The most sensational two days in Wall Street’s history are, on July 28, 2008 when Merrill Lynch agreed to sell itself to Bank of America for roughly $50 billion to reduce increasing financial crisis and on September 15, 2008 when another famous securities firm, Lehman Brothers, filed for Chapter 11 bankruptcy protection. These incidents affected the broader economy, which has been declining firmly as the financial crisis has aggravated over the last year, this led to the increase of unemployment and in turn slowed down nation’s growth rate. They ended up a weekend with distress and with continuous discussions, as Wall Street bankers gathered in meetings at the order of Bush administration officials to take decisions to avoid drop in the markets rising from a crisis of confidence. Because of the crisis, US government had requested the remaining two major investment banks Goldman Sachs and Morgan Stanley to convert themselves to be commercial banks. The Bush administration rushed to pass a $700 billion rescue of financial firms. The consequences of Merrill Lynch and Lehman Brothers would not seem to be connected, Merrill has the nation’s largest brokerage force and its name is famous in towns across America, while Lehman’s main customers are big institutions. But during the credit prosperity both firms piled into insecure or sensitive real estate and ended up severely damaged, with inadequate capital and toxic assets.
November 23, 2009
Fall of Wall Street had Huge Impact on Economy
Bankruptcy of Lehman Brothers is recorded as the largest one
On September 15, 2008, Lehman Brothers filed for Chapter 11 bankruptcy protection. The bankruptcy of Lehman Brothers is considered as the largest bankruptcy filing in U.S. history with Lehman holding over 600 billion dollars of property. Lehman experienced an unusual loss due to the continuous real estate and financial crisis. The impact of Lehman’s bankruptcy is severe. It is expected to cause some reduction in the price of commercial real estate. Lehman experienced pressure to sell securities in commercial real estate to liquidate (to get cash) its properties. Several money funds or mutual funds and institutional cash funds had done serious hazard to Lehman as there is fall in the share value to below $1 for the banks like Bank of New York Mellon and the Primary Reserve Fund which are involved in institutional cash fund and money-market fund respectively. Apartment-building investors are also expected to experience pressure to sell properties, as Lehman discharges its debt and equity of $22 billion. The degraded moves which transformed the outlook of American finance marked the restless chapter in the year 2008. The once-proud financial institutions had been collapsed, as a result, loss of hundreds of billions of dollars is occurred because of bad mortgage finance and real estate investments.
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November 17, 2009
Rise in Food Prices Created imbalance in Poor and Developed Countries
The sudden increase in food prices in 2008 created global crisis causing political and economical imbalance and social disturbance in both poor and developed nations. The short term causes for the rise of food prices are untimely droughts in grain-producing nations, increase in oil prices which led to increase in costs of fertilizers, food transport, and industrial agriculture or modernized agriculture, increasing use of bio-fuels in several countries that is, diverting of farm lands to produce fuel, increase in demand for different diet products, decrease in world-food stock. The long term reasons for rise in food prices are fundamental changes in trade and agricultural production, risky marketing of goods, and climate change. Major rice exporters, such as China, Brazil, India, Indonesia, Vietnam, Cambodia and Egypt, have imposed strict export bans on rice in order to secure food remains for their internal populations. The emergency steps that should be taken to come out of this crisis is to improve productivity in the commercial food crop sector, in terms of production, processing and marketing or else people will suffer from lack of nutrition. Agricultural development should be given top most importance on the global agenda. Governments should allow farmers to access little more fertilizer, phytosanitary products, good roads, processing facilities, credit, advisory services, insurance and information on prices, cut police taxes on roads and the cost of diesel.
iPhone Created Revolution in use of Mobile phones
Apple has revolutionized the way to approach mobile phones. Apple has inserted application and design into a single device. Sales of iphones reached half a billion turnover after its release in span of two months. It became so much popular because of its features. It is having a serious impact on the mobile and computing industries. Apple iphone is simply a greatest smart phone ever developed, as it is very easy to use. It became standard for all future cell phone developments. The touchscreen technology used in this is marvelous. Apple’s chief executive, Steve Jobs, launched iphone and called it as “magic”, “super-smart”, super-hyped device, which provides more ordinary functions of the traditional phone. The iPhone uses Apple’s OSX operating system and enables users to watch films, download songs, store photos, as well as provides facilities like emailing, seeing calendar, and contacts. The new iPhone 3G was introduced on June 9, 2008 combining all the advanced features of iPhone with 3G networking that is very fast. It is made available in 70 countries. As Apple, iphone has good rechargeable battery, which lasts for long time, as it looks very stylish and design is unique, and available in good colors, they became very popular.
Financial Crisis is supposed to be recovered by 2011
Popular economists have declared the financial crisis of 2007–2009, the worst financial crisis since the one pertained to the Great Depression of the 1930s. It is responsible for the failure of important businesses, downfall in consumer wealth that is evaluated in the trillions of U.S. Dollars, acquisition of important financial commitments by government, and critical decline in economic activity. There are many causes for the economic crisis with varying consequence. With the increase in loan losses and the fall of Lehman Brothers on September 15, 2008, a big alarm broke out on the inter-bank loan market. The banks of United States and Europe experienced huge losses, faced bankruptcy and this resulted in massive public financial assistance. The effects of global recession are, sudden drop in the international trade, increasing unemployment and increase in prices of goods. Several economists have supposed that recovery from recession may not appear until 2011. Growth in financial or material demand, improper regulation and administration and increasing irregularity contributed to the economic crisis which in turn led to excessive increase of resource prices. It had a severe impact on the world. There is drop in the world stock markets, large financial institutions have collapsed, and even the wealthiest nations had introduced rescue packages to provide guarantee to their financial systems.