To what extent does international trade explain the remarkable success Essay - 1

To what extent does international trade explain the remarkable success of the East Asian economies since 1945 - Essay Example Deng Xiaoping, at the Third Plenum of the 11th Party Congress of the Chinese Communist Party (CCP) in 1978, criticized the Cultural Revolution and insisted that CCP should prioritize economic growth (Hess 22). This incident is widely recognized as the beginning of China’s financial reform period and undeniable economic wonder, as an outcome of which China became the second biggest and most vigorous economy in the world. This paper discusses the evolution of China’s financial reform. In 1978, Deng Xiaoping and his peers from the Party’s Central Committee gathered in Beijing and agreed that financial reform was the only solution to the political and economic problems confronting China (Tam 83). China, during that time, was an impoverished, strictly regulated agrarian economy on the brink of failure. The initial period of financial reforms was characterized by a marked growth of financial institutions. From 1978 to 1988, leading banks, including the central bank, were founded, as well as numerous financial agencies, credit cooperatives, and trust and investment firms at municipal, provincial, and central level (Zhu 1505). In 1983, two highly significant events occurred: first, the People’s Bank of China (PBoC) took on the functions of a central bank; and, second, PBoC’s commercial banking operations were divided into four state-owned, autonomous banks, popularly called the ‘Big Four’— the People’s Construction Bank o f China, the Agricultural Bank of China, the Bank of China, and the recently established Industrial and Commercial Bank of China (Hess 25). Institution building began in the initial reform period with the formation of a two-level banking structure. In 1995, central banking experienced a new push when a new policy on the PBoC was implemented that provided the central bank the legal structure to function under the headship of the State Council in a market-driven setting (Riedel and Jin 79). At

Russian Financial Crisis in 1998 Essay Example for Free

Russian Financial Crisis in 1998 Essay These events led Russia’s international reserves to fall by $13. 5 billion and to the dissolution of the Kiriyenko government. One month later, Standard and Poor’s downgraded its rating of the Russian ruble to â€Å"CCC,† the lowest possible Standard and Poor’s rating, for its long-term outlook and â€Å"C† for short-term outlook. These events signaled the onset of the Russian financial crisis, which had its roots in the fundamental problems in the Russian economy but was triggered in part by the continuing financial crises in emerging markets in Asia and around the world. What were the causes of this crisis and near financial collapse? What are the so-called â€Å"experts† saying about the crisis and its spillover effects on other ENI countries? What are the possible courses of action that could minimize the adverse effects of the crisis and reduce the likelihood of future occurrences? The purpose of this paper is to summarize the divergent viewpoints expressed by leading scholars and practitioners in the field of international development and finance. By surveying the literature, it is apparent that the Russian crisis, and to some extent the Asian crisis that preceded it, was caused by a combination of internal structural problems in the domestic economy (especially in the banking and fiscal systems) and growing problems with the international financial system that permits excessively rapid outflows of capital. However, there is significant divergence of opinion among scholars and practitioners as to which set of factors, those related to the Russian economy or those related to the international financial system, are the cause of the crisis. In addition to the differences of opinion as to the causes of the crisis, disagreement exists as to the remedies to the crisis. As a result, each group has recommended its own set of policy prescriptions. The first section of this paper discusses the divergent opinions on the causes of the crisis. The second section highlights the economic, social, and political effects of the crisis. The third section provides a list of the proposed remedies offered by the divergent camps. The final section summarizes the main findings and includes a timeline of the Asian and Russian crises. Divergent Opinions: Causes of the Russian and Global Financial Crises The divergent views regarding the causes and cures of the Russian and Asian financial crises can be broken down into two camps: (1) those that believe that the crises derived primarily from problems in the international financial system and (2) those that place blame primarily on the structural problems within the countries themselves which left them vulnerable to capital flight and other problems arising from external financial instabilities. Members of the first group tend to be critical of the IMF and other international financial institutions, saying that these institutions played a role in creating and exacerbating the financial crises rather than helping to reduce the negative impact, although the â€Å"fix the system† critics do agree that each of the crisis countries did suffer from internal structural problems as well. The second group of analysts—the â€Å"fix the countries† group—believes that the international financial system and the approach of the IMF in assisting these countries are more or less working, and that the current crises derived from a lack of sufficient regulatory and fiscal reforms in Russia and Asia. â€Å"Fix the Global Financial System† Critics Jeffrey Sachs. According to Sachs, â€Å"the Treasury and the IMF have driven a large part of the developing world into recession†¦And the Brazil case makes absolutely clear that the first step is not to defend overvalued currencies. The punishing cost of this is overwhelmingly high. This is a lesson that the IMF and the Treasury have continued to ignore† (Uchitelle 1999). In his view, the IMF exacerbated the crisis by demanding tight fiscal and monetary policies. He claims that perceiving the crisis to be one of balance of payments, rather than a financial panic, the IMF chose an approach similar to the mistaken policies implemented by the United States in the early stages of the Great Depression of the 1930s (Radelet and Sachs 1999). Furthermore, Sachs insists that since high interest rates and austerity measures are bringing disaster to many emerging markets, interest rates should be kept down to encourage economic activity and allow exchange rates to find their own equilibrium level. He does not attribute the devaluation of exchange rates as a cause of the crisis in Russia, nor does he believe that a currency board arrangement would have saved the country. He states that â€Å"when pegged rates become overvalued, [this] forces countries to deplete their foreign exchange reserves, in a vain defense of the currency peg. † In his view, it was the combination of broken promises (i. e. , the ruble will not be devalued) and depleted reserves that left the country vulnerable to panic (Radelet and Sachs 1999). He believes that a growing economy is more likely to restore investor confidence than a recessionary one burdened by high interest rates (Uchitelle 1999). An additional contributing factor to the crisis, according to Sachs, was â€Å"moral hazard. Investors clearly had doubts about Russia’s medium-term stability, and talked openly about the risk of collapse and about the safety net that they expected the IMF and G-7 to provide to Russia. Knowing that these international lenders would rescue Russia and guarantee investments in the event of a financial meltdown in Russia, international investors tended to underestimate the r isks—and hence tended to over-invest in Russia. Russia was viewed as â€Å"too big to fail,† and this led to an inflow of capital that was larger than appropriate for the actual level of risk (Radelet and Sachs 1999). George Soros. As one of the world’s most successful international investors, an important philanthropist with millions of dollars invested in democracy projects throughout the ENI region, and a public intellectual who has proposed that sweeping changes be made to the international financial system, George Soros is a key figure in the Russian and Asian financial crises. His disparate roles often create a conflict, as Soros-the-intellectual appears to many an advocate of the regulation of international capital flows to prevent potential damages from speculations by people like himself (Frankel 1999). Soros was Russia’s biggest individual investor prior to the crisis in August 1998. He held a $1 billion stake in Svyazinvest, a telecommunications concern, and millions in stocks, bonds, and rubles. In mid-August 1998 Soros sprang into action to try to stop the crisis. He contacted the U. S. Treasury department, influential former members of Yeltsin’s administration, a nd published a letter in The Financial Times saying that the meltdown in Russian financial markets â€Å"had reached the terminal phase† (O’Brien 1998). In his letter, Soros called for immediate action—a devaluation of the ruble and institution of a currency board—that would have eliminated the Russian central bank’s discretion over monetary policy. Not realizing that a letter from Soros would be perceived as coming from Soros-the-investor instead of Soros-the-intellectual, his letter helped to prompt a panic in Russian markets, where investors believed Soros was shorting the ruble. Soros’ funds ultimately lost $2 billion in Russia as a result of the financial crisis there. According to his testimony to the Congressional Committee on Banking and Financial Services on 15 September 1998, Soros pointed out that â€Å"the Russia meltdown has revealed certain flaws in the international banking system which had previously been disregarded† (Soros 1998a). These flaws can be summarized as follows: (1) Banks engage in swaps, forward transactions, and derivative trades among each other— in addition to their exposure on their own balance sheets—but these additional transactions do not show up in the banks’ balance sheets. So when Russian banks defaulted on their obligations to western banks, the western banks continued to owe their own clients. As these transactions form a daisy chain with many intermediaries, and each intermediary has an obligation to his/her counterparty, no simple way could be found to offset the obligations of one bank against another. As a result, many hedge and speculative funds sustained large losses, and had to be liquidated. This systemic failure led most market participants to reduce their exposure to emerging markets all around, and this caused bank stocks to plummet and global credit market to enter a crunch phase. 2) As individual countries attempt to prevent the exodus of capital from their economy by raising interest rates and placing limits on foreign withdrawal of capital (as in Malaysia), this â€Å"beggar-thy-neighbor† policy tends to hurt the other countries that are trying to keep their capital markets open. (3) Another â€Å"major factor working for the d isintegration of the global capitalist system is the evident inability of the international monetary authorities to hold it together†¦ The response of the G7 governments to the Russian crisis was woefully inadequate, and the loss of control was kind of scary. Financial markets are rather peculiar in this respect: they resent any kind of government interference but they hold a belief deep down that if conditions get really rough the authorities will step in. This belief has now been shaken† (Soros 1998a). He also adds that â€Å"†¦financial markets are inherently unstable. The global capitalist system is based on the belief that financial markets, left to their own devices, tend toward equilibrium†¦This belief is false† (Soros 1998a). 3 His proposed cure is to reconsider the mission and methods of the IMF as well as replenish its capital base. Additionally, he’d like to see the establishment of an International Credit Insurance Corporation to help create sound banking systems, which would be subject to close supervision by the international credit agency, in developing countries (Soros 1998b). His last recommendation is to reconsider the functioning of debt-swap and derivative markets (Soros 1998b). Academia and Other Nongovernmental Organizations. Initially, Paul Krugman, an economist at MIT, argued that problems with the Asian economies, combined with corruption and moral hazard, led to wild over-investment and a boom-bust cycle. More recently, however, Krugman explains that such weaknesses cannot explain the depth and severity of the crisis, nor the fact that it occurred in so many countries simultaneously, and instead he places the blame on financial panic and overly liberalized international and domestic financial systems (Radelet and Sachs 1999). According to Krugman, â€Å"all short-term debt constitutes potential capital flight. † The need to fix structural problems in individual countries should not stand in the way of broader macroeconomic measures, in particular those designed to stimulate growth in hard times. He states that â€Å"it is hard to avoid concluding that sooner or later we will have to turn the clock at least part of the way back. To limit capital flows for countries that are unsuitable for either currency unions or free floating; to regulate financial markets to some extent; and to seek low, but not too low, inflation rather than price stability. We must heed the lessons of Depression economics, lest we be forced to relearn them the hard way† (Uchitelle 1999). In other words, the global financial system is largely to blame for the recent crises. Fix the Countries† Analysts IMF. According to the IMF, Russia’s financial crisis was brought on by a combination of (1) weak economic fundamentals, especially in the fiscal area; (2) unfavorable developments in the external environment, including contagion effects from the Asian financial crisis and falling prices for key export commodities such as oil; and (3) its â€Å"vulnerability to changes in market sentiment arising from the financing of balance of payments through short-term treasury bills and bonds placed on international markets† (IMF December 1998). The IMF had pointed out in May 1998 that Russia had made insufficient progress in improving budget procedures and tax systems, establishing competent agencies to collect taxes and control expenditures, clarifying intergovernmental fiscal relations, and ensuring transparency at all levels of government operations. By August 1998, investor confidence in the ability of Russian authorities to bring the fiscal system under control began to decline, immediately leading to the financial crisis, after the Duma failed to approve fiscal measures planned under the augmented Extended Fund Facility (EFF). These measures were aimed at reducing the fiscal deficit, implementing new structural reforms addressing the problem of arrears, promoting private sector development, and reducing the vulnerability of the government’s debt position, including a voluntary restructuring of treasury bills. 4 The extent to which the Russian crisis is attributable to contagion effects from the Asian crisis instead of to internal problems stemming from insufficient reforms in fiscal management is difficult to determine. According to the IMF’s May 1998 assessment of spillover effects from the Asian crisis, Russia’s stock market was seriously hit by the crisis and by early spring 1998, stock prices in Russia had indeed not yet fully recovered from the lows reached in fall 1997. The Russian ruble had also been hit hard and the central bank had to intervene heavily in the foreign exchange market just to keep the currency within the new exchange rate band. As international capital fled from the risky Asian economies in the fall and winter of 1997, investors who were similarly wary of risky investments in the transition economies began to reduce their exposure to Russian and other ENI markets. Nevertheless, emerging market investors quickly began to differentiate between high- and low-risk countries. By first quarter 1998 the Czech Republic and Poland had become relatively attractive to investors, receiving considerable short-term capital inflows and by January 1998 Standard and Poor’s credit rating for Hungary had greatly improved. Russia and Ukraine, on the other hand, continued to suffer from structurally weak financial sectors and an over-dependence on short-term borrowing. To attract investment back into Russia, the Russian government had to raise interest rates in order to offer yields well above pre-crisis levels to cover for the increased perception of risk. As a result, foreign investment had started to flow back into Russia by early 1998. According to the IMF, differences in the severity of interest rate and equity price movements among the transition countries illustrate the importance of appropriate domestic macroeconomic and structural policies to limit vulnerability to international financial crises. In Russia and Ukraine, financial sector weaknesses and a high dependence on government borrowing, in addition to chronic revenue problems, especially in Russia’s case, explain why these two countries were more affected by the Asian crisis than the Central and East European countries. In other words, the Asian crisis exposed Russia’s underlying structural problems and made the need to address them more apparent. The IMF continues to assert that the financial crisis in Russia was a crisis of the state. Nearly a year and a half ago, Michel Camdessus, Managing Director of the IMF, claimed that the Russian state â€Å"interferes in the economy where it shouldn’t; while where it should, it does nothing. Camdessus pointed out that the Russian state needs to make progress in promoting an efficient market economy through transparent and effective regulatory, legal, and tax systems. At present, the IMF still supports these recommendations (IMF November 1998). Existence of a Virtual Economy. Clifford Gaddy of the Brookings Institution and Barry Ickes of Penn State University argue that although the immediate causes of Russia’s financial crisis are the large budget deficit, resulting from nsufficient revenue collection, and an inability to service the debt, especially short-term dollar liabilities, there are more fundamental problems with Russia’s economy. These problems stem from â€Å"illusions† regarding prices, wages, taxes, and budgets that permeate the Russian economy to such a great extent that the economy has become â€Å"virtual† rather than actual. This virtual economy 5 is derived from a public pretense that the economy is bigger and output more valuable than they really are. According to Gaddy and Ickes, the virtual economy primarily originated from the unreformed industrial sector inherited from the Soviet era, in which enterprises produced output that was sold via barter at prices that were higher than they would be if sold for cash. In general, these enterprises operate without paying their bills, as wages that should be paid to employees (but are not paid) become wage arrears, and required payments for inputs (which are also not paid) emerge as interenterprise arrears and payments through barter. In fact, Gaddy and Ickes assert, people make an effort to avoid cash transactions because they would expose the pretense of the virtual economy. They go on to state that although the virtual economy acts as a safety net for Russian society, it has serious economic repercussions since it negatively affects enterprise restructuring, economic performance measuring, and public sector reform (Gaddy and Ickes 1998). At this point, they argue that the West has two choices on how to help Russia. First, the West can concentrate on keeping Russia stable in the short term by bailing out the virtual economy, which will lead to further consolidation of a backward, noncompetitive economy and will guarantee the need for future emergency bailouts. The second option would be to refuse the bailout. The consequences of this option would be drastic—the ruble will lose its value, foreign capital will flee—but on the positive side, the Russian economic policy that is so addicted to borrowing would have to kick the habit as it found its supply of international credit cut off. They state that â€Å"denying Russia a bailout is not without risks. But bailing out the virtual economy is sure to increase those risks for the future† (Gaddy and Ickes 1998). U. S. Government. The U. S. Treasury Department points out that despite the many important reforms that have been carried out in Russia—including extensive privatization, price liberalization, and reduction of government spending—reforms in a few critical sectors have lagged behind, leading to the financial crisis. According to David Lipton, the principal problems include the failure to control the budget deficit and extensive government borrowing. The budget problems are a manifestation of the political struggle over the country’s economic direction and as long as these disputes over the proper role of government remain unresolved, he believes that budget difficulties and unnecessary government borrowing will continue unabated. He also argues that Russia’s high fiscal deficits have led to the country’s high interest rates since â€Å"Russias macroeconomic problem is fundamentally fiscal; interest rates are more properly viewed as a symptom of that problem, not a cause† (Lipton 1998). Lastly, he argues that the failure to build a favorable investment climate and adhere to the rule of law also helped to sow the seeds of the financial crisis (Lipton 1998). The Treasury Department also points to external factors that led to the crisis. According to Deputy Secretary Lawrence Summers, the Russian crisis was not inevitable. He avers that if the Asian crisis had not reduced confidence among emerging markets investors, and had the prices of export commodities (e. g. , oil) not fallen so dramatically—the August 1998 crisis might not have taken place (Summers 1999). Nevertheless, the crisis did occur because the Russian government attempted to pursue an enormously risky course of simultaneously 6 devaluing the ruble, imposing a debt moratorium, and restructuring government bonds in response to the external pressures (Lipton 1998). To avoid future crises, Summers points out that Russia needs a tax system that supports the government and legitimizes enterprises, which probably involves a new allocation of spending and revenues between central and regional governments. Summers, however, is also quick to point out that it is much easier to talk about what tax reforms need to be implemented than to discuss how the reforms can be accepted politically. He adds that bank restructuring is another area where reform is needed and that it should be done in a fair nd transparent way within a legal framework that makes current owners take responsibility for their losses before scarce public funds are used (Summers 1999). Russian Government and Nongovernmental Analysts. Yegor Gaidar, former prime minister of Russia, attributes the crisis to the combined continuation of soft budget constraints from the socialist period along with the weakening of previous administrative controls and government corruption, which led to the ban kruptcy of state enterprises. The early years of transition in Russia were marred by inefficient macroeconomic policy, weak budgetary and monetary constraints, and inflation that eroded budget revenues. Although later macroeconomic policy was more efficient and succeeded in controlling inflation, efforts to improve revenue collection or cut expenditure obligations have failed, leading to unsustainable deficits. The lessons learned here are that budget deficits should be reduced as quickly as possible, as inflation is also controlled, and the vulnerability of exchange rate regimes to potential crises should be addressed immediately (IMF 1999; Gaidar 1999). In terms of the current regime, Gaidar describes Primakov and his government as a â€Å"communist government in post-communist Russia,† because Primakov and his cabinet come from the â€Å"traditional Soviet economics establishment† and his post-crisis approach relies on strengthening and centralizing government control. According to Gaidar, the Russian government faced two possible paths to solve the crisis: (1) return to the approach employed in 1992–94, with soft monetary and budget policies, or (2) maintain a tight monetary policy, stabilize the ruble, and carry out fundamental budget reforms to allow the government to balance revenues and expenditures. The first path would lead to the return of high inflation rates, as the government relaxed its control over the money supply in an attempt to pay its debts, but the banks would benefit from the return of â€Å"cheap money† issued by the Central Bank. The second path would involve speeding up structural reforms, which would be good news for profitable enterprises but would mean painful consequences for unproductive enterprises—mostly firms in the industrial and financial sectors—as they would be allowed to go bankrupt if they could not compete in world markets. Both paths would be painful, Gaidar explains, but the first path of high inflation would also be inequitable, as the poorest layer of society tends to suffer most from increasing prices. Not surprisingly, Primakov chose to pursue a modified version of the inflationary approach, a sort of populist economics policy that had been implemented in many Latin American countries. The reason Primakov opted for this path, as Gaidar states, is because â€Å"in part, the lack of internal and external sources for financing after the 7 dismissal of the Kiriyenko government pushed [the Primakov government] toward choosing the inflationary variant† (Institute for Economics in Transition 1999). Andrei Illarionov, Director of the Institute for Economic Analysis in Moscow, while noting the IMF’s successes with respect to Russia, criticized the IMF for being too willing to compromise on Russian conditionality. Not one of the IMF programs developed in Russia, Illarionov claims, has been executed in full, as a result of the softening and revision of conditions in original agreements. He states that â€Å"decisions to provide financing for Russia, motivated by political rather than economic considerations, have given rise to the problem of moral hazard. As a result, the Russian government became spoiled after being granted unearned financial assistance, and policy became even more irresponsible than before (Illarionov 1998). Finally, Illarionov also criticizes the IMF for offering inappropriate policy recommendations to Russian authorities in two other areas: exchange rate and fiscal policies. The IMF program (mid-1998, pre-crisis) stipulated that the exchange rate policy should remain unchanged for the remainder of 1998, in order to preserve the low inflation rates, and prescribed that the Russian government should concentrate mainly on raising revenue rather than reducing expenditures. Although many poor 9 O c t 9 8 J u l 9 8 A p r 9 8 egaw muminim laiciffo J a n 9 8 O c t 9 7 .9991/20 ,PECER :ecruoS J u l 9 7 A p r 9 7 J a n 9 7 Dissatisfaction over the continuing problem of wage arrears led to an increase in strikes throughout the country toward the latter part of 1998; 1873 strikes were registered in December 1998, nearly 3. 4 times the number during the previous December. aissuR ni ecnetsisbuS dna ,snoisneP ,segaW ecnetsisbus woleb era % 92 level ecnetsisbus laiciffo ecnetsisbus woleb era % 12 0 001 002 003 004 005 006 007 008 R u bl e s p e r m o n t h . eople have become poorer, the impoverishing effects of the crisis have also hit other groups within Russian society. Workers involved in the business of selling imported goods have found that demand for their products has nearly evaporated as not only consumer incomes have fallen, but also ruble depreciation means higher prices on imports. As a result, many of these trade businesses have shed labor or closed. One of the longer-term consequences of the economic crisis in Russia may be the strain on society, which is likely to weaken the Russian government’s ability to continue to push for reforms. In some ENI countries, the crisis has given reform skeptics an excuse to abandon or reverse some reforms already implemented. The social pressure against further economic reforms, now seen by many as the cause rather than the cure for the economic crises, may become strong enough to counter-balance the pro-reform force. It may lead some ENI countries to get stuck in what Adrian Karatnycky describes as a â€Å"state of stasis† rather than of transition. Stability Versus Democracy Politically, the financial collapse has weakened Russia vis-a-vis the west, but its relative power in the region has in many ways increased. Not only has the crisis given Moscow an excuse to consolidate power over the regions throughout Russia, but it has also allowed many hard-liners within Russia to gain some ground in their push to reassert Russia’s traditional sphere of influence. In addition, many neighboring regions have found themselves with large arrears on their payments to Russia for natural gas deliveries, and have had to strike deals with Russia to find ways to settle these debts through deliveries of food and other barter arrangements. Following the onset of the crisis in August, the Russian government proposed many changes intended to promote economic stability at the cost of democracy. In February 1999, Prime Minister Primakov argued that Russia’s governors should be appointed by the President, rather than elected by their constituents, so that Moscow can take back control over the regions and avoid a collapse of the country. President of Belarus Alyaksandr Lukashenko rejoiced in the crumbling of IMF-backed reforms in Russia, considering the crisis to be a indication of his position in favor of state planning and price controls. The old proposal regarding a possible political union of Belarus, Ukraine, and Russia has also resurfaced, as Russia and some neighboring countries have concluded that further integration will help solve their problems. In the words of Ivan Rybkin, President Yeltsin’s envoy to the CIS, â€Å"the recent crisis taught us all that we must stand together in order to surviveâ₠¬  (Rutland 1999). Effects on Neighboring Countries The drop in real wages in Russia—coupled with the devaluation of the ruble—has translated into dramatically reduced Russian imports. For the neighboring countries that depend on Russia as a market for their exports, the shrinking market in Russia has been disastrous for their local economies. As Russians are shifting consumption away from the relatively more expensive imported goods, the producers of these goods in neighboring countries are faced 10 with a dramatic fall in demand for their products. This has translated into falling output and increased unemployment for the countries that are most closely tied to Russia through trade, especially Moldova (more than 50 percent of Moldovan exports go to Russia); Belarus, Ukraine, and Kazakhstan, (;gt;33 percent of exports to Russia, as of early 1998); and Georgia (;gt;30 percent of exports to Russia) (EC 1999). The drop in remittances from nationals living in Russia has led to decreased incomes in neighboring countries with large numbers of gastarbeiter working in Russia. Armenia, Georgia, and Azerbaijan have been most severely hit by this decline in remittances. In some cases the pattern seems to have been reversed, with families in neighboring countries now supporting relatives living in Russia (EC 1999). Finally, food prices have also increased in the neighboring countries of the NIS, as the cost of imports from outside Russia has risen as a consequence of the significant devaluation of local currencies. Some of the specific effects and impacts on other NIS and neighboring countries are summarized briefly below. Armenia—Accumulation of public sector arrears is likely, as government is facing difficulties in financing of education, health care, and other expenditures. Remittances from Armenians in Russia have decreased, placing additional pressure on family support systems, and this could result in increased poverty. Azerbaijan—Trade-related consequences in the short term are less than for other NIS countries, as the political instability in the North Caucasus region has already limited trade ties with Russia prior to the crisis. Government spending was cut in 1998, and further cuts in 1999 will affect key social sectors. As in other Caucasus countries, decreased remittances from Azerbaijani nationals residing in Russia has reduced family incomes in Azerbaijan. Baltic Region—Estonia, Latvia, and Lithuania—The Russian crisis forced some Baltic banks to fail, and several others to reveal their under-reporting of exposure to Russia in their September 1998 quarterly reports. Better developed financial systems, a reorientation toward western markets, and general political stability have helped to limit the damage and contagion effects from the Russian crisis. Belarus—One of the most affected countries in the NIS, Belarus was highly dependent on trade with Russia prior to the crisis. Exports to Russia plunged from $400 million/month in the first half of 1998 to just $170 million/month by September 1998. Shortages of basic foods forced the government to introduce rationing. Georgia—The Russian market accounted for 30 percent of Georgia’s exports prior to the crisis, and Georgian nationals living in Russia provided a significant amount of income to Georgian families through remittances. The trade deficit with Russia widened to 50 percent in October 1998, forcing the Georgian authorities to float the lari (which led to a sharp depreciation). 11 Kazakhstan—In the first half of 1998, half of Kazakhstan’s exports went to Russia, and the impact of the crisis has been felt in Kazakhstan primarily through the reduction of exports to Russia. Kazakhstan introduced a temporary ban on the import of some Russian foodstuffs, in order to control the inflow of cheapened Russian goods following the depreciation of the ruble. Kyrgyzstan—Nearly 60 percent of Kyrgyzstan’s exports went to Russia, prior to the crisis, so this country was also one of the more vulnerable to negative shocks through the trade mechanism. In this most pro-reform of the Central Asian Republics, price liberalization of utilities and privatization may be threatened, as consumers are less able to pay the higher tariffs as a esult of fallen incomes. Moldova—Trade with Russia is important to Moldova, as 50 percent of Moldovan exports went to Russia prior to the crisis. Many farms and other agro-exporters have been unable to pay wages, as their export market has dried up in Russia. Here, too, the crisis has threatened the reform and liberalization process implemented by the government, as investors’ interest in the Moldovan economy has diminished and a heavy withdrawal from commercial banks have signaled a lack of confidence in this country. Tajikistan—Low commodity prices for cotton and gold had already damaged the Tajikistan economy before the Russian crisis, and the fragile peace held together in part with the support of the Russian military (serving as border guards) has certainly not gained strength from the crisis. Apparently, Tajikistan is not as dependent on trade with Russia as other NIS countries, and this has helped to insulate Tajikistan from the direct effects of the crisis. Turkmenistan—Exposure of Turkmen banks to Russian markets has been limited, as the Turkmenistan economy is tightly controlled by the state. The Russian crisis therefore is not expected to have a strong direct impact on Turkmenistan. Ukraine—Closely linked to Russia through trade and financial ties, Ukraine has suffered greatly as a result of the Russian crisis. The hryvnia lost half its value against the dollar following the crisis, and reserves have fallen (as of early 1999) to only one month of imports. Inflation surged to 12. 8 percent in October 1998 alone, following a long period of relatively stable inflation before the onset of the crisis (2 percent inflation in first half of 1998). Uzbekistan—As Uzbekistan has been gradually reorienting its international trade profile away from Russia over recent years, the country has apparently been less affected by the crisis than other NIS countries. Further, the underdeveloped banking system and financial markets in Uzbekistan may have helped to insulate that country from the shocks emanating from Russia in August 1998, as Uzbekistan had relatively little exposure to Russia’s financial markets. 2 Proposed Remedies As discussed throughout this paper, two camps have emerged in academic and policy circles that seek to explain the causes of and remedies for the Russian financial crisis. This section highlights some of the remedies proposed by each camp. According to the â€Å"fix the countries† critics, such as the IMF and the U. S. Treasury Department, the Russian government must continue pushing for reforms in the public finance and banking sectors. According to Gaddy and Ickes, only two options exist for western creditors and international financial institutions: keep Russia stable in the short-term by bailing out the virtual economy or refusing a bailout. Denying Russia a bailout would have negative effects in the short-term by leading to the demise of large commercial banks and oligarchs, foreign capital flight, and currency devaluation. In the long run, however, Gaddy and Ickes prefer this option because they believe it will force Russia to adjust to economic life without a steady supply of credit available and adapt sound economic policies. They dislike the first option simply because they believe it will lead to the further development of a nonmarket-oriented economy that would require bailouts in the future. The Treasury Department adds that bank restructuring and reforms in tax administration and collection are necessary as well. The â€Å"fix the global financial system† critics, such as Jeff Sachs and George Soros, urge that the international financial system be reformed so that short-term borrowing by banks and governments be limited so as to avoid potential investor panics. In addition, Sachs recommends that domestic banking regulations, in the form of enhanced capital adequacy standards and policies that encourage partial bank-sector ownership by foreign capital, be implemented in order to limit vulnerability of the domestic economy to foreign creditor panics, and that exchange rates be kept flexible instead of pegged. In addition to these proposed remedies, others have gone further to propose mechanisms for recovering losses (Sexton 1998). According to Sexton, foreign creditors have at their disposal four mechanisms to recover losses to Russian firms: 1. Convertible debt securities: debtors could issue convertible bonds to creditors although Sexton argues that this probably won’t work too well in Russia 2. Treasury or redeemed shares: company may exchange its own shares, that were bought back, or interests to extinguish outstanding indebtedness; there should be no tax consequences to debtor on repurchase of shares; on resale to foreign creditor, debtor should be taxed on any gain on shares or should be able to deduct any loss sustained 3. Alternative debt refinancing structure: swapping debt for convertible debt which creditor converts into equity; issue by debtor to creditor of convertible bonds as a means of refinancing outstanding debt; creditor should make sure conversion ratio covers value of outstanding debt over term of loan; disadvantage to this 13 strategy is that creditor is refinancing and likely to have twice the outstanding debt for some time 4. Securitizing the debt: convert debt into security which creditor then contributes to debtor’s charter capital to pay for the shares (key issue facing creditors thinking of taking equity in a Russian debtor company in exchange for indebtedness is how to value that equity) Summary This paper has addressed the opposing views as to the causes of and remedies for the Russian financial crisis. †¢ Two central camps have emerged. One camp argues that the Russian economy has severe structural problems that were the primary cause of the crisis: fiscal deficit, banking sector problems. The other group points to the IMF and the problems with the international financial system, claiming that moral hazard problems led investors to underestimate the risk of investing in emerging markets such as Russia, and that unregulated short-term investment flows out of emerging markets can result from the panic. Each of these groups proposes different remedies for the crisis, based on their assessment of the roots of the crisis. The IMF and Treasury Department insist that the Russian government continue to push for reforms in public finance and the banking sector, claiming that weaknesses in these areas ultimately led to the onset of the Russian crisis. Jeffrey Sachs, George Soros, and others who are critical of the international financial systems and the role of the IMF in the recent financial crises, recommend that the short-term borrowing by governments and banks in emerging markets be limited and regulated, and that exchange rates are flexible rather than pegged. †¢ Although the worst of the Russian crisis may have already passed, as the Russian and other ENI stock markets appear to have recovered and the dramatic fall in production has been reversed, the original causes of the crisis still need to be addressed. Continued progress in banking and fiscal reforms in Russia will be necessary to ensure that the country is less vulnerable to future external shocks and foreign creditor panics. Improvements in these sectors would help restore investor confidence in the Russian economy and reverse the current outflow of capital. 14 ANNEX: What Happened in Russia? A Brief Chronology of Events Asian Crisis: Precursor to the Russian Crisis †¢ †¢ July 1997, Thailand—devaluation of Thai baht December 1997, Korea—devaluation of Korean won †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ ate October 1997— Pressure on ruble intensifies, as result of Asian crisis December 1997—Foreign exchange pressure temporarily recedes in Russia 19 December 1997—Standard and Poor’s Sovereign Ratings of Russian ruble: longterm—â€Å"BB-â€Å"; outlook—negative; short-term—â€Å"B† January 1998—Reemerging p ressure on ruble forces Central Bank to raise interest rates, increase reserve requirements on foreign exchange deposits, and intervene on ruble and treasury bill market March 1998—Stock market prices in Russia have not yet recovered from lows reached in late fall 1997 May 1998—Russia places major commercial bank under Central Bank administration; miners strike over wage arrears; Russia continues to intervene on foreign exchange markets to support ruble, but investors increasingly see this strategy as unsustainable Late May 1998—Interest rates in Russia increased to 150 percent; Russian government announces revisions to 1998 budget, including 20 percent cut in expenditures and new initiatives to boost revenues Early June 1998—Recent policy announcements temporarily ease tensions, allow partial reversal of earlier interest rate hikes 9 June 1998—Standard and Poor’s Sovereign Ratings of Russian ruble: long-term— â€Å"B+â€Å"; outloo k—stable; short-term—â€Å"B† Late June 1998—Russian authorities unveil anti-crisis program, aimed at boosting tax revenues, cutting expenditures, and speeding up structural reforms . 9991 lirp A , eci vre S et aR egn ahc xE CIFI C AP : ecruo S 15 4 / 2 / 9 9 3 / 2 / 9 9 2 / 2 / 9 9 1 / 2 / 9 9 1 2 / 2 / 9 8 1 1 / 2 / 9 8 1 0 / 2 / 9 8 9 / 2 / 9 8 8 / 2 / 9 8 7 / 2 / 9 8 6 / 2 / 9 8 5 / 2 / 9 8 4 / 2 / 9 8 3 / 2 / 9 8 2 / 2 / 9 8 1 / 2 / 9 8 03 Russian Crisis Timeline 0 5 01 51 02 52 After the devaluation of the Thai baht in July 1997, one Asian country after another had to raise interest rates sharply to avoid currency devaluation. But the combination of high interest rates and currency depreciation, which inflated the burden of foreign debt, provoked a financial crisis (Krugman 1999). SU$/selbuR :etaR egnahcxE elbuR †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ 16 1 2 / 2 0 / 9 8 9 / 2 0 / 9 8 6 / 2 0 / 9 8 3 / 2 0 / 9 8 1 2 / 2 0 / 9 7 9 / 2 0 / 9 7 6 / 2 0 / 9 7 3 / 2 0 / 9 7 1 2 / 2 0 / 9 6 .9991 lirpA ,semiT wocsoM :ecruoS 9 / 2 0 / 9 6 6 / 2 0 / 9 6 3 / 2 0 / 9 6 1 2 / 2 0 / 9 5 9 / 2 0 / 9 5 6 / 2 0 / 9 5 3 / 2 0 / 9 5 1 2 / 2 0 / 9 4 9 / 2 0 / 9 4 6 / 2 0 / 9 4 0 †¢ 003 †¢ xednI semiT wocsoM :egnahcxE kcotS naissuR †¢ Mid-July 1998—Russian authorities introduce additional policy package, in the context of an IMF agreement on an augmented Extended Fund Facility (EFF) arrangement 20 July 1998—IMF releases first $4. 8 billion tranche of $22. billion extra credit pledge, as policy package is approved by IMF Late July 1998—Initial effects of this package are positive, with equity prices rebounding 30 percent, treasury bill rates falling from 100 to 50 percent, and a low ering of the Central Bank refinancing rate from 80 to 60 percent Early August 1998—The Duma fails to approve new reform program; President forced to veto several Duma measures and introduce others by decree 13 August 1998—Standard and Poor’s Sovereign Ratings of Russian ruble: longterm—â€Å"B-â€Å"; outlook—negative; short-term—â€Å"C† 14 August 1998—Average treasury bill rates are about 300 percent, international reserves down to only $15 billion, and Russian banks are unable to meet payment obligations Russia on the verge of full-scale banking and currency crisis 15 August 1998—Boris Yeltsin announces that there will be no devaluation of the ruble 17 August 1998—Russian government defaults on GKO Treasury Bonds, imposes 90day moratorium on foreign debt payments, abandons ruble exchange rate corridor 17 August 1998—Standard and Poor’s Sovereign Ratings of Russian ruble downgraded: long-term—â€Å"CCC†; outlook—negative; short-term—â€Å"C† 21 August 1998—Russia’s international reserves fall to $13. 5 billion, after renewed heavy intervention in an effort to support the weakened ruble 26 August 1998—Following heavy intervention, the Russian Central Bank announces that it will stop selling U. S. ollars, and suspends trading of ruble on main exchanges Late August 1998—Kiriyenko government is dissolved, financial crisis intensifies 1 September 1998—Russia is the IMF’s largest borrowe r, with a combined total of credits at this date equal to nearly $18. 8 billion 2 September 1998—Russian Central Bank abandons exchange rate band, lets the ruble float 16 September 1998—Standard and Poor’s Sovereign Ratings of Russian ruble: longterm—â€Å"CCC-† [lowest possible S and P rating]; outlook—negative; short-term—â€Å"C† January 1999—Moody’s assesses financial strength (â€Å"E†) and credit ratings (â€Å"Ca†) of the Russian banks at the lowest possible levels; most banks are insolvent (or nearly so) 005 054 004 053 052 002 051 001 05 †¢ †¢ †¢ 15 January 1999—The Central Bank of Russia re-launches trading on the domestic debt market. The new securities are to be used in the restructuring of frozen GKO and other debt instruments 27 January 1999—Standard and Poor’s Sovereign Ratings of Russian ruble: Longterm—â€Å"Selective Default†; outlook—â€Å"Not Meaningful†; short-term—â€Å"Selective Default† 5 February 1999—The 1999 budget was passed by the Duma in its fourth and final reading. The budget estimates a 2. 5 percent budget deficit, and assumes that the government will receive $7 billion in external loans to help finance foreign debt service 17 BIBLIOGRAPHY European Bank for Reconstruction and Development (EBRD). March 1999. â€Å"Overview on Developments in the Operating Environment,† mimeo. European Commission (EC). 20 January 1998. â€Å"The Russian Crisis and Its Impact on the New Independent States and Mongolia. † Communication of the European Commission to the Council and the European Parliament. [http://europa. eu. int/comm/dg1 a/nis/russian_crisis_impact/1. htm] Frankel, Jeffrey A. 1999. Soros’ Split Personality: Scanty Proposals from the Financial Wizard. † Foreign Affairs 78 (2): 124-130. Gaddy, Clifford G. , and Barry W. Ickes. 1998. â€Å"Russia’s Virtual Economy. † Foreign Affairs 77 (5): 53-67. Gaidar, Yegor. February 1999. â€Å"Lessons of the Russian Crisis for Transition Economies. † Institute for Economies in Transition on-line publication. Illarionov, Andrei. 1998. â€Å"Russia and the IMF,† testimony prepared for hearing of the General Oversight and Investigations Subcommittee of the Banking and Financial Services Committee of the U. S. House of Representatives, 10 September. International Monetary Fund (IMF). 1999. IMF Survey. Volume 28, Number 4. International Monetary Fund. May 1998 and December 1998. World Economic Outlook. International Research and Exchange Board (IREX). 1998. â€Å"Russia’s Economic Crisis and Its Effect on the New Independent States,† a discussion report summarizing conclusions of an IREX policy forum held on 18 November. â€Å"Kommunisticheskie pravitel’stvo v postkommunisticheskoi Rossii: pervye itogi i vozmozhnye perspektivy [Communist Government in Post-Communist Russia: Initial Results and Possible Perspectives]. † 1999. Working Paper Series. Moscow: Institut ekonomiki perekhodnogo perioda [Institute for Economies in Transition]. Krugman, Paul. 1999. â€Å"The Return of Depression Economics. Foreign Affairs 78 (1): 5674. Lipton, David. 1998. â€Å"Treasury Undersecretary David Lipton Testimony Before the House Banking General Oversight and Investigations Subcommittee on Russia,† RR-2673, 10 September. Odling-Smee, John. 1998. â€Å"The IMF Responds on Russia: A Letter to the Editor,† 30 November. 18 O’Brien, Timothy. 1998. â€Å"George Soros Has Seen the Enemy. It Looks Like Him. † The New York Times, 6 December: . Phillips, Michael M. 1999. â€Å"Apocalypse? No. Round the Globe, Signs Point to Final Days of Financial Crisis. † The Wall Street Journal, 14 April: . Radelet, Steven, and Jeffrey Sachs. 1999. â€Å"What Have We Learned, So Far, From the Asian Financial Crisis? Paper sponsored by USAID/G/EGAD under Consulting Assistance on Economic Reform (CAER) II Project. Robinson, Anthony. 1999. â€Å"Russia: Coming in from the Cold. † The Banker 149 (877): 4849. Russian European Centre for Economic Policy (RECEP). 1999. â€Å"Russian Economic Trends. † Monthly Update, 10 February. Russian Market Research Company (RMRC). 1998. â€Å"Business Barometer Survey: Moscow, October 2-3, 1998,† published on the American Chamber of Commerce in Russia website. Rutland, Peter. 1999. â€Å"Moscow Casts a Long Shadow. † Transitions 6 (3): 27-31. Sexton, Robert. 1999. â€Å"Turning Russian Debt into Equity. † Euromoney no. 357: 75-76. Smirnov, Mikhail. 1998. Rubl’ kaput ili kak bank Rossii opustil rubl’ [The Ruble is Kaput, or, How the Bank of Russia Lost the Ruble],† National’naia sluzhba novostei [National News Service]. Soros, George. 1998a. Testimony to the Congressional Committee on Banking and Financial Services of the U. S. House of Representatives, 15 September. Soros, George. 1998b. â€Å"The Crisis of Global Capitalism: Open Society Endangered,† remarks before the Council on Foreign Relations, New York, 10 December. Summers, Lawrence H. 1999. â€Å"Russian and the United States: The Economic Agenda,† remarks by Deputy Treasury Secretary Lawrence H. Summers at the U. S. -Russian Investment Symposium in Cambridge, MA, 14 January. Uchitelle, Louis. 1999. â€Å"Crash Course: Just What’s Driving the Crisis in Emerging Markets? † The New York Times, 29 January: . 19

Investigation of Water Scarcity in Singapore

Investigation of Water Scarcity in Singapore Wong Shuang Qi (Kiki) This study is going to take a close look at the current situation of the fresh water scarcity in Singapore and the governments enforcement on the potential solutions, like desalination or NEwater. The best option to the chronic water issue for increasing or decreasing the water demand and supply would be discussed in this topic and a proposed solution that suggested for the water problem in Singapore is a new technology called NEwater would be mentioned in conclusion. The hypothesis of the entire report is doing the decline of water demand and the climb of water supply at the same time. 1.0 Introduction This scientific research is on the purpose of giving suggestion and solutions on the fresh water scarcity in Singapore. Apparently Singapore is lack of fresh water for the 4 million populations in total, since this country is a small island without any river, there are 14 artificial reservoirs, though.(Christine Lee, Sim Hwee Huang and Chang Chew Hung, 2003) In recent years, Singapore always devotes themselves to improve the technique of NE water, which is a strategy for manufacturing new water. Dragonfly lake is existed for the government official vision of city in the garden. This Gardens lake system is important for integrating ecological processes and function as a living system and capturing the water runoff within the gardens. (Aeration Industries International, 2015) Therefore, both increasing the water supply and decreasing the demand of fresh water is supposed to be the best option of solution to this problem. 2.0 Methodology Choosing the particular country as a respondent for this research is the first step to do. The country with water scarcity problems is the reason of Singapore is chosen. Research on the Singapores fresh water issues and understanding the current situation would be the initial mission that has to complete. After dealing with deciding the best solution, the other information such as where Singapore get their water supply, how they take action to decrease the demand of fresh water and what the governments enforcements are. Majorities of my research were done on the Internet and websites that are selected for this scientific research would more likely to be those with .gov or .edu, which represent academic websites with high reputations. Investigating the different solutions in the same number of websites and from different experts was considered to make sure the fairness of this topic. 3.0 Findings The key fresh water issues in Singapore are known as limited areas for water storage and long-term security of water. Currently, Singapore is concentrated on finding approaches for water supply. Malaysia is the biggest supplier of water supply for 40% to Singapore. (UKessays, 2015)Desalination is an important and potential strategy to expand the availability of water sources, which used to dissolve the salinity of the sea water in order to drink, and it can help to solve the problem because Singapore is a country surrounded by sea. However there are still many factors and effects should be considered seriously such as the first desalination plant was instituted at the cost of S$200 million in 1995, which is really a huge amount of money. NEwater is a three-stage process that built for producing better quality of water from wastewater in order to increase water supply controlled by an organization called Public Utilities Board (PUB). Singapore government also encourages private enterp rises to save water and establish more water-saved plants by factories to deal with the security of water.(Cercilia Tortajada, 2007) There are two figures under that include the statistic which fluctuates after the tariffs of water become more expensive.    Table1, Average Monthly Consumption and Bill of All Taxes       Reference: https://www.cscollege.gov.sg/Knowledge/Ethos/Issue%202%20Apr%202007/Pages/Water-Management-in-Singapore.aspx It is a table which shows the average monthly consumption of household and it has slightly decreased from 1995 to 2004. The monthly bill of all taxes is dropped a bit as well. Figure 1, Domestic Water Consumption Reference: https://www.cscollege.gov.sg/Knowledge/Ethos/Issue%202%20Apr%202007/Pages/Water-Management-in-Singapore.aspx The figure above shows the statistic of water consumption from 1995 to 2005 in Singapore. Obviously, the numbers have a stable decline as the price of water has increased, which means the enforcement of water recycle is successfully worked because people dont want to or cannot afford the expensive tariffs of water. 4.0 Discussion According to the findings, Singapore has put their efforts on both increasing the water supply and decreasing the demand of fresh water. If only spend time on one side, it will probably fluctuate the entire economy of the country. In addition, water problem is a chronic existence that occurred from the past to the future. Water supply and demand decreased will definitely be considered as the direction of solution consequently. The whole country all worries about the long-term protection of water. Therefore, they excessively focus on increase water availability, enhance water quality management, and lower the production and management price. Water supply from Malaysia is good but actually it is unreliable and not suitable to be a long-term plan if Malaysia doesnt have sufficient water to use one day. Even though both of NEwater and desalination are based on complex technology and cost much money, NEwater has the advantage of constant existence and improving the quality of water by rem oving the bacteria undoubtedly and desalination has several external factors that may influence its quality and safety. Moreover, if the government keeps making the tariff higher, it will definitely lose many of the consumers and affect the economy badly. As a result, NEwater will be supposed to be the proposed solution to the water scarcity problem.(Cercilia Tortajada, 2007) 5.0 Conclusions and Recommendations The NEwater is successfully worked for improving the quality of drinking water since 2000, and the expert panel also tested its safety in 2002. It can be easily found in the statistic of the treated wastewater amount from 2002 to 2004, which rose up from 1.315 to 1.369 million cubic meters per day.(Cercilia Tortajada, 2007) For the further study on this proposed solution, some other data such as how long the NEwater takes to make 1- cubic- meter water, where the wastewater is from, whether the water will generate some health problems and whether this process will create pollution to the environment can be suggested to support the feasibility of this solution. A limitation that occurred during the research is one of the articles was actually submitted by a student instead of a professional expert. Overall, the future plan of water management in the next couple years in Singapore is a suggested point that used for the further research to understand this topic clearly. References Cecilia Tortajada (2007), Water Management in Singapore, Civil Service College [online]. Available from: https://www.cscollege.gov.sg/Knowledge/Ethos/Issue%202%20Apr%202007/Pages/Water-Management-in-Singapore.aspx [Accessed 13th September 2016] Dealing with Water Scarcity in Singapore: Institutions, Strategies, and Enforcement (2006), Site Resources [online]. Available from: http://siteresources.worldbank.org/INTEAPREGTOPENVIRONMENT/Resources/WRM_Singapore_experience_EN.pdf [Accessed 13th September 2016] https://www.ukessays.com/essays/environmental-sciences/the-issues-of-fresh-water-in-singapore-environmental-sciences-essay.php [Accessed 13th September 2016] Christine Lee, Sim Hwee Huang Chang Chew Hung (2003), Water In Singapore, HSSE [online]. Available from: http://www.hsse.nie.edu.sg/webquest/SSCC/water/water%20index.htm Singapore Gardens an Environmental Sustainability Showcase (2016), Aeration Industries International [online]. Available from:   http://www.aireo2.com/case-studies/singapore-gardens-an-environmental-sustainability-showcase/ Reference from: http://siteresources.worldbank.org/INTEAPREGTOPENVIRONMENT/Resources/WRM_Singapore_experience_EN.pdf

Pre registration contracts Essay example -- essays research papers

The common law view of pre-registration contracts was that the company did not exist for legal purposes until it had been formally incorporated (registered). This common law view resulted in company’s being unable to enter a binding contract until they had been registered.   Ã‚  Ã‚  Ã‚  Ã‚  However â€Å"given the delays which can be encountered in the registration process, the promoter of a company may wish to enter into contracts `for’ the company prior to its incorporation† . An example of this may be a promoter wanting to ensure a company will have stock on hand so it will be ready to operate when its registered. He might order stock and sign the contract in the unregistered company’s name. Since a company did not exist before registration it could not sign a contract itself or appoint an agent to sign on its behalf. Therefore promoters could not be seen as the company’s agent. Circumstances such as this are problematic and raise difficult questions as to the enforceability of the contract and the availability of damages for its breech.   Ã‚  Ã‚  Ã‚  Ã‚  At common law, a company was also incapable of ratifying a pre-registration contract after it was registered. â€Å"This was because under the law of agency , ratification has a retrospective effect and the contract was regarded as being made at the time it was entered into by the agent when the company was not in existence† . A company could only be held liable for a pre-registration contract if it entered into a new contract with the same terms as the pre-registration contract after it was registered. This is called ‘novation’.   Ã‚  Ã‚  Ã‚  Ã‚  Seeing as though a company would not be held liable on a pre-registered contract, the courts recognised that innocent third parties could be prejudiced. Accordingly â€Å"the courts were prepared on occasions to infer an intension by the promoter to assume personal liability on the contract†   Ã‚  Ã‚  Ã‚  Ã‚  An important case is Kelner v Baxter (1866) where the promoters who had signed the contract on behalf of an unformed company were held to be personally liable. In this particular case the promoters of an unformed company agreed to purchase stock and signed an agreement, which stated ‘on behalf of the Gravesend Royal Hotel Alexandra Hotel Company Limited’. A difficultly had arisen as since the company had not yet been for... ...is case an accountant who was one of the companies four promoters entered into a contract on behalf of a unformed company. The company failed to ratify the contract and the supplier attempted to sue all four promoters. The Supreme Court of New South Wales found that only the account was liable since he was the only person who had signed the contract. The court also made it aware that the accountant has a separate right to claim against the other promoters if he acted as their agent in regards to the contract.   Ã‚  Ã‚  Ã‚  Ã‚  Ã¢â‚¬Å" While the promoter is primarily liable in these circumstances, the company does have a potential secondary liability. Hence â€Å"where the company is registered but does not ratify the pre-registration contract within the prescribed time, the court may ‘do anything it considers appropriate in the circumstances’. The courts powers include the option of ordering the company to rectify the unfairness† . The courts are able to this by ordering the company to pay for part or all of the damages for which the promoter is liable, transferring property received under the contract to a party to the contract or paying an amount to a party to the contract.

Attitudes Towards Love in Poetry Essay -- Love and Loss Poetry Poems E

Attitudes Towards Love in Poetry Love is an emotion that has been felt by people throughout time. It is extremely difficult to put any strong emotion into words, but through the pre-twentieth century ‘Love and Loss’ poetry we are able to see various different attitudes shown towards love and the way that love is conveyed through relationships. The poems referred to in this essay are â€Å"First Love† by John Clare, â€Å"How Do I Love Thee† by Elizabeth Barrett Browning, â€Å"A Birthday† by Christina Rossetti, â€Å"A Woman to Her Lover† by Cristina Walsh and â€Å"My Last Duchess† by Robert Browning. By studying the love and loss poetry, the poets lives and the cultures they lived in, it is easy to see why people have different perceptions of love. The poem â€Å"First Love† by John Clare reflects his attitudes towards love. It is a complex poem describing the physical and emotional affects of falling in love for the first time. In this poem, the narrator has experienced love at first sight and has feeling for nobody else. He says that â€Å"†¦ my blood rushed to my face And took my sight away.† This quotation describes one of the physical effects love brings; it shows that the poet is so fixated in one woman that he is blinded by everything else. It mirrors the clichà © ‘blinded by love’. This shows that Clare feels that love can be for only one person at a time, as he is concentrating on nobody else. The way Clare uses language shows that he finds first love an uncomfortable feeling. This is shown in the rhetorical questions he uses. â€Å"Are flowers the winter’s choice?† These are two images that have been unusually linked, flowers and winter. This is not a comfortable image. Flowers usually die in winter and this creates dea... ...ill be stronger after death, this shows an open attitude: that love is never ending and there is no loss of love from death. The final poem is â€Å"A Birthday†, which I believe is describing the love that Christina Rossetti has for God. She uses language to portray beautiful imagery to try and express how she is feeling. This is a celebration of her love and her attitude is that love brings a person only joy. All the pre-twentieth poets lived different lives in different cultures and so there attitudes would have formed in different ways. However like most others they have all felt love in some way or experienced the jealousy and pain it can bring. Their love and loss poetry shows love in different forms, neither more true than the other but all just showing the different attitudes that people of different cultures have learnt or felt is true about love.

The Cultural Invasion of Kenya Essay -- American Culture Traditions Es

The Cultural Invasion of Kenya A screeching yell ripped through the house that Wednesday evening, "Ahhhhh, we're being invaded!". My mother rushed into the living room. I pointed to the flickering television screen. "Look," I whispered in disbelief. A few seconds of silence followed. There they were, the words I never thought would appear on our 29 inch Sony screen: "Sizzlin' Hot Country". The appearance of American country music on the Kenyan airwaves was the latest sign that American culture had penetrated the borders of my country. The airing of Garth Brooks and Dolly Parton on the local television station is not the only evidence of the rapid spread of American culture in Kenya. One look at a large portion of its youth and this cultural invasion will become apparent. Baggy pants, Nike, pop music and malls, symbols of American youth culture can now be associated with the Kenyan teenagers. The Nike phenomenon hit Kenya several years ago. My classmates in primary school were obsessed with the American brand name that had rocked the global shoe industry. Their school desks had the Nike name and logo painted on in every color imaginable. Not being able to afford some of the merchandise, many resorted to drawing the logo on bags, clothes, shoes and other visible possessions. Turning up to a class party with the trademark tick appearing on one's footwear simply made one the center of attention. My favorite pair of shoes, I have to admit, were a pair of black Nikes which raised many brows and turned just as many heads. Secondary school had its fair share of examples of the cultural invasion. In most schools in Kenya, students dress in uniforms. For example, in my school it was compulsory to wear a white shirt, gra... ...ols of success. While hip hop and baggy pants may not epitomize American success, Kenyan youth adopt this aspect of American culture perhaps because of the common roots and racial background the majority share with African Americans. Wearing Nike shoes or sagging one's pants may seem to be meaningless gestures. However, wearing shoes that many popular, rich American sporting icons don or sagging pants like the famous hip hop artists makes one different from the rest. It allows one to adopt an American identity, one defined by success and importance. While some would argue that such a spread of American culture would be beneficial because it would, in a sense, create a global village, I think this cultural invasion creates more harm than good. It would result in the demise of local cultures and languages. And this is certainly not a good thing.

Privilege: Race and White Supremacy

As a Latina that I am I was brought to the united states by the myth of the American Dream, hoping to find equality, freedom and opportunity. Becoming an American requires that immigrants like me take a new identity, to be able to be equally treated as members of the white community with all rights, responsibilities, and opportunities that American citizens have and when I mean American people I mean white people. The myth of the American Dream then falls flat on my face because it lies when it says that Americans are â€Å"equally created. Once I came into this country I came across the reality that in fact we are created equal but yet we are not the same because our skin color is not â€Å"white† and we have distinct physical characteristics. Life experiences made me ask, What does it mean to be white? , What is white privilege? , and what is white supremacy? And I came to a conclusion that white privilege and white supremacy can be described as a right or protection grante d essay writer needed, advantage or favor to whites and the ability to take advantage of people that belong to minorities.White privilege means more opportunities to whites rather than to people that actually need it; white privilege is also invisible to whites but not to minorities that have been oppressed throughout the years. The article â€Å"Constructing Race, Creating White Privilege† by Pem Davidson Buck explains on the ideas behind white privilege and how it is created perfectly. It begins with the idea behind constructing race and keeping racial categories separate. It then gets into the privileges white people have such as the right to bear arms, own livestock, and even the right to beat any blacks.Buick writes, â€Å"More pain could be inflected on blacks than on whites. Whites alone could bear arms; Whites alone had the right to self-defense† (34). Meaning that if a white person hits you for no reason then you were not allowed to defend yourself just becaus e you were â€Å"black,† but what if the white men was beating you to death, could you defend yourself? , no, because you were black. Nothing has change even today white still think they have the right to humiliate you because they think they are better than you.I work at a grocery store and I always have to take the humiliation specially from white customers, because people personally ask me if I speak English or they let me know that I shouldn’t be working there because this is a white people store, I am not allowed to defend myself because I will get fire, just like African Americans were not allowed to defend themselves because otherwise they will get bit up by their owner. This article ends with psychological wage and how whites are treated differently in places of business. This sense of superiority allowed struggling northern whites to look down their noses at free blacks and at recent immigrants particularly the Irish. This version of whiteness was supposed to make up for their otherwise difficult situation providing them with a ‘psychological wage’ instead of cash- a bit like being employee of the month and given a special parking place instead of a raise†(Buck. Pg. 35). This also meant that the poor whites helped by supporting the unfair system and made it easier for the rich whites to have control over the labor force and economy.Therefore, the psychological wage â€Å"paid† the poor whites because it made them feel as if being white was a privilege; it was a reward to be white and it made them look down on blacks, Indians and other minorities. On the other hand minorities were not paid because white people did not want to pay them instead they would just give them something such as ‘employee of the month’ to make them think that they were important. I believe this country is one of the riches because oppressors were always living off African Americans and other minorities’ hard work instea d of giving them what they deserve.This reading hits great points on the differences seen between whites and blacks and the differences on how they are treated. Not enough with mistreating them and not giving them the right to get a wage they also take advantage by passing laws that will make minorities sink , stay uneducated and do not let them progress. There is a stereotypical view that underprivileged minorities are sometimes considered uneducated. This lack of minorities’ education is not our fault, but the fault of unlikely outside powers such as white supremacy.Consequently there is some truth to this specific label, but the minorities are not to blame for lack of education we did not choose to be poor we were forced to be poor and stay at the bottom of the ladder. Few opportunities are given to us, starting with housing then leading to schools which would then affect our education. This all started with our Federal Housing Agency or the FHA. In the reading The Possess ive Investment in Whiteness the author George Lipsitz puts extensive research into how the FHA started and how its agency ties into minorities receiving loans or the lack of.In 1934 the FHA was provided from the government who then gave the agency’s power to private home lenders, and this is when racial biasness came into place through selective home loans. Lipsitz says, â€Å"the Federal Housing Agency’s confidential surveys and appraiser’s manuals channeled almost all of the loan money toward whites and away from communities of color† (pg. 74). These surveys were conducted by the private lenders who had free supremacy to prove the loans to whomever they want.Because the minorities did not get a chance to receive the FHA loans that they needed, they are then forced to live in urban areas. This is one of the reasons why people stay segregated because on one side of town you have the minorities living in the poorest side and on the other side you have the wealthiest, which are mainly white people. If we take a look at global segregation, the third world countries are mainly non-white ethnicity for example Haiti is a third world country that does not progress because the United States (one of the riches country) does not let that country progress.White supremacy is lead by the tought that white people do not think of themselves as a race because that would bring them down and think that they are ‘inferior’. In the article â€Å"Failing to See† by Harlon Dalton, he suggests that most white people tend to see themselves in racial terms. Dalton writes â€Å" The emergence in the 1980smof the term ‘African American’ was meant to supply a label for our ethnicity that is distinct from the one used for race. Most people, however, continue to use the term ‘black’ to refer to both. White’ on the other hand refers only to race. It has no particular content† (pg. 17). In my opinion Dalt on is referring to the circumstance that white people don't see themselves as a race because their race has never been an issue in their lives. For example a white person has to go through the pain of not getting a job because of their racial identity on the other hand a person who belongs to a minority race that of African American or Latino decent they do get rejected from jobs just because they either look â€Å"black† or â€Å"brown†.Most white people never associate whiteness as race because they were taught to label others and not themselves cause if they label others as raced they themselves cannot be a part of that group. Teaching with people to not label themselves is one of the lessons thought by their ancestors in addition to the lessons of hating other people outside their with circle. In the book Killers of the Dream by Lillian Smith the author writes about the way she was brought up, the lessons she was thought. The book starts off with the author remembe ring a childhood incident with her parents that made her onder about the hypocrisy she has been raised by in the Southern way of life. â€Å" A little white girl was found in the colored section of our town, living with a Negro family in a broken-down shack† (Smith pg. 34-35). Her mother’s friend believed that the girl was kidnapped and the little girl ends up living at the Smith’s house for a few weeks. The author quickly becomes friends with this girl-Janie, until her mother tells Lillian that Janie is in fact a black girl and cannot live in their home anymore. Moreover, her mother informs Lillian that she is too young to understand why, and she should not ever ask about this subject again.Lillian now had to explain to Janie that colored children should not live with white children. This was one of the lessons her parents thought Lillian; Smith also explains the parents’ mentality towards their children and how they are raised. Those parents enforce the ir children into believing that sexual desires, and all the parts of their bodies that cause these sexual desires, are shameful and should be feared; including their fear for black people. In the reading The Lessons, Smith writes, â€Å"Our first lesson about God made the deepest impression on us.We were told that He loved us, and then we were told that He would burn us in everlasting flames of hell if we displeased Him. We were told we should love Him for He gives us everything good that we have, and then we were told that we should fear Him because He has the power to do evil to us whenever He cares to. We learned from this part of the lesson another: that â€Å"people,† like God and parents, can love you and hate you at the same time; and though they may love you, if you displease them they may do you great injury† (pg. 5). Smith is trying to explain the confusion that society creates because in one hand society teaches us that we should be treated the same because we are all humans, but on the other hand whites are better than any other person because their color is better and they are better overall. There is a contradiction in what our society teaches us. The ironic part of all is that not only white parents thought that being around black people was bad; black people also knew that being around white people was a bad social behavior.In â€Å"The Ethics of Living Jim Crow: An Autobiographical Sketch† a reading by Richard Wright, is a chapter about his life growing up in the segregated south. He remembers what his mother tells him about the differences between whites and blacks. His mother teaches her son not to fight the white man and beat her son when a broken milk bottle, thrown by a white kid, hits him. She taught him that blacks belonged in their place and whites had their own, informing him that he did not mix with the whites. Just like how Lillian was tought to not mix with black people.From here on out Richard Wright lived in fear of the whites and he would soon learn why his mother wished him to feel this way. When Richard went to get a job he remembered his mother’s word and talked to his white boss with the utmost respect using â€Å"yessirs† and â€Å"nosirs†. Despite his respectfulness to the white man, his boss penalized him for wanting to learn and asked him if he thought he was ‘white’. Richard witnesses countless â€Å"Jim Crow† racism throughout his life all so the white man could feel superior to him and his race.At one point he witnesses his boss and twelve year old son beat a black woman and when she ran to a white cop he accused her of being drunk. Richard was searched for being in a white neighborhood, cursed for looking at an attractive white woman, and was forced to falsify a white man’s signature to receive books from the library. In my opinion the white man treated this boy in a bad way because his white privilege gave him the authority t o do so his whiteness served the men as a protection. Going back to what Richards mother was telling him that he was unequal to whites probably saved his life.Before he knew this he would partake in fights with white kids throwing black cinders as they returned fire with bottles. When he got hit with one of these bottles and told his mother of the happened she beat him for fighting with whites. Though terrible this was an important lesson for young Richard who would encounter racism for the rest of his life, racism that if he didn’t listen to his mother could have got him killed. Nowadays if someone’s mother tells him or her at an early age that they are unequal to others because you look different could scar that person for life.Those words could lower someone’s self-esteem and mental state that they would be in and out psychologist’s offices for a very long time. But What if more black mothers taught their sons and daughters to fight back against oppres sion? Could they have made a difference? Possibly, but southern whites would do all they could in order to keep blacks as inferiors. Though eventually blacks did take this stand it took them along time to end segregation and receive more rights.Maybe if boys like Richard were taught to fight they could have changed things earlier, but this would not come without consequences. Groups like the KKK would murder many blacks and without the significance of media to open the eyes of many white in the north it would be an extreme struggle. Believing in equality maintains inequality. If we let people brainwash us by letting us think that we are all equal we are contributing to white supremacy. Instead of contributing to white supremacy let’s contribute to end it.I know that white supremacy will not end from one day to another but we as a society should be able to start changing this dilemma. Works Cited Smith, Lillian. â€Å"When I Was a Child. † Killers of The Dream. Margaret Rose Gladney. W. W. Norton ;Company. New York: 1994. 34-35. Smith, Lillian. â€Å"The Lessons. † Killers of The Dream. Margaret Rose Gladney. W. W. Norton ;Company. New York: 1994. 85. Buck, Davidson Buck. â€Å"Constructing Race, Creating White Privilege†. Race, Class, and Gender In The United States. The Possessive Investment in Whiteness by