introduction The EU crisis policy framework The importance of EU coordination 55 56 56 58 59 2. Crisis control and mitigation 62 vii 2. 1. 2. 2. 2. 3. 2. 4. Introduction Banking support Macroeconomic policies Structural policies Introduction Crisis resolution policies Crisis prevention Introduction The pursuit of crisis resolution The role of EU coordination 62 62 64 71 3. Crisis resolution and prevention 3. 1. 3. 2. 3. 3. 78 78 78 80 4. Policy challenges ahead 4. 1. 4. 2. 4. 3. 82 82 82 85 References 87 LIST OF TABLES II. 1. 1. II. 1. 2. III. 1. 1. III. 2. 1. III. 2. 2.Main features of the Commission forecast The Commission forecast by country Crisis policy frameworks: a conceptional illustration Public interventions in the banking sector Labour market and social protection measures in Member States' recovery programmes 71 27 27 58 63 LIST OF GRAPHS I. 1. 1. I. 1. 2. I. 1. 3. I. 1. 4. I. 1. 5. I. 1. 6. I. 1. 7. I. 2. 1. I. 2. 2. I. 2. 3. I. 2. 4. I. 2. 5. I. 2. 6. II. 1. 1. II. 1. 2. II. 1. 3. II. 1. 4. II. 1. 5. II. 1. 6. II. 1. 7. Projected GDP growth for 2009 Projected GDP growth for 2010 3-month interbank spreads vs T-bills or OIS Bank lending to private economy in the euro area, 2000-09 Corporate 10 year-spreads vs.Gove rnment in the euro area, 2000-09 Real house prices, 2000-09 Stock markets, 2000-09 GDP levels during three global crises World average of own tariffs for 35 countries, 1865-1996, un-weighted average, per cent of GDP World industrial output during the Great Depression and the current crisis The decline in world trade during the crisis of 1929-1933 The decline in world trade during the crisis of 2008-2009 Unemployment rates during the Great Depression and the present crisis in the US and Europe Bank lending standards Manufacturing PMI and world trade Quarterly growth rates in the EU Construction activity and current account position Growth composition in current account surplus countries Growth compostion of current account deficit countries Potential growth 2007-2013, euro area 18 24 24 27 29 30 30 31 15 16 16 16 8 8 9 10 10 12 12 15 viii II. 1. 8. II. 1. 9. II. 1. 10. II. 2. 1. II. 2. 2. II. 2. 3. II. 2. 4. II. 2. 5. II. 2. 6. II. 2. 7. II. 2. 8. II. 2. 9. II. 2. 10. II. 2. 11. II. 2. 12. II. 3. 1. II. 3. 2. II. 3. 3. II. 3. 4. II. 3. 5. II. 3. 6. II. 3. 7. II. 3. 8. II. 4. 1. II. 4. 2. II. 4. 3. II. 4. 4. II. 4. 5. III. 2. 1. III. 2. 2. III. 2. 3. III. 2. 4. III. 2. 5. III. 2. 6. III. 2. 7. III. 2. 8. III. 2. 9. III. 2. 10.Potential growth 2007-2013, euro outs Potential growth 2007-2013, most recently acceding Member States Potential growth by Member State Unemployment rates in the European Union Employment growth in the European Union Unemployment and unemployment expectations Unemployment and hours worked Change in monthly unemployment rate – Italy Unemployment expectations over next 12 months (Consumer survey) – Italy Change in monthly unemployment rate – Germany Unemployment expectations over next 12 months (Consumer survey) Germany Change in monthly unemployment rate – France Unemployment expectations over next 12 months (Consumer survey) – France Change in monthly unemployment rate – United Kingdom Unemployment expectations over next 12 months (Consumer survey) – United Kingdom Tracking the fiscal position against previous banking crises Change in fiscal position and employment in construction Change in fiscal position and real house prices Fiscal positions by Member State Tracking general government debt against previous banking crises Gross public debt Fiscal space by Member State, 2009 Fiscal space and risk premia on government bond yields Current account balances Trade balance in GCC countries and oil prices The US trade deficit The Euro Area trade balance China's GDP growth rate and current account to GDP ratio Macroeconomic policy mix in the euro area Macroeconomic policy mix in the United Kingdom Macroeconomic policy mix in the United States Central bank policy rates ECB policy and eurozone overnight rates Central bank balance sheets Fiscal stimulus in 2009 Fiscal stimulus in 2010 Output gap and fiscal stimulus in 2009 Fiscal space and fiscal stimulus in 2009 31 31 32 35 36 3 7 38 40 40 40 40 40 40 40 40 41 42 42 42 43 44 44 45 46 49 50 51 52 65 65 65 66 66 66 67 68 68 69 LIST OF BOXES I. 1. 1. I. 2. 1. II. 1. 1. II. 1. 2. II. 1. 3. II. 1. 4. II. 4. 1. III. 1. 1.Estimates of financial market losses Capital flows and the crisis of 1929-1933 and 2008-2009 Impact of credit losses on the real economy The growth impact of the current and previous crises Financial crisis and potential growth: econometric evidence Financial crisis and potential growth: evidence from simulations with QUEST Making sense of recent Chinese trade data. Concise calendar of EU policy actions 11 17 25 28 33 34 49 57 ix III. 2. 1. III. 2. 2. III. 2. 3. III. 2. 4. Measuring the economic impact of fiscal stimulus under the EERP EU balance of payments assistance Labour market and social protection crisis measures: examples of good practice EU-level financial contributions 70 73 76 77 x EXECUTIVE SUMMARY assively liquidated their positions and stock markets went into a tailspin. From then o nward the EU economy entered the steepest downturn on record since the 1930s. The transmission of financial distress to the real economy evolved at record speed, with credit restraint and sagging confidence hitting business investment and household demand, notably for consumer durables and housing. The cross-border transmission was also extremely rapid, due to the tight connections within the financial system itself and also the strongly integrated supply chains in global product markets. EU real GDP is projected to shrink by some 4% in 2009, the sharpest contraction in its history.And although signs of an incipient recovery abound, this is expected to be rather sluggish as demand will remain depressed due to deleveraging across the economy as well as painful adjustments in the industrial structure. Unless policies change considerably, potential output growth will suffer, as parts of the capital stock are obsolete and increased risk aversion will weigh on capital formation and R&D. The ongoing recession is thus likely to leave deep and long-lasting traces on economic performance and entail social hardship of many kinds. Job losses can be contained for some time by flexible unemployment benefit arrangements, but eventually the impact of rapidly rising unemployment will be felt, with downturns in housing markets occurring simultaneously affecting (notably highly-indebted) households.The fiscal positions of governments will continue to deteriorate, not only for cyclical reasons, but also in a structural manner as tax bases shrink on a permanent basis and contingent liabilities of governments stemming from bank rescues may materialise. An open question is whether the crisis will weaken the incentives for structural reform and thereby adversely affect potential growth further, or whether it will provide an opportunity to undertake far-reaching policy actions. 2. VAST POLICY CHALLENGES 1. A CRISIS OF HISTORIC PROPORTIONS The financial crisis that hit the global econ omy since the summer of 2007 is without precedent in post-war economic history. Although its size and extent are exceptional, the crisis has many features in common with similar financial-stress driven recession episodes in the past.The crisis was preceded by long period of rapid credit growth, low risk premiums, abundant availability of liquidity, strong leveraging, soaring asset prices and the development of bubbles in the real estate sector. Over-stretched leveraging positions rendered financial institutions extremely vulnerable to corrections in asset markets. As a result a turn-around in a relatively small corner of the financial system (the US subprime market) was sufficient to topple the whole structure. Such episodes have happened before (e. g. Japan and the Nordic countries in the early 1990s, the Asian crisis in the late-1990s). However, this time is different, with the crisis being global akin to the events that triggered the Great Depression of the 1930s.While it may be appropriate to consider the Great Depression as the best benchmark in terms of its financial triggers, it has also served as a great lesson. At present, governments and central banks are well aware of the need to avoid the policy mistakes that were common at the time, both in the EU and elsewhere. Large-scale bank runs have been avoided, monetary policy has been eased aggressively, and governments have released substantial fiscal stimulus. Unlike the experience during the Great Depression, countries in Europe or elsewhere have not resorted to protectionism at the scale of the 1930s. It demonstrates the importance of EU coordination, even if this crisis provides an opportunity for further progress in this regard.In its early stages, the crisis manifested itself as an acute liquidity shortage among financial institutions as they experienced ever stiffer market conditions for rolling over their (typically shortterm) debt. In this phase, concerns over the solvency of financial instituti ons were increasing, but a systemic collapse was deemed unlikely. This perception dramatically changed when a major US investment bank (Lehman Brothers) defaulted in September 2008. Confidence collapsed, investors The current crisis has demonstrated the importance of a coordinated framework for crisis management. It should contain the following building blocks: †¢ Crisis prevention to prevent a repeat in the future. This should be mapped onto a collective 1 European Commission Economic Crisis in Europe: Causes, Consequences and Responses udgment as to what the principal causes of the crisis were and how changes in macroeconomic, regulatory and supervisory policy frameworks could help prevent their recurrence. Policies to boost potential economic growth and competitiveness could also bolster the resilience to future crises. †¢ Crisis control and mitigation to minimise the damage by preventing systemic defaults or by containing the output loss and easing the social hardship stemming from recession. Its main objective is thus to stabilise the financial system and the real economy in the short run. It must be coordinated across the EU in order to strike the right balance between national preoccupations and spillover effects affecting other Member States. Crisis resolution to bring crises to a lasting close, and at the lowest possible cost for the taxpayer while containing systemic risk and securing consumer protection. This requires reversing temporary support measures as well action to restore economies to sustainable growth and fiscal paths. Inter alia, this includes policies to restore banks' balance sheets, the restructuring of the sector and an orderly policy ‘exit'. An orderly exit strategy from expansionary macroeconomic policies is also an essential part of crisis resolution. The beginnings of such a framework are emerging, building on existing institutions and legislation, and complemented by new initiatives.But of course policy makers in Europe have had no choice but to employ the existing mechanisms and procedures. A framework for financial crisis prevention appeared, with hindsight, to be underdeveloped – otherwise the crisis would most likely not have happened. The same held true to some extent for the EU framework for crisis control and mitigation, at least at the initial stages of the crisis. Quite naturally, most EU policy efforts to date have been in the pursuit of crisis control and mitigation. But first steps have also been taken to redesign financial regulation and supervision – both in Europe and elsewhere – with a view to crisis prevention. By contrast, the adoption of crisis resolution policies has not begun in earnest yet.This is now becoming urgent – not least because it should underpin the effectiveness of control policies via its impact on confidence. 2. 1. Crisis control and mitigation Aware of the risk of financial and economic meltdown central banks and governments in the European Union embarked on massive and coordinated policy action. Financial rescue policies have focused on restoring liquidity and capital of banks and the provision of guarantees so as to get the financial system functioning again. Deposit guarantees were raised. Central banks cut policy interest rates to unprecedented lows and gave financial institutions access to lender-of-last-resort facilities.Governments provided liquidity facilities to financial institutions in distress as well, along with state guarantees on their liabilities, soon followed by capital injections and impaired asset relief. Based on the coordinated European Economy recovery Plan (EERP), a discretionary fiscal stimulus of some 2% of GDP was released – of which two-thirds to be implemented in 2009 and the remainder in 2010 – so as to hold up demand and ease social hardship. These measures largely respected agreed principles of being timely and targeted, although there are concerns that in some cases measures were not of a temporary nature and therefore not easily reversed.In addition, the Stability and Growth Pact was applied in a flexible and supportive manner, so that in most Member States the automatic fiscal stabilisers were allowed to operate unfettered. The dispersion of fiscal stimulus across Member States has been substantial, but this is generally – and appropriately – in line with differences in terms of their needs and their fiscal room for manoeuvre. In addition, to avoid unnecessary and irreversible destruction of (human and entrepreneurial) capital, support has been provided to hard-hit but viable industries while part-time unemployment claims were allowed on a temporary basis, with the EU taking the lead in developing guidelines on the design of labour market policies during the crisis.The EU has played an important role to provide guidance as to how state aid policies – including to the financial sector – could be shaped so as to pay respect to competition rules. Moreover, the EU has provided balance-of payments assistance jointly with the IMF and World Bank to Member States in Central and Eastern Europe, as these have been exposed to reversals of international capital flows. 2 Executive Summary Finally, direct EU support to economic activity was provided through substantially increased loan support from the European Investment Bank and the accelerated disbursal of structural funds. These crisis control policies are largely achieving their objectives.Although banks' balance sheets are still vulnerable to higher mortgage and credit default risk, there have been no defaults of major financial institutions in Europe and stock markets have been recovering. With short-term interest rates near the zero mark and ‘non-conventional' monetary policies boosting liquidity, stress in interbank credit markets has receded. Fiscal stimulus proves relatively effective owing to the liquidity and credit constraints fa cing households and businesses in the current environment. Economic contraction has been stemmed and the number of job losses contained relative to the size of the economic contraction. 2. 2. Crisis resolution ontext, the reluctance of many banks to reveal the true state of their balance sheets or to exploit the extremely favourable earning conditions induced by the policy support to repair their balance sheets is of concern. It is important as well that financial repair be done at the lowest possible long-term cost for the tax payer, not only to win political support, but also to secure the sustainability of public finances and avoid a long-lasting increase in the tax burden. Financial repair is thus essential to secure a satisfactory rate of potential growth – not least also because innovation depends on the availability of risk financing. †¢ Macroeconomic policies. Macroeconomic stimulus – both monetary and fiscal – has been employed extensively.The chal lenge for central banks and governments now is to continue to provide support to the economy and the financial sector without compromising their stability-oriented objectives in the medium term. While withdrawal of monetary stimulus still looks some way off, central banks in the EU are determined to unwind the supportive stance of monetary policies once inflation pressure begins to emerge. At that point a credible exit strategy for fiscal policy must be firmly in place in order to pre-empt pressure on governments to postpone or call off the consolidation of public finances. The fiscal exit strategy should spell out the conditions for stimulus withdrawal and must be credible, i. e. ased on pre-committed reforms of entitlements programmes and anchored in national fiscal frameworks. The withdrawal of fiscal stimulus under the EERP will be quasi automatic in 2010-11, but needs to be followed up by very substantial – though differentiated across Member States – fiscal conso lidation to reverse the adverse trends in public debt. An appropriate mix of expenditure restraint and tax increases must be pursued, even if this is challenging in an environment where distributional conflicts are likely to arise. The quality of public finances, including its impact on work incentives and economic efficiency at large, is an overarching concern. †¢ Structural policies.Even prior to the financial crisis, potential output growth was expected to roughly halve to as little as around 1% by the While there is still major uncertainty surrounding the pace of economic recovery, it is now essential that exit strategies of crisis control policies be designed, and committed to. This is necessary both to ensure that current actions have the desired effects and to secure macroeconomic stability. Having an exit strategy does not involve announcing a fixed calendar for the next moves, but rather defines those moves, including their direction and the conditions that must be sat isfied for making them. Exit strategies need to be in place for financial, macroeconomic and structural policies alike: †¢ Financial policies.An immediate priority is to restore the viability of the banking sector. Otherwise a vicious circle of weak growth, more financial sector distress and ever stiffer credit constraints would inhibit economic recovery. Clear commitments to restructure and consolidate the banking sector should be put in place now if a Japan-like lost decade is to be avoided in Europe. Governments may hope that the financial system will grow out of its problems and that the exit from banking support would be relatively smooth. But as long as there remains a lack of transparency as to the value of banks' assets and their vulnerability to economic and financial developments, uncertainty remains. In this 3European Commission Economic Crisis in Europe: Causes, Consequences and Responses 2020s due to the ageing population. But such low potential growth rates are li kely to be recorded already in the years ahead in the wake of the crisis. As noted, it is important to decisively repair the longer-term viability of the banking sector so as to boost productivity and potential growth. But this will not suffice and efforts are also needed in the area of structural policy proper. A sound strategy should include the exit from temporary measures supporting particular sectors and the preservation of jobs, and resist the adoption or expansion of schemes to withdraw labour supply.Beyond these defensive objectives, structural policies should include a review of social protection systems with the emphasis on the prevention of persistent unemployment and the promotion of a longer work life. Further labour market reform in line with a flexicuritybased approach may also help avoid the experiences of past crises when hysteresis effects led to sustained period of very high unemployment and the permanent exclusion of some from the labour force. Product market ref orms in line with the priorities of the Lisbon strategy (implementation of the single market programme especially in the area of services, measures to reduce administrative burden and to promote R and innovation) will also be key to raising productivity and creating new employment opportunities.The transition to a low-carbon economy should be pursued through the integration of environmental objectives and instruments in structural policy choices, notably taxation. In all these areas, policies that carry a low budgetary cost should be prioritised. 2. 3. Crisis prevention particular in China, into the world economy. This prompted accommodative monetary and fiscal policies. Buoyant financial conditions also had microeconomic roots and these tended to interact with the favourable macroeconomic environment. The list of contributing factors is long, including the development of complex – but poorly supervised – financial products and excessive short-term risk-taking.Crisis p revention policies should tackle these deficiencies in order to avoid repetition in the future. There are again agendas for financial, macroeconomic and structural policies: †¢ Financial policies. The agenda for regulation and supervision of financial markets in the EU is vast. A number of initiatives have been taken already, while in some areas major efforts are still needed. Action plans have been put forward by the EU to strengthen the regulatory framework in line with the G20 regulatory agenda. With the majority of financial assets held by cross-border banks, an ambitious reform of the European system of supervision, based on the recommendations made by the High-Level Group chaired by Mr Jacques de Larosiere, is under discussion.Initiatives to achieve better remuneration policies, regulatory coverage of hedge funds and private equity funds are being considered but have yet to be legislated. In many other areas progress is lagging. Regulation to ensure that enough provisions and capital be put aside to cope with difficult times needs to be developed, with accounting frameworks to evolve in the same direction. A certain degree of commonality and consistency across the rule books in Member States is important and a single regulatory rule book, as soon as feasible, desirable. It is essential that a robust and effective bank stabilisation and resolution framework is developed to govern what happens when supervision fails, including effective deposit protection.Consistency and coherence across the EU in dealing with problems in such institutions is a key requisite of a much improved operational and regulatory framework within the EU. †¢ Macroeconomic policies. Governments in many EU Member States ran a relatively A broad consensus is emerging that the ultimate causes of the crisis reside in the functioning of financial markets as well as macroeconomic developments. Before the crisis broke there was a strong belief that macroeconomic instability had bee n eradicated. Low and stable inflation with sustained economic growth (the Great Moderation) were deemed to be lasting features of the developed economies.It was not sufficiently appreciated that this owed much to the global disinflation associated with the favourable supply conditions stemming from the integration of surplus labour of the emerging economies, in 4 Executive Summary accommodative fiscal policy in the ‘good times' that preceded the crisis. Although this cannot be seen as the main culprit of the crisis, such behaviour limits the fiscal room for manoeuvre to respond to the crisis and can be a factor in producing a future one – by undermining the longer-term sustainability of public finances in the face of aging populations. Policy agendas to prevent such behaviour should thus be prominent, and call for a stronger coordinating role for the EU alongside the adoption of credible national medium-term frameworks.Intra-area adjustment in the Economic and Monetary Union (which constitutes two-thirds of the EU) will need to become smoother in order to prevent imbalances and the associated vulnerabilities from building up. This reinforces earlier calls, such as in the Commission's [email  protected] report (European Commission, 2008a), to broaden and deepen the EU surveillance to include intra-area competitiveness positions. †¢ Structural policies. Structural reform is among the most powerful crisis prevention policies in the longer run. By boosting potential growth and productivity it eases the fiscal burden, facilitates deleveraging and balance sheet restructuring, improves the political economy conditions for correcting cross-country imbalances, makes income redistribution issues less onerous and eases the terms of the inflation-output trade-off.Further financial development and integration can help to improve the effectiveness of and the political incentives for structural reform. at the Heads of State Level in the autumn of 2008 â €“ for the first time in history also of the Eurogroup – to coordinate these moves. The Commission's role at that stage was to provide guidance so as to ensure that financial rescues attain their objectives with minimal competition distortions and negative spillovers. Fiscal stimulus also has cross-border spillover effects, through trade and financial markets. Spillover effects are even stronger in the euro area via the transmission of monetary policy responses.The EERP adopted in November 2008, which has defined an effective framework for coordination of fiscal stimulus and crisis control policies at large, was motivated by the recognition of these spillovers. †¢ At the crisis resolution stage a coordinated approach is necessary to ensure an orderly exit of crisis control policies across Member States. It would not be envisaged that all Member State governments exit at the same time (as this would be dictated by the national specific circumstances). But it would be important that state aid for financial institutions (or other severely affected industries) not persist for longer than is necessary in view of its mplications for competition and the functioning of the EU Single Market. National strategies for a return to fiscal sustainability should be coordinated as well, for which a framework exists in the form of the Stability and Growth Pact which was designed to tackle spillover risks from the outset. The rationales for the coordination of structural policies have been spelled out in the Lisbon Strategy and apply also to the exits from temporary intervention in product and labour markets in the face of the crisis. †¢ At the crisis prevention stage the rationale for EU coordination is rather straightforward in view of the high degree of financial and economic integration.For example, regulatory reform geared to crisis prevention, if not coordinated, can lead to regulatory arbitrage that will affect location choices of institutions and may change the direction of international capital flows. Moreover, with many financial institutions operating cross border there is a 3. A STRONG CALL ON EU COORDINATION The rationale for EU coordination of policy in the face of the financial crisis is strong at all three stages – control and mitigation, resolution and prevention: †¢ At the crisis control and mitigation stage, EU policy makers became acutely aware that financial assistance by home countries of their financial institutions and unilateral extensions of deposit guarantees entail large and potentially disrupting spillover effects. This led to emergency summits of the European Council 5European Commission Economic Crisis in Europe: Causes, Consequences and Responses clear case for exchange of information and burden sharing in case of defaults. The financial crisis has clearly strengthened the case for economic policy coordination in the EU. By coordinating their crisis policies Member States heighten the credibi lity of the measures taken, and thus help restore confidence and support the recovery in the short term. Coordination can also be crucial to fend off protectionism and thus serves as a safeguard of the Single Market. Moreover, coordination is necessary to ensure a smooth functioning of the euro area where spillovers of national policies are particularly strong.And coordination provides incentives at the national level to implement growth friendly economic policies and to orchestrate a return to fiscal sustainability. Last but not least, coordination of external policies can contribute to a more rapid global solution of the financial crisis and global recovery. EU frameworks for coordination already exist in many areas and could be developed further in some. In several areas the EU has a direct responsibility and thus is the highest authority in its jurisdiction. This is the case for notably monetary policy in the euro area, competition policy and trade negotiations in the framework of the DOHA Round. This is now proving more useful than ever. In other areas, ‘bottom-up' EU coordination frameworks have been developed and should be exploited to the full.The pursuit of the regulatory and supervisory agenda implies the set-up of a new EU coordination framework which was long overdue in view of the integration of financial systems. An important framework for coordination of fiscal policies exists under the aegis of the Stability and Growth Pact. The revamped Lisbon strategy should serve as the main framework for coordination of structural policies in the EU. The balance of payment assistance provided by the EU is another area where a coordination framework has been established recently, and which could be exploited also for the coordination of policies in the pursuit of economic convergence. At the global level, finally, the EU can offer a framework for the coordination of positions in e. g. the G20 or the IMF.With the US adopting its own exit strategy, press ure to raise demand elsewhere will be mounting. The adjustment requires that emerging countries such as China reduce their national saving surplus and changed their exchange rate policy. The EU will be more effective if it also considers how policies can contribute to more balanced growth worldwide, by considering bolstering progress with structural reforms so as to raise potential output. In addition, the EU would facilitate the pursuit of this agenda by leveraging the euro and participating on the basis of a single position. 6 Part I Anatomy of the crisis 1. 1. 1. ROOT CAUSES OF THE CRISIS INTRODUCTIONThe depth and breath of the current global financial crisis is unprecedented in post-war economic history. It has several features in common with similar financial-stress driven crisis episodes. It was preceded by relatively long period of rapid credit growth, low risk premiums, abundant availability of liquidity, strong leveraging, soaring asset prices and the development of bubbles in the real estate sector. Stretched leveraged positions and maturity mismatches rendered financial institutions very vulnerable to corrections in asset markets, deteriorating loan performance and disturbances in the wholesale funding markets. Such episodes have happened before and the examples are abundant (e. g.Japan and the Nordic countries in the early 1990s, the Asian crisis in the late-1990s). But the key difference between these earlier episodes and the current crisis is its global dimension. When the crisis broke in the late summer of 2007, uncertainty among banks about the creditworthiness of their counterparts evaporated as they had heavily invested in often very complex and opaque and overpriced financial products. As a result, the interbank market virtually closed and risk premiums on interbank loans soared. Banks faced a serious liquidity problem, as they experienced major difficulties to rollover their short-term debt. At that stage, policymakers still perceived the c risis primarily as a liquidity problem.Concerns over the solvency of individual financial institutions also emerged, but systemic collapse was deemed unlikely. It was also widely believed that the European economy, unlike the US economy, would be largely immune to the financial turbulence. This belief was fed by perceptions that the real economy, though slowing, was thriving on strong fundamentals such as rapid export growth and sound financial positions of households and businesses. These perceptions dramatically changed in September 2008, associated with the rescue of Fannie Mae and Freddy Mac, the bankruptcy of Lehman Brothers and fears of the insurance giant AIG (which was eventually bailed out) taking down major US and EU financial institutions in its wake.Panic broke in stock markets, market valuations of financial institutions evaporated, investors rushed for the few safe havens that were seen to be left (e. g. sovereign bonds), and complete meltdown of the financial system b ecame a genuine threat. The crisis thus began to feed onto itself, with banks forced to restrain credit, economic activity plummeting, loan books deteriorating, banks cutting down credit further, and so on. The downturn in asset markets snowballed rapidly across the world. As trade credit became scarce and expensive, world trade plummeted and industrial firms saw their sales drop and inventories pile up. Confidence of both consumers and businesses fell to unprecedented lows. Graph I. 1. : Projected GDP growth for 2009 6 4 2 0 -2 -4 Nov-07 CF-NMS EC-NMS Jan-08 May-08 Mar-08 CF-UK EC-UK Jul-08 Sep-08 CF-EA EC-EA Nov-08 Jun-09 Aug-09 Aug-10 % -4. 0 -4. 3 Oct-09 Oct-10 -6 Feb-09 Sources: European Commission, Consensus Forecasts Graph I. 1. 2: Projected GDP growth for 2010 6 4 2 0 -2 -4 Nov-08 CF-NMS EC-NMS Jan-09 May-09 Mar-09 CF-UK EC-UK Jul-09 Sep-09 CF-EA EC-EA Dec-09 Feb-10 Jun-10 Apr-10 % -6 Sources: European Commission, Consensus Forecasts This set chain of events set the scene fo r the deepest recession in Europe since the 1930s. Projections for economic growth were revised downward at a record pace (Graphs I. 1. 1 and I. 1. 2).Although the contraction now seems to have bottomed, GDP is projected to fall in 2009 by the order of 4% in the euro area and the European Union as whole – with a modest pick up in activity expected in 2010. 8 Apr-09 Part I Anatomy of the crisis The situation would undoubtedly have been much more serious, had central banks, governments and supra-national authorities, in Europe and elsewhere, not responded forcefully (see Part III of this report). Policy interest rates have been cut sharply, banks have almost unlimited access to lender-oflast-resort facilities with their central banks, whose balance sheets expanded massively, and have been granted new capital or guarantees from their governments.Guarantees for savings deposits have been introduced or raised, and governments provided substantial fiscal stimulus. These actions giv e, however, rise to new challenges, notably the need to orchestrate a coordinated exit from the policy stimulus in the years ahead, along with the need to establish new EU and global frameworks for the prevention and resolution of financial crises and the management of systemic risk (see Part III). that point most observers were not yet alerted that systemic crisis would be a threat, but this began to change in the spring of 2008 with the failures of Bear Stearns in the United States and the European banks Northern Rock and Landesbank Sachsen.About half a year later, the list of (almost) failed banks had grown long enough to ring the alarm bells that systemic meltdown was around the corner: Lehman Brothers, Fannie May and Freddie Mac, AIG, Washington Mutual, Wachovia, Fortis, the banks of Iceland, Bradford & Bingley, Dexia, ABN-AMRO and Hypo Real Estate. The damage would have been devastating had it not been for the numerous rescue operations of governments. When in September 2008 L ehman Brothers had filed for bankruptcy the TED spreads jumped to an unprecedented high. This made investors even more wary about the risk in bank portfolios, and it became more difficult for banks to raise capital via deposits and shares. Institutions seen at risk could no longer finance themselves and had to sell assets at ‘fire sale prices' and restrict their lending.The prices of similar assets fell and this reduced capital and lending further, and so on. An adverse ‘feedback loop' set in, whereby the economic downturn increased the credit risk, thus eroding bank capital further. The main response of the major central banks – in the United States as well as in Europe (see Chapter III. 1 for further detail) – has been to cut official attributed to a common systemic factor (see for evidence Eichengreen et al. 2009). 1. 2. A CHRONOLOGY OF THE MAIN EVENTS The heavy exposure of a number of EU countries to the US subprime problem was clearly revealed in the s ummer of 2007 when BNP Paribas froze redemptions for three investment funds, citing its inability to value structured products. 1 ) As a result, counterparty risk between banks increased dramatically, as reflected in soaring rates charged by banks to each other for short-term loans (as indicated by the spreads — see Graph I. 1. 3). ( 2 ) At (1) See Brunnermeier (2009). (2) Credit default swaps, the insurance premium on banks' portfolios, soared in concert. The bulk of this rise can be Bps 500 400 300 200 100 0 Jan-00 Graph I. 1. 3: 3-month interbank spreads vs T-bills or OIS Default of Lehman Brothers BNP Paribas suspends the valuation of two mutual funds Jan-01 Jan-02 EUR Jan-03 Jan-04 USD Jan-05 Jan-06 JPY Jan-07 Jan-08 GBP Jan-09 Sources: Reuters EcoWin. 9 European Commission Economic Crisis in Europe: Causes, Consequences and Responses interest rates to historical lows so as to contain funding cost of banks.They also provided additional liquidity against collateral in ord er to ensure that financial institutions do not need to resort to fire sales. These measures, which have resulted in a massive expansion of central banks' balance sheets, have been largely successful as three-months interbank spreads came down from their highs in the autumn of 2008. However, bank lending to the non-financial corporate sector continued to taper off (Graph I. 1. 4). Credit stocks have, so far, not contracted, but this may merely reflect that corporate borrowers have been forced to maximise the use of existing bank credit lines as their access to capital markets was virtually cut off (risk spreads on corporate bonds have soared, see Graph I. 1. 5). Graph I. 1. : Bank lending to private economy in the euro area, 2000-09 16 14 12 10 8 6 4 2 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Source: European Central Bank institutions incentives to sell to the government while giving taxpayers a reasonable expectation that they will benefit in the long run. Financial inst itutions which at the (new) market prices of toxic assets would be insolvent were recapitalised by the government. All these measures were aiming at keeping financial institutions afloat and providing them with the necessary breathing space to prevent a disorderly deleveraging. The verdict as to whether these programmes are sufficient is mixed (Chapter III. 1), but the order of asset relief provided seem to be roughly in line with banks' needs (see again Box I. 1. ). Graph I. 1. 5: Corporate 10 year-spreads vs. Government in the euro area, 2000-09 450 350 basis points 250 150 50 -50 Corp AAA rated Corp A rated Corp composite yield Corp AA rated Corp BBB rated y-o-y percentage change house purchases households Non-financial corporations -150 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Source: European Central Bank. 1. 3. GLOBAL FORCES BEHIND THE CRISIS Governments soon discovered that the provision of liquidity, while essential, was not sufficient to restore a normal functionin g of the banking system since there was also a deeper problem of (potential) insolvency associated with undercapitalisation.The write-downs of banks are estimated to be over 300 billion US dollars in the United Kingdom (over 10% of GDP) and in the range of over EUR 500 to 800 billion (up to 10% of GDP) in the euro area (see Box I. 1. 1). In October 2008, in Washington and Paris, major countries agreed to put in place financial programmes to ensure capital losses of banks would be counteracted. Governments initially proceeded to provide new capital or guarantees on toxic assets. Subsequently the focus shifted to asset relief, with toxic assets exchanged for cash or safe assets such as government bonds. The price of the toxic assets was generally fixed between the fire sales price and the price at maturity to giveThe proximate cause of the financial crisis is the bursting of the property bubble in the United States and the ensuing contamination of balance sheets of financial instituti ons around the world. But this observation does not explain why a property bubble developed in the first place and why its bursting has had such a devastating impact also in Europe. One needs to consider the factors that resulted in excessive leveraged positions, both in the United States and in Europe. These comprise both macroeconomic and developments in the functioning of financial markets. ( 3 ) (3) See for instance Blanchard (2009), Bosworth and Flaaen (2009), Furceri and Mourougane (2009), Gaspar and Schinasi (2009) and Haugh et al. (2009). 10 Part I Anatomy of the crisis Box I. 1. 1: Estimates of financial market losses Estimates of financial sector osses are essential to inform policymakers about the severity of financial sector distress and the possible costs of rescue packages. There are several estimates quantifying the impact of the crisis on the financial sector, most recently those by the Federal Reserve in the framework of its Supervisory Capital Assessment Program, w idely referred to as the â€Å"stress test†. Using different methodologies, these estimates generally cover write-downs on loans and debt securities and are usually referred to as estimates of losses. The estimated losses during the past one and a half years or so have shown a steep increase, reflecting the uncertainty regarding the nature and the extent of the crisis.IMF (2008a) and Hatzius (2008) estimated the losses to US banks to about USD 945 in April 2008 and up to USD 868 million in September 2008, respectively. This is at the lower end of predictions by RGE monitor in February the same year which saw losses in the rage of USD 1 to 2 billion. The April 2009 IMF Global Financial Stability Report (IMF 2009a) puts loan and securities losses originated in Europe (euro area and UK) at USD 1193 billion and those originated in the United States at USD 2712 billion. However, the incidence of these losses by region is more relevant in order to judge the necessity and the extent of policy intervention. The IMF estimates write-downs of USD 316 billion for banks in the United Kingdom and USD 1109 billion (EUR 834 billion) for the euro area.The ECB's loss estimate for the euro area at EUR 488 billion is substantially lower than this IMF estimate, with the discrepancy largely due to the different assumptions about banks' losses on debt securities. Bank level estimates can be used in stress tests to evaluate capital adequacy of individual institutions and the banking sector at large. For example the Fed's Supervisory Capital Assessment Program found that 10 of the 19 banks examined needed to raise capital of USD 75 billion. Loss estimates can also inform policymakers about the effects of losses on bank lending and the magnitude of intervention needed to pre-empt this. Such calculations require additional assumptions about the capital banks can raise or generate through their profits as well as the amount of deleveraging needed.As an illustration the table below presents four scenarios that differ in their hypothetical recapitalisation rate and their deleveraging effects The IMF and ECB estimates of total write-downs for euro area banks are taken as starting points. Net write-downs are calculated, which reflect losses that are not likely to be covered either by raising capital or by tax deductions. Depending on the scenario net losses range between 219 and 406 billion EUR using the IMF estimate, and roughly half of that based on the ECB estimate. Such magnitudes would imply balance sheets decreases amounting to 7. 3% in the mildest scenario and 30. 8% in the worst case scenario (period between August 2007 and end of 2010). Capital recovery rates and deleveraging play a crucial role in determining the magnitude of the balance sheet effect.Governments' capital injections in the euro area have been broadly in line with the magnitude of these illustrative balance sheet effects, committing 226 billion EUR, half of which has been spent (see Chap ter III. 1). Table 1: Balance-sheet effects of write-downs in the euro area* Scenario (1) (2) (3) Capital 1760 1760 1760 Assets 31538 31538 31538 Estimated write-downs IMF 834 834 834 ECB 488 488 488 Recapitalisation rate 65% 65% 50% Net write-downs IMF 219 219 313 ECB 128 128 183 Decrease in balance sheet (leverage constant) IMF -12. 4% -12. 4% -17. 8% ECB -7. 3% -7. 3% -10. 4% Change in leverage ratio 0% -5% -5% Decrease in balance sheet (with delevraging) IMF -12. 4% -16. 8% -21. % ECB -7. 3% -11. 9% -14. 9% * Billion EUR, EUR/USD exchange rate 1. 33. Source : European Commission (4) 1760 31538 834 488 35% 407 238 -23. 1% -13. 5% -10% -30. 8% -22. 2% 11 European Commission Economic Crisis in Europe: Causes, Consequences and Responses As noted, most major financial crises in the past were preceded by a sustained period of buoyant credit growth and low risk premiums, and this time is no exception. Rampant optimism was fuelled by a belief that macroeconomic instability was eradicate d. The ‘Great Moderation', with low and stable inflation and sustained growth, was conducive to a perception of low risk and high return on capital.In part these developments were underpinned by genuine structural changes in the economic environment, including growing opportunities for international risk sharing, greater stability in policy making and a greater share of (less cyclical) services in economic activity. Persistent global imbalances also played an important role. The net saving surpluses of China, Japan and the oil producing economies kept bond yields low in the United States, whose deep and liquid capital market attracted the associated capital flows. And notwithstanding rising commodity prices, inflation was muted by favourable supply conditions associated with a strong expansion in labour transferred into the export sector out of rural employment in the emerging market economies (notably China).This enabled US monetary policy to be accommodative amid economic bo om conditions. In addition, it may have been kept too loose too long in the wake of the dotcom slump, with the federal funds rate persistently below the ‘Taylor rate', i. e. the level consistent with a neutral monetary policy stance (Taylor 2009). Monetary policy in Japan was also accommodative as it struggled with the aftermath of its late-1980s ‘bubble economy', which entailed so-called ‘carry trades' (loans in Japan invested in financial products abroad). This contributed to rapid increases in asset prices, notably of stocks and real estate – not only in the United States but also in Europe (Graphs I. 1. 6 and I. 1. 7).A priori it may not be obvious that excess global liquidity would lead to rapid increases in asset prices also in Europe, but in a world with open capital accounts this is unavoidable. To sum up, there are three main transmission channels. First, upward pressure on European exchange rates vis-a-vis the US dollar and currencies with de facto pegs to the US dollar (which includes inter alia the Chinese currency and up to 2004 also the Japanese currency), reduced imported inflation and allowed an easier stance of monetary policy. Second, so-called â€Å"carry trades† whereby investors borrow in currencies with low interest rates and invest in higher yielding currencies while mostly disregarding exchange rate risk, implied the spillover of global liquidity in European financial markets. 4 ) Third, and perhaps most importantly, large capital flows made possible by the integration of financial markets were diverted towards real estate markets in several countries, notably those that saw rapid increases in per capita income from comparatively low initial levels. So it is not surprising that money stocks and real estate prices soared in tandem also in Europe, without entailing any upward tendency in inflation of consumer prices to speak of. ( 5 ) Graph I. 1. 6: Real house prices, 2000-09 190 180 170 160 150 140 130 120 110 100 90 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Index, 2000 = 100 United States United Kingdom Source: OECD euro area euro area excl. Germany 500 400 300 200 100 0 03. 01. 00 12. 10. 00 Graph I. 1. 7: Stock markets, 2000-09 300 200 100 0 27. 07. 01 14. 05. 02 25. 02. 03 05. 12. 03 22. 09. 04 05. 07. 05 12. 04. 06 25. 1. 07 07. 11. 07 22. 08. 08 DJ EURO STOXX (lhs) Source: www. stoxx. com DJ Emerging Europe STOXX (rhs) Aside from the issue whether US monetary policy in the run up to the crisis was too loose relative to the buoyancy of economic activity, there is a broader issue as to whether monetary policy should lean against asset price growth so as to prevent bubble formation. Monetary policy could be blamed – at both sides of the Atlantic – for (4) See for empirical evidence confirming these two channels Berger and Hajes (2009). (5) See for empirical evidence Boone and Van den Noord (2008) and Dreger and Wolters (2009). 12 Part I Anatomy of the crisis cting too narrowly and not reacting sufficiently strongly to indications of growing financial vulnerability. The same holds true for fiscal policy, which may be too narrowly focused on the regular business cycle as opposed to the asset cycle (see Chapter III. 1). Stronger emphasis of macroeconomic policy making on macro-financial risk could thus provide stabilisation benefits. This might require explicit concerns for macro-financial stability to be included in central banks' mandates. Macro-prudential tools could potentially help tackle problems in financial markets and might help limit the need for very aggressive monetary policy reactions. 6 ) Buoyant financial conditions also had microeconomic roots and the list of contributing factors is long. The ‘originate and distribute' model, whereby loans were extended and subsequently packaged (‘securitised') and sold in the market, meant that the creditworthiness of the borrower was no longer assessed by the originator of the loan. Moreover, technological change allowed the development of new complex financial products backed by mortgage securities, and credit rating agencies often misjudged the risk associated with these new instruments and attributed unduly triple-A ratings. As a result, risk inherent to these products was underestimated which made them look more attractive for investors than warranted.Credit rating agencies were also susceptible to conflicts of interests as they help developi