Quantitative Easing After the Financial Crisis

Quantitative Easing After the Financial Crisis Jose Nunez The global financial crisis started in August 2007 and lasted to 2009, which was the collapse of the subprime mortgage market (lenders with higher interest rates demand, and borrowers that can repay their loans) that led to a huge amount of losses to financial institutions in that time. The crisis led to one of the worst markets in the past 50 years. The impact it had on the economy was severe, it lead to a downward growth for U.S. companies, and an increase of uncertainty for the U.S. economy. The causes of the 2007- 2009 financial crisis were: financial innovation in mortgage markets, agency problems in the mortgage markets, and the role of asymmetric information in the credit rating process. There weren’t as many innovations back then, so before the year 2000 only credit worthy borrowers could get mortgages unlike others that didn’t have good credit. After advances in technology and new statistical techniques, that led to better evaluations on credit risk for a new risky loan to be made. FICO was developed by the Fair Isaac Corporation, which just predicted the outcome of how likely it was for a borrower to default on their loans and not pay the loan back. By lowering the cost of transactions, newer technology was able to bundle smaller loans that were similar to mortgages into debt securities. With these factors the banks were able to give out subprime mortgages to borrowers with less than good credit scores. Also, there were agency problems in the market, the brokers who made the loans usually did not make an effort to see whether the people taking the loans could actually pay the loans back, in other words they just gave out the loans to almost complete strangers that they knew very little about and they did not have the same interest as the investors had; once the broker earned his or her commission from the loan he or she did not care about the whether the borrowers paid or did not pay the loan off. Credit rating agencies were also a factor because of their asymmetric information; they were telling clients how to structure financial instruments at the time they rated the products so different information was being passed from firms to the borrowers. The effects it had on the U.S. economy were; housing prices went down, many subprime borrowers were finding that their mortgages were going underwater meaning that the house value was falling below the amount of the mortgage. Many homeowners just walked away from their homes giving the keys back to the lenders because the prices were going down. The default on mortgages rose tremendously, which led to many foreclosures. Value of mortgages backed securities and CDOs went down as well, and left the value of those assets to banks and financial institutions. Many of the well-known firms from had to be sold off to other larger companies for less than what they once worth and others had to file for bankruptcy. With all the things that happen in 2007-2009 in the economy, the crisis did not lead to a depression because of the actions of the Federal Reserve and government bailouts of the financial institutions but many call it a â€Å"great recession† instead. The economic recovery has been slow because people are now scared to invest their money in the markets and do not what to take on other risks, jobs are going overseas, inflation is rising, and economies of other countries are going down as well. Michael Farr said in an article from the Huffington â€Å"Corporate managers are just doing what works. Following the financial crisis, investors are not in the mood to take big risks. They would rather have the certainty that comes with higher dividend payments and increased stock buybacks†. When the economy is about to slip into a recession or depression the government uses a tactic called quantitative easing. Quantitative easing is when the central bank makes purchases from the market to bring down the interest rates so more people can have money in their pockets to spend and invest in the market. Federal Reserve gives the financial institutions money so they can lend out to the consumers and increase liquidity. Some of the down sides of quantitative easing are that it can cause inflation to increase due to being a certain amount of goods that are being sold when the money supply of the consumers has increased, and another is that instead of the banks lending out the money that was meant to be loaned out to people or companies was being kept by the banks instead. This strategy of the government in our last financial crisis was not really affective because the banks kept the money for reserve instead of lending it out the people and companies to increase liquidity and s pending. Many articles have been saying that the government has ended QE but according to an article by Terry Burnham  on pbs.org argues, By all accounts, the  Federal Reserve ended its bond buying program, known as quantitative easing, at its policy meeting at the end of last month. Over six years, the central bank bought $4.5 trillion worth of mortgage-backed securities and Treasury bonds. But since the beginning of this year, the Fed has been gradually drawing down its purchases by $10 billion a month to now, zero. It’s not that simple, though, says economist  Terry Burnham. The Fed is continuing what he calls â€Å"Stealth QE,† or the purchase ofmorebonds with the interest the Fed earns on the bonds it has already purchased. In order to stop that, he writes, the Fed would need to shrink its balance sheet by the amount of interest that it earns. Deleverage is when banks start to lose capital so they fall back on loaning money to others. They try to reduce the debt they have by selling their assets. Losses on their loans they gave out begin to drop in value which drops the net worth of the banks and financial institutions. Tejvan Pettinger said â€Å"To reduce debts people sell off assets to gain liquidity. Selling assets causes fall in the price of shares and house prices. Falling house prices cause lower consumer spending, negative equity and more losses for banks.† With less capital the banks and financial institutions have, the more risky they look towards others causing lender-savers to take out their funds. The decrease in funds will mean fewer loans to produce investments. Deleverage hurts the economy for those reasons. Globalization is when different countries trade with each other things such as products, ideas, aspects of their cultures, and other subject matters. Globalization has been increasing and has been getting easier due to the fact of newer and more advanced technology that has been invented till today to help us communicate with each other and transport product from one place to another. With globalization the cost of goods that we are buying that are coming from different parts of the world are low, compared to if we were to make them here because, it cost less for others to make it in their own country. Also the variety of goods within a country will increase because maybe we can’t produce certain goods here like other countries are able too. With globalization we have free trade, promoting jobs, keeping cost of goods low in the economy, and it’s making business more competitive thus stimulating the economy. Globalization also has a negative impact on the economy, that i s jobs are being moved over seas and outsourcing jobs to other places in the worked. The rich will continue to get richer and people looking for jobs will have to take on new jobs for less money because companies are moving out of the country. Both inflation and deflation can have a negative impact in the economy if inflation and deflation rises are severe. Inflation means the prices of goods and services are going up, lowering the purchasing power of the people and lowering the value of the dollar. A certain amount of inflation can also mean that we have a healthy economy because prices of goods and services will continue to go up. Deflation is the opposite of inflation, so instead of the rising prices of goods and services the prices are falling. When deflation is happening people tend to save more money and spend less because the value of the dollar is increasing. By not spending more the demand for goods and services drops and unemployment increases because not many people want to buy things. Deflation can be caused by a decrease in spending by the government, and people. There are also pages that say QE can also lead to deflation. The Wall Street Journal said â€Å"Nearly a decade after Japan’s central bank fi rst experimented with the policy, the country remains mired in deflation, a general decline in wages and prices that has crippled its economy.† Moderate levels of both inflation and deflation are normal have little effect on the economy. Works Cited Burnham, Terry. â€Å"So you thought quantitative easing was over? Think again† PBS News Hour. 24 November 2014. Farr, Michael. â€Å"What Is Causing the Drag?† The Huffington Post, 21 November 2014. Mishkin, S. Frederic. â€Å"The Economics of Money, Banking, and Financial Markets Tenth Edition.† Colombia College. Pearson, 2013. Print. Pettinger, Tejvan. â€Å"Paradox of Deleveraging.† Economics Help, 6 May 2009. WashingtonsBlog. â€Å"Why QE May Lead to DEFLATION In the Long Run.† Washington’s Blog. 18 November 2014.

Internet working Essay

Today, the Internet and World Wide Web (WWW) are familiar terms to millions of people all over the world. Many people depend on applications enabled by the Internet, such as electronic mail and Web access. In addition, the increase in popularity of business applications places additional emphasis on the internet. The Transmission Control Protocol / Internet Protocol (TCP/IP) protocol suite is the engine for the Internet and networks worldwide. Its simplicity and power has lead to be the single network protocol of choice in the world today so the world has become a global village where the people live their life on the Internet. It has no boundaries or barriers, It is open to all who have access to Internet using computer. The e-commerce and online business has really facilitated the people nowadays. The main design goal of TCP/IP was to build an interconnection of networks, referred to as an internetwork, or internet, that provided universal communication services over heterogeneous physical networks. The clear benefit of such an internetwork is the enabling of communication between hosts on different networks, perhaps separated by a large geographical area. 1. Introduction. The internet has been a useful source of information for the public and made things possible which were impossible in the past . Such as emailing has accelerated the process of Mailing and it hardly takes seconds to reach in any part of the world as the Client are connected to Server and the Server connects the clients to world wide web . it is like cob web which keeps connected to all users at the same time . The Internet’s growth has become explosive and it seems impossible to escape the bombardment of www.com’s seen constantly on television, heard on radio, and seen in magazines. Because the Internet has become such a large part of our lives, a good understanding is needed to use this new tool most effectively. This whitepaper explains the underlying infrastructure and technologies that make the Internet work. It does not go into great depth, but covers enough of each area to give a basic understanding of the concepts involved. For any unanswered questions, a list of resources is provided at the end of the paper. Any comments, suggestions, questions, etc.are encouraged and may be directed to the author at the email address given above. The Internet Frame Work As the Internet is a global network of computers each computer connected to the Internet must have a unique address. Internet addresses are in the form nnn. nnn. nnn. nnn where nun must be a number from 0 – 255. This address is known as an IP address. (IP stands for Internet Protocol; more on this later. ) The picture below illustrates two computers connected to the Internet; your computer with IP address 1. 2. 3. 4 and another computer with IP address 5. 6. 7. 8. The Internet is represented as an abstract object in-between. (As this paper progresses, the Internet portion of Diagram 1 will be explained and redrawn several times as the details of the Internet are exposed. ) Diagram 1. a These IP addresses are actually divided into different classes, where each class has it’s own range and criteria to define the number of hosts and networks. These types of information depends on your network size, criteria and purpose. In the Diagram 1. b, you can find the detail information related with the IP address classes. Diagram 1. b. The decimal representation of Internet addresses If you connect to the Internet through an Internet Service Provider (ISP), you are usually assigned a temporary IP address for the duration of your dial-in session. If you connect to the Internet from a local area network (LAN) your computer might have a permanent IP address or it might obtain a temporary one from a DHCP (Dynamic Host Configuration Protocol) server. In any case, if you are connected to the Internet, your computer has a unique IP address. Hierarchical Versus Flat Address Space Internetwork address space typically takes one of two forms: hierarchical address space or flat address space. A hierarchical address space is organized into numerous subgroups, each successively narrowing an address until it points to a single device (in a manner similar to street addresses). A flat address space is organized into a single group (in a manner similar to U. S. Social Security numbers). Hierarchical addressing offers certain advantages over flat-addressing schemes. Address sorting and recall is simplified through the use of comparison operations. Ireland, for example, in a street address eliminates any other country as a possible location. Fig. 1. 1. Hierarchical and flat address spaces differ in comparison operations. Fig: 1. 2 Source: TCP/IP Illustrated, Volume 1, The Protocols. W. Richard Stevens. Addison-Wesley, Reading, Massachusetts. 1994. The Ping Program If any body who is using Microsoft Windows or a flavor of UNIX and have a connection to the Internet, there is a handy program to see if a computer on the Internet is alive. It is called ping, probably after the sound made by older submarine sonar systems. 1 if you are using Windows, start a command prompt window. If you are using a flavor of UNIX, get to a command prompt. Type ping www. yahoo. com. The ping program will send a ‘ping’ (actually an ICMP (Internet Control Message Protocol) echo request message) to the named computer. The pinged computer will respond with a reply. The ping program will count the time expired until the reply comes back (if it does). Also, if you enter a domain name (i. e. www. yahoo. com) instead of an IP address, ping will resolve the domain name and display the computer’s IP address. More on domain names and address resolution later. Protocol Stacks and Packets So your computer is connected to the Internet and has a unique address. How does it ‘talk’ to other computers connected to the Internet? An example should serve here: Let us say your IP address is 1. 2. 3. 4 and you want to send a message to the computer 5. 6. 7. 8. The message you want to send is â€Å"Hello computer 5. 6. 7. 8! † Obviously, the message must be transmitted over whatever kind of wire connects your computer to the Internet. Let us say you have dialed into your ISP from home and the message must be transmitted over the phone line. Therefore the message must be translated from alphabetic text into electronic signals, transmitted over the Internet, and then translated back into alphabetic text. Now there is the question that how is this accomplished? Through the use of a protocol stack. Every computer needs one to communicate on the Internet and it is usually built into the computer’s operating system (i. e. Windows, UNIX, etc. ). The protocol stack used on the Internet is referred to as the TCP/IP protocol stack because of the two major communication protocols used. The TCP/IP stack looks like this: Protocol Layer: Application Protocols Layer Protocols specific to applications such as WWW, e-mail, FTP, etc. Transmission Control Protocol Layer TCP directs packets to a specific application on a computer using a port number. Internet Protocol Layer. IP directs packets to a specific computer using an IP address. Hardware Layer Converts binary packet data to network signals and back. (E. g. Ethernet network card, modem for phone lines, etc. ) If we were to follow the path that the message â€Å"Hello computer 5. 6. 7. 8! † took from our computer to the computer with IP address 5. 6. 7. 8, it would happen something like this: Diagram 2 The message would start at the top of the protocol stack on your computer and work its way downward. If the message to be sent is long, each stack layer that the message passes through may break the message up into smaller chunks of data. This is because data sent over the Internet (and most computer networks) are sent in manageable chunks. On the Internet, these chunks of data are known as packets. The packets would go through the Application Layer and continue to the TCP layer. Each packet is assigned a port number. Ports will be explained later, but suffice to say that many programs may be using the TCP/IP stack and sending messages. We need to know which program on the destination computer needs to receive the message because it will be listening on a specific port. After going through the TCP layer, the packets proceed to the IP layer. This is where each packet receives its destination address, 5. 6. 7. 8. Now that our message packets have a port number and an IP address, they are ready to be sent over the Internet. The hardware layer takes care of turning our packets containing the alphabetic text of our message into electronic signals and transmitting them over the phone line. On the other end of the phone line your ISP has a direct connection to the Internet. The ISPs router examines the destination address in each packet and determines where to send it. Often, the packet’s next stop is another router. More on routers and Internet infrastructure later. Eventually, the packets reach computer 5. 6. 7. 8. Here, the packets start at the bottom of the destination computer’s TCP/IP stack and work upwards. As the packets go upwards through the stack, all routing data that the sending computer’s stack added (such as IP address and port number) is stripped from the packets. When the data reaches the top of the stack, the packets have been re-assembled into their original form, â€Å"Hello computer 5. 6. 7. 8! † Networking Infrastructure: So now you know how packets travel from one computer to another over the Internet. But what is in-between? What actually makes up the Internet? Let us look at another diagram: Diagram 3. 1 Here we see Diagram 1 redrawn with more detail. The physical connection through the phone network to the Internet Service Provider might have been easy to guess, but beyond that might bear some explanation. The ISP maintains a pool of modems for their dial-in customers. This is managed by some form of computer (usually a dedicated one) which controls data flow from the modem pool to a backbone or dedicated line router. This setup may be referred to as a port server, as it ‘serves’ access to the network. Billing and usage information is usually collected here as well. After your packets traverse the phone network and your ISP’s local equipment, they are routed onto the ISP’s backbone or a backbone the ISP buys bandwidth from. From here the packets will usually journey through several routers and over several backbones, dedicated lines, and other networks until they find their destination, the computer with address 5. 6. 7. 8. But wouldn’t it would be nice if we knew the exact route our packets were taking over the Internet? As it turns out, there is a way†¦ The Trace route Program: If you’re using Microsoft Windows or a flavor of UNIX and have a connection to the Internet, here is another handy Internet program. This one is called trace route and it shows the path your packets are taking to a given Internet destination. Like ping, you must use trace route from a command prompt. In Windows, use tracer www. yahoo. com. From a UNIX prompt, type trace route www. yahoo. com. Like ping, you may also enter IP addresses instead of domain names. Trace route will print out a list of all the routers, computers, and any other Internet entities that your packets must travel through to get to their destination. If you use trace route, you’ll notice that your packets must travel through many things to get to their destination. Most have long names such as sjc2-core1-h2-0-0. atlas. digex. net and fddi0-0. br4. SJC. globalcenter. net. These are Internet routers that decide where to send your packets. Several routers are shown in Diagram 3. 1, but only a few. Diagram 3. 1 is meant to show a simple network structure. The Internet is much more complex.

The Rainforest

Rainforest's are a tropical forest that are found around the earths equator. The rainforest is found in Idonesia, South America and west and central Africa. The average temperatures are about 25-30 degrees. The rainforests are important because they provide homes for animals, plants and human, they also stabilise the climate by absorbing carbon dioxide. However in the 21st century they are under threat because of logging for timber, mining, road building, pasture for cattle ranching, crops and settlements. This essay will be researching 4 statements on the valuable resources that the rainforest offers and if sustainable devlopment can truly be introduced in the rainforest. â€Å"The rainforest is a valuable resource and its preservation is important to us all† The rainforest provides homes for about 70 million people, it also provides habitats for over 50% of the earths species of plants and animals. It also contains many plants which could provide new drugs and medicines in the furture e.g. Curae is a poison on Waorani hunting arrows which we also use as a relaxant in modern surgery. The rainforest also stablise's the climate by absorbing carbon dioxide this also helps reduce the rate of global warming and they reduce soil erosion by intercepting the rainfall and also keep water courses free from sediment. If deforestation was to continue millions of animals and plants would lose their habitats and possibly become extinct. Thousands of indigenous people of the rainforest would lose their homes and their way of life. We would also lose many cures for dieases and medicines that we could discover in the furture. Lots of damage to the climate and the enviorment could also mean that global warming would increase at a quicker rate. â€Å"The indigneous people of the rainforest respond positively to the challenges of their natural enviorment and act as stewards of the forest† Their are about 250 million indigenous people and about 5 thousand tribes, two of the tribes are Maorani and Kayapo. They live of the forest by using it to make food medicines and products to sell to make money such as brazil nuts. The indigenous people should be stewards of the forest because they live there, it is their home and they lived there for thousands of years which gives them historical rights to the Rainforest, they also want to protect it from damage and the dieases people have brought in. â€Å"There are some people who wish to exploit the rainforest. Explotation of the forest has positive and negative effects.† Explotation of the rainforest can be negative and positive. Cattle ranching is positive because it helps feed the countrys own people and they can sell it to other countrys to make money, the negative side of it is the grass that grows in rainforest area is of poor quality and cattle do not thrive, also milk yields tend to be low and after a few years the land is no good. Logging is good because it gets us useful materials such as mahogany, sapele and lauan, which grow no where else in the world, the negative of this is one hactare of rainforest is cut down just to log one mahogany tree. The positive of mining is that we get many good and useful metals such as gold, silver, aluminium, iron ore, copper and zinc. The negative of it is many trees get chopped down and mercury which is used in gold mining causes contamination. Road building does not cause much deforestation but the settlements in its way do get destroyed, it does do a lot of good it allows people to get in and out of the forest easily and quickly. Oil exploration does alot of damage to the forest, many trees have to be chopped down for the pipe lines and disturbs the wild life. The toxic chemicals do alot of contamination to the rivers and soil. the positive of it is oil is a very useful resource. Farming is one of the largest causes of forest loss. Huge plantations of banana and African oil palm now stand where rainforest once did, often farmers form other places who do not the farming techniques needed for forest enviorments, which means the soil soon becomes depleted, requiring further forest to be cleared. Hydro-electric dams are enviormentally friendly but to build them a lot of forest is destroyed. The positive of all these things is that it means money for the devloping countries and also opens up lots of jobs for the local people. The negative of these things is that they all do at least some damage to the rainforest. â€Å"A balance can be achieved between sustained devlopment and conservation of the rainforest† National park areas would make money from visiting tourists and would protect an area of the rainforest. Brazil nut trade is a good way for the indigenous people to make money, they pick them with out harming the trees and then turn them into an oil, which they sell to the body shop and the body shop turns the oil into a conditioner. Rubber tapping is where a liquid called latex is extrated from plantation trees, the latex is then processed to make a solid material called rubber, it is then sold and exported to other countrys. Enviormentally friendly logging is where only the trees that they want are cut down with out damaging the surrounding enviornment. The definition of eco tourism is â€Å"responsible travel to natural areas that conserves the environment and improves the well-being of local people.† there are seven principles to this: * Minimize impact * Build environmental and cultural awareness and respect * Provide positive experiences for both visitors and hosts * Provide direct financial benefits for conservation * Provide financial benefits and empowerment for local people * Raise sensitivity to host countries' political, environmental, and social climate * Support international human rights and labor agreements Eco tourism is something everybody can participate in. Bibliography Bunce-Contexts Arnell-Geography Worksheets given to me by teacher

Definition and Examples of Primary Sources in Research

In research  activities,  a primary source refers to information collected firsthand from such sources as historical documents, literary texts, artistic works, experiments, surveys, and interviews. It is also called primary data and is very different than a secondary source. The Library of Congress defines primary sources as actual records that have survived from the past, such as letters, photographs, or articles of clothing, in contrast to secondary sources, which are accounts of the past created by people writing about events sometime after they happened   Examples of Primary Sources [Primary sources] provide the raw data that you use first to test the working hypothesis and then as evidence to support your claim. In history, for example, primary sources include documents from the period or person you are studying, objects, maps, even clothing; in literature or philosophy, your main primary source is usually the text you are studying, and your data are the words on the page. In such fields, you can rarely write a research paper without using primary sources. (Wayne C. Booth et al. The Craft of Research. University of Chicago Press, 2008) Chief Characteristics The chief characteristics of  primary sources are: (1) being present during the experience, event or time and (2) consequently being close in time with the data. This does not mean that data from  primary sources are  always the best data. . . . Data from human sources are subject to many types of distortion because of such factors as selective recall, selective perceptions, and purposeful or nonpurposeful omission or addition of information. Thus data from primary sources are not necessarily accurate data even though they come from firsthand sources. (Natalie L. Sproull,  Handbook of Research Methods: A Guide for Practitioners and Students in the Social Sciences, 2nd ed. Scarecrow Press, 2002) Methods of Collecting Primary Data If the information you need is unavailable or hasnt yet been gathered, youll have to gather it yourself. Four basic methods of collecting primary data are field research, content analysis, survey research, and experiments. Other methods of gathering primary data include historical research, analysis of existing statistics, . . . and various forms of direct observation. (H. Dan OHair et al. Business Communication: A Framework for Success. South-Western, 2001) Secondary Sources and Their Bibliographies By identifying basic facts, such as year of construction, secondary sources can point the researcher to the  best primary sources, such as the right tax books. In addition, a careful reading of the bibliography in a secondary source can reveal important sources the researcher might otherwise have missed. (Alison Hoagland and Gray Fitzsimmons, History.  Recording Historic Structures, 2nd. ed., edited by John A. Burns. Wiley, 2004) Original Sources The distinction also needs to be made between primary and original sources. It is by no means always necessary, and all too often it is not possible, to deal only with original sources. Printed copies of original sources, provided they have been undertaken with scrupulous care (such as the published letters of the Founding Fathers), are usually an acceptable substitute for their handwritten originals. (E. J. Monaghan and D. K. Hartman, Undertaking Historical Research in Literacy, in Handbook of Reading Research, ed. by P. D. Pearson et al. Erlbaum, 2000) Finding and Accessing Primary Sources This one is entirely dependent on the assignment given and your local resources; but when included, always emphasize quality.  . . . Keep in mind that there are many institutions such as the Library of Congress that make primary source material freely available on the Web.  (Joel D. Kitchens, Librarians, Historians, and New Opportunities for Discourse. ABC-CLIO, 2012)