StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...
Free

Financial Engine Failure - Essay Example

Cite this document
Summary
The author of the article “Financial Engine Failure” compares the concurrent failure of the twin engines of the BA flight from China to Heathrow to the failure of the banking and financial markets in the US. He places blame on LBO debt, complex mortgage-backed securities, and consumer lending…
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER95.7% of users find it useful
Financial Engine Failure
Read Text Preview

Extract of sample "Financial Engine Failure"

Also, the waning corporate net worth has increased moral hazard inducements for companies to make risky investments because they now have less to lose. Again this increase in moral hazard makes lending less attractive. The failure of financial institutions in the mortgage debacle, together with the drop in the stock market has led to uncertainty in financial markets. It is more difficult to determine good from bad credit, which again has resulted in a fall in lending, investment, and cumulative activity.

The source of the current bank panic, therefore, is asymmetric information. The result is that loan funds have been reduced and the price of intermediation has risen, which has caused a drop in investment and a decline in aggregate economic activity (Mishkin). The current bank panic could lead to further interest rate hikes, which would, in turn, increase adverse selection in financial markets, which is why the Feds have cut interest rates. The current unforeseen fall in the price level has also resulted in a decline in firms' real net worth and an increase in adverse selection and moral hazard problems facing lenders.

This in turn has resulted in a decline in investment and economic activity. The asymmetric information approach also favors an expanded lender-of-last-resort role and a discounting facility (Mishkin), which would provide liquidity to the financial sectors that most need it. The Feds have tried to hold back 'the credit crunch' but now we need to see how far they will go. Will they lower interest rates further even though they do not have as much room as in the past to cut Will they provide the much-needed liquidity to the financial sector, In other words, are they able to bail America out of a recession.

Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(Financial Engine Failure Essay Example | Topics and Well Written Essays - 500 words, n.d.)
Financial Engine Failure Essay Example | Topics and Well Written Essays - 500 words. https://studentshare.org/finance-accounting/1525853-analyze-the-article
(Financial Engine Failure Essay Example | Topics and Well Written Essays - 500 Words)
Financial Engine Failure Essay Example | Topics and Well Written Essays - 500 Words. https://studentshare.org/finance-accounting/1525853-analyze-the-article.
“Financial Engine Failure Essay Example | Topics and Well Written Essays - 500 Words”. https://studentshare.org/finance-accounting/1525853-analyze-the-article.
  • Cited: 0 times

CHECK THESE SAMPLES OF Financial Engine Failure

Operations Management LongXi Manufacturing

Situation Analysis LongXi's position in the Chinese small diesel engine market LongXi's position in the Chinese small diesel engine market is heading to international scope.... As the demand for product offerings within diesel engine industry increases as far as the Chinese economic reform is concerned, competition increases within the international business setting.... However, prior to this significant market trend, LongXi has been creating a major market share considering that small diesel engine market particularly in the agriculture and machinery sector was pushed to pursue even more due to Chinese economic reform....
7 Pages (1750 words) Essay

Rolls-Royce and the Stock Market

ompany have foreseen the difficulties they would be facing in their engine production and was their financial crisis due to lack of foresight or a roll of the dice With empirical research, up-to-date news, government articles and papers on the business economy, an effort will be made to answer this question.... At the start of World War I, Royce designed his first aero engine, the Eagle, which provided half the horsepower used by the Allies in the air war.... With the production of the "R" engine, business continued and Rolls-Royce gained the technological base to develop the Merlin, used in the Battle of Britain during World War II, and the gas turbine for the civil aviation market which led to the Comet, the first turbo jet to enter transatlantic service ....
13 Pages (3250 words) Case Study

Analysis of Airbus A380 Engine Failure Above Bantam Island

"Analysis of Airbus A380 engine failure Above Bantam Island" provides a detailed investigation with the flight history, information of the aircraft, timeline of events and the cause of the failure.... The researcher of this essay analyzes the failure of the engine of Airbus A380 on November 4th, 2010.... hellip; It was reported that Airbus A380 that departed Changi International Airport for Sidney, Australia on November 4th, 2010 at 1:56 hours UTC experienced Uncontained Engine Turbine failure and other system failures (ATSB 2010)....
14 Pages (3500 words) Research Paper

Airplane Accident: Who Is Responsible

This is because most of the airplane accidents are due to engine mechanical failures, which come as a result of poor engine design and manufacturing.... As explained by one of the passengers in the Asiana Flight 214 “Then I heard the noise of the pilot trying to send more power to the engine to push the plane back-up” (Irving 52)....
5 Pages (1250 words) Assignment

The Concord Accident

While some people found that the cause of the accident was a tyre burst that led engine failure, an after-accident investigation showed that the aero plane was overweight and that one of the engines was shut-off.... While the court found that the airline was responsible for the failure of the plane, there are those who still believe that the crash happened as a result of the fire.... nbsp;           From one side, the cause of the air crash was the fire that burnt the engine resulting to instability....
5 Pages (1250 words) Report

Engineering Contribution in Project Failure

The paper "Engineering Contribution in Project failure" describes that the rates of failure for typical machines from industries, “bathtub” curve and exponential distribution have been essential when explaining the aspect of reliability thus helping engineers to minimize chances of project failures.... hellip; The application of the reliability engineering was made effective regarding project Bombardier Q400 aircraft operating QF1466 where its failure was minimized by a group of engineers by applying the “bathtub” curve which they used to reflect the possibility of the machine failing versus time it is likely to take for the project to fail....
29 Pages (7250 words) Case Study

Proactive Maintenance of Aircraft Engines

The reliability-centered maintenance program is able to carry out a reliability analysis and failure analysis in maintenance schedules so as to evaluate the possible failures in aircraft components in order to reduce costs of maintenance.... Hence, there is the need to carry out a failure analysis in a reliability-centered program in order to ensure long terms cost savings.... "Proactive Maintenance of Aircraft Engines" paper focuses on the discussion of the importance and reliability of aircraft engine maintenance and the various ways in which engine maintenance can be conducted using different methods and programs in order to reduce costs....
12 Pages (3000 words) Coursework

Proactive Maintenance of Aircraft Engines

Any major aircraft accident gets attributed to engine failure or malfunctions associated with the engine.... hellip; Engine reliability, as suggested by many authors, can be accessed based on Meant Time to failure and Mean Time before failure criteria.... For those components in the aircraft's engine regarded as not repairable, such as the electronic system, Mean Time To failure gets used.... Proactive maintenance has one primary aim, eliminating the resultant consequences of engine damage....
12 Pages (3000 words) Research Paper
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us