Ethics Wall Mart Essay

1. What financial impact do you think the lawsuit could potentially have on Wal-Mart? Ans. Wal-Mart is the biggest or largest retail store in the world. Naturally, their earning and employees are also more compared to other corporate. The lawsuit against the company was not the company needed when they were facing other legal issues such as the child labor and employment of illegal immigrants. Six women who say women were treated lower than the male even if they acquired equal posts; qualification and experience filed the lawsuit. The six women who filed the case against Wal-Mart are not only asking the company pay for the unfair deed but also asking them to pay back and compensate for all 1.6 female employees against whom Wal-Mart discriminated. This would cost the company a fortune because these 1.6 female workers were entitled to promotions, salary increment, trainings and other such things. To compensate or reimburse that much amount for that much workers would surely have a huge and major impact on the company’s financial position. The other way in which this lawsuit could affect the company’s financial position would be through the transaction or sales. Other thing is the reputation and goodwill of the company. 2. What are the major moral complaints of the females suing Wal-Mart? Do you believe these moral complaints are justified? Why? Ans. Major Complaints: Difference in the promotion scheme between male and female employees, The lower payment of wages and salaries to female employees even they were at same level with male employees, Unequal distribution of management training among the male and female employees, Male allotted a better job assignment compared to women even they were equally qualified, ranked and experienced. Yes, I believe these complaints are justifiable because we can see from every point that women were not treated fairly and equally. It wasn’t that women lacked in anything or that they were unwilling to work, it was because they were woman. We can very well compete with men and in some cases may even prove better than them but it is act like this what is pulling the power of women down. The six women who sued Wal-Mart didn’t sue for nothing; they had physical proof and evidences of the discrimination laid upon them. Some of the evidences were found in the employees’ records where by Richard Drogin, a statistical expert found out that employee at Wal-Mart was divided into two main groups, hourly employees who occupied the lower levels and salaried managers who occupied the higher levels. Compensation increases from one level to the next. In 2001, salaried managers made about $50,000 a year while hourly employees made $18,000. Drogin found out that not only 65% of hourly employees were women but also 33% of salaried managers constituted women. So at both the point women earned less than man. When we also look upon the experience level, an average woman was far more experienced than an average man because women worked or stuck there for longer than men. Women despite having other responsibilities like raising a kid or managing the home, they dedicate more where they work that is why they have less turnover rates. So this adds up to another reason why the lawsuit was appropriate or justifiable. 3. What factors do you think might account for the discrepancies the Drogin report uncovered? Ans. The company took the women employees for granted. At first the founder Sam Walton wanted equality but after passing away the core value was lost. The management took the women employees for granted so didn’t feel the need to promote them. 4. What, if anything, do you think Wal-Mart should do to correct these discrepancies? Should the company institute an â€Å"affirmative action† promotion program for female employees? If so, what should this program be like? Ans. 1 ) Work Discrimination Here I am talking about the actual work or labor work. Women at Wal-Mart seem to be working at par with men but still they are not paid at par. To compensate for the women’s losses they could reduce their work time or they could allocate women to areas where minimum energy is required. For example they could work at displaying of items, as a cashier, and such places where not much of hard labor is required. 2) Facility such as Day Care Wal-Mart is one of the biggest retail all over the world and they have lots of property they own. If they established some Day care centre for their employees especially the female employees then those employees who have kids can drop their kids in those centre and work carefree in the store. The centre could be near the store and they could also charge some amount as charge but this could not only benefit the workers but also the company for could avoid unnecessary absenteeism 3) Women’s Association An association called the Women’s Association can be formed in every retail store so that female employees can come together to discuss their issues and forward suggestions and feedback. Such programs do not have to disturb their normal work time, it could be conducted once in every month or whenever major issues arise. 4) Equal Respect At Wal-Mart’s women were mostly looked down and not given the respect they deserve. A woman may be somebody’s mother, wife or sister. Men at Wal-Mart fail to see that and they criticized women of their looks, their past, future and their purpose in life. So therefore women should be given respect and treated equally. Yes definitely the company should institute an â€Å"affirmative action† in order to promote program for the female employees. From my point of view, since the company is based in the United States they should associate their program with the Statue of Liberty . That statue denotes the power of women and it signifies the right to freedom for all the U.S citizens. The title or the main theme of such program could be â€Å"Liberty for Women†   . Whereby they could stress the freedom to speak, advance and employment especially for the female workers. They could relate women to some famous figure such as the Mother Teresa or simply their own mom. On this particular day they could give all the female employees a one-day holiday and let them embrace themselves. The company should however grant monetary compensation for this day. This way women employee could proudly say they work at Wal-Mart and dedicate completely to their work and avoid complaining. Some of the points they could keep in mind while pursuing such program could be as follows: * The right and responsibilities of women * The importance of women * The success of women till now * The potential and ability of women * The sacrifices women make in every aspect of life * And maybe life without women 5. Do you think the women deserve to win the lawsuit? Ans. Yes I feel that they should win the lawsuit. The grounds on which they are fighting is right. As everyone is equal in today’s world, the demand for female employees to have their salaries equal to that of men is justified. The company can frame new policies for salary, wages and promotion, which doesn’t discriminate men and women employees. So in the future both genders have equal opportunities and are paid equally.

Changing perspectives on Othello

Depending on cultural differences and upbringing a text will have different impacts on the audience. Like any great piece of literature, William Shakespearean plays deal with timeless concerns that have the ability to be adapted and presented to remain relevant for modern audiences. Shakespearean Othello Is a Jacobean play written In a time of racist attitudes towards foreigners and sexist attitudes to women. This revenge tragedy follows the protagonist Othello, a black army general who Is manipulated by his ensign Ago.For me the way that race and color is presented in entrant to the stereotypical portrayal highlights the prejudice apparent in not only the Jacobean society but our own as well. This is portrayed through Sago's racist depiction of Othello and the opposing imagery of black and white. The play can also be viewed as having a strong feminist theme. The two heroines are portrayed as capable and steadfast individuals. Both women are the only characters that remain justified throughout in their loyalty to their husbands. My Interest In Othello Is drawn to the way that race and color is presented.Shakespeare was revolutionary in his casting of a black man to be the tragic hero and white man to be the villain. In Jacobean society and even In many societies toddy, the audience would of expected to see a black man as the felon. The setting In Cyprus Is dramatically significant as it is isolated in the wild frontiers of war. Away from the structured society of Venice social norms and hierarchy are not relevant allowing Shakespeare to place a Moor in a position of authority. This daring theme of a black man in power has remained controversial ever since and it wasn't until 1833 that a black man actually played the part.The issue of mixed race relationships was specially an issue in segregated America up until the twentieth century with Othello being played with blackjack till 1940. The unnatural war setting also enables Sago's passion to be unmasked, unregula ted by the usual constraints of society. In the exposition our first Impression of this revolutionary character Is from Ago when he disrespectfully describes Othello as â€Å"the devil†, Glenn the Impression of a beastly, barbaric man. This Is quickly contradicted when the audience Is presented with the confident and calm Othello who is clearly respected by his peers and is able to speak with grace.Othello is seen as â€Å"far more fair than black†, challenging the prejudice of the audience by demonstrating the opposite to what they expect. On the other hand Ago is a â€Å"hellish villain† portraying the stereotypical qualities that a Jacobean audience would expect from a black man. Shakespeare creates dramatic effect and reinforces the audience's perceptions of evil being dark through the opposing imagery of black verses white. Lags evil work is performed In the duologue's with Othello, which always occur at night. It is In this darkness that Othello Jealousy I s stirred and he Is taken away from the pure and white Desman.Ago Is using Adhesion's goodness, which Is portrayed as light, to be the evil and darkness that destroys them all. Unmasking himself In a soliloquy I turn her virtue into pitch, That shall enmesh them all†. This reinforces the continuing theme of light opposing dark. Lags inherent racism takes its toll on Othello and gradually he acts according to this stereotype. As the play reaches the catastrophe the noble language of Othello reverts to that of the swearing Ago. Othello becomes like his enemy, a destructive avenger. Evil has won but has to triumphed as Othello finally recognizes Lags black heart, â€Å"l†¦ Emend that deem- devil why he has thus ensnared my soul†. The struggle between light and dark, despite the tragic catastrophe, resolves and light prevails. A common feminist valuation of the play focuses on how the play portrays the strength of women. In the dominant patriarchy of Jacobean culture w omen were not free to make their own decisions. Desman is portrayed as a strong heroine with an uncommon verbal dexterity, not normally portrayed in Jacobean plays. She asserts her independence and challenges the patriarchy by scandalously eloping withOthello. Her father Abrogation is quick to pass Judgment and disown his daughter as â€Å"dead? † â€Å"Ay to me! † even before he has even seen her. A Jacobean audience would have understood the father's treatment of his daughter whereas viewers today would see this as an inherently sexist act. Ago presents the misogynistic view that a Jacobean audience would relate to, believing that a women is only meant to enhance a man's image and bring children into the would. â€Å"she that was ever fair, and never proud Had tongue at will, and yet never loud†¦ Though Sago's beliefs are extreme they represent society's expectation of the role of omen in contrast to the actions of the strong women in the play. The strength of these women can be seen through the solidity of both wives loyalty to their husbands. In the two women's duologue they talk of adultery â€Å"l would not do such a thing†¦ But for the whole world†. The only reason that they would sleep with another man would be if they were given the world so that their husbands could rule it. Adhesion's strength also amplified by the way that the play is structured.Her purity and character is Juxtaposed against how easily Othello fell under Lags malignant manipulation. She remains faithful to Othello till her last breath, not blaming her husband for her murder but â€Å"l myself†. Even though Emilie holds a very cynical view of how men portray her, most likely from her experience with Ago, â€Å"they are all but stomachs; and we all but food†. She also remains loyal to her husband stealing the handkerchief â€Å"but to please his fantasy†. Although both women are murdered and the masculine power is restored the miso gynistic men do not triumph. It is only the women who remain Justified.In conclusion there are as many views of Othello as there are responders. For me the play highlights the way that a black man is portrayed in society throughout the ages. I see this through setting, dramatic structure and the opposing imagery of light verses dark. Another common interpretation of the play is the way that the play presents women. Shakespeare creates strong, individual women who are loyal and stable throughout. Their strength is emphasized through Juxtaposition and metaphor. Like would have been revolutionary for a Jacobean audience but sadly they are still relevant today in a world still fighting for social Justice.

Profile of Top 5 CEO in the Philippines Essay

1.- Data show that 49-year-old Federico Lopez earns the most both in terms of monthly salary and total compensation in 2011. In the 30-company PSEi list, Lopez is head of two firms: First Gen Corporation (FGEN) and Energy Development Corporation (EDC). As Chairman and CEO of FGEN, his basic monthly salary is around P1.79 million. Yup, that’s P1.79 million basic salary per month. He receives another P1.19 million per month as bonus and additional compensation. All in all, he gets more than P3 million every month as FGEN’s chief executive. The same position in EDC gives him an additional P1.4 million every month. Considering only these two companies, Lopez earns roughly P4.4 million monthly — more than any other CEO on the list. – Federico Rufino Lopez is the incumbent Chairman and Chief Executive Officer of the publicly-listed Energy Development Corporation. He also heads the First Philippine Holdings Corporation and First Generation Corporation as their Chief Executive Officer. Lopez serves as Director of other Lopez-owned companies including ABS-CBN, Lopez Holdings Corporation (formerly Benpres Corporation), and First Private Power Corporation. – Lopez serves as the Chairman and CEO of Energy Development Corporation. Within the board, he serves as Chairman of Nominations and Compensation Committee, Chairman of Corporate Social Responsibility Committee and Member of Operations Committee. He has been a Board Member since the company’s privatization in 2007. – Lopez serves as the Chairman and CEO of Energy Development Corporation. Within the board, he serves as Chairman of Nominations and Compensation Committee, Chairman of Corporate Social Responsibility Committee and Member of Operations Committee. He has been a Board Member since the company’s privatization in 2007. – Prior to that, he served Vice President of First Philippine Holdings Corporation in September 1992, and oversaw the development, financing and implementation of its energy-related projects. He then served as the Assistant Treasurer in 1993. – At present, he is also the Chairman and CEO of First Gen Corporation and First Philippine Holdings Corporation (FPHC). He is also a director of ABS-CBN, First Private Power Corp., and Bauang Private Power Corp. He also serves as director, President and CEO of FG Bukidnon Power Corp., First Gen Hydro Power Corp., First Gen Energy Solutions, Inc., Red Vulcan Holdings Corp., Prime Terracota Holdings Corp., First Gas Holdings Corp., First Gas Power Corp., FGP Corp., Unified Holdings Corp., First NatGas Power Corp., and First Gas Pipeline Corp. – Lopez has been a member of the Energy Task Force since 1993 promoting market reforms in the power industry. He is also an environmentalist, serving as the President of the First Philippine Conservation, Inc. and a Director of Conservation International. 2. The sixth richest Filipino, Jaime Augusto Zobel de Ayala, is the second-highest paid CEO on the list. As Chairman and CEO of the conglomerate Ayala Corporation, he earns more than P2.42 million total compensation every month, inclusive of a monthly basic salary of P1.66 million. – Jaime Augusto Zobel de Ayala (born 1959) is a Filipino businessman. He currently serves as chairman and chief executive officerof the Ayala Corporation. His brother, Fernando Zobel de Ayala, is president of the corporation, while his father, Jaime Zobel de Ayala, was president until 1994 and currently holds the title of chairman emeritus. -In addition to his position in the Ayala Corporation, Mr. Zobel is chairman of the Board of Directors of Globe Telecom, Bank of the Philippine Islands, and Integrated Microelectronics Inc. (IMI); vice chairman of the Board of Directors and member of the Executive Committee of Ayala Land, Inc. (ALI); vice chairman of Manila Water Co.; and co-vice chairman and trustee of Ayala Foundation, Inc. He is also a member of various international and local business and socio-civic organizations including the J.P. Morgan International Council, Mitsubishi Corporation International Advisory Committee, Toshiba International Advisory Group, Harvard University Asia Center Advisory Committee, Board of Trustees of the Asian Institute of Management, National Council member of the World Wildlife Fund (US), and Chairman of World Wildlife Fund (Philippines). Honors include World Economic Forum Global Leader for Tomorrow in 1995; Emerging Markets CEO of the year in 1998 (sponsored by ING); Philippine TOYM (Ten Outstanding Young Men) Award in 1999 and Management Association of the Philippines Management Man of the Year Award in 2006. Most recently, Mr. Zobel was awarded the Presidential Medal of Merit on March 11, 2009 by Philippine President Gloria Macapagal Arroyo for â€Å"enhancing the prestige and honor of the Republic of the Philippines both at home and abroad.† – On September 27, 2007, Ayala Corp. chair Jaime Augusto Zobel de Ayala was conferred the Harvard Business School’s highest honor, the Alumni Achievement Award, byDean Jay O. Light. The award was also given to: Donna Dubinsky, A. Malachi Mixon of Invacare, Sir Martin Sorrell of WPP Group and Hansjorg Wyss of Synthes. Zobel de Ayala received his MBA from HBS in 1987. Zobel de Ayala was cited for â€Å"his innovative, entrepreneurial style of management (that) has benefited both Ayala and an island nation that faces significant social and economic challenges. He is the first Filipino to receive this prestigious award. – The Philippine Legion of Honor with rank of Grand Commander was awarded to Mr. Zobel on June 29, 2010. This is awarded by the President of the Republic of the Philippines to recognize outstanding public service that has benefitted the republic, particularly in the preservation of the honor of the country and in nation building. – On November 25, 2010, Mr. Zobel received the Asia Talent Management Award at the 9th CNBC Asia Business Leaders Awards held in Singapore. Mr. Zobel was recognized for â€Å"his personal involvement in supporting and nurturing leadership within the company.† Zobel was quoted as saying that he and his brother Fernando Zobel de Ayala, president and COO of Ayala, consider succession planning as a critical element in ensuring the corporation’s sustainability. He was the third Filipino to be recognized by the annual program, following Globe Telecom CEO Gerardo Ablaza, Jr. who received the ABLA in 2004, and Jollibee CEO Tony Tan Caktiong for corporate citizenship in 2006. – Mr. Zobel holds a B.A. degree in economics (cum laude) from Harvard College (1981), and an MBA from the Harvard Graduate School of Business Administration (1987). He is married to Elizabeth (Lizzie) Eder Zobel, a descendant of Santiago Eder. The couple have four children. -3. Manny Pangilinan or MVP is Chairman and CEO of three companies on the list, making him the third-highest paid CEO with a combined total compensation of P2.65 million per month. This is inclusive of his monthly basic salary of P1.76 million in those companies. His basic salary is P950,000 per month as head of Meralco; more than P588,000 per month as chair of Metro Pacific Investments Corp. (MPI); and around P230,000 every month as CEO of Philex Mining Corporation. – Manuel V Pangilinan (born July 14, 1946 in Manila, Philippines), also known as Manny Pangilinan and MVP, is a Filipino businessman. He is the Chairman of the Philippine Long Distance Telephone Company, from 1998 up to the present. – Pangilinan spent his elementary and high school days at San Beda College. He graduated cum laude from the Ateneo de Manila University with a Bachelor of Arts degree in Economics. He received his MBA degree in 1968 from the Wharton School of the University of Pennsylvania.] He is also the owner of ABC/TV5 network, Cignal Digital TV and Smart Communications. He was the former Chairman of the Board of Trustees of Ateneo de Manila University. – Pangilinan founded First Pacific in 1981 and served as its Managing Director until 1999. He was appointed as Executive Chairman until June 2003, when he was named CEO and Managing Director. Within the First Pacific Group, he holds the positions of President Commissioner of P.T. Indofood Sukses Makmur Tbk, the largest food company in Indonesia. He was named Chairman of Philippine Long Distance Telephone Company (PLDT), after serving as its President and CEO until February 2004. He also serves as Chairman of Maynilad Water Services, Inc., Metro Pacific Tollways Corporation, Medical Doctors, Inc., Metro Pacific Investments Corporation, Landco Pacific Corporation, Pilipino Telephone Corporation, Smart Communications, Inc. and Manila Metro Rail Transit System. -4. Another highest-paid chief executive is Danding Cojuangco of San Miguel Corporation. As CEO of the diversified conglomerate SMC, he gets P1.58 million salary per month plus P746,000 additional compensation monthly, for a total of P2.33 million every month. – Eduardo Murphy Cojuangco, Jr. (born June 10, 1935), also known as Danding Cojuangco, is the chairman of San Miguel Corporation, the largest food and beverage corporation in the Philippines and Southeast Asia, former Philippine ambassador, and former governor of Tarlac. In 2005, his personal wealth was estimated at US$527 million.It was estimated that, at one time, his business empire accounted for 25% of the gross national product of the Philippines. He has been called â€Å"one of the country’s leading businessmen†. – He was a candidate for the Philippine presidency in 1992, ultimately losing in a tight election to Fidel V. Ramos. Ramos received 23.6 % of the vote. Miriam Defensor Santiago came in second with 19.7% and Cojuangco came in third with 18.2%. – He tested the political waters in 2003, planning to run in the 2004 Presidential and Local Elections, but soon withdrew. He was a close adviser and personal friend to former President Ferdinand E. Marcos, which led him to become estranged from his cousin,Corazon Aquino, who after Marcos’ ouster succeeded him as president. Cojuangco is of partial Irish, Spanish, and Chinesedescent.[citation needed] – Cojuangco was a member of the Rolex 12, a group of 12 men who were closest to Marcos and allegedly were his enforcers of Martial Law. He is also an honorary member of PMA Class 1951. Cojuangco also was accused by the military men at the scene ofBenigno Aquino, Jr.’s assassination, as the leader who orchestrated the crime. – He is currently the chairman emeritus of the Nationalist People’s Coalition, the party he founded in 1992 which served as his vehicle to further his aspirations in the 1992 presidential elections. – He was also an advocate for sports in the country through using his company as sponsors for various events. He is notable for supporting basketball in a huge way since the 1980s as a basketball godfather for President Marcos with the famed Northern Consolidated teams of coach Ron Jacobs and the three SMC owned teams currently playing in the Philippine Basketball Association (the flagship Petron Blaze Boosters, the Barangay Ginebra Kings, and the B-Meg Llamados). – He studied at San Beda College, De La Salle University, University of the Philippines, Los Baà ±os and California State College. – Besides English and Tagalog, he speaks Ilocano, the dialect of his mother and Kapampangan, the original dialect of the Cojuangcos. -5. James L Go, Chairman and CEO of JG Summit Holdings (JGS), Universal Robina Corp. (URC) and Robinsons Land (RLC) — total compensation of P1.82 million per month, roughly the same as his basic monthly salary – James L. Go, is the Chairman and Chief Executive Officer of JGSHI. He had been President and Chief Operating Officer of JGSHI and was elected to his current position effective January 1, 2002. As Chairman and Chief Executive Officer, he heads the Executive Committee of JGSHI. He is currently the Chairman and Chief Executive Officer of Universal Robina Corporation, Robinsons Land Corporation, JG Summit Petrochemical Corporation, Robinsons Inc., and Oriental Petroleum and Minerals Corporation. In addition, he is the President and a Trustee of Gokongwei Brothers Foundation, Inc. He was elected director of the Philippine Long Distance Telephone Company (PLDT) on November 3, 2011 and was also appointed as a member of PLDT’s Technology Strategy Committee. He is also a director of Cebu Air, Inc., Panay Electric Co., United Industrial Corporation Limited, Singapore Land Limited, Marina Center Holdings, Inc., Hotel Marina City Private Limited and JG Summit Capital Markets Corporation. He received a Bachelor of Science degree and a Master of Science degree in Chemical Engineering from the Massachusetts Institute of Technology.

Geography Assignment Example | Topics and Well Written Essays - 750 words

Geography - Assignment Example The country I have chosen to discus is Estonia which is officially called the Republic of Estonia. Gulf of Finland borders it on the north, Baltic Sea lies on the west; it shares a border with Latvia on the south and to the east lies the Russian Federation. One of the primary centripetal forces acting on Estonia is the Estonian Language, which is very closely linked with Finnish and thus Estonians are Finnic people. Another centripetal force that acts on Estonia is Music; the Estonians have a tradition of â€Å"Estonian Song Festivals which emerged during that Estonian National Awakening in 1969. Presently, it is one of the largest amateur choral events world-over, and generally a choir comprises of about 18,000 people. Centripetal force acting on Estonia is the Estonian Constitution which guarantees absolute religious freedom, clear distinction between state and religion, the individual privacy in religious practices and affiliations. This leads for Estonia to have one of the highe st levels of irreligious individuals, the highest percentage is of religious followers is that of is Evangelical Lutheranism which has only 14.8% followers in the Estonian population. Estonia also possesses a very well-built information technology sector, it is also measured as the most â€Å"wired† and advanced country in the entire Europe in light of e-Government of Estonia. Estonia is expected to receive 3.4 billion Euros in the next few years which will be invested in the energy sector, economic and local development and welfare activities. The cultural indicators of language and music will also continue to bind the Estonian people, so I predict that these initiatives will boost the Estonian economy I the next ten years. The centrifugal forces acting on Estonia are in terms if their main industry and the impact they are having on the environment. Environmentally conscious individuals as well as the Estonian Government are very

Left Bank Group Analysis Research Paper Example | Topics and Well Written Essays - 1250 words

Left Bank Group Analysis - Research Paper Example Likewise, as with many movements, the New Wave movement was something of a conscious rejection with regards to the subject matter, stylistics, self-actualization, and experimentation that seemed to be so devoid in the periods prior to the development and nominal success that the New Wave movement was ultimately able to engender. Furthermore, like so many other artistic movements throughout history, the full scope of the importance contributions that the New Wave movement brought to cinematography filmmaking were of course not realized completely or appreciated accordingly during the time that they were being developed. Nevertheless, although many aspects of the New Wave movement were so experimental that they existed only within the confines of the current time in which they were developed, many of the experimental techniques and new ideas with which these filmmakers sought to integrate continue to have found measurable effect on some talk to the current Europe. Accordingly, this bri ef analysis will seek to understand, identify, and draw inference on the means by which one such group of influential French filmmakers from this New Wave movement contributed to a more complete and nuanced understanding of filmmaking is the hope of this author that such an analysis will engage the reader with the lasting importance that this group of film makers continues to exhibit. As such, the group to be analyzed will be that which was dubbed â€Å"Left Bank†. ... nown, were referred to as the Right Bank; likewise, the group of filmmakers which will be analyzed herein came to be known as the Left Bank (Reeder 63). This was not only a reference to the geographical meaning of where these individuals hailed from within Paris, but also a thinly veiled allusion to the political views espoused by the latter group. One of the greatest differentials came to be seen between the right bank as compared to the Left Bank directors was with regards to the level and approach that these Left Bank directors viewed the relationship between cinema and art. Whereas more traditional numbers of the New Wave movement saw literature and other art forms distinctly separate from cinematography, the Left Bank directors saw them as one and the same attempt to incorporate many of the avant garde and cutting edge techniques and ideas that were being pioneered within the art world within the cinematography that they created (Schwartz 147). However, as much as one might seek to distinguish the Left Bank New Wave filmmakers from their other counterparts within the New Wave movement, the reality of the situation was that they were oftentimes almost identical with regards to the approach to cinematography that they made. In reality, both schools of thought sought integrate a high level of modernism within current cinematography; the only means differential and/or to supreme that existed with regards to this modernism was where the inspiration for it could ultimately be drawn. To the Left Bank filmmakers, this inspiration was available from both existing and previous arts. Regardless of the level to which critics may seek to portray these groups as being in opposition to one another, the fact of the matter is that there was never any ill will between either the

The assignment should be presented as a Journal opinion article and

The should be presented as a Journal opinion article and address an economic issue of current interest to Wall Street - Assignment Example Louis named James Bullard revealed that the outlook of different monetary policies is incessantly enhancing the turbulent financial scenario along with mitigating the challenges resulting from inflationary pressures by a greater level. Moreover, Bullard proclaimed that the enhancement in the financial landscape might assist in slowing down the tempo of buying bonds at large (Derby, â€Å"Fed's Bullard: Weak Inflation May Argue for More Fed Stimulus†). Relating to the article, Bullard affirmed that though the conditions of the labour market have enhanced, the Federal Open Market Committee (FOMC) can slow down the pace of purchasing bonds. But, the rise of the crucial aspect concerning weak inflation might reveal that FOMC would have to raise its tempo in buying bonds (Derby, â€Å"Fed's Bullard: Weak Inflation May Argue for More Fed Stimulus†). This can be justified with reference to the other article i.e. â€Å"Fed head says low inflation may warrant prolonging bond-bu ying program† which presented by Steve Matthews and Greg Quinn that the vital concern of weak inflation below 2 percent target of the Central Bank may raise the extensive usage of bond buying for the purpose of developing financial position and most significantly lessening the rate of unemployment. It has been apparently observed in this particular article that the FOMC will continue to purchase bonds until the conditions of the labour market enhanced considerably. In response, Bullard proclaimed that this major decision of FOMC can be related with an important concern. In this regard, the significant concern has been viewed to be the consideration of low-interest charges that can be linked with extreme risk-taking especially in the financial business markets by FOMC (Matthews and Quinn, â€Å"Fed head says low inflation may warrant prolonging bond-buying program†). According to the article â€Å"Fed Stimulus Stays Strong† which presented by Joseph Cafariello, it can be viewed that FOMC tends or promises to buy extra agency based mortgage-backed securities at $40 billion and also long-term based Treasury securities at $45 billion on a monthly basis with the motive of attaining certain additional benefits. These benefits comprise preserving downward pressure resulting from the imposition of interest charges that are long term, assisting mortgage markets and most vitally making wider financial circumstances much more accommodative among others. Furthermore, Cafariello argued in the article that the committee is quite prepared to raise or lessen its purchase of bonds or securities by taking into concern the prevailing conditions of the labour market. Similarly, it has been viewed in the article that like FOMC, the FED is also keeping itself much open towards raising or lessening purchase of bonds or securities as financial conditions necessitate. As mentioned in the article, both FOMC and the FED is much concerned towards increasing or lesseni ng their respective pace of buying bonds or securities owing to the reason that different fiscal policies are restraining financial growth by a greater level and most vitally weakening the economy at large (Cafariello, â€Å"Fed Stimulus Stays Strong†). In accordance with the article i.e. â€Å"Fed's Bullard: Weak Inflation May Argue For More Fed Stimulus† which presented by Michael S. Derby, it can be apparently observ

ENGLISH LEGAL HISTORY Essay Example | Topics and Well Written Essays - 3000 words

ENGLISH LEGAL HISTORY - Essay Example Such a long experience of many generations has given this system the depth no legal systems in the world can match. The process of going through ages of human civilization has evolved this system in such a way that it not only meets the legal standards of practicability but also the human side of it. British legal system is consistent with the thinking of its citizens. Traditions and conventions are at the heart of it making the law and the folk wisdom compatible with each other. This traditional approach has given rise to certain inherent principles of British legal system e.g. the doctrine of rule of law, independence of judiciary and habeas corpus. These principles –just like the legal system itself- have evolved over a period of centuries and form the basis of British system of Justice. The fact that most of the modern day world has also benefited from the British common law principles, make these traditional laws a sound base for many universally accepted rules now. In the below discussion we will look at some of these principles in detail. We will highlight their evolution, their importance in the development of legal system and their implications in the modern age. We will also see how the tradition side of these rules still reflects itself in the developed laws. Habeas Corpus is a Latin word which means ‘you shall have the body’. In legal sense it represents a method through which any person can claim relief against unlawful attest or detention from any other person or even the legal system itself. In other words, it is a system through which the court can order to bring a detained person so that it may be ascertained whether he was detained lawfully or not. The petition of Habeas Corpus can be brought by the person himself or if he is unable to seek such remedy because of being in detention, then by any other person. Habeas Corpus is originally an English concept which originated in the early

Philemon Essay Example | Topics and Well Written Essays - 1000 words

Philemon - Essay Example Paul is therefore writing against the backdrop of Onesimus willing to return to Philemon, and thus, the need for this personal appeal to Philemon to accept Onesimus as a Christian brother (1:16) (Jason, 2010). Just as Betz (2004) observes, Apostle Paul writes with a lighthearted tone, but tactfully and with clever wordplay (1:11), to win Philemon’s willingness. Paul organizes the appeal as was prescribed by ancient Romans and Greeks by: building a common ground (1:4-21); persuading the mind (1:11-19); and appealing to emotions (1:20-21). It is interesting that Onesimus’ name is not mentioned until rapport is built between Paul and Philemon (1:10). The appeal is also made at the end (1:17). As has already been roughly mentioned in the introduction, Apostle Paul is writing to Philemon who is a Christian in the church in Colosse. It is plain that Philemon is a slave master and that there are others in the church with similar status in the same church, according to Colossians 4:1. Onesimus, one of Philemon’s slaves, had stolen from Philemon his master and ran away (v. 18). The import of Onesimus’ act is that it amounts to capital offence under Roman law. As a fugitive, Onesimus happens upon Paul in his ministry and becomes a Christian (v.10). After his stint with Apostle Paul, Onesimus is willing to return to his master, Philemon. For this purpose, Paul makes a concerted appeal to Philemon to accept back Onesimus as a Christian brother (1:16). According to Gromacki (2008), the main addressee in the epistle is Philemon, Onesimus’ master. Again, as already stated, the main intention or purpose of Paul’s address to Philemon is to have him accept Onesimus, his runaway slave back as a Christian brother (v. 16). Paul does this by using several logical strategies which are also subthemes of Paul’s address. One of the underlying themes that Paul uses to convince Philemon is that just as

The Land of Opportunity Essay Example | Topics and Well Written Essays - 750 words

The Land of Opportunity - Essay Example One should keep in mind that increasing employment signals increasing businesses that hire people, hence, more competition.   The firm might also consider expanding its market. For example, if the firm’s product is only meant to appeal to a particular range of age, say, teenagers to young adults, it might want to try producing manufactured goods modified for younger children. Of course, an extensive customer research must follow. Product improvement will occur after determining from the customers answers to questions like â€Å"How can this product improve?† or â€Å"What product that is not available yet will compliment this available product?† And lastly, the firm must acquire all the possible business from its product. If the product that the customer will experience? After this, the company can then proceed to providing branches that will deal with specific issues concerning the product.  has something to do with technology, the firm must pre-meditate wha t will be the problems that the customer will experience? After this, the company can then proceed to providing branches that will deal with specific issues concerning the product.In the Foreign Trade Statistics, a list is presented containing the Top 10 Trading Partners of the U.S.—surplus, deficit and total trade. Countries with which the U.S. has a trade surplus includes: Netherlands, United Arab Emirates, Hong Kong, Australia, Belgium, Singapore, Panama, Bahamas, Honduras and Jamaica. Countries with which the U.S. has a trade deficit are: China, Japan, Canada.... In the Foreign Trade Statistics, a list is presented containing the Top 10 Trading Partners of the U.S.-surplus, deficit and total trade. Countries with which the U.S. has a trade surplus includes: Netherlands, United Arab Emirates, Hong Kong, Australia, Belgium, Singapore, Panama, Bahamas, Honduras and Jamaica. Countries with which the U.S. has a trade deficit are: China, Japan, Canada, Mexico, Federal Republic of Germany, Venezuela, Nigeria, Saudi Arabia, Malaysia and Italy. Lastly, the countries with which the U.S. trades are the following: Canada, Mexico, China, Japan, Federal Republic of Germany, United Kingdom, South Korea, Taiwan, France, and Malaysia. Netherlands has a year-to-date surplus of U.S. $ 4,615.92M. China has a year-to-date deficit of U.S. $ 64,354.56M. Canada has a year-to-date total of U.S. $ 178.07B. These are the leading countries in the three categories and their amounts in surplus, deficit and total trade. Apparently, the trade deficit amount exceeds the trade surplus with the countries. In studying these lists, it can also be noticed that several countries appear in more than one category. The countries Canada, China, Japan, Mexico and Federal Republic of Germany consistently appear on the Top 5 of both trading partners and deficit countries, in slightly different order. While Malaysia follows behind as the 10th in the trading partners, and 9th in the deficit countries. This clearly shows how the countries with which the U.S. has a trade deficit (specifically Canada, China, Japan, Mexico, Federal Republic of Germany and Malaysia) are also the same countries that are its top trading partners. Based on the Foreign Trade Statistics

Subprime Crisis Essay Example | Topics and Well Written Essays - 750 words

Subprime Crisis - Essay Example In layman's terms, they use the supposed income from these mortgages as their collateral in their other investments. The banks were hoping that with the prime rate on the upward trend, they could make considerable gains on the basis of that hypothetical margin of profit. The problem began when the bubble burst and the prime rate skyrocketed so much to the point that the people were no longer capable of paying their mortgages. The financial institutions who were counting their immense profit lines on paper were suddenly left holding the bag, left saddled with numerous foreclosed properties that were both unloadable and prone to depreciation. Haunted by serious liquidity issues arising from this maelstrom, a lot of these lending institutions have been rocked to the very core. Some have even declared bankruptcy, the most notable being former investment powerhouse Bear Stearns, the 5th largest investment house in the nation. In the IMF's recent report, it is illustrated that the global level of aversion from an emerging market, macroeconomic, and credit risk standpoint has increased exponentially from the previous year. This is highly indicative of the ripple effect emanating from the U.S. housing crisis. In addition, the prices of U.S. mortgage-related securities have plummeted from a high of roughly $100 a share in 2006 to less than $20 in 2008, causing billions of dollars in equity losses. With no liquid equity, these institutions are hard pressed to back individual mortgages, which in turn perpetuates the crisis. The cold, hard facts do not paint a rosy picture on the global scale. Average housing market prices have tumbled accordingly, with the United States and United Kingdom embroiled in a rapid downward spiral. The rest of the Europe is holding, but even there the downward trend has already started over the past two years. Just when did the housing boom originate Fueled by a favorable prime rate and the advent of poorly underwritten, predatory loans, commercial mortgage borrowing reached historically high levels in the 2nd quarter of 2005. Over $400 billion worth of loans were underwritten, a good percentage of which has fell into default as of 2008. The effects of these massive defaults are momentous; during the 1st quarter of 2008 estimated losses from defaulted loans have already reached the $130 billion plateau for banks, and roughly $500 billion overall with no relief in sight. Over the next few years losses are expected to reach the $900 billion mark, and banks and financial institutions everywhere are scrambling just to keep their head above their water. While recent Federal Reserve initiatives to bail out financial institutions reeling from the crisis are admirable, its lukewarm reception can be attributed to a prevailing notion that it is just too little, too late. With mounting losses expected in the coming months, we can only hope that the country would survive this catastrophic downturn which has rendered even more losses than the infamous Asian financial crisis of the 90's.With capital markets running dry and a high propensity towards risk aversion, one can only hope that the government and the Federal Reserve will put forth dynamic stimulus programs to bail out this badly

Management Essay Example | Topics and Well Written Essays - 500 words - 11

Management - Essay Example Mergers of existing power player like Vodafone and Hochstein also made the situation more vulnerable for entrants, thus making them mighty and unbeatable. For better hold on coverage, working in collaboration with government is highly beneficial for entrants (ZDNet Australia). Due to substantial growth in the industry over a decade, industry has reached a level of saturation. Therefore, there is a considerable decline in prices and rise in number of buyers. They include kids from 12 years of age to adults 0f 60 years. Buyers are driving force for providers; in order to keep them loyal Miller Ltd. needs to provide and edge in price for competitive advantage. Mobile service industry in Australia is multiple sectors. In a flourishing industry like Australian telecommunication, monopoly can’t survive is today’s market. Market is diverse which include manufacturing of hardware, carriage service providers (CSPs), content service providers and retailers. The report by Economic access and ATMA briefly describe the market. Ericsson Australia, Nokia Siemens and Alcatel-Lucent are infrastructure provider in hardware sector. Nokia, Samsung, LG, i-Mate have market in consumer goods. CSPs provide services by utilizing carrier network infrastructure and have different levels; mobile telecommunication carriers in Australia are; Telstra, Vodafone, Optus, and Hutchison’s ‘3’ and Orange. Resellers services include; Primus Mobile, AAPT, Virgin mobile, B Digital, DigiPlus, Sim Plus, People TelecomM8 Telecom and Dodo Mobile. MVNOs or Mobile Virtual Network Operators are basically wholesalers and provide value adding services.B Digital, Revolution, People telecom Primus Telecom and Boost Mobile are a few to name. Content service providers, aggregators and program developers are other dimensions of service providers; Legion Interactive, Touch and Infospace are main content aggregators. CSPs have their own retailers like Hutchison ’s ‘3’ but other

Blaise Thomas “Tom” Golisano Essay Example for Free

Blaise Thomas â€Å"Tom† Golisano Essay Blaise Thomas Tom Golisano is the founder of Paychex, the second-largest payroll processor in the United States. He also owns the Buffalo Sabres hockey team. He ran for governor of New York in 1994, 1998, and 2002. He lost all three elections but surprisingly defeated incumbent New York Governor George Pataki in the hotly contested 2002 elections. The founder of Paychex built a high-performing organization on an unconventional premise at the time: Hire people with the right attitude and then teach them the skills to do the job. But rapid growth in the 1990s showed Paychex that it needed a more systematic approach to reliably execute this philosophy throughout its geographically dispersed operations, especially at the important front line of customer service. The resulting solution  Ã‚  one that includes more sophisticated hiring practices, more extensive training and development, and multiple reinforcement mechanisms  Ã‚  still serves the company well today. He stands for good government, political reform and fair play.   In January 31, 2006 he announced his decision to no longer run for public office due to personal and professional reasons.   He is involved in many business interests, and will continue to remain active in Paychex and other entrepreneurial ventures.   He also said he will continue his philanthropic activity. He is still committed to the economic development of New York, as well as promoting responsible government. He has received many awards for his prowess in business: David T. Kearns Medal of Distinction recognizing significant achievements in business, public service and education, by the University of Rochesters William E. Simon Graduate School of Business Administration Rochester Business Hall of Fame (2001) The 1987 Herbert W. VandenBrul Entrepreneurial Award, presented by Rochester Institute of Technologys College of Business Master Entrepreneur award in Ernst Youngs Entrepreneur of the Year awards competition for Western New York Humanitarian of the Year Award, presented by the Boys Town of Italy, and the Commerce and Industry Award of the Rochester Chamber of Commerce. Outstanding Alumni Award from the American Association of Community Colleges He has been actively involved in a great deal of charitable work. In 1984, he founded the B. Thomas Golisano Foundation. His foundation awards grants to organizations dedicated to providing opportunities for those with disabilities and offering support to their families. In 2002, The University of Rochester re-named their pediatric hospital Golisano Childrens Hospital where he donated $14 million in March 6, 2006 as well as $6 million to Bishop Kearney High School and Our Lady of Mercy. Reference: Edited by Investor’s Business Daily. Profiles in Business Success 51 Top Leaders and How They Achieved Greatness.. New York: McGraw-Hill p. 50. Retrieved from the web:   http://www.en.wikipedia.org/wiki/Tom_Golisano   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚     http://www.golisano.com http://www3.interscience.wiley.com/cgin/abstract/109792492/ABSTRACT?CRETRY=1RETRY=0

Personal Reflection on Intermediate Anaesthetic Practice

Personal Reflection on Intermediate Anaesthetic Practice I am a student anaesthetic practitioner with a clinical placement in an acute hospital. I will be reflecting on my personal experience with a 20 year old patient who underwent a Myringotomy and Bilateral Ear Grommets Insertion procedure wherein a local anaesthetic was used and had failed, and prompting the case to be done under general anaesthesia. The operation was deemed necessary by the consultant as the patient was diagnosed with recurrent Otitis Media with Effusion (OME), see Appendix A [on page 23], because it will eventually help to correct his hearing loss and prevent further deterioration as stated by Woolfson and McCafferty 1993. Following the NMC Code of Conduct (2008) on Confidentiality of patients information, I will refer to patient as Mr. B. I will be using the Gibbs Reflective Cycle which is shown in Appendix B as the framework of my reflection Jasper (2003). It will highlight how researching further led to a better understanding of surgery and anaesthetics and to know how to respond if the same situation happens again. Mr. B. had been admitted in the ward at noontime of the surgery. He was seen by the anaesthetist to carry out a preoperative assessment. According to the anaesthetist, he is generally fit for surgery and does not pose as an anaesthetic risk. The anaesthetist discussed with him about her plan to give him a general anaesthesia, but he asked the anaesthetist if the operation can be done without having a general anaesthetic because he prefers to remain awake. The consultant surgeon also came in and explained the surgery. He was allowed to undertake a local anaesthetic provided that he cooperate well and if the local anaesthetic is unsuccessful, an alternative anaesthetics will be used, that is a general anaesthesia. The surgeon and anaesthetist explained what he will experience with local anaesthetics like a burning sensation in his ears, including possibly a degree of pain. Any anaesthetic may arise complications and that other types of anaesthetic is not sufficient for the surgery and therefore needs to be changed to a general anaesthetic at any time (Box Hill Hosp. Dept. of Anaesthesia, 2001). A written consent was obtained by the surgeon from Mr. B. The Department of Health Guidelines (2007) on Consent states that Informed Consent ensures the patient has full knowledge of the procedure because it is fully explained to the patient by the surgeon. The patient is also given the time to ask any questions he may have and voice any concerns and honest answers must be provided. I was assigned in the ENT theatre for the afternoon session which has three booked cases. The operating department practitioner (ODP) and I did the necessary checks in the anaesthetic room and safely prepared the anaesthetic materials and equipment in preparation of the list (AAGBI 2004). I also checked the safe and correct functionality of the anaesthesia machine and refilled drugs in the anaesthetic cupboards. Shields and Werder (2002) said that adequate preparation of the anaesthetic equipment, resources and patient is essential to the provision of safe anaesthetic care. The team members gathered to initiate a preoperative briefing. During the briefing, the surgeon mentioned about the order of the list. Mr. B will be done last as he is a private case anyway. After finishing the first two cases, the ODP and I went to the waiting area of patients to fetch Mr. B. I introduced myself and checked his identity. Then I checked that all preoperative preparations were done and documented. The consent form was confirmed to him that it was his signature and dated. As the patient was having a Myringotomy and Bilateral Ear Grommets Insertion, the site of his procedure was not marked. For most procedure, this is an important check. The National Patient Safety Alert NPSA (2005) recommend that by marking the site for the operation with an arrow using a permanent marker will assist in reducing the incidents of wrong site surgery being performed. I also checked him for any allergies, presence of any metalwork, prosthetic aids in his body, contact lenses, crowns and dentures and asked if he has any other significant surgery or illness. Then I accompanied him to the operating room and made him lay down comfortably. While conversing with him, I placed on the external non-invasive monitors such as the blood pressure, ECG and pulse oximeter. I tried to maintain a quiet and supportive environment. I sat beside him and continued to communicate with him as he looked anxious. Kumar (2 000) said that patients are apprehensive about what will happen and the anaesthetic practitioner needs to monitor patients anxiety level throughout the surgical procedure. Meanwhile, the circulating nurse initiated the Time Out check which is carried out in every operation to enhance a safe surgery (World Health Organisation Guidelines for Safe Surgery, 2008). The surgeon applied the local anaesthetic drug Ametop gel 4% onto Mr. Bs ears. Woolfson and McCafferty (1993) suggest that it should be instilled into the external ear canal using a soft, intravenous cannula and a 5ml syringe and performed under a microscope to ensure immediate contact of the gel with the entire ear drums and that the ear canal was filled and the depth of the gel provides self occlusion. According to the BNF (2010) Ametop is a topical local anaesthetic in gel form which contains Tetracaine base 40 mgs. believed to act by blocking nerve conduction mainly by inhibiting sodium ion flux across the axon membrane. The ester type caine anaesthetics are rapidly metabolised in blood mainly by plasma pseudocholinesterase. A slight erythema local skin reaction will be usually seen at the site of the application and as a result of the pharamacological action of tetracaine dilating the capillary vessels.This helps in delineating the anaesthetised area as explained by the National Library of Guidelines (2007). Adequate anaesthesia can usually be achieved following 30-60 minutes application time and anaesthesia is maintained for 4 to 6 hours in most patients after a single application. We waited only for about 30 minutes to anaesthetise his ears. While waiting, Mr. B became anxious as he was seen perspiring a lot. Everyone reassured him. The surgeon began cleaning and draping the area. Working with an operating microscope, the surgeon started to suction and made a small incision in his eardrum. Mr. B reacted to the pain but I encouraged him to keep still. The surgeon continued to suction the fluid present in the middle ear but Mr. B kept on moving his head because the pain was more intense. A tiny grommet was to be inserted into his surgical aperture but he refused as he cannot bear the intense pain. The surgeon stopped and asked the patient not to move if he wanted the operation to continue or if he cannot tolerate, he will be put to sleep instead. Mr. B and the whole team proceeded further as consented. The anaesthetist cannulated Mr. B. using a gauge 18 large bore venflon secured with a transparent and semi permeable dressing connected to a litre of Hartmanns solution which has been labelled and checked by the anaesthetist and the ODP as per NHS protocol for intravenous infusion, AfPP (2007). Clarke and Jones (1998) describes that a Hartmanns or sodium lactate or lactated ringers is a crystalloid type of intravenous fluid that will cross a semipermeable membrane, thus allowing movement of electrolytes to correct any imbalance. It contains calcium, chloride and lactate similar in composition to extracellular fluid as a balanced salt solution. The anaesthetist started the induction and an I-gel airway (see appendix C) was inserted. The surgery was resumed and carried out without any problems. Mr. B. was fully recovered and transferred back to the ward without complications. I felt disappointed because the result of this experience was clearly contrary to initial expectations. A minor operation like this can be done under local anaesthetics and is a quick procedure. It could have finished if only the patient cooperated well. Although this experience was frustrating for the patient as he requested to be awake during the procedure, still it went well and the treatment for a possible hearing loss and deterioration was done for him. The duties and responsibilities expected from me as an anaesthetic theatre practitioner were performed according to the policies and procedures of my clinical placement. The whole team cooperated well and performed their job accordingly. I have also found out a controversial issue regarding the Ametop gel which has aroused my doubt. Netdoctor (2004) points out that Ametop is a topical anaesthetic for dermal analgesia which must not to be applied to broken skin, mucous membrane or to the eyes or ears. Tetracaine gel could be ototoxic like other local anaesthetics and should not be introduced to the middle ear or use in procedures which might involve penetration into the middle ear. Therefore, Mr. B. might be at risk for ototoxicity. In addition to that, the local anaesthetic did not fail but it is because the surgeon did not wait longer enough until Mr. B was pain free before starting the surgery. A proper consent was secured earlier from him, thus, saved the time in securing a fresh consent. Moreover, it saved NHS resources akin to if the list was cancelled and rescheduled and along with the unsatisfactory hospital experience of Mr. B. The surgery could have been done quickly and safely under a most and effective local anaesthetic rather than topical and waiting for a clinically acceptable anaesthesia before commencing the surgery. I suggest that next time this event occurs again, I would tell the whole team in the preoperative briefing, to give ample time for the anaesthesia to take effect before we can start the surgery. I would also write an incident report so that a proper evaluation could be done and errors will be omitted in the future for the safety of the patient.

Impact of Financial Crisis on Islamic Banks

Impact of Financial Crisis on Islamic Banks Chapter 1 Background / Introduction of recent financial crises and Islamic banking system The credit crunch is widely blamed upon the sub prime crisis which originated in America, where banks offered housing loans to those known in the industry as ninjas (no income, no job, no assets). Such people often had poor financial track records. However these loans were subsequently repackaged into financial products known as ‘collaterised debt obligations (CDOs). They were then mixed in with ‘prime loans and sold on to other banks via the wholesale market. In theory, this trading in debts was meant to spread the risk of bad loans amongst many different banks, thereby reducing risk. In fact, it lead to the ‘sub prime problem infecting not just the banks that offered the dodgy loans in the first place, but a far, far greater number of banks who bought the ‘toxic loans via the wholesale markets. The knock-on effect of this was for banks to suddenly become unsure of the value of their ‘toxic assets and as a result to stop lending each other money, or to lend money only at much higher rates. As a result the London Interbank Offered Rate (LIBOR) shot up to unprecedented levels, which in turn massively increased the cost of providing loans to the general public according to Khan (2008). The Western perspective also argues that this initial problem with sub prime debts triggered a secondary problem whereby banks which relied for cash flow principally on accessing funds from other banks via the wholesale market, suddenly found they could no longer borrow enough money to meet their cash flow requirements This is what led to the crisis with collapse of 150 year old Lehman Brothers and take over of Merrill Lynch by Bank of America, which, more than any other bank relied on the wholesale market rather than its own depositor funds to meet the banks day-to-day cash requirements Khan (2008). According to Bashir (2008) the paralysis in interbank lending led in turn to banks drastically reducing the money they lent to customers, as well as dramatically raising the cost of existing loans. This in turn substantially reduced demand for property and led to the ongoing crash in the property market. This is now feeding back to create a yet bigger problem for the banks because property is what they mostly hold as collateral for all the debts people owe them. Evidently this collateral is now worth a lot less than a year ago, and this will inevitably lead to a much higher rate of loan defaults and repossessions Bashir (2008). Having covered a secular analysis, we now turn to Islam, which proposes a very different explanation for these problems. According to Haddad (2008) Islam does not consider money to be a commodity, which can be traded at a profit, that is to say a transaction that is interest (or usury) based. Thus the reality of negating this Islamic consideration provides us with the first part of the problem. Interest, known as Riba in Arabic, is one of the major violations of Gods law, and when it spreads through society becoming an established norm without any condemnation nothing can be expected but divine wrath. Islamic banks do not borrow or lend on international money markets because interest is not allowed, traditionally they have a larger proportion of their assets in reserve accounts with central banks. Islamic banking is based on the principles of risk sharing between depositor and investor in theory, meaning that customers practice greater oversight of an Islamic banks lending performance. Shariah law stipulates that Islamic securities should be asset-based, which means that a trader must own the asset being traded. This, in turn, proscribes most forms of futures trading, as goods that the seller does not own or will not deliver cannot be the subjects of an Islamic contract. Practices such as short selling, consequently, are not a feature of Islamic Banking according to Haddad (2008). According to Siddiqi (2009) Islamic finance is growing in various parts of the world. It has moved from a mere theoretical concept to a practical reality. Islam not only prohibits dealing in interest but also in liquor, pork, gambling, pornography and anything else, which the Shariah (Islamic Law) deems Haram (unlawful). Islamic banking is an instrument for the development of an Islamic economic order. The core principles of Islamic economics system are justice, equity and welfare. Islamic economics seeks to establish a broad based economic well being with full employment and optimum rate of economic growth, it will bring socio economic justice and equitable distribution of income and wealth. Islamic economics will also ensure the stability in the value of money to enable the medium of exchange to be a reliable unit of account and a stable store of value Siddiqi (2009). According to Bagsiraj (2009) in the Islamic economy, Islamic banks act as venture capital firms collecting peoples wealth and investing it in the economy, then distributing the profits amongst depositors. Islamic banks act as investment partners for those who need money to do businesses, becoming part owners of the business. The banks should only be able to recoup their original capital by selling their share of the mortgage/business at the prevailing market value. As real partners, Islamic banks should have no objection to owning real assets and hence should be ready to share the consequential risk. This scheme, although seemingly inconsequential, could constitute a major relief to Islamic banks clients, as they would no longer live under the burden of debt and fear of repossession Bagsiraj (2009). Further more, according to Siddiqi, (2009) Islam neither endorses the capitalist nor the communist financial model. However, both the capitalist and socialist systems share certain elements with Islam, such as encouraging people to work, to be productive and earn as much as they can. Islam promotes an awareness of the hereafter in the hearts and minds of believers and instructs them not to be overcome by greed or excessively attached to money. The Islamic economic and financial system is based on a set of values, ideals and morals, such as honesty, credibility, transparency, clear evidence, facilitation, co-operation, complementarities and solidarity. These morals and ideals are fundamental because they ensure stability, security and safety for all those involved in financial transactions. Islamic Shariah prohibits economic and financial transactions that involve lying, gambling, cheating, gharar (risk or uncertainty), monopoly, exploitation, greed, unfairness and taking peoples mone y unjustly Siddiqi, 2009. The aim of this research is to examine the extent to which the Islamic banks have been affected by the recent financial crisis in contrast with its conventional counterpart. Chapter 2 Literature review 1.1 Detailed history of credit crunch: According to BBC website a credit crunch is an economic condition in which loans and investment capital are difficult to obtain. In such a period, banks and other lenders become wary of issuing loans, so the price of borrowing rises, often to the point where deals simply do not get one. When a National Public Radio journalist asked the famous economists Nouriel Roubini, Kenneth Rogoff, and Nariman Behravesh, their reaction on the monthly report that was just released by the U.S. Department of labor, their answers were â€Å"Its worse then anybody had anticipated†; â€Å"Its pretty disastrous†, and â€Å"I am shocked† Langfitt (2007). Before the report was published, the economic forecasters view was that the report would show the U.S economy increased about 100,000 jobs in August. Instead there was a net loss of 4,000 jobs; there was no growth for the first time in four years. U. S Department of Labor (2007). The forecasters were not done getting it wrong, however, after publication of the jobs data, a number of them predicted the news would bolster the U.S. stock market, because they argued, the employment report practically guaranteed that the Federal Reserve would cut interest rate on September 18, Instead, investor panic over the employment report caused the market, which had been volatile during most of the summer, to quickly lose about 2% on all major indices as per Whalen (2007). The Federal Reserve did eventually cut rates as expected, but it took a number of reassuring comments by U.S. central bank governors on September 10 to calm Wall Streets fears according to Monica (2007). What is now clear is that most economists underestimated the widening economic impact of the credit crunch that has shaken U.S. financial markets since at least mid-July 2007. According to Times online (2009) years of lax lending inflated a huge debt bubble as people borrowed cheap money and ploughed it into property. Lenders were free with their funds, especially in the US, where billions of dollars of so-called Ninja mortgages no income, no job or assets were sold to people with weak credit ratings (called sub-prime borrowers). The informal notion was that if they ran into trouble with their repayments rising house prices would allow them to re mortgage their property as per times online (2009). It seemed a good idea when Central Bank interest rates were low; the trouble was it could not last. Interest rates hit rock bottom in America in 2004 at just 1 per cent, but in June that year they began to rise Bernank (2006). As interest rates jumped, US house prices started to fall and borrowers began to default on their mortgage payments sparking trouble for us all BBC websites (2009). According to Mullan, 2008 easy money conditions made funds available to finance millions of US ‘sub prime borrowers, less well-off people who in earlier times would not have been seen as credit-worthy enough to get a plastic card never mind a home mortgage. These extra homebuyers helped reinforce the pre-existing rise in property prices, producing price hikes in many regional markets across the US. By summer 2007, the market had turned house prices were falling and default levels were raising Mullan, 2008. When the sub prime crisis hit, liquidity froze in the wholesale money markets, not just in the US but also across the Western world nytimes (2008). Following the common pattern of all credit crises, at a certain point never precisely predictable, because of the ‘elastic nature of credit debt becomes too extended for some borrowers when their circumstances change, default levels begin to grow, and the upward spiral of credit expansion and asset price appreciation turns into its unwelcome opposite Mullan, 2008. Just as mortgage issuance and rising US house prices fed on each other for several years, so now price falls and mortgage foreclosures reinforce each other BBC websites (2009). The difference with the credit crisis this time is that the necessity for writing off the bad debts spreads far beyond the original lenders, the banks and the other institutions, which issued the sub prime mortgages, repackaged the debts and sold them on elsewhere into the financial system the process of passing on debt from one institution to another has long been a feature of the financial markets, this activity became so frequent that the terminology of ‘securitization became commonplace, as bank lending was repackaged and sold on as bonds or securities, the same underlying value of a piece of financial paper (or electronic account) becomes reproduced often multiple times elsewhere in the financial system Economichelp.org (2008). In essence, such loans are resold as assets to others so that the same underlying value becomes used many times over, is what the credit system has been about since its early days. This time, in fact since the 1980s, the scale and scope of the repackaging of debt was simply more extensive than ever Mullan (2008). Hence the emergence of trading in ‘derivatives instruments derived from the original credit note that dominates modern financial markets trading. More recently, over the past few years, this practice spawned a number of new acronyms which have been a feature of the terminology for todays crisis: ABSs (asset-backed securities, with the ‘assets often being those home mortgages); CDOs (collateralised debt obligations); and SIVs (structured investment vehicles these are the alternative secondary financial bodies which invested in the new mortgage-backed financial instruments) according to Mullan (2008). 1.2 Causes of credit crunch Inaccurate Credit ratings: According to Acharya, Viral, Bharath, and Srinivasan, (2007) The Collateralized Debt Obligations (CDO) market has grown substantially since 2001 with issuance volume reaching $551.7 billion in 2006. While securitization makes financing more accessible for firms and households1, it also presents regulatory challenges, as rating agencies and institutions struggle to keep up with the rapid pace of financial innovation on Wall Street. According to Coval, Jurek, and Stafford (2008) Since summer 2007, both academics and practitioners have blamed complex CDOs for being, in part, responsible for the current sub prime crisis and credit crunch. While more than 85% of the dollar value of CDO securities issued was rated AAA by either Moodys or Standard and Poors (SP), 3 several major banks and financial institutions eventually had to write-off substantial portions of their balance-sheets related to investments in CDOs, largely those backed by sub prime mortgages. In 2007, Moodys downgraded $76bn in CDO securities and another $150bn remained on credit watch as of January 2008. Downgrades in November 2007 alone numbered 2,000 and many downgrades were severe, with 500 trenches downgraded more than 10 notches.4 The ensuing confusion about the true value of these complicated securities and the extent of exposure by financial institutions, incited a credit crunch with effects beyond sub prime mortgage related investments. In another words the securities, especially the now-notorious C.D.O.s, for (collateralised debt obligations) were probably too complex for anyones good. Investors placed too much faith in the rating agencies which, to put it mildly, failed to get it right. It is tempting to take the rating agencies out for a public whipping. But it is more constructive to ask how the rating system might be improved. Thats a tough question because of another serious incentive problem. Under the current system, the rating agencies are hired and paid by the issuers of the very securities they rate which creates an obvious potential conflict of interest. The following figure shows the typical collateralised debt obligations (CDO) structure and CDO issuances over time respectively: 1.3 Sub prime market collapse: According to Khan (2008) As the housing sector continued to inflate due to the appetite for housing by Americans, the sub prime sector continued to also grow. Commercial banks entered what they considered a buoyant market that could only raise, many Americans refinanced their homes by taking out second mortgages against the added value to use the funds for consumer spending. The first sign that the US housing bubble was in trouble was on the 2nd April 2007 when New Century Inc the largest sub rime mortgage lender in the US declared bankruptcy due to the increasing number of defaults from borrowers. In the previous month 25 sub prime lenders declared bankruptcy, announcing significant losses, with some putting themselves up for sale. Khan (2008) also highlights the crisis that then spread to the owners of collateralized debt who were now in the position where the payments they were promised from the debt they had purchased was being defaulted upon. By being owners of various complex products the constituent elements of such products resulted in many holders of such debt to sell other investments in order to balance losses incurred from exposure to the sub prime sector or what is known as ‘covering a position. This second round of selling to shore up funds and meet brokerage margin requirements is what caused the collapse in share prices across the world in August 2007, with the market getting into a vicious circle of falling prices, leading to the further sales of shares to shore up losses. This type of behavior is typical of a Capitalist market crash and is what caused worldwide share values to plummet. What made matters worse was many investors caught in this vicious spiral of declining prices did not just sell sub prime and related products; they sold anything that could be sold. This is why share prices plummeted across the world and not just in those directly related to sub prime mortgages Khan (2008). International institutes who poured their money into the US housing sector realized they will not actually receive their money that they loaned out to investors as individual sub prime mortgage holders were defaulting on mass on such loans this resulted in all those who took positions in the housing sector not being able to pay the institutes they borrowed money from. It was for these reason central banks across the world intervened in the global economy in an unprecedented manner providing large amounts of cash to ensure such banks and institutes did not go bankrupt Khan (2008). According to bbc.co.uk the European Central Bank, Americas Federal Reserve and the Japanese and Australian central banks injected over $300 billion into the banking system within 48 hours in a bid to avert a financial crisis. They stepped in when banks, such as Sentinel, a large American investment house, stopped investors from withdrawing their money, spooked by sudden and unexpected losses from bad loans in the American mortgage market, other institutions followed suit and suspended normal lending. Intervention by the worlds central banks in order to avert crisis cost them over $800 billion after only seven days. 2.1 Islamic Banking: The beginning of Islamic Banking: The earliest writings on the subject of Islamic banking and finance date back to the forties of the twentieth century Nejatullah (1981) and the earliest practice can be traced to early sixties Mahmud (1995). The literature showed ambivalence between the model of an intermediary designed after conventional commercial banks and one like an investment company serving individuals seeking profits as well as the community needing development. Models of commercial banking based on two-tier Mudaraba came from economists aspiring to build an alternative to a system of banking and finance hinged on interest. Some of them placed the issue in the larger context of the struggle between capitalism and socialism in which Muslim intellectuals projected Islam as having a different approach resulting in a distinct economic system with its own financial institutions. Community initiatives looked forward to something workable while avoiding interest. The nineteen-sixties saw the establishment of an interest-free bank in Karachi, that of Tabung Haji in Malaysia, and saving-investment banks in Mit Ghamr in Egypt, that were based on sharing profits and avoided interest. Only Tabung Haji survived, Haji (1995), thanks to its roots in the community, its narrow focus, official blessings and clear structure as a business. Early in the nineteen seventies came the Dubai Islamic Bank, taking deposits in current as well as investment accounts and engaging in profit-making activities directly as well as through working partners. The Islamic Development Bank, which started operations in 1975, was designed to serve Muslim countries and communities by arranging finance for trade and development on non-interest bases. By late nineteen-seventies there were half a dozen more banks in the private sector in Egypt, Jordan, Kuwait, and the Gulf. The following decade saw a rapid expansion bringing the number of banks to dozens by the end of the decade. To banks were now added non-bank financial institutions, like investment companies and insurance companies IAIB (1997). According Mohammad (1970) till the end of the nineteen-seventies, largely a plea for replacing interest in bank lending by profit sharing. This would change the nature of financial intermediation, making the fund owners as well as the financial intermediaries share the risks of enterprise with the fund users. Early literatures main emphasis was on fairness. Making the fund-user-entrepreneur bear all the risks of business and allowing fund owner and bank claim a predetermined return was regarded to be unjust. The environment in which productive enterprise was conducted did not guaranty a positive return, so there was no justification for money capital claiming a positive return irrespective of the results of enterprise, it was argued. Hadi (1973), Nejatullah (1968). It was also argued that most, though not all, the other problems of capitalism were rooted in the practice of lending on interest. Among these problems were unemployment, inflation, poverty amidst plenty, increasing inequa lity and recurrent business cycles Mohammad (1955), Ala (1961), Mahmud (1972), According to Mohammad (1970) abolishing interest and replacing it by profit sharing could solve these problems. It was not until the next decade that Islamic economists were able to fortify these claims by sophisticated economic analysis, especially at the macroeconomic level. The focus at this stage was largely on pointing out the deficiencies of capitalism and linking them to the institution of interest, among other things. With this went the arguments showing that it was possible to have banking without interest and that it would not adversely affect savings and investment Ala (1961), Ala (1969) Iqbal (1946), Nejatullah (1969). Hasan (2005) The most significant development during the late nineteen-seventies and early eighties was the advent and proliferation of Murabahah or cost-plus financing. What the businessman got from the Islamic bank under this arrangement is the commodity he needed purchased by the bank at his request, with the promise to purchase it from the bank at a price higher than its purchase price, to be paid after a period of time. Each Murabahah transaction created a debt. Compared to funds supplied on a profit-sharing basis, funds invested in Murabahah transactions were safe. Within a couple of years of the introduction of Murabahah in late nineteen seventies, it conquered the landscape of Islamic finance, assigning Mudarabah or profit-sharing to a corner accounting for less than ten percent of the operations. Security of capital invested rather than magnitude of returns to capital ruled the roost, insofar as the fund owners were concerned. However, the proliferation of Murabahah did give a big boost to Islamic finance during the coming decades. Their total number by year 2004 may have exceeded 200, spread over more than fifty countries. Archer and Karim (2002) the seventies also saw Pakistan officially committing to interest-free Islamic banking, followed by Iran and Sudan in the eighties. Meanwhile Malaysia developed a new approach of introducing Islamic banking and finance under official patronage, while the main system continued along conventional lines Indonesia followed in early nineties. This pattern later became the model for certain countries in the Gulf, like Bahrain, Qatar and the UAE. With the spread of Islamic financial institutions across the globe and enlargement of the size of funds managed by them, came the involvement of big players in the international financial arena like Citibank, HSBC and ABN AMRO according to Archer Karim (2002). According to Vogel and Hays (1998) in the development of theory of Islamic finance and banking, the late seventies and the eighties saw many significant contributions. Murabaha or cost plus financing, acknowledged only grudgingly in documents such as the Islamic Ideology Council of Pakistan Report on Elimination of Interest from the Economy, earned full recognition as well as respectable rationale. The controversy around its legitimacy, its efficacy hardly had any impact on the speed with which it conquered the landscape of Islamic finance. Practitioners of Islamic finance report they tried to push through sharing based Finance but the results were not encouraging Attiyah (2007). The laws of the land did not (may be, could not) offer the financier same protection from false reporting of profits by the users of funds, even against outright fraud and deception, not to speak of delay in payment, as was offered to borrowers in a lending contract. There seemed to be no room for collaterals. On top of all this there were projects to be financed that simply defied profit-sharing finance, like long term municipal plans to lay sewage-pipes in a city. In this case, returns to the finance would accrue over many decades in the future while costs had to be met in the present. In the absence of a market on which shares could be floated, even medium term Mudarabah bonds designed to finance development of WAQF property did not succeed Khairallah (1994). Recourse to trade based modes of finance became necessary. This happened with privately established Islamic banks in the Gulf area as well as with the Islamic Development Bank. By the early nineteen-eighties, Murabahah had become the dominant mode of Islamic finance everywhere. As pointed out above, early theory had failed to pay due attention to trade based modes of finance and to the issue of capital protection. Murabahah seemed to fill the gap. According to Khairallah (1994) the macroeconomic implications of Islamic banking were still being worked out on the assumption that it would be largely based on profit sharing. It was argued that financial intermediation based on profit sharing rather than lending will contribute to greater stability in the economic system in general and the financial markets in particular. It was also argued that such a system would be more efficient than the conventional system Khairallah (1994). 2.2 An overview of Islamic Banking and Financial products: The earliest Islamic financial product to appear on the scene was investment deposit with an Islamic bank or investment certificate issued by an Islamic investment company IIBI (1995). Both were based on profit-sharing/ Mudarabah between the depositor/certificate holder (Rabbal-mal) and the bank/investment company (Mudarib). The next to appear were based on sale. Murabahah is sale with a mark-up on purchase price, payment being deferred. Ijarah is sale of usufruct of an equipment or real estate owned by the seller. Murabahah proceeds on the basis of a purchase order by a client who commits to buy the commodity involved. Originally introduced as contracts between two parties both Ijarah and Murabahah ended up in the form of securities. Bypassing controversies around operating leases versus financial leases Nejatullah (2005b) The market seized upon Sukuk. Ijarah bonds are investment certificates indicating ownership of a real asset subject to a lease contract yielding predetermined rent yields, they are very popular in the Gulf, unlike the Sukuk based on Murabahah receivables that are considered valid only in Malaysia. Adam and Thomas (2004). Other sale-based modes in Islamic finance are Salam and Istisnaa Islamic banks started by using them as bases for extending finance to agriculture and industry respectively. As they had no interest in taking possession of the commodities or the manufactured goods involved, there was usually a parallel contract reversing the flow so that the bank ended up with cash, larger in amount than that paid by it in the first contract. In their more developed forms, the Islamic financial market now has Sukuk based on Ijarah, Salam and Istisnaa. The buyers of Sukuk periodically get a predetermined income over and above the privilege of redemption at par on maturity, as in case of conventional bonds. According to (http://www.bankislam.com.my) there are efforts to develop secondary markets on which these Islamic bonds could be traded. If and when these efforts succeed, the same markets could handle variable return Mudarabah bonds or Sukuk based on Mudarabah/musharakah. The big difference would be in there being no guaranteed value on redemption as these investors are vulnerable to losses too, unlike those who invest in fixed income Sukuk mentioned earlier. We have to examine, first how trade based modes of finance got in, and second, how bond-like Sukuk were constructed. Later on, we go on to economics: the impact of fixed income financial products on an economy aspiring to be Islamic. Malaysia introduced sale of debt (Bay Al-Dayn) in Islamic finance. It also brought in Inah, a way of obtaining cash now against a larger amount of cash to be paid after a period of time, on the basis of sale contracts on deferred prices followed by buyback contracts at lower cash prices. The first Islamic bank to come up in Malaysia, Bank Islam Malaysia Berhad, started its operations in 1983. It is now marketing about 50 innovative and sophisticated Islamic banking products and services, comparable to those of their conventional counterparts (http://www.bankislam.com.my). A second Islamic bank, Bank Muamalat Malaysia Berhad commenced operations in 1999. The Central Bank of Malaysia also decided to allow the existing banking institutions to offer Islamic banking services using their existing infrastructure and branches. The long-term objective of BNM is to create an Islamic banking system operating on parallel lines with the conventional system This involves some interaction between the two systems, which is overseen and organized by the central bank, Bank Negara Malaysia, which has in-house National Shariah Advisory Council. An Islamic Inter-bank Money Market launched in 1994 plays a significant role in this regard (http://www.bnm.gov.my). There is also Mudarabah Inter-bank Investment facilitating interaction between deficit and surplus Islamic banks. The backbone of the whole structure seems to be the Government Investment Issue (GII). It was originally based on ‘the Shariah contract of Qard Hasan, the holder being given back only what he/she gave. ‘Any return on the loans (if any) is on the absolute discretion of the government. But, in 2001, the basis of Government Investment Issue (GIIs) issuance was further enhanced to accommodate the need to develop further the secondary market activities of the Islamic money market. An alternative concept of GII based on Sell and Buy Back Arrangement was introduced in June 2001. Under this arrangement, the Government will sell its identified assets at an agreed cash price to the buyer and subsequently buy back the same assets from the buyer at an agreed purchase price to be settled at a specified future date (http://www.bnm.gov.my). Saleem (2006) says besides complying with the prohibitions against interest and the financing of forbidden activities, Islamic banking products are based on the concept of property exchange, profit and risk sharing, and certainty. Uncertainty (gharar) is not permissible, and contracts for banking services must clearly define the responsibilities and rights of the customer and bank as to the ownership of property, fees, and risk sharing. 2.3 Istisnaa The Istisnaa the second kind of sale where a commodity is transacted before it comes into existence. This allows the Bank to order for the goods or equipment required for a construction project according to the choice of the client and delivers them to the client. The client agrees to pay in installments at specified dates. There are two sub types of Istisnaa contracts, which are classified based on the commodity bought or sold Saleem (2006). 2.4 Ijarah Islamic Investments ‘Ijarah is the process by which (Usufruct of a particular property is transferred to another person in exchange for a rent claimed from him/her). It is the equivalent of ‘Leasing in commercial banking. This allows the Bank to order for Capital assets required for the customer against a rental agreement with him. The title Impact of Financial Crisis on Islamic Banks Impact of Financial Crisis on Islamic Banks Chapter 1 Background / Introduction of recent financial crises and Islamic banking system The credit crunch is widely blamed upon the sub prime crisis which originated in America, where banks offered housing loans to those known in the industry as ninjas (no income, no job, no assets). Such people often had poor financial track records. However these loans were subsequently repackaged into financial products known as ‘collaterised debt obligations (CDOs). They were then mixed in with ‘prime loans and sold on to other banks via the wholesale market. In theory, this trading in debts was meant to spread the risk of bad loans amongst many different banks, thereby reducing risk. In fact, it lead to the ‘sub prime problem infecting not just the banks that offered the dodgy loans in the first place, but a far, far greater number of banks who bought the ‘toxic loans via the wholesale markets. The knock-on effect of this was for banks to suddenly become unsure of the value of their ‘toxic assets and as a result to stop lending each other money, or to lend money only at much higher rates. As a result the London Interbank Offered Rate (LIBOR) shot up to unprecedented levels, which in turn massively increased the cost of providing loans to the general public according to Khan (2008). The Western perspective also argues that this initial problem with sub prime debts triggered a secondary problem whereby banks which relied for cash flow principally on accessing funds from other banks via the wholesale market, suddenly found they could no longer borrow enough money to meet their cash flow requirements This is what led to the crisis with collapse of 150 year old Lehman Brothers and take over of Merrill Lynch by Bank of America, which, more than any other bank relied on the wholesale market rather than its own depositor funds to meet the banks day-to-day cash requirements Khan (2008). According to Bashir (2008) the paralysis in interbank lending led in turn to banks drastically reducing the money they lent to customers, as well as dramatically raising the cost of existing loans. This in turn substantially reduced demand for property and led to the ongoing crash in the property market. This is now feeding back to create a yet bigger problem for the banks because property is what they mostly hold as collateral for all the debts people owe them. Evidently this collateral is now worth a lot less than a year ago, and this will inevitably lead to a much higher rate of loan defaults and repossessions Bashir (2008). Having covered a secular analysis, we now turn to Islam, which proposes a very different explanation for these problems. According to Haddad (2008) Islam does not consider money to be a commodity, which can be traded at a profit, that is to say a transaction that is interest (or usury) based. Thus the reality of negating this Islamic consideration provides us with the first part of the problem. Interest, known as Riba in Arabic, is one of the major violations of Gods law, and when it spreads through society becoming an established norm without any condemnation nothing can be expected but divine wrath. Islamic banks do not borrow or lend on international money markets because interest is not allowed, traditionally they have a larger proportion of their assets in reserve accounts with central banks. Islamic banking is based on the principles of risk sharing between depositor and investor in theory, meaning that customers practice greater oversight of an Islamic banks lending performance. Shariah law stipulates that Islamic securities should be asset-based, which means that a trader must own the asset being traded. This, in turn, proscribes most forms of futures trading, as goods that the seller does not own or will not deliver cannot be the subjects of an Islamic contract. Practices such as short selling, consequently, are not a feature of Islamic Banking according to Haddad (2008). According to Siddiqi (2009) Islamic finance is growing in various parts of the world. It has moved from a mere theoretical concept to a practical reality. Islam not only prohibits dealing in interest but also in liquor, pork, gambling, pornography and anything else, which the Shariah (Islamic Law) deems Haram (unlawful). Islamic banking is an instrument for the development of an Islamic economic order. The core principles of Islamic economics system are justice, equity and welfare. Islamic economics seeks to establish a broad based economic well being with full employment and optimum rate of economic growth, it will bring socio economic justice and equitable distribution of income and wealth. Islamic economics will also ensure the stability in the value of money to enable the medium of exchange to be a reliable unit of account and a stable store of value Siddiqi (2009). According to Bagsiraj (2009) in the Islamic economy, Islamic banks act as venture capital firms collecting peoples wealth and investing it in the economy, then distributing the profits amongst depositors. Islamic banks act as investment partners for those who need money to do businesses, becoming part owners of the business. The banks should only be able to recoup their original capital by selling their share of the mortgage/business at the prevailing market value. As real partners, Islamic banks should have no objection to owning real assets and hence should be ready to share the consequential risk. This scheme, although seemingly inconsequential, could constitute a major relief to Islamic banks clients, as they would no longer live under the burden of debt and fear of repossession Bagsiraj (2009). Further more, according to Siddiqi, (2009) Islam neither endorses the capitalist nor the communist financial model. However, both the capitalist and socialist systems share certain elements with Islam, such as encouraging people to work, to be productive and earn as much as they can. Islam promotes an awareness of the hereafter in the hearts and minds of believers and instructs them not to be overcome by greed or excessively attached to money. The Islamic economic and financial system is based on a set of values, ideals and morals, such as honesty, credibility, transparency, clear evidence, facilitation, co-operation, complementarities and solidarity. These morals and ideals are fundamental because they ensure stability, security and safety for all those involved in financial transactions. Islamic Shariah prohibits economic and financial transactions that involve lying, gambling, cheating, gharar (risk or uncertainty), monopoly, exploitation, greed, unfairness and taking peoples mone y unjustly Siddiqi, 2009. The aim of this research is to examine the extent to which the Islamic banks have been affected by the recent financial crisis in contrast with its conventional counterpart. Chapter 2 Literature review 1.1 Detailed history of credit crunch: According to BBC website a credit crunch is an economic condition in which loans and investment capital are difficult to obtain. In such a period, banks and other lenders become wary of issuing loans, so the price of borrowing rises, often to the point where deals simply do not get one. When a National Public Radio journalist asked the famous economists Nouriel Roubini, Kenneth Rogoff, and Nariman Behravesh, their reaction on the monthly report that was just released by the U.S. Department of labor, their answers were â€Å"Its worse then anybody had anticipated†; â€Å"Its pretty disastrous†, and â€Å"I am shocked† Langfitt (2007). Before the report was published, the economic forecasters view was that the report would show the U.S economy increased about 100,000 jobs in August. Instead there was a net loss of 4,000 jobs; there was no growth for the first time in four years. U. S Department of Labor (2007). The forecasters were not done getting it wrong, however, after publication of the jobs data, a number of them predicted the news would bolster the U.S. stock market, because they argued, the employment report practically guaranteed that the Federal Reserve would cut interest rate on September 18, Instead, investor panic over the employment report caused the market, which had been volatile during most of the summer, to quickly lose about 2% on all major indices as per Whalen (2007). The Federal Reserve did eventually cut rates as expected, but it took a number of reassuring comments by U.S. central bank governors on September 10 to calm Wall Streets fears according to Monica (2007). What is now clear is that most economists underestimated the widening economic impact of the credit crunch that has shaken U.S. financial markets since at least mid-July 2007. According to Times online (2009) years of lax lending inflated a huge debt bubble as people borrowed cheap money and ploughed it into property. Lenders were free with their funds, especially in the US, where billions of dollars of so-called Ninja mortgages no income, no job or assets were sold to people with weak credit ratings (called sub-prime borrowers). The informal notion was that if they ran into trouble with their repayments rising house prices would allow them to re mortgage their property as per times online (2009). It seemed a good idea when Central Bank interest rates were low; the trouble was it could not last. Interest rates hit rock bottom in America in 2004 at just 1 per cent, but in June that year they began to rise Bernank (2006). As interest rates jumped, US house prices started to fall and borrowers began to default on their mortgage payments sparking trouble for us all BBC websites (2009). According to Mullan, 2008 easy money conditions made funds available to finance millions of US ‘sub prime borrowers, less well-off people who in earlier times would not have been seen as credit-worthy enough to get a plastic card never mind a home mortgage. These extra homebuyers helped reinforce the pre-existing rise in property prices, producing price hikes in many regional markets across the US. By summer 2007, the market had turned house prices were falling and default levels were raising Mullan, 2008. When the sub prime crisis hit, liquidity froze in the wholesale money markets, not just in the US but also across the Western world nytimes (2008). Following the common pattern of all credit crises, at a certain point never precisely predictable, because of the ‘elastic nature of credit debt becomes too extended for some borrowers when their circumstances change, default levels begin to grow, and the upward spiral of credit expansion and asset price appreciation turns into its unwelcome opposite Mullan, 2008. Just as mortgage issuance and rising US house prices fed on each other for several years, so now price falls and mortgage foreclosures reinforce each other BBC websites (2009). The difference with the credit crisis this time is that the necessity for writing off the bad debts spreads far beyond the original lenders, the banks and the other institutions, which issued the sub prime mortgages, repackaged the debts and sold them on elsewhere into the financial system the process of passing on debt from one institution to another has long been a feature of the financial markets, this activity became so frequent that the terminology of ‘securitization became commonplace, as bank lending was repackaged and sold on as bonds or securities, the same underlying value of a piece of financial paper (or electronic account) becomes reproduced often multiple times elsewhere in the financial system Economichelp.org (2008). In essence, such loans are resold as assets to others so that the same underlying value becomes used many times over, is what the credit system has been about since its early days. This time, in fact since the 1980s, the scale and scope of the repackaging of debt was simply more extensive than ever Mullan (2008). Hence the emergence of trading in ‘derivatives instruments derived from the original credit note that dominates modern financial markets trading. More recently, over the past few years, this practice spawned a number of new acronyms which have been a feature of the terminology for todays crisis: ABSs (asset-backed securities, with the ‘assets often being those home mortgages); CDOs (collateralised debt obligations); and SIVs (structured investment vehicles these are the alternative secondary financial bodies which invested in the new mortgage-backed financial instruments) according to Mullan (2008). 1.2 Causes of credit crunch Inaccurate Credit ratings: According to Acharya, Viral, Bharath, and Srinivasan, (2007) The Collateralized Debt Obligations (CDO) market has grown substantially since 2001 with issuance volume reaching $551.7 billion in 2006. While securitization makes financing more accessible for firms and households1, it also presents regulatory challenges, as rating agencies and institutions struggle to keep up with the rapid pace of financial innovation on Wall Street. According to Coval, Jurek, and Stafford (2008) Since summer 2007, both academics and practitioners have blamed complex CDOs for being, in part, responsible for the current sub prime crisis and credit crunch. While more than 85% of the dollar value of CDO securities issued was rated AAA by either Moodys or Standard and Poors (SP), 3 several major banks and financial institutions eventually had to write-off substantial portions of their balance-sheets related to investments in CDOs, largely those backed by sub prime mortgages. In 2007, Moodys downgraded $76bn in CDO securities and another $150bn remained on credit watch as of January 2008. Downgrades in November 2007 alone numbered 2,000 and many downgrades were severe, with 500 trenches downgraded more than 10 notches.4 The ensuing confusion about the true value of these complicated securities and the extent of exposure by financial institutions, incited a credit crunch with effects beyond sub prime mortgage related investments. In another words the securities, especially the now-notorious C.D.O.s, for (collateralised debt obligations) were probably too complex for anyones good. Investors placed too much faith in the rating agencies which, to put it mildly, failed to get it right. It is tempting to take the rating agencies out for a public whipping. But it is more constructive to ask how the rating system might be improved. Thats a tough question because of another serious incentive problem. Under the current system, the rating agencies are hired and paid by the issuers of the very securities they rate which creates an obvious potential conflict of interest. The following figure shows the typical collateralised debt obligations (CDO) structure and CDO issuances over time respectively: 1.3 Sub prime market collapse: According to Khan (2008) As the housing sector continued to inflate due to the appetite for housing by Americans, the sub prime sector continued to also grow. Commercial banks entered what they considered a buoyant market that could only raise, many Americans refinanced their homes by taking out second mortgages against the added value to use the funds for consumer spending. The first sign that the US housing bubble was in trouble was on the 2nd April 2007 when New Century Inc the largest sub rime mortgage lender in the US declared bankruptcy due to the increasing number of defaults from borrowers. In the previous month 25 sub prime lenders declared bankruptcy, announcing significant losses, with some putting themselves up for sale. Khan (2008) also highlights the crisis that then spread to the owners of collateralized debt who were now in the position where the payments they were promised from the debt they had purchased was being defaulted upon. By being owners of various complex products the constituent elements of such products resulted in many holders of such debt to sell other investments in order to balance losses incurred from exposure to the sub prime sector or what is known as ‘covering a position. This second round of selling to shore up funds and meet brokerage margin requirements is what caused the collapse in share prices across the world in August 2007, with the market getting into a vicious circle of falling prices, leading to the further sales of shares to shore up losses. This type of behavior is typical of a Capitalist market crash and is what caused worldwide share values to plummet. What made matters worse was many investors caught in this vicious spiral of declining prices did not just sell sub prime and related products; they sold anything that could be sold. This is why share prices plummeted across the world and not just in those directly related to sub prime mortgages Khan (2008). International institutes who poured their money into the US housing sector realized they will not actually receive their money that they loaned out to investors as individual sub prime mortgage holders were defaulting on mass on such loans this resulted in all those who took positions in the housing sector not being able to pay the institutes they borrowed money from. It was for these reason central banks across the world intervened in the global economy in an unprecedented manner providing large amounts of cash to ensure such banks and institutes did not go bankrupt Khan (2008). According to bbc.co.uk the European Central Bank, Americas Federal Reserve and the Japanese and Australian central banks injected over $300 billion into the banking system within 48 hours in a bid to avert a financial crisis. They stepped in when banks, such as Sentinel, a large American investment house, stopped investors from withdrawing their money, spooked by sudden and unexpected losses from bad loans in the American mortgage market, other institutions followed suit and suspended normal lending. Intervention by the worlds central banks in order to avert crisis cost them over $800 billion after only seven days. 2.1 Islamic Banking: The beginning of Islamic Banking: The earliest writings on the subject of Islamic banking and finance date back to the forties of the twentieth century Nejatullah (1981) and the earliest practice can be traced to early sixties Mahmud (1995). The literature showed ambivalence between the model of an intermediary designed after conventional commercial banks and one like an investment company serving individuals seeking profits as well as the community needing development. Models of commercial banking based on two-tier Mudaraba came from economists aspiring to build an alternative to a system of banking and finance hinged on interest. Some of them placed the issue in the larger context of the struggle between capitalism and socialism in which Muslim intellectuals projected Islam as having a different approach resulting in a distinct economic system with its own financial institutions. Community initiatives looked forward to something workable while avoiding interest. The nineteen-sixties saw the establishment of an interest-free bank in Karachi, that of Tabung Haji in Malaysia, and saving-investment banks in Mit Ghamr in Egypt, that were based on sharing profits and avoided interest. Only Tabung Haji survived, Haji (1995), thanks to its roots in the community, its narrow focus, official blessings and clear structure as a business. Early in the nineteen seventies came the Dubai Islamic Bank, taking deposits in current as well as investment accounts and engaging in profit-making activities directly as well as through working partners. The Islamic Development Bank, which started operations in 1975, was designed to serve Muslim countries and communities by arranging finance for trade and development on non-interest bases. By late nineteen-seventies there were half a dozen more banks in the private sector in Egypt, Jordan, Kuwait, and the Gulf. The following decade saw a rapid expansion bringing the number of banks to dozens by the end of the decade. To banks were now added non-bank financial institutions, like investment companies and insurance companies IAIB (1997). According Mohammad (1970) till the end of the nineteen-seventies, largely a plea for replacing interest in bank lending by profit sharing. This would change the nature of financial intermediation, making the fund owners as well as the financial intermediaries share the risks of enterprise with the fund users. Early literatures main emphasis was on fairness. Making the fund-user-entrepreneur bear all the risks of business and allowing fund owner and bank claim a predetermined return was regarded to be unjust. The environment in which productive enterprise was conducted did not guaranty a positive return, so there was no justification for money capital claiming a positive return irrespective of the results of enterprise, it was argued. Hadi (1973), Nejatullah (1968). It was also argued that most, though not all, the other problems of capitalism were rooted in the practice of lending on interest. Among these problems were unemployment, inflation, poverty amidst plenty, increasing inequa lity and recurrent business cycles Mohammad (1955), Ala (1961), Mahmud (1972), According to Mohammad (1970) abolishing interest and replacing it by profit sharing could solve these problems. It was not until the next decade that Islamic economists were able to fortify these claims by sophisticated economic analysis, especially at the macroeconomic level. The focus at this stage was largely on pointing out the deficiencies of capitalism and linking them to the institution of interest, among other things. With this went the arguments showing that it was possible to have banking without interest and that it would not adversely affect savings and investment Ala (1961), Ala (1969) Iqbal (1946), Nejatullah (1969). Hasan (2005) The most significant development during the late nineteen-seventies and early eighties was the advent and proliferation of Murabahah or cost-plus financing. What the businessman got from the Islamic bank under this arrangement is the commodity he needed purchased by the bank at his request, with the promise to purchase it from the bank at a price higher than its purchase price, to be paid after a period of time. Each Murabahah transaction created a debt. Compared to funds supplied on a profit-sharing basis, funds invested in Murabahah transactions were safe. Within a couple of years of the introduction of Murabahah in late nineteen seventies, it conquered the landscape of Islamic finance, assigning Mudarabah or profit-sharing to a corner accounting for less than ten percent of the operations. Security of capital invested rather than magnitude of returns to capital ruled the roost, insofar as the fund owners were concerned. However, the proliferation of Murabahah did give a big boost to Islamic finance during the coming decades. Their total number by year 2004 may have exceeded 200, spread over more than fifty countries. Archer and Karim (2002) the seventies also saw Pakistan officially committing to interest-free Islamic banking, followed by Iran and Sudan in the eighties. Meanwhile Malaysia developed a new approach of introducing Islamic banking and finance under official patronage, while the main system continued along conventional lines Indonesia followed in early nineties. This pattern later became the model for certain countries in the Gulf, like Bahrain, Qatar and the UAE. With the spread of Islamic financial institutions across the globe and enlargement of the size of funds managed by them, came the involvement of big players in the international financial arena like Citibank, HSBC and ABN AMRO according to Archer Karim (2002). According to Vogel and Hays (1998) in the development of theory of Islamic finance and banking, the late seventies and the eighties saw many significant contributions. Murabaha or cost plus financing, acknowledged only grudgingly in documents such as the Islamic Ideology Council of Pakistan Report on Elimination of Interest from the Economy, earned full recognition as well as respectable rationale. The controversy around its legitimacy, its efficacy hardly had any impact on the speed with which it conquered the landscape of Islamic finance. Practitioners of Islamic finance report they tried to push through sharing based Finance but the results were not encouraging Attiyah (2007). The laws of the land did not (may be, could not) offer the financier same protection from false reporting of profits by the users of funds, even against outright fraud and deception, not to speak of delay in payment, as was offered to borrowers in a lending contract. There seemed to be no room for collaterals. On top of all this there were projects to be financed that simply defied profit-sharing finance, like long term municipal plans to lay sewage-pipes in a city. In this case, returns to the finance would accrue over many decades in the future while costs had to be met in the present. In the absence of a market on which shares could be floated, even medium term Mudarabah bonds designed to finance development of WAQF property did not succeed Khairallah (1994). Recourse to trade based modes of finance became necessary. This happened with privately established Islamic banks in the Gulf area as well as with the Islamic Development Bank. By the early nineteen-eighties, Murabahah had become the dominant mode of Islamic finance everywhere. As pointed out above, early theory had failed to pay due attention to trade based modes of finance and to the issue of capital protection. Murabahah seemed to fill the gap. According to Khairallah (1994) the macroeconomic implications of Islamic banking were still being worked out on the assumption that it would be largely based on profit sharing. It was argued that financial intermediation based on profit sharing rather than lending will contribute to greater stability in the economic system in general and the financial markets in particular. It was also argued that such a system would be more efficient than the conventional system Khairallah (1994). 2.2 An overview of Islamic Banking and Financial products: The earliest Islamic financial product to appear on the scene was investment deposit with an Islamic bank or investment certificate issued by an Islamic investment company IIBI (1995). Both were based on profit-sharing/ Mudarabah between the depositor/certificate holder (Rabbal-mal) and the bank/investment company (Mudarib). The next to appear were based on sale. Murabahah is sale with a mark-up on purchase price, payment being deferred. Ijarah is sale of usufruct of an equipment or real estate owned by the seller. Murabahah proceeds on the basis of a purchase order by a client who commits to buy the commodity involved. Originally introduced as contracts between two parties both Ijarah and Murabahah ended up in the form of securities. Bypassing controversies around operating leases versus financial leases Nejatullah (2005b) The market seized upon Sukuk. Ijarah bonds are investment certificates indicating ownership of a real asset subject to a lease contract yielding predetermined rent yields, they are very popular in the Gulf, unlike the Sukuk based on Murabahah receivables that are considered valid only in Malaysia. Adam and Thomas (2004). Other sale-based modes in Islamic finance are Salam and Istisnaa Islamic banks started by using them as bases for extending finance to agriculture and industry respectively. As they had no interest in taking possession of the commodities or the manufactured goods involved, there was usually a parallel contract reversing the flow so that the bank ended up with cash, larger in amount than that paid by it in the first contract. In their more developed forms, the Islamic financial market now has Sukuk based on Ijarah, Salam and Istisnaa. The buyers of Sukuk periodically get a predetermined income over and above the privilege of redemption at par on maturity, as in case of conventional bonds. According to (http://www.bankislam.com.my) there are efforts to develop secondary markets on which these Islamic bonds could be traded. If and when these efforts succeed, the same markets could handle variable return Mudarabah bonds or Sukuk based on Mudarabah/musharakah. The big difference would be in there being no guaranteed value on redemption as these investors are vulnerable to losses too, unlike those who invest in fixed income Sukuk mentioned earlier. We have to examine, first how trade based modes of finance got in, and second, how bond-like Sukuk were constructed. Later on, we go on to economics: the impact of fixed income financial products on an economy aspiring to be Islamic. Malaysia introduced sale of debt (Bay Al-Dayn) in Islamic finance. It also brought in Inah, a way of obtaining cash now against a larger amount of cash to be paid after a period of time, on the basis of sale contracts on deferred prices followed by buyback contracts at lower cash prices. The first Islamic bank to come up in Malaysia, Bank Islam Malaysia Berhad, started its operations in 1983. It is now marketing about 50 innovative and sophisticated Islamic banking products and services, comparable to those of their conventional counterparts (http://www.bankislam.com.my). A second Islamic bank, Bank Muamalat Malaysia Berhad commenced operations in 1999. The Central Bank of Malaysia also decided to allow the existing banking institutions to offer Islamic banking services using their existing infrastructure and branches. The long-term objective of BNM is to create an Islamic banking system operating on parallel lines with the conventional system This involves some interaction between the two systems, which is overseen and organized by the central bank, Bank Negara Malaysia, which has in-house National Shariah Advisory Council. An Islamic Inter-bank Money Market launched in 1994 plays a significant role in this regard (http://www.bnm.gov.my). There is also Mudarabah Inter-bank Investment facilitating interaction between deficit and surplus Islamic banks. The backbone of the whole structure seems to be the Government Investment Issue (GII). It was originally based on ‘the Shariah contract of Qard Hasan, the holder being given back only what he/she gave. ‘Any return on the loans (if any) is on the absolute discretion of the government. But, in 2001, the basis of Government Investment Issue (GIIs) issuance was further enhanced to accommodate the need to develop further the secondary market activities of the Islamic money market. An alternative concept of GII based on Sell and Buy Back Arrangement was introduced in June 2001. Under this arrangement, the Government will sell its identified assets at an agreed cash price to the buyer and subsequently buy back the same assets from the buyer at an agreed purchase price to be settled at a specified future date (http://www.bnm.gov.my). Saleem (2006) says besides complying with the prohibitions against interest and the financing of forbidden activities, Islamic banking products are based on the concept of property exchange, profit and risk sharing, and certainty. Uncertainty (gharar) is not permissible, and contracts for banking services must clearly define the responsibilities and rights of the customer and bank as to the ownership of property, fees, and risk sharing. 2.3 Istisnaa The Istisnaa the second kind of sale where a commodity is transacted before it comes into existence. This allows the Bank to order for the goods or equipment required for a construction project according to the choice of the client and delivers them to the client. The client agrees to pay in installments at specified dates. There are two sub types of Istisnaa contracts, which are classified based on the commodity bought or sold Saleem (2006). 2.4 Ijarah Islamic Investments ‘Ijarah is the process by which (Usufruct of a particular property is transferred to another person in exchange for a rent claimed from him/her). It is the equivalent of ‘Leasing in commercial banking. This allows the Bank to order for Capital assets required for the customer against a rental agreement with him. The title