Comparisons and Contrasts of the Social Structures Essay

There are many comparisons and contrasts of the social structures and religious beliefs between West Africa and Europe from 700-1500 BCE. Some of these include that West Africa was mainly Islam and Europe was Catholic. Both West Africa and Europe had patriarchal societies. Both of these groups are very different but also have some similarities. West Africa was mainly Islam and Europe was Catholic. This is because West Africa was largely affected by sub Saharan trade. During this time period most of Europe was catholic although it was not as widespread as other religions. Both West Africa and Europe had patriarchal societies although in West Africa women had more influence and could actually govern people. The Muslims of Africa during this time period were typically much less strict about the roles of women than their Middle Eastern counterparts. In both Western Africa and Europe, people were born into leadership positions and higher classes. Instead of having elected officials, both of these societies have leaders that live in a royal family. In Europe the top of the social ladder are priests and in West Africa military leaders are the top of the social ladder. In Europe, the catholic religion is a main part of everyday life. The Pope elects many political leaders in European countries displaying the dominance of religion in this region. Many things about West Africa and Europe are similar, but as we can see they are also very different. This is evident in the fact that both regions are patriarchal and that West Africa was Islam and Europe is Catholic between 700-1500 BCE.

Lottery Addiction: Its Effects on the Respondents’ Economic Status in Nasugbu, Batangas

LOTTERY ADDICTION: ITS EFFECTS ON THE RESPONDENTS’ ECONOMIC STATUS IN NASUGBU, BATANGAS A Research Paper Presented to MR. JOSEPH B. EVANGELISTA Nasugbu Christian Faith Academy, Inc. In Partial Fulfillment Of the Requirements as Secondary Graduates by Sibelle Justine L. Gallivo Richard Jason R. Dastas Angelica B. Magpantay Ronnel Aries B. Ilao Mark Bryan A. Urena Regine N. Antazo Alfred C. Drio March 2010  ©2010 Sibelle Justine L. Gallivo Richard Jason R. Dastas Angelica B. Magpantay Ronnel Aries B. Ilao Mark Bryan A. Urena Regine N. Antazo Alfred C. DrioAll Rights Reserve ABSTRACT Title:Lottery Addiction: Its Effect on the Respondents’ Economic Status in Nasugbu, Batangas 2. Researchers :Sibelle Justine L. Gallivo Alfred C. Drio Angelica B. Magpantay Mark Bryan A. Urena Regine N. Antazo Richard Jason R. Dastas Ronnel Aries B. Ilao 3. Publication 3. 1Date: 3. 2Place: 3. 3Region: IV-A CALABARZON 4. Institution 4. 1Name: Nasugbu Christian Faith Academy, Inc. 4. 2School Y ear: 2009-2010 5. Statement of the Problem 1. Personal profile of the respondents in terms of: 1. 1 sex 1. 2 civil status 1. 3 salary range 2.What are the effects of lottery to the economic status of the respondents? 3. What is the relationship of the respondents; bet to their employment status? 4. Who usually give the biggest bet: employed or unemployed? 5. Who usually play lotto: employed or unemployed? 6. What are the advantages and disadvantages of playing lotto? 6. Summary of Findings Profile of Respondents With the total of fifteen (15) respondents, nine (9) or 60% were female while six (6) were males eleven (11) or 73. 3% were married while four (4) or 26. 7% were single by civil status; eight (8) or 53. % of the respondents falls on salary bracket of Php 1,500 t0 5,000, four (4) or 26. 7% with no salary , two (2) or 13. 3% range a salary from Php 10,000 to 20,000 while a salary range of Php. 30,000 and above has one (1) or 6. 7%. Effects of Lottery to the Respondent’s Economic Status Most of the enumerated effects listed by the respondents were affects the budget of the family resulting to the increase of allotted budget; affects the family relationship due to additional burden brought by playing lotto; intentional use of budget allotted to the children’s needs, and; highly emphasized fall of economic status.Relationship of Respondents bet to their Employment Status Employed versus unemployed status of the respondents established outstanding relationship with their bet. Eleven (11) or 73. 3% were employed thus give there usual or bigger bet compared to four (4) or 26. 6% unemployed. Usual Lotto players between employed and unemployed Employed respondents were the major lotto player since they have the means to gamble as compared to unemployed respondents. Advantages and Disadvantages Most of the respondents believed that playing lotto can only give hope of becoming rich through winning the jackpot prize.Most likely playing lotto was disad vantages: fall of their economic status; family budget/allocation suffered; unwise use of the money; becoming unproductive citizen; lead to addiction thus committing unacceptable actions due to gambling 7. Conclusions 1. Since majority of the respondents were married and female, they invest their future through playing lotto hoping to win the jackpot prize. 2. Since most of the respondents were employed, they have the high tendency of playing lotto because of their source of money as well as the tendency to put the biggest bet. . Since the respondents feels the negative effects of playing lotto in their economic status they would probably limit or refrained from playing lotto. 4. Since lotto playing was disadvantageous, the respondents surely realized its implication to their family as well as to the community. 8. Recommendations 1. Instead of investing family’s future through the chance of luck, find a real and long-term job that will secure your future, better to gain the v alue of worth rather than relying on your chance. 2.Lotto fanatics should not rely much on winning since it is computer operated this east to manipulate. 3. Employed lotto players should not give their biggest bet although they gave the means or source to gamble. 4. Male use/spend family’s budget wisely instead of gambling in lotto. 5. Local Authorities should impose law governing the age allowed to bet in lotto since it is a form of gambling. 6. Avoid becoming addicted in playing lotto since it is disadvantages in nature. 7. Further study about this interesting topic for future preference. APPROVAL SHEETThis research paper entitled, â€Å"LOTTERY ADDICTION: ITS EFFECTS ON THE RESPONDENTS’ ECONOMIC STATUS IN NASUGBU, BATANGAS†, prepared and submitted by Sibelle Justine L. Gallivo, Richard Jason R. Dastas, Angelica B. Magpantay, Ronnel Aries B. Ilao, Mark Bryan A. Urena, Regine N. Antazo, and Alfred C. Drio in partial fulfilment of the requirements as Secondary G raduating Students, has been examined and approved by our Research Teacher, MR. JOSEPH B. EVANGELISTA, with a grade of _____________. Accepted and approved, _____________________ Mr. Joseph B. Evangelista ACKNOWLEDGMENTThe researchers sincerely acknowledge their debt of gratitude to those in one way or another contributed and gave assistance to the preparation and completion of this study. Mr. Joseph B. Evangelista, for providing original ideas and opinions which made the completion of this study possible. Our Parents, who gave us financial aid and supported us morally that serves as our strength. The Borja Family, who helped us in distributing our questionnaires. Our Relatives and Friends, who shared their wisdom, time and effort as well as their suggestions valuable to our study.Our Alma Mater, Nasugbu Christian Faith Academy, Inc. , for the support, knowledge and for molding us to become productive and inytellectual students capable of competing in all aspect. To our Respondents, for their time, effort and invaluable assistance in answering the questionnaires that serves as our main source of informations. And above all, to Our Almighty Creator, for gracing us strength, wisdom and holy guidance as we accomplish all these things. A. B. M. A. C. D. M. A. U. R. N. A. R. R. D. R. B. I. S. L. G. DEDICATION To our beloved parents: Mr. and Mrs. Regino Antazo Mr. nd Mrs. Joseph Dastas Mr. and Mrs. Christopher Drio Mr. and Mrs. Christopher Gallivo Mr. and Mrs. Antonio Ilao Mr. and Mrs. Noeh Magpantay Mr. and Mrs. Lourdeliza Urena To our brothers and sisters: Angelo Magpantay Christopher Drio Jr. Jerome Dastas Rose Marie Eliza Raizza Mae Dastas Ray Anthony Ilao Reynaldo Antazo Resty Antazo Richel Antazo Rose Marie Eliza Antaso Ruby Antazo Ruel Antazo Ruiter Allan Ilao This piece of work is humbly dedicated. The Researchers TABLE OF CONTENTS Page Title pagei Copyright Pageii Abstractiii Approval Sheetvi Acknowledgementvii Dedicationviii Chapter I.THE PROBLEM AND ITS B ACKGROUND Introduction1 Statement of the Problem3 Statement of the Hypothesis3 Assumptions3 Significance of the Study4 Scope and Limitation of the Study4 Definition of Terms4 II. REVIEW OF RELATED LITERATURES AND STUDIES Foreign Literature6 Local Literature6 Foreign Studies12 Local Studies15 III. METHODS OF RESEARCH AND PROCEDURE Design and Method of Research19 Sample and Sampling Techniques Used19 Statistical Treatment of Data21 IV. PRESENTATION, ANALYSIS AND INTERPRETATION OF DATA Sub-problem 1. What is the profile the respondent’s terms of: 1. sex 2. civil status 3. alary range22 Sub-problem 2. What are the effects of lottery to the economic status of the respondents? 22 Sub-problem 3. What is the relationship of the respondents bet to their employment status? 22 Sub-problem 4. Who usually give the biggest bet: employed or unemployed? 23 Sub-problem 5. Who usually play lotto: employed or unemployed? 23 Sub-problem 6. What are the advantages and disadvantages of playing lot to? 23 V. SUMMARY OF FINDINGS, CONCLUSIONS AND RECOMMENDATIONS Summary 25 Findings25 Conclusions26 Recommandations27 BIBLIOGRAPHY28 APPENDICE A. Questionnaires CURRICULUM VITAE29

Conservative Nostalgia in the United States of America Essay

Conservative Nostalgia in the United States of America - Essay Example On the other hand, conservatives hugely assume and believe that every individual should be responsible; there should be free markets, limited or minimum government intervention, a rigid and firm national defence personal liberty and those ancient American values (Lipsman 129). They more emphasize that the function of the government is to grant the individuals or citizens the freedom to fulfil their own goals and ambitions. The major points that are going to be discussed in this essay are the arguments that conservatives usually want and discuss whether if there reasons are valid and try to compare them with government policies and the liberals’ arguments. Most authors have come up with different ideas and opinion to justify the differences between the conservatives and the liberals and this essay is focused to bring out the arguments between the two sides, firstly, according to Lipsam, conservatives are usually focused on preventing the negative results and are better organize d whereas liberals concentrate on being creative and they are open minded and usually concentrate on positive outcomes (Lipsman 37). Generally, Anderson believes that conservatives have very strong motivation compared to liberals who focuses on preservation of purity and cleanliness this is evidenced where by conservatives are quicker, efficient hence letting up their ideologies, whereas liberals are effortful and deliberate hence there difference in ideologies too(Anderson 10). In this essay we are going to discuss some of the factors.

The Court Decisions and Powers Over Educational Financing Essay

The Court Decisions and Powers Over Educational Financing - Essay Example The disparity in education financing has been the major issue with the judicial system. Legal provisions for equal protection, based on the 14th amendment, have formed the basis of the litigation regarding the finances. According to the clauses, every person is entitled to equal treatment and no disparity should, therefore, exist on education financing (Ryu, 2015). While the courts made significant efforts in enforcing existing laws to regulate educational financing, reforms that the courts initiated had little effects in solving the financing inequality that the society realized. Ryu further argues that court decisions on educational reforms have argued for adequacy of available education and not on financial neutrality. The ineffectiveness in previous courts’ attempt to regulate educational financing suggests a lack of power to implement the decisions and indicate a possible occurrence in future. The change in focus from fiscal neutrality also means possible elimination of t he jurisdiction from the judicial system and suggests that the courts are not likely making decisions on the issue (Ryu, 2015). The Supreme Court decision on fundamentality of education as a constitutional right and the court’s final decision on related cases is another indicator that courts have ceded their power on educational financing and are not likely to make any ruling on a case that seeks to challenge educational financing policies. The Supreme Court noted that education is not a fundamental right and should therefore not be considered under the equal opportunity clauses and any other amendments that provide for human rights.

Toyota Motor Corporation Essay Example | Topics and Well Written Essays - 1250 words

Toyota Motor Corporation - Essay Example There are huge risks, however, in establishing production bases in emerging markets particularly in China. Sino-Japanese relations are now at a low point due to the increasing assertiveness of the former in its sovereignty claim of a string of islands that the later now possesses. This string of islands, known as Diaoyu to the Chinese and Senkakku to the Japanese, has been the flashpoint of national sentiment especially when Tokyo purchased the islands from its private Japanese owners. Ever since the purchase, several Japanese establishments and even diplomats have been under threat by Chinese activists leading to shutdowns. Nationalistic sentiment has risen to the point that boycotts of Japanese products have been called upon. Warships and jet fighters have also been recently deployed underlining the turmoil between the two nations (Gao, 2013).There are also threats of regulatory requirements requiring companies to reveal industry secrets, especially technological innovations. The W all Street Journal, for example, reported that Chinese authorities are contemplating about requiring foreign companies to register all information on their products before they can operate in the country (Alexander, 2010). Cases have also been filed against local Chinese manufacturers alleging that they have copied designs of certain models. In the worst case, nationalization of Toyota’s assets in China can happen as Chinese history provides several examples, especially during its communist transformation.... This string of islands, known as Diaoyu to the Chinese and Senkakku to the Japanese, has been the flashpoint of national sentiment especially when Tokyo purchased the islands from its private Japanese owners. Ever since the purchase, several Japanese establishments and even diplomats have been under threat by Chinese activists leading to shutdowns. Nationalistic sentiment has risen to the point that boycotts of Japanese products have been called upon. Warships and jet fighters have also been recently deployed underlining the turmoil between the two nations (Gao, 2013). There are also threats of regulatory requirements requiring companies to reveal industry secrets especially technological innovations. The Wall Street Journal, for example, reported that Chinese authorities are contemplating about requiring foreign companies to register all information on their products before they can operate in the country (Alexander, 2010). Cases have also been filed against local Chinese manufactur ers alleging that they have copied designs of certain models. In the worst case, nationalization of Toyota’s assets in China can happen as Chinese history provides several examples especially during its communist transformation. The wounds of World War 2 is being brought up to the front with China and South Korea declaring that Japan has not fully addressed issues of war crimes especially the use of their women as sex slaves of Japanese soldiers (Reuters,2012). Hence, while emerging markets present tremendous opportunity for sales and lower production costs, the current political and social situation can present losses to the company. Careful consideration of current events should be conducted in light of the territorial dispute between the two countries. Toyota does not enjoy the

Camera Essay Example | Topics and Well Written Essays - 1250 words

Camera - Essay Example The high creativity and innovation of new cameras such as smart phones, which have numerous uses apart from taking photographs may lead to the decline of sales and profits reaped by camera companies (Kurtz 79). This indicates that the product has reached the decline stage, and it may become extinct if the innovation of new photo taking gadgets continues. Introduction Stage This is the stage when the product enters the market the first time, and firms reap low sales and profits because they conduct intense marketing to attract customers (Kurtz 30). The camera was first introduced in the market during the proto globalization period that began in the sixteenth century. Human intelligence increased during this period leading to the invention of various objects such as the wheel and the camera. The first camera, known as obscura, took inverted images that were not saved on any material. The object was as big as a house, and it allowed photographs of one person only. The camera had a hole through which light passed and formed inverted images of the objects in front of the gadget. The images taken by the camera were unclear and unattractive. The inventors of the product later developed portable cameras that increased the need for photography in the world (Joanne 65). Image of the first camera obscura (writtenshots.wordpress.com) Image taken using camera obscura (fineartamerica.com) Growth Stage The growth stage is the second phase of product development, which involves increases in sales and profits. Organizations reap higher benefits in this stage than in the introductory phase because of the incoming of new customers. During this stage, new firms begin producing the good so that they can reap the high profits and sales in the industry (Kurtz 84). In the introductory stage of the camera, Kodak was the only company that produced the product. However, new companies such as Nixxon and Sony entered the industry. The growth stage also involves the addition of features to the products to make them more attractive to existing customers. The additional features also help companies in attracting new users, and this enables them to recover they capital they invest in the production of the good. Eastman, the director of Kodak developed the camera by enabling the saving of images in films. The films were of limited length meaning that they would save a limited number of images. Users of the camera went back for film refilling to the companies where they bought the product when the existing space finished. The images saved on the films were also produced by the producing companies when there was no additional space in a film (Joanne 76). This meant that customers would wait for numerous days to view their pictures. The photographs taken using the film cameras were not also clear; although they were better than those of the obscura. The film camera (www.retrothing.com) Image taken using the film camera (www.shootingfilm.net) Instant cameras were also develop ed during the growth stage of the product life cycle. This is the camera that enabled consumers to recover their photographs immediately. Users did not have to wait for days or months to see their photographs like they did with the film camera (Joanne 93). The invention of this camera increased the sales of Kodak and other companies in the industry. This is because they attracted new customers and recovered sales from those who were dissatisfied by the extensive periods taken to produce

Tesco Managing Capabilities Essay Example | Topics and Well Written Essays - 3750 words

Tesco Managing Capabilities - Essay Example Tesco was founded by Jack Cohen in 1919. It is listed on the London Stock Exchange and also is the component of FTSE100 Index. The company experienced a market capitalization of about  £24.4 billion by 15 January 2012. According to a retail analyst it has been revealed that Tesco is the most successful retail business round the globe. According to Tesco’s strategy the company uses its own brand products. The innovative technology usage has been Tesco’s core part for its expansion strategy (Wrigley, 2000). The Company is listed on London Stock Exchange with the symbol of TSCO. Tesco represents in UK the largest food and drink retail sector industry. It provides employment to more than three million people in manufacturing, retailing and primary production. Tesco’s largest market is in UK and the company banners under four main things that are Extra, Metro, Superstore and Express. Almost 40,000 food items and products and also the non food lines and the clothing are sold by the company. The annual sales in 2011/12 for Tesco were  £65.17bn. Out of this figure  £42.8bn were produced from UK and showed a rise of 5% and the online sales of UK rose by 10% in this time period. 3.0 Importance of capabilities and how they contribute to competitive advantage at Tesco. 3.1 Capabilities, Strategy, Competitive Advantage and RBV The competitive rivalry forces have lessened the margins of profit for the supermarket chains and also the suppliers. Famous loyalty card of Tesco known as Clubcard remains the mainly booming strategy for customer retention that considerably raises Tesco’s profitability. To retain the customer base Tesco meets the customer needs, customizes the service, ensures lower prices, helps in making better choices, continuous flow of in-store promotions. In grocery industry the substitute of need and the product for product concept is very common (Ritz, 2005). An accelerated development level has been fostered by this highly competitive market, this results in a situation for innovation for UK grocery retailers in order to maintaining and building market share. Innovation like this can be seen in the development of a range of trading formats, in reply to transformation in consumer behavior. The main market leaders respond by focusing again on the value and price, while also reinforcing the elements of value addition of the services they 3.2 3.2 Tesco Competitive Advantage As Tesco is giant retailer, so in order to get a sustainable competitive advantage they must follow any one of the three generic strategies mentioned ahead. Cost leadership is the first strategy that Tesco can use to get the lowest of all the costs in the same industry (Palmer, 2004). Cost leadership strategy is likely to be

Management Science & System Coursework Example | Topics and Well Written Essays - 3000 words - 1

Management Science & System - Coursework Example The cost of the rooms was  £120 per room per night. They would book the accommodation but if they found out a week in advance that they were not going to make the trip, they would cancel at a cost of 10% of the total value. If they cancelled one (1) to three (3) days in advance then the charge would be 50% and on the day 100%. The Reservations manager who was pretty new did not know how to handle situations like these and so he flatly refused to accept the booking or to give it any further thought. The hotel was already 60% booked for two of the days when the group wanted to stay. All the other days were below 50%. The group required 42% of the rooms which meant that there would have been an excess demand of a mere 2%. This case is considered of major importance because in a few months the Olympic Games will be in London and similar situations may arise during that period. Managers are required to make decisions everyday. It is important that when matters arise that they are analysed properly before actions are taken. Pearce and Robinson (1997) states that one of the critical tasks of strategic management is to: â€Å"identify the most desirable options by evaluating each option in light of the company’s mission.† One of the roles of management is to make decisions and there are a number of models that are available to assist in this process. One such method is decision analysis which uses a construct called a decision tree to analyse situations. According to Lucey (1992, p27) a decision tree is: â€Å"A pictorial method of showing a sequence of inter-related decisions and outcomes. All the possible choices are shown on the tree as branches and the possible outcomes are subsidiary b ranches.† Another model of major significance is linear programming – a mathematical technique. â€Å"Linear Programming has helped to bridge the gap between abstract economic theory and managerial decision making in practice† (Koutsoyiannis, 1979). It is normally used in

Discuss the implications of the increasing length of annual reports Coursework

Discuss the implications of the increasing length of annual reports - Coursework Example Information on market prices is used as a reflection of publicly available knowledge concerning a company. Financial reporting of market prices enhances efficiency through provision of more disclosure despite some anomalies that occur in the process of reporting. Experimental literature supports the fact on displaying financial information such as comprehensive income, which have influence on investor’s decisions. Consequently, financial statistics provide useful facts such as earnings and financial ratios that at times prove more costly to extract since they are never revealed by market prices. However, demand for financial information arises from the requirements posed by pending decision task. Such demand requires some level of information processing capacity that is determined by simplicity in presentation and information load (Deloitte, 2010). According to Hall (2009) sheer volumes of disclosures within International Financial Reporting Standards (IFRS) has substantially increased the length of annual reports (Morunga and Bradbury, 2012). There are adequate results showing the impact of information overload on processing strategies and outcome of annual reports. The increase in length is further attributed to increase in the size of financial section of the entire report. There is substantial increase in the notes explaining the accounts and accounting policies. Information on IFRS reconciliations and accounting policies on transition accounts for nearly over 5% of annual reports despite the items not necessarily required on a continuing basis. Elimination of such transition items still gives space for accounting policies as well as note disclosures under IFRS which consumes close to 20% of total space. Therefore, there is significant proof that different components of accounting policy such as general, IFRS transition, f inancial instruments as well as

Paul Tillich Response to Modern Criticism Essay Example for Free

Paul Tillich Response to Modern Criticism Essay This course explores the themes of Paul Tillichs philosophical theology, with special attention to his analysis of meaning and its apparent loss in modern society. The course will also evaluate Tillichs response to the problem of meaninglessness and his effort to interpret the Christian message. WHAT IS EMPIRICISM? According to John Scott Gordon Marshall, empiricism, in philosophy, is â€Å"the attitude that beliefs are to be accepted and acted upon only if they first have been confirmed by actual experience†. This broad definition accords with the derivation of the name from the Greek word empeiria, meaning â€Å"experience. † Primarily, and in its psychological application, the term signifies the theory that the phenomena of consciousness are simply the product of sensuous experience, i. e. of sensations variously associated and arranged (Andrew M. Colman: 2003:242). It is thus distinguished from Nativism or Innatism. Secondarily, and in its logical (epistemological) usage, it designates the theory that all human knowledge is derived exclusively from experience, the latter term meaning, either explicitly or implicitly, external sense-percepts and internal representations and inferences exclusive of any superorganic (immaterial) intellectual factor. Empiricism is thus opposed to the claims of authority, intuition, imaginative conjecture, and abstract, theoretical, or systematic reasoning as sources of reliable belief. Its most fundamental antithesis is with the latter (i. e. with Rationalism, also called intellectualism or apriorism). Forms of Empiricism According to Catholic Encyclopedia empiricism appears in the history of philosophy in three principal forms: (1) Materialism, (2) Sensism, and (3) Positivism. a. Materialism: Materialism in its crudest shape was taught by the ancient atomists (Democritus, Leucippus, Epicurus, Lucretius), who, reducing the sum of all reality to atoms and motion, tau ght that experience, whereof they held knowledge to be constituted, is generated by images reflected from material objects through the sensory organs into the soul. The soul, a mere complexus of the finest atoms, perceives not the objects but their effluent images. With modern materialists (Helvetius, dHolbach, Diderot, Feuerbach, Moleschott, Buchner, Vogt, etc. ), knowledge is accounted for either by cerebral secretion or by motion. b. Sensism: All materialists are of course sensists. Though the converse is not the case, nevertheless, by denying any essential difference between sensations and ideas (intellectual states), sensism logically involves materialism. Sensism, which is found with Empedocles and Protagoras amongst the ancients, was given its first systematic form by Locke (d. 1704), though Bacon (d. 1626) and Hobbes (d. 1679) had prepared the data. Locke derives all simple ideas from external experience (sensations), all compound ideas (modes, substances, relations) from internal experience (reflection). Substance and cause are simply associations of subjective phenomena; universal ideas are mere mental figments. Locke admits the existence, though he denies the demonstrability, in man of an immaterial and immortal principle, the soul. Berkeley (d. 1753), accepting the teaching of Locke that ideas are only transfigured sensations, subjectivizes not only the sensible or secondary qualities of matter as his predecessor had done, but also the primary qualities which Locke held to be objective. Berkeley denies the objective basis of universal ideas and indeed of the whole material universe. The reality of things he places in their being perceived and this perceivedness is effected in the mind by God, not by the object or subject. He still retains the substance-reality of the human soul and of spirits generally, God included. Hume (d. 1776) agrees with his two empiricist predecessors in teaching that the mind knows only its own subjective organic impressions, whereof ideas are but the images. The supersensible is therefore unknowable; the principle of causality is resolved into a mere feeling of successiveness of phenomena; its necessity is reduced to a subjective feeling resulting from uniform association experienced in consciousness, and the spiritual essence or substantial being of the soul is dissipated into a series of conscious states. Lockes sensism was taken up by Condillac (d. 780), who eliminated entirely the subjective factor (Lockes reflection) and sought to explain all cognitional states by a mere mechanical, passive transformation of external sensations. The French sensist retained the spiritual soul, but his followers disposed of it as Hume had done with the Berkeleian soul relic. The Herbartians confound the image with the idea, nor does Wundt make a clear distinction between primitive con cepts (empirische Begriffe, representations of individual objects) and the image: Denken ist Phantasieren in Begriffen und Phantasierenist Denken in Bildern. c. Positivism: Positivists, following Comte (d. 857), do not deny the supersensible; they declare it unknowable; the one source of cognition, they claim, is sense-experience, experiment, and induction from phenomena. John Stuart Mill (d. 1870), following Hume, reduces all knowledge to series of conscious states linked by empirical associations and enlarged by inductive processes. The mind has no certitude of an external world, but only of a permanent possibility of sensations and antecedent and anticipated feelings. Spencer (d. 1903) makes all knowledge relative. The actual existence of things is their persistence in consciousness. Consciousness contains only subjective feelings. The relative supposes the absolute, but the latter is unknowable to us; it is the object of faith and religion (Agnosticism). All things, mind included, have resulted from a cosmical process of mechanical evolution wherein they are still involved; hence all concepts and principles are in a continuous flux. d. Classical Empiricism: Classical empiricism is characterised by a rejection of innate, in-born knowledge or concepts. John Locke, well known as an empiricist, wrote of the mind being a tabula rasa, a â€Å"blank slate†, when we enter the world. At birth we know nothing; it is only subsequently that the mind is furnished with information by experience. e. Radical Empiricism: This was advanced by William James, an American pragmatist philosopher and psychologist, based on the pragmatic theory of truth and the principle of pure experience, which contends that the relations between things are at least as real as the things themselves, that their function is real, and that no hidden substrata are necessary to account for the various clashes and coherences of the world. James summarized the theory as consisting of (1) a postulate: â€Å"The only things that shall be debatable among philosophers shall be things definable in terms drawn from experience†; (2) a factual statement: â€Å"The relations between things, conjunctive as well as disjunctive, are just as much matters of direct particular experience, neither more so nor less so, than the things themselves,† which serves to distinguish radical empiricism from the empiricism of the Scottish philosopher David Hume; and (3) a generalized conclusion: â€Å"The parts of experience hold together from next to next by relations that are themselves parts of experience. The directly apprehended universe needs, in short, no extraneous transempirical connective support, but possesses in its own right a concatenated or continuous structure. † The result of this theory of knowledge is a metaphysics that refutes the rationalist belief in a being that transcends experience, which gives unity to the world. According to James there is no logical connection between radical empiricism and pragmatism. One may reject radical empiricism and continue to be a pragmatist. Jamess studies in radical empiricism were published posthumously as Essays in Radical Empiricism (1912). According to him, it is only if it is possible to empirically test a claim that the claim has meaning. As all of our information comes from our senses, it is impossible for us to talk about that which we have not experienced. Statements that are not tied to our experiences are therefore meaningless. This principle, which was associated with a now unpopular position called logical positivism, renders religious and ethical claims literally nonsensical. No observations could confirm religious or ethical claims, therefore those claims are meaningless.

Biography of Ernst Ruska

Biography of Ernst Ruska ERNST RUSKA INTRODUCTION Mankind has come a long way since the dark ages in the field of science and medicine. We have seen many great inventions and discoveries that have helped shape our lifestyle. The electron microscope was one such invention which helped scientists and medical practitioners detect deadly diseases and viruses. The electron microscope helped scientists detect differences between the virus that caused smallpox and the virus that caused chicken pox. Today the electron microscope continues to be an integral part of many laboratories helping researchers to examine biological materials, medical biopsy samples and the characteristics of various surfaces. However, due credit should be given to the man behind the invention of this great apparatus. That man was none other than Ernst Ruska. Ernst Ruska came from a humble family whose intellect surpassed other children his age. Boisterous and full of life, Ernst went on to create history when he collaborated with Dr. Max Knoll to invent the world’s first electron microscope. So what drove Ernst towards the complex field of mathematics and science? What were the difficulties he had to face before becoming the man who today is known as the father of microscopes? Let us go back in time and explore the journey of Ernst Ruska and witness firsthand his rise to glory. THE BIRTH OF A GENIUS It was a typical cold morning on 25th December 1906 in Heidelberg, Germany. Julius Ruska and his wife Elisabeth welcomed a beautiful baby boy into their family. Elisabeth had tears of joy as Julius gently caressed the baby with affection. The baby was christened Ernst Ruska by the proud parents. Ernst’s father, Julius was a professor, a passionate botanist and a mineralogist who had the big Zeiss microscope kept in his study. For an innocent child like Ernst, the microscope seemed very unique and strange. Ernst was fascinated by this strange looking artefact and wanted to see it in person. However, his father strictly forbade him to touch the microscope. But, like all children, this only heightened Ernst’s curiosity. Ernst’s father noticed the keen interest his son showed towards the microscope. So, he would take time off his busy schedule and show Ernst magnified objects with the invention. Ernst’s uncle was in charge of an observatory on a hill overlooking Heidelberg. As a result, Ernst would often visit the observatory to meet his uncle and see the telescopes in action. After graduating from school, Ernst wanted to study engineering but his father, Julius was not too happy with the decision. Julius was very judgemental of his son’s decision to become an engineer. â€Å"How could the son of a Professor choose an inferior educational path?† thought Julius. However, Ernst was adamant about his decision to study engineering and got himself enrolled at the Technical College in Munich in the autumn of 1925 and later moved to Berlin. EARLY YEARS Ernst was extremely energetic as a student and began involving himself in studying high voltage and vacuum technology at the institute of High voltage under the tutelage of Adolf Matthias. Sometime around the end of the summer term in 1928, Mr. Matthias formed a small team to develop a high-performance cathode ray oscilloscope. When Ernst heard of Mr. Matthias’ plan, he jumped at the opportunity and joined the small team created by Matthias becoming the team’s youngest member. The team was headed by Ernst’s classmate called Max Knoll who was an electrical engineer. Ernst noticed that the cathode in the oscilloscope emitted a beam of electrons which could be used to form a dot or a writing spot on a fluorescent screen. But, the beam emitting from the cathode was unstable. Ernst and his team put all their energies into improving the cathode and sharpening the focus of the electron beams. During their research Ernst came across an article in a journal called ‘Archives Elektrotechnic’. The article was written by a professor named Hans Busch. In the article, Busch stated that the short coil present in the cathode generated a magnetic field that made stimulated electron particles behave in the same way as light when it passed through a convex glass lens. Ernst remembered his childhood and realised that the same type of lens was found in his father’s microscope. Unfortunately, Busch was unable to bring his brilliant theory to practical use due to unavailability of newer data. However, Ernst was fascinated by Busch’s theory and decided to make it a part of his thesis which he submitted in his graduate years in May 1929 at the age of 23. In his thesis, Ernst calculated the characteristics of the magnetic coil. He tested whether it could actually be used to unite electron rays and focus on a target. He was successful in his approach and with the use of the coil; he managed to gain the first recorded electron ocular images of the anode orifice of the cathode ray tube. Ernst was elated to say the least. He had just brought Busch’s theory to life! An accomplishment which even Busch was unable to achieve! A SLOW PATH TO SUCCESS Ernst had an innovative outlook towards his profession. Yes, he was successful in obtaining images but his main agenda was to create an electron microscope. However, it wasn’t an easy task. In 1930, at the age of 24 Ernst tried to create a cheaper version of this experiment as part of his diploma thesis but failed to come through. So, Ernst went back to his original idea of using coils as lenses. Using two coils, Ernst managed to build a tube similar to the microscope. Ernst tested the apparatus for the first time and noted that the magnification factor of his unique invention was a mere 15 units. Even though the magnification of the apparatus was far lower than what Ernst had expected, he had managed to prove to his peers that it was possible to obtain magnified images using electron beams and magnetic fields. One day while working on developing the apparatus further, Ernst noticed that the electrons in the machine emitted a huge quantity of heat. The heat was destroying the objects that were being viewed by Ernst through the machine. Ernst was a bit disappointed with this outcome. There was no use of creating modestly magnified images when the objects in view could be burnt to ashes. Thus, Ernst along with colleague Bodo von Borries and Max Knoll ventured on building a new and efficient microscope. However, Ernst knew that in order to impress the scientific society, his microscope would have to be better than the current light microscope which was being used. During the process of constructing his very first electron microscope, Ernst noted that the trick to compressing the magnetic field to a tiny area relied heavily on the shape of the coil. The coil had to be designed in a way that the focal length could be kept as short as possible. Keeping the focal length short was a must so that the apparatus could obtain images with high magnification. To achieve this, Ernst and his colleague Bodo constructed a coil cocooned by iron with a small gap in the center which helped to compress the magnetic field. Ernst and Bodo named their coil the â€Å"pole shoe lens† and had it patented in 1932. Finally after a year of thorough research and sleepless nights, 27 years old Ernst and his colleagues built the first electron microscope in 1933. Unlike Ernst’s previous invention which had a magnification factor of merely 15 units, this new microscope had a magnification factor of a humongous 12000 units. Finally, after years of research and dedication, Ernst finally managed to achieve his dream. OVERCOMING OBSTACLES The feat of inventing the first ever electron microscope in the world should have brought joy to Ernst. But, on the contrary Ernst wasn’t too happy as he couldn’t convince the industry to invest in the production of his microscope. The problem of overheating the objects under the lens of the microscope was still a major concern. Ernst noticed that the electron microscope would mostly be utilized by biologists. He also realised that the vacuum tube present in the microscope dehydrated the specimens and the electrons damaged them. On most occasions the heat generated burnt the specimen to ashes. Ernst was in a fix as he was unable to come to a solution to this particular problem. He turned to his younger brother, Helmut Ruska for assistance. Helmut Ruska was a medical practitioner with a positive attitude. He was sure the microscope would work if certain improvements were made. As a result, Helmut approached Richard Siebeck who was the director of the medical clinic at the Charity Hospital. Richard was also Helmut’s former medical professor and so, he managed to convince Richard to invest his time and effort into his brother’s invention. Richard was initially reluctant but after 3 years on 2nd October 1936, Siebeck praised Ernst’s invention and explained how the microscope could help doctors in analyzing the cause of diseases. He credited Ernst by stating that the microscope was capable of advancing research into identifying infectious agents that caused diseases which on paper seemed similar to each other. Diseases like measles, smallpox, and chickenpox seemed to have similar symptoms but Richard knew that the infectious agents causing the diseases were different. And he backed Ernst by stating that the microscope would be helpful in distinguishing the agents. Richard Siebeck’s testimony was enough to convince industries and companies to take the financial risk and and invest in developing electron microscopes. A renowned company called ‘Siemens’ hired Ernst and Bodo von Borries in 1937. Together Ernst and Bodo began work on producing microscopes. In late 1939 Siemens delivered the first series of microscopes branded â€Å"Siemens Super Microscope† to the laboratories of I.G. Farben in Frankfurt-Hochst. Ernst was eager to make his instrument famous all over the country. So in order to promote his invention, he suggested to the CEOs of his company Siemens to set up a visiting institute so that biologists and doctors could carry out their research using his microscope. The Institute of Electron Optics was built in 1940 when Ernst was 34 years old. Ernst along with German and foreign scientists managed to publish around 200 scientific papers from the institute by 1944. Ernst was obviously involved in the development and mass production of the electron microscope. Following the Second World War which proved to be devastating for Germany, the Institute of Electron Optics was disbanded. As a result production of microscopes had come to a halt. The demand for the instrument was huge and so in order to meet the demands of his customers; Ernst reconstituted the institute. FINAL YEARS In order to further develop the microscope, Ernst began working at the German academy of Sciences in Berlin from August 1947 to December 1948. In 1949, at the age of 43 he was made the head of department at the Fritz Haber Institute. After spending almost 20 years at Siemens, Ernst left the company at the age of 49 in 1955. After two years at the age of 51, Ernst was made Director of the institute of electron microscopy at the Fritz Haber Institute on 27th June 1957. In 1960, Ernst’s contribution to the field of medical science was acknowledged when he was awarded the Lasker Award. Ernst spent the 1960s serving as Director at Fritz Haber. He also held lectures at the Technical University of Berlin and Free University where he would talk about the basic principles of electron optics and electron microscopy. On 31st December 1974 at the age of 68, Ernst stepped down as Director and officially announced his retirement. In 1986, 80 years old Ernst received the Nobel Prize for his contribution to science. 25th May 1988 was a gloomy day in West Berlin. 82 years old Ernst Ruska left the world peacefully. He was cremated in West Berlin. TRIBUTE Even though Ernst left the world, his invention of the electron microscope continues to help biologists and medical practitioners till date. His ability to think out of the box was a quality that helped him reach a stage of grandeur. Ernst was all alone during the initial years of his studies when he stated that an electron microscope could be developed. Many doubted him and scoffed at his idea that an apparatus of such great significance could actually be built. The same people had to eat their hats when the microscope was finally invented. What one should learn from this legendary inventor is that one should never lose the will to succeed. Ernst’s life would have been very different had he chosen to give up on his dreams. Like they say, man is the maker of his own destiny and Ernst deserved every accolade that he received for his ingenuity. Here’s saluting the legendary inventor and genius known as Ernst Ruska.

Theodore Roethke and The Waking :: Waking Essays

Theodore Roethke and The Waking In describing the way he receives life's lessons and learned experiences, Theodore Roethke uses repetition of two different sentences and a simple rhyme scheme to help the reader understand his outlook on how to endure life. The two sentences repeated throughout the poem are "I wake to sleep, and take my waking slow" and "I learn by going where I have to go" [with slight variation in the latter]. "I wake to sleep, and take my waking slow" shows up in stanzas 1, 2, 4, and 6 and figuratively means that Roethke awakens in the morning and learns from the day's experiences. Unlike most people, Roethke does not rush through the day as if he expected another. He lives through the day in a calm and slow manner so that he learns about life without missing anything along the way. At night, he falls asleep content with the day's experiences and awakens the next morning in the same slow manner. When Roethke states "I learn by going where I have to go" in stanzas 1, 3, 5, and 6, he declares that he goes anywhere and everywhere to experience all that he can. He observes rare things throughout his journeys and makes mistakes along the way, but wherever he goes, he locks the experiences in his memory and repeats the cycle. The repetition of the sentences in the poem set a tone of determination and perseverance to enjoy all of life's experiences that come Roethke's way. The emotion portrayed by the sentences is an uplifting feeling because Roethke observes and enjoys even the most trivial aspects of life such as when "the lowly worm climbs up a winding stair." The rhyme scheme initiated by the author follows the rhyme scheme ABA in the first two stanzas, CDA in the third through fifth stanzas, and ABAA in the final stanza. This particular rhyme scheme creates a comfortable flow of overt rhyming. In the first two stanzas, the rhyming is the same (ABA) as Roethke talks about how to experience life by feeling. The rhyme scheme changes in the third through fifth stanzas as the focu s in the topic changes to how Roethke epitomizes his "experience by feeling" idea by sharing the specific examples of the worm and the ground. The last stanza returns to an ABAA rhyme scheme much like that of the first two stanzas.

Geronimo :: essays papers

Geronimo Geronimo's grandfather, Maco, had been the chief of the Nedni Apaches. He had been of great size and strength. When Maco had been chief his principle wars had been against the Mexicans. They were seldom at great length of peace with the Mexicans. When Maco's son (Geronimo's Dad) became a warrior, Maco died. Geronimo's father could not become the chief of the Nedni's, because he married a woman from the Bedonkohe Apaches. The two had 8 children- four boys and four girls, including Geronimo. The possibility that one of the boys would become chief of he Bedonkohe was very slim. His mother taught him the legends of his people; taught him the sun and sky, the moon and stars, the clouds and storms. She also taught him to kneel and pray to Usen fir strength, health, wisdom, and protection. When the children were young they would play with each other and sometimes with their mother and father. When they were grown up enough to do real services they went to the field with their parents: not to play, but to toil. They did not cultivate tobacco, but they found it in the wild. All of Geronimo's tribe smoked, both men and woman. No boy was allowed to smoke until he could hunt alone and kill large game such as; wolves, bear, deer, etc. Geronimo's father died when Geronimo was at a young age. They wrapped his father in his finest clothes, painted his face, wrapped a rich blanket around him, saddled his favorite horse, bore his arms in front of him, and led his horse behind, repeating in wailing tones his deeds of valor as they carried his body to a cave in the mountain. They then slew his horses and gave way all his property, as was customary in our tribe, after which his body was deposited in the cave, his arms beside him. Geronimo's mother never married again, which was not a custom to the Bedonkohe Apache. In 1846, when Geronimo was 17 years of age, he was admitted to the council of warriors. If a war had started between tribes he could go on the warpath with his tribe. Geronimo had long desired to fight with his warriors. What he was the happiest about was that he could marry Alope, the daughter of No-po-so. The two had been with each other along time before. So when he got the news that he was in the council of

Relationship Essay -- science

Relationship The relationship between men and women has always been complicated and sometimes even a really loving relationship cannot survive if people chose their personal longing as a priority. No matter how strong are the values of a man or a woman they should never forget about feelings and happiness that are nowhere else to be found but in the heart of the beloved person. Men and women fight in relationships: fight for more independence, fight to prove their rightness and keep forgetting that love is not a fight but a â€Å"mutual support alliance†. William Carlos Williams in his story â€Å"The Buffalos† gives an outstanding example of a relationship between a man and a woman. Francie in this story has a certain notion of what a relationship should be like. She seeks for being loved, unde...

Development of Communities

Communities, like tribes, were traditionally considered to be the second stage of human grouping, right after families. They however now mean different things to different people, making the definition of community too broad and incapable of clear description. The notion of community, as per the Oxford English Dictionary, is defined to be â€Å"the people of a country (or district) as a whole; the general body to which all alike belong. † This definition is however largely inadequate, considering the many contexts in which the word is used today.At one level communities stand for clusters of persons, larger than families, who are related by specific common features like the language they speak, the gods they worship, the ethnicity they belong to, the traditions they practice and the place they stay in. Again whilst communities represent human groupings that are more populous than families, many extended families like the tribes that people the islands of the Indian Ocean can e asily qualify to be treated as communities.Communities are further known to have the same social standards, plainly discernible structures and come from specific locations. Communities are powerful entities and have on many occasions achieved remarkable goals in self determination and the pursuit of autonomy, ergo the many struggles for independence in Asia and Africa in recent decades. The sustained struggle of the Tamil community in Sri Lanka in the face of the most horrendous deprivation captures the essential resilience of community feeling and the extent to which it binds community members.Much of this internal strength comes from the sense of solidarity, identification and support that exists within these structures, the instilling of social values, and the development of attitudes and common strengths. The growth of terrorism is clearly linked to the influence of community attitudes and values; the London bombers, for example, owe their religious fanaticism to community feeli ngs, which superseded the influence of factors like education and financial and social well being and led them to take plainly irrational decisions.Whilst the notion of community has attracted attention and debate from the time of Aristotle, the social, economic, and political developments that have occurred on the global platform since the 1980s have put the relevance of community into sharper focus. Globalization, a phenomenon that took off in the 1980s after the collapse of the Soviet Union and entailed the breakdown of physical, economic, and trade barriers between peoples of different regions has truly made the world a much smaller place.Apart from the much greater interconnectedness that has happened in areas of business, trade, economics, education, travel and other areas of human activity, globalization has also led to substantial migrations of peoples from their native lands, Bangladeshis into India, East Europeans into the UK, people from South and Southeast Asia into the US and UK, and an ever increasing stream of Mexicans into the US.Spurred on by the desire for better living standards, people from economically backward and politically unstable countries are moving into neighboring or distant areas, putting up base, and settling down, changing local demographic structures, interacting with the original inhabitants, bringing their culture and tradition with them, influencing and being influenced by their adopted lands.By no means is this phenomenon restricted to the affluent countries, (viz.  global magnets like the USA and the UK), which have traditionally attracted the deprived with their economic affluence and individual freedoms. Bangladeshis, Tibetans and Nepalese, for instance, have crossed their porous borders with neighboring India and spread out all over the country, offering cheap labor at construction sites, restaurants, and to security companies, changing local equations, provoking sympathy as well as hostility and resentment.The Unite d States, which has for long been known to be a multicultural and welcoming haven for the poor and needy of the world is now home to millions of people from the Latin speaking countries of South America, Asia and the Pacific Rim, who have settled down in large numbers and significantly changed what was essentially a society dominated by whites, with peripheral roles played by African Americans. The inflow of these outsiders has led to the establishment of communities, where people with commonalities cluster together, sustaining and supporting each other, and interacting in various ways with the larger society around them.This study examines the issue of survival of such communities in the era of globalization, using readings from two distinguished and well known books, â€Å"Becoming neighbors in a Mexican American Community† (2004) by Gilda L. Ochoa and â€Å"The Politics of Diversity: Immigration, Resistance and Change in Monterey Park, California† (1997) by John Hor ton. Commentary and Analysis Gilda Ochoa, a professor of sociology at the California State University at Los Angeles picks up an intriguing subject, the relationships and interaction between Mexican Americans, for detailed investigation and analysis.Referring to a variety of sources like direct interviews, observations from participating in group discussion sessions, minutes of board meetings of local schools, and other relevant papers, Ochoa presents a vivid and disturbing picture of the relationships that are emerging between established Mexican Americans and the new immigrants from Mexico, who are pouring in, legally and illegally, from across the southern border of the United States in hundreds of thousands every year.Whilst the two communities of Mexican origin do have common historical, cultural, ethnic and religious traditions, their relationships and interaction are characterized by a number of contradictions and insecurities that include sympathy, helpfulness, and cooperati veness, as well as resentment, fear, and mistrust.Apart from emphasizing the role played by women in the construction of communities, Ochoa deals with issues pertaining to the use of Spanish at home and English in the outside world, the formation of identity and the dynamics of group working during the interactions of the two communities in commonly frequented public places in the small and predominantly working class city of La Puente, 20 miles southeast of downtown Los Angeles in Los Angeles County.John Horton’s book focuses on the small (just 60,000 inhabitants) town of Monterey Park; which in recent years has generated substantial media and researcher interest. At one time Monterey Park was a suburb located some distance east from downtown Los Angeles. Immigration from China, Hong Kong and other Pacific Rim countries that began in the early 1970s and gained momentum thereafter led to the city becoming the first in the United States with a majority of Asian inhabitants.Hor ton’s book is actually one of a duo on the subject, the other being authored by Timothy Fong. The evolution of Monterey Park into an Asian majority city in the United States is important for the social and economic ramifications that arise out of the coming together of people of different races, different ethnic backgrounds and different classes in a nation that is becoming increasingly diverse in terms of cultures, languages, religions and income groups.Horton refuses to see Monterey Park as another Chinatown and views it in terms of a bustling and diverse location that has witnessed the political changes that arose from the interaction of immigrants and earlier residents of Asian, Latino and Anglo American lineage; he uniquely showcases the political battles that started off on the basis of ethnicity and race, which were thereafter gradually abandoned in favor of accord and harmony.The steady evolution of a multicultural, multiracial, and multiethnic society in the United S tates has led to significant demographic shifts and political changes. With the Latina/o population in Los Angeles expected to outstrip the white population by 2 million by 2010, the city is already known as the Chicano capital of the US. Such events have led to the development of complex relationships between the original inhabitants and newcomers and to the emergence of feelings of conflict as well as solidarity between different population segments.Whilst the entry of large numbers of migrants is bound to lead to the development of complex local relationships, the impact of globalization on the modern day economy and the consequent migration of industries and jobs to low wage areas in South America and from other parts of the world have also led to escalation in hostility, resentment and the tendency to lay the blame for difficulties arising out of such events on the influx of immigrants.Ochoa uses a number of research techniques to investigate the evolution of the Mexican immigr ant community in La Puente in the face of white resentment and hostility, the many obstacles and difficulties that characterized their lives in the city and the strange and complex relationships that developed between the incoming Mexican immigrants and the established Mexican Americans who had arrived earlier, put down their roots, brought up their children, and built their homes in the face of white resistance.Her investigations lead to the development of a piquant tale, warm and heartbreaking, and documents events that often go completely unnoticed by members of the majority and older community, for whom the newcomers often represent nothing more than unwelcome intrusions who clutter residential areas, litter streets, strain existing infrastructure, and take away jobs.Ochoa recounts, through a number of personal interviews, the travails of the Mexican community in the face of a dominant white population that felt strongly enough about immigration to enact laws seeking to deny und ocumented Mexicans â€Å"access to public services, such as excluding children from the public school system, another that denied affirmative action in schools and workplaces, and a third that stemmed from the larger English-only movement and aimed to eliminate bilingual education† (Ochoa, 2004, 3).Ochoa’s work is unique in the sense that most studies on the Mexican community until now have been quantitative in nature, have focused on demographic and work related issues and have not, like her study, taken cognizance of the impact of the environment and local interaction on the evolution of the Mexican community. Working purely within the confines of La Puente, Ochoa addresses issues that affect the evolution of the Mexican American community and the complex attitudes and behaviors that characterize the relations between Mexican Americans and Mexican immigrant newcomers.Her investigation also throws up the impact of the dominant culture on immigrant cultures and the pro bability of new cultures and new communities becoming assimilated in the culture of the majority community. With most assimilative and integrative methods practiced through local schools, Ochoa’s work focuses strongly on the working of schools and school boards, on the attitudes and impressions of local parents and how control of schooling provides the dominant community with strong weapons to suppress the expression of newer communities, take away from them the language of their forefathers and break their links with their ancestors.Apart from the pernicious effect of schooling on the latent aspirations of incoming communities, Ochoa’s investigation of interaction between Mexican Americans and Mexican immigrants brings out the areas of conflict as well as solidarity and the extent to which the constant flow of immigrants can affect the assimilation process of older and established inhabitants from the same ethnic and geographical background. Immigrant communities from different cultures have to often face resistance to their traditions, language, and customs in their adopted homes from members of the home community.A phenomenon that has repeatedly expressed itself in the past in various settings, it has led to the immigrant community assimilating itself with the culture of the local community, adopting their way of life, language, customs and traditions. The United States has itself played host to impoverished immigrants from Ireland and other countries of Europe like Poland and Germany, who have over decades learnt English, Anglo traditions and customs, conformed to local expectations and become Americans.Assimilation of foreigners is not restricted to the United States and expresses itself in all societies that play host to immigrants. The United Kingdom for example is redrawing immigration procedures that now require all immigrants to take tests on their knowledge of England, English, and English society. Much of this assimilation is carried out at the level of local schools, where school policies are predominantly weighed in favor of maintaining the local language and local culture to the exclusion of alien languages and cultural influences.Ochoa makes the point that with schools being reproductions of the larger surrounding society, their structure, policies, procedures, and regulations, in La Puente, work towards strengthening the established values, attitudes, ideologies and inherent discriminatory attitudes of the American way of life; their socialization process emphasizes the integration of children of immigrants and other colored people by teaching and inculcating values, norms, attitudes and expectations of the dominant class.The emphasis on English to the exclusion of all other languages, including Spanish, is one of the most important tools for the gradual elimination of Mexican identity and the assimilation of children of different communities into the Anglo way of life that characterizes American society. L a Puente’s investigations also lead to the inescapable conclusion of immigrant communities having to do with poorer school quality and the routing of their children to inferior career paths, conditions that tend to perpetuate existing hierarchical and power structures.Such discomfort, which is supposedly normal in the early years of immigrant arrival in terms of the assimilationist paradigm, (Ochoa, 2004, 21) is expected to gradually lead to a betterment of conditions; the Mexicans are expected to follow in the footsteps of the Irish, Jewish, and Italian communities who came before them and gradually shed their community attributes and adopted the American way of life, i. e. entered into the activities and general life of the dominant community.The assimilationist paradigm further postulates that with immigrant communities expected to become less distinguishable from the dominant community with the passage of generations, such assimilation leads to greater acceptance and less er hostility and a gradual easing of difficult living conditions. Apart from the tactics of assimilation practiced in schools, Ochoa also documents the complex and dichotomous relationships that exist between Mexican Americans and immigrant Mexicans, with the reactions of Mexican Americans moving from feelings of distaste, shame and rejection to cooperation, assistance and solidarity.With the responses of Mexican Americans being shaped by (a) their feelings about California once being part of Mexico and now occupied by Americans, (b) their experiences in La Puente, their adopted homeland, their struggles and the hostility they faced in their efforts to settle down in La Puente (c) their affinity towards their people from Mexico, and (d) their feelings of embarrassment arising out of the backwardness of the new entrants, their reactions are contradictory and, going by the interviews with Mexican immigrants, veer from goodwill and cooperation to rejection and hostility.Much of the neg ative attitudes can presumably be put down to insecurity that could stem from feeling that their acceptance in American society could be adversely affected by the buildup of negative perceptions in the face of continuing influx. Ochoa also documents the struggles the Mexican community has faced and is facing in preserving their language and culture from established institutional and social culture and their need for preservation of their cultural and social identity.Horton’s book focuses on the emergence of diversity in politics in Monterey Park from one and a half decades (mid 1980s to late 1990s) of interaction between immigrants and native residents. Employing techniques like ethnography, the use of exit polls and interviews, Horton is able to represent the process of change, which encompasses the giving way of established networks of loyalty, the increasing importance of women, minorities and newcomers, and the makeover of identities.Horton examines the municipal election s of 1988, 1990 and 1992 to show that voters made their election choices in the first 2 elections mostly on the basis of ethnicity. By 1992 feelings of ethnic solidarity appeared to have diluted significantly and voting patterns did not appear to move along ethnic lines.Horton furthermore also investigates areas other than those concerning politics like civic organizations and social events to assess the results of interaction between the city’s multi-ethnic residents, and seeks to show that whilst ethnicity was an important political force, it was in a state of fluidity and was mined and modified for political advantage.Elaborating on the divisive and essentially racist approach of the Slow-Growth and the Official-English movements, (Horton, 1997, 121) Horton also points out the importance of class stating that integration at Monterey Park was furthered because both native inhabitants and immigrants belonged to the middle class. The middle class resources of the newcomers an d the middle class status of the established inhabitants helped in reducing differences between the two groups. This point is extremely valid; it reinforces the force of class as a divisive factor in society and its power to overcome differences in culture, traditions and ethnicity.Based upon a wide range of data that comprised of reviews of newspapers, exit polls, interviews and eyewitness accounts, Horton compares the issues of ethnicity, immigration and race in Monterey Park with larger regional, national, and global contexts. Opposing the view that that cultural diversity will lead to disunity among American people, Horton makes the point that diversity does not inescapably lead to lasting competition and conflict (Horton, 1997, 182) and that moreover the politics of diversity based on alliances between different ethnic groups can bring about unity and harmony.His effort is important for the analysis that interethnic politics lead to the redefinition of ethnic identities. A comm unity is far more than a collection of individual humans with some common bonds or purposes, such groups being more appropriately described as associations. Communities develop mores and are characterized by a sense of self identity that comes about from a common and shared past as well as a collective vision of the future, an identification with the concept of â€Å"us† and â€Å"them†, and finally of collective thought and attitudes, (features of community characteristics that are brought out very clearly both by Ochoa and Horton).Again communities need individuals to be integrated by principles, be active, and participate strongly in the pursuit of its interests. Communities, experts say, are united by an identifying principle, which represents the value, the ideal, and the good that the community revolves around for its sustained survival, and shapes the processes for assessing such principle.With the establishment of the values and principles and the organization of the community requiring its members to participate in such processes, interaction between community members is dependent upon communication, an essential feature of community life that is destroyed through negation of the use of ethnic languages by assimilative processes. Communities require communicating to grow and consolidate. With humans living in communities by virtue of the things they share and possess, ideal communities are restricted in size and distinguished by strong communication between its members.Globalization, migration, and assimilation of traits of other cultures obviously work against the strengthening of communication bonds between community members and affect its furtherance. The subject of globalization and its repercussions have come to the vanguard of socio-political debate and discussion, there being a growing concern that globalization, through its various manifestations, is wiping out communities and cultures and creating an ugly similarity all over the world.Events like the protests against the WTO in Seattle during 1999, the objection to the entry of McDonald’s in various parts of the world and other insurrections, suggest that the concept of a unified world is not just difficult but also unwanted by many peoples. It however needs to be realized that the personal and cultural impact that globalization is having all over the world is as important as its economic impact. The creation of a global society actually needs diversity in its constituents, the diversity in a society adding to its novelty and, hopefully, to its ability to be flexible.The integrating principle of a global society should not just reject sameness but should try to represent the views of all those involved in its creation and maintenance There is an increasing feeling that globalization can lead to the destruction of a myriad ethnic cultures in favor of one common culture, which most people feel will be predominantly Euro-American, considering the soft and hard powers of the western nations and their domination of global media.In both La Puente and Monterey Park, the cultures of ethnic communities have been subjected to a fierce assault by the dominant culture, much of which is played out in schools and by the imposition of the English language. The all pervasive effect of American advertising and television programs is also seen as a strong culturally invasive force, not just with immigrant communities in the US but all over the world; the concern about loss of cultural identity and local uniqueness is substantial and is caused by the perception of the imposition of cultural hegemony through all possible means.With globalization impacting the world at all levels, society, community, and individual, it is not difficult to foresee that the assimilation of individual cultures and unique community traits into the folds of the dominant community can have a negative impact upon community life. It however remains a fact that the homogen ization of the world, as also of different communities in the United States, is happening at a fast clip, a phenomenon that is adversely affecting the independence, growth and sustenance of a myriad communities. A number of reasons are behind this decline in community life.With globalization involving travel and migration of labor forces in large volumes from areas of deprivation and excess labor availability to those deficient in workforce and willing to pay for the same, it is become progressively difficult for communities to retain their distinguishing characteristics in the new areas that some of their members decide to make their homes in. Whilst increases in communication technology and cheaper air travel are making communication cheap and easy between people in different areas, the absence of direct face to face communication that existed in the past is bound to affect the integrity of community life.Limited communication will not allow for the development of relationships to levels that are needed for the continuance of communities. Apart from the deterioration in 121 relationships, community spirits are also hurt by cultures of consumption, market cultures and the cultures of dominant communities, all of which lead community members, especially those who are young to conform to what they feel to be the most popular, acceptable and esteemed culture. Market cultures affect community life adversely, leading to the dominance of commodification and the decline of neighborhoods, communities and common links of history and tradition.The adoption of the cultural mores and ways of life of the dominant community by immigrant communities is, in many cases, as highlighted by Ochoa, due to need for increasing the self esteem and self worth of members of immigrant communities. Such feelings in the minds of new immigrants are moreover reinforced by seeing people of the same community, who had come earlier, having already adopted the culture of sameness, and conseque ntly lead to greater assimilation with dominant communities and submersion of individual community traits.Homogenization of individuals into persons with similar behavioral and cultural norms arises from (a) environmental forces that do not appreciate and do not tolerate any deviation from accepted norms and (b) the erroneous notion that social or national unity requires all individuals to follow the same culture; much like the concept of organizational culture in the private sector. A nation or a society is however significantly different from a private sector corporation and such notions lead to the creation of utmost confusion over concepts of homogeneity and unity.Strong unity, most policymakers and intellectuals assert, comes from the affirmation of diversity in the context of similar objectives. Homogeneity in fact leads to dogma, intolerance, prejudice, and divisiveness and works against the concept of unity and effective progress towards common goals. Diversity has time and again been shown to be associated with the successful working and goal attainment of most groups of people.Communities and larger societies thrive on diversity and the underlying objective for the achievement and establishment of a beneficial structure, concepts and ideas that cannot progress in the absence of tolerance for other ideas and perspectives. The necessity of changing with the times is critical for all communities and larger societies. Globalization is also steadily eliminating the sense of responsibility necessary for the growth, purpose and consolidation of community life, with most community affairs being decided by state or national governmental bodies, and even by large corporate organizations.All this as well as the process of assimilation is leading to the steady deterioration of community life and the construction of associations that are characterized by sameness to the exclusion of oneness in the reinforcing presence of diversity. Lack of diversity, tolerance, a nd communication, leads to the stifling of communities. In actual fact, the concept of a truly global society allows communities to grow and flourish; it takes strength and sustenance from their various inputs and features, even as it strives for the achievement of common and not selective good.Such a society will work optimally only after the striking of a proper balance between the needs of globalization and the dominant and minority communities in areas of political, social and economic activity. Whilst globalization does not appear to be a reversible phenomenon, actions need to be taken to ensure that it is not allowed to destroy the notion of community. Both the studies, by Ochoa and Horton, reveal that whilst immigrant communities come under enormous pressure in early years, such strains disappear with the progress of assimilation.Although most community members show mixed approaches to the process of assimilation, resenting the taking away of the characteristic features of th eir life and at the same time wishing to be held in esteem by members of the dominant host community, the preservation of communities depends greatly upon the tolerance and openness of establishment members and the extent to which they are ready to respect the uniqueness of newcomers in their midst.Assimilation can actually instead of leading to unity result in a false sense of sameness, and such societies, which press for the establishment of sameness rather than diversity, can lead to the suppression of growth and sustenance of communities. Conclusion The continuance of communities in a fast globalizing world, as is evidenced from the foregoing discussion, depends to a large extent upon the tolerance and open-mindedness of dominant communities.Whilst most communities are formed over the ages and are by nature extremely resilient, excessive fragmentation, migration and exposure to more politically and economically powerful cultures that are furthermore negatively disposed towards a lien communities can put such communities under immense strain and lead to irreversible changes.Horton makes the point that modern day society, whilst containing elements of dogma and intolerance, are by nature receptive to the concept of multi ethnic structures; they are open to being shaped by and responding to external influences, and to the creation of freer and more vibrant social structures. The concept of a globalized world allows communities to retain their distinguishing and reinforcing features, even while it strives for the betterment of the common good.The successful progression of such social structures work towards the advantage and benefit of the many communities that sustain its diversity and multifaceted nature and it becomes the responsibility of all individuals to ensure that diversity is not sacrificed at the altar of sameness. Communities are critical to the successful progression of human society; they facilitate the establishment and sustenance of bonds betwee n humans at elemental levels, lead to joint and cooperative action for the betterment of society and to the continuation of different identities and cultures that have grown over centuries.Such features of diverse and multiethnic societies need to be valued and not extinguished by narrow and insecure parochialism and the desire to create a globally similar society. Unthinking efforts to assimilate separate cultures and extinguish their unique characteristics in favor of the establishment of uniformity can lead to nothing but the detriment of globalization efforts and society needs to be ever vigilant against such regressive tendencies.Recognizing the impact of globalization on communities and making of concerted efforts to preserve them is an imperative for the establishment of a truly globalized society and should be a priority of leading world societies. Globalization need not lead to the decline of community. Shifting of short sighted perspectives will help in the preservation, s ustenance and growth of unique communities and to the diversity and strength of a truly globalized society. References Ochoa, G.L, (2004), Becoming Neighbors in a Mexican American Community: Power, Conflict, and Solidarity, University of Texas Press Horton, J, (1997), The Politics of Diversity: Immigration, Resistance, and Change in Monterey Park, California, Temple University Press

Small Family Owned Business

My assignment for the presentation on (small) family owned businesses was to research and share an organized piece on the international studies of the subject. After several days of searching the internet for appropriate studies, I had gathered enough data to put together a three part report. The three parts consisted first off of an intro, which I believed was enough to be considered its own part, just because of the extremely interesting point that family owned businesses are such a widespread commonality.Second came the bulk of my research, the description of small family owned businesses under the laws of different countries, specifically those belonging to countries in Europe. Last but not least, I followed up with the importance of small family owned businesses’ impact on the overall economy of Europe, and how they applied. When you think of a small family owned business, you usually think of at least one local business you have known and have used your whole life whethe r a gas station, kebab imbiss, cafe, restaurant, or car dealership, etc. However, think about if everyone in the world named at least one such business.Many people would name the some of the same enterprises, but now you can imagine just how many small family owned businesses there are across the world. Because there are so many, not many reports exist that can contain the entire scope of every kind in every country, therefore, my report covers information regarding largely to european studies. Across Europe and in the United States, there is no widely accepted definition or legal description of a â€Å"family business†, however there are many criteria that if met by a small business, can be used to classify a business as such.Although each country has its own list of indicators, some countries use â€Å"common knowledge† to decide what constitutes a family business. This means that most countries simply use perception to differentiate a family business from a non-fami ly business based on the interrelationship between family and enterprise that can obviously be observed like the active involvement of family members in the enterprise’s everyday activities.Few countries legal codes actually mention regulations in which small businesses are referred and partially defined, but can vary easily from each other such as the Austrian regional agricultural legislation stating â€Å"a family business defined as any autonomous economic entity regularly and sustainably providing for the farming family’s income† to the Italian Civil Code which describes family businesses as â€Å"enterprises in which members of the family unit work and have ownership.For most cases, instead looking for derelict, briefly mentioned bits of code referring to family business, a group of common â€Å"soft† and â€Å"hard† criteria has been identified(#3). Soft criteria includes: o family relations affect the assignment of the management o family indirectly runs the company o â€Å"major family influence/dominance† of the management (in terms of strategic decisions) o â€Å"significant proportion† of the enterprises’ senior management o â€Å"most important decision† made by the family o â€Å"family control† of the management of the enterprise at least 2 generations having had control over the enterprise Hard criteria includes more legitimate and quantifiable proof such as: o CEO has to be a family member o 1 family member is actively involved in the operative management of the company o More than 1 family member in the management o CEO and at least 1 management team member stems from the family o At least 2 directors/board members stem from the family o At least 3 board or staff members stem from the family o Majority of the management team stem from the familyOr, in the case of Denmark, a family has control over the company: †¢ if it has 50 % of the shares, or †¢ if it has 50 % of the shares and a member of the family is the CEO In regards to impact on economy, although small family owned businesses seem like only a small part of the world economy, they actually make up quite a large percent of all enterprises. It is estimated that about 70-80% of businesses across Europe are family businesses, and of those, about 50% are small family owned businesses.Over all, small family owned businesses also contribute to about 40-50% of employment in Europe(#3). The following table(#3) shows elements of the definition of family business by country, gathered by several international studies on family business. What the previous table shows, is cross-national (European) minimum criteria for the ownership, control, or management of a company by a family according to FBN International 2007, Les Henokiens, European Group of Owner managed and Family Enterprises (GEEF), and PriceWaterhouseCoopers LLP. 2007.Under FBN International 2007, and also according to the European Gro up of Owner managed and Family Enterprises, ownership is described as the direct or indirect majority of votes held by the founders, spouses, parents, children, heir, or persons having acquired the shares; control/management is described as at least one representative of family or kin present in the management. In contrast to those studies, Les Henokiens suggests that in order to hold ownership, a company must own the majority of shares for more than two hundred years; in regards to control/management the enterprise must be managed by a direct descendant of the founder.Another contrasting opinion to FBN International 2007 and the European Group of Owner managed and Family Enterprises, but perhaps not as extreme as Les Henokiens, is the study performed by PriceWaterhouseCoopers LLP. 2007 which defines ownership as simply at least fifty-one percent of shares held by a family or related families, and control/management as a majority of the senior management team and the owners having a day to day responsibility for the management of the business.In conclusion, we can see that (small) family owned businesses are a huge contributing factor to the economy worldwide, but still remain a mostly ignored topic by most countries and their legal systems, which is interesting because one would think something so important would be more tightly regulated. I would like to thank my hard working group, and Ms. Fink for the opportunity to present this topic. Works Cited (I have numbered my sources to make identification easier within the report) 1. D, Jamie. â€Å"Running a Family Business Within the Law | SBA. ov. † Running a Family Business Within the Law | SBA. gov. U. S. Small Business Administration, 4 May 2010. Web. 5 May 2012. . 2. Elliott, Larry, and Julia Kollewe. â€Å"Germany's Smaller Firms Emerge Intact from the Recession. † The Guardian. Guardian News and Media, 15 Mar. 2011. Web. 5 May 2012. . 3. Mandl, Irene. â€Å"Overview of Family Business Relev ant Issues. † Ec. europa. eu. European Commission, Enterprise and Industry Directorate-General, 2008. Web. 5 May 2012. . 4. Winslow, CJ. â€Å"Welcome to FoodTronix. † Welcome to FoodTronix. Web. 5 May 2012. .

Europe Economic Crisis

ISSN 0379-0991 Economic Crisis in Europe: Causes, Consequences and Responses EUROPEAN ECONOMY 7|2009 EUROPEAN COMMISSION The European Economy series contains important reports and communications from the Commission to the Council and the Parliament on the economic situation and developments, such as the Economic forecasts, the annual EU economy review and the Public ? nances in EMU report. Subscription terms are shown on the back cover and details on how to obtain the list of sales agents are shown on the inside back cover.Unless otherwise indicated, the texts are published under the responsibility of the Directorate-General for Economic and Financial Affairs of the European Commission, BU24, B-1049 Brussels, to which enquiries other than those related to sales and subscriptions should be addressed. LEGAL NOTICE Neither the European Commission nor any person acting on its behalf may be held responsible for the use which may be made of the information contained in this publication, or for any errors which, despite careful preparation and checking, may appear.More information on the European Union is available on the Internet (http://europa. eu). Cataloguing data can be found at the end of this publication. Luxembourg: Of? ce for Of? cial Publications of the European Communities, 2009 ISBN 978-92-79-11368-0 doi 10. 2765/845 40  © European Communities, 2009 Reproduction is authorised provided the source is acknowledged. Printed in Luxembourg European Commission Directorate-General for Economic and Financial Affairs Economic Crisis in Europe: Causes, Consequences and ResponsesEUROPEAN ECONOMY 7/2009 FOREWORD The European economy is in the midst of the deepest recession since the 1930s, with real GDP projected to shrink by some 4% in 2009, the sharpest contraction in the history of the European Union. Although signs of improvement have appeared recently, recovery remains uncertain and fragile. The EU’s response to the downturn has been swift and decisive. A side from intervention to stabilise, restore and reform the banking sector, the European Economic Recovery Plan (EERP) was launched in December 2008.The objective of the EERP is to restore confidence and bolster demand through a coordinated injection of purchasing power into the economy complemented by strategic investments and measures to shore up business and labour markets. The overall fiscal stimulus, including the effects of automatic stabilisers, amounts to 5% of GDP in the EU. According to the Commission's analysis, unless policies take up the new challenges, potential GDP in the EU could fall to a permanently lower trajectory, due to several factors. First, protracted spells of unemployment in the workforce tend to lead to a permanent loss of skills.Second, the stock of equipment and infrastructure will decrease and become obsolete due to lower investment. Third, innovation may be hampered as spending on research and development is one of the first outlays that businesses cu t back on during a recession. Member States have implemented a range of measures to provide temporary support to labour markets, boost investment in public infrastructure and support companies. To ensure that the recovery takes hold and to maintain the EU’s growth potential in the long-run, the focus must increasingly shift from short-term demand management to supply-side structural measures.Failing to do so could impede the restructuring process or create harmful distortions to the Internal Market. Moreover, while clearly necessary, the bold fiscal stimulus comes at a cost. On the current course, public debt in the euro area is projected to reach 100% of GDP by 2014. The Stability and Growth Pact provides the flexibility for the necessary fiscal stimulus in this severe downturn, but consolidation is inevitable once the recovery takes hold and the risk of an economic relapse has diminished sufficiently.While respecting obligations under the Treaty and the Stability and Growth Pact, a differentiated approach across countries is appropriate, taking into account the pace of recovery, fiscal positions and debt levels, as well as the projected costs of ageing, external imbalances and risks in the financial sector. Preparing exit strategies now, not only for fiscal stimulus, but also for government support for the financial sector and hard-hit industries, will enhance the effectiveness of these measures in the short term, as this depends upon clarity regarding the pace with which such measures will be withdrawn.Since financial markets, businesses and consumers are forward-looking, expectations are factored into decision making today. The precise timing of exit strategies will depend on the strength of the recovery, the exposure of Member States to the crisis and prevailing internal and external imbalances. Part of the fiscal stimulus stemming from the EERP will taper off in 2011, but needs to be followed up by sizeable fiscal consolidation in following years to reverse the unsustainable debt build-up.In the financial sector, government guarantees and holdings in financial institutions will need to be gradually unwound as the private sector gains strength, while carefully balancing financial stability with competitiveness considerations. Close coordination will be important. ‘Vertical’ coordination between the various strands of economic policy (fiscal, structural, financial) will ensure that the withdrawal of government measures is properly sequenced — an important consideration as turning points may differ across policy areas. Horizontal’ coordination between Member States will help them to avoid or manage cross-border economic spillover effects, to benefit from shared learning and to leverage relationships with the outside world. Moreover, within the euro area, close coordination will ensure that Member States’ growth trajectories do not diverge as the economy recovers. Addressing the underlying cause s of diverging competitiveness must be an integral part of any exit strategy.The exit strategy should also ensure that Europe maintains its place at the frontier of the low-carbon revolution by investing in renewable energies, low carbon technologies and â€Å"green† infrastructure. The aim of this study is to provide the analytical underpinning of such a coordinated exit strategy. Marco Buti Director-General, DG Economic and Financial Affairs, European Commission ABBREVIATIONS AND SYMBOLS USED Member States BE BG CZ DK DE EE EL ES FR IE IT CY LV LT LU HU MT NL AT PL PT RO SI SK FI SE UK EA-16 EU-10 EU-15 EU-25 EU-27 Currencies EUR BGN CZK DKK EEK GBP HUF JPY LTL LVL PLN RON SEKBelgium Bulgaria Czech Republic Denmark Germany Estonia Greece Spain France Ireland Italy Cyprus Latvia Lithuania Luxembourg Hungary Malta The Netherlands Austria Poland Portugal Romania Slovenia Slovakia Finland Sweden United Kingdom European Union, Member States having adopted the single currency (BE , DE, EL, SI, SK, ES, FR, IE, IT, CY, LU, MT, NL, AT, PT and FI) European Union Member States that joined the EU on 1 May 2004 (CZ, EE, CY, LT, LV, HU, MT, PL, SI, SK) European Union, 15 Member States before 1 May 2004 (BE, DK, DE, EL, ES, FR, IE, IT, LU, NL, AT, PT, FI, SE and UK) European Union, 25 Member States before 1 January 2007 European Union, 27 Member States euro New Bulgarian lev Czech koruna Danish krone Estonian kroon Pound sterling Hungarian forint Japanese yen Lithuanian litas Latvian lats New Polish zloty New Romanian leu Swedish krona iv SKK USD Slovak koruna US dollar Other abbreviations BEPG Broad Economic Policy Guidelines CESR Committee of European Securities Regulators EA Euro area ECB European Central Bank ECOFIN European Council of Economics and Finance Ministers EDP Excessive deficit procedure EMU Economic and monetary union ERM II Exchange Rate Mechanism, mark II ESCB European System of Central Banks Eurostat Statistical Office of the European Communities F DI Foreign direct investment GDP Gross domestic product GDPpc Gross Domestic Product per capita GLS Generalised least squares HICP Harmonised index of consumer prices HP Hodrick-Prescott filterICT Information and communications technology IP Industrial Production MiFID Market in Financial Instruments Directive NAWRU Non accelerating wage inflation rate of unemployment NEER Nominal effective exchange rate NMS New Member States OCA Optimum currency area OLS Ordinary least squares R Research and development RAMS Recently Acceded Member States REER Real effective exchange rate SGP Stability and Growth Pact TFP Total factor productivity ULC Unit labour costs VA Value added VAT Value added tax v ACKNOWLEDGEMENTS This special edition of the EU Economy: 2009 Review â€Å"Economic Crisis in Europe: Causes, Consequences and Responses† was prepared under the responsibility of Marco Buti, Director-General for Economic and Financial Affairs, and Istvan P. Szekely, Director for Economic St udies and Research. Paul van den Noord, Adviser in the Directorate for Economic Studies and Research, served as the global editor of the report.The report has drawn on substantive contributions by Ronald Albers, Alfonso Arpaia, Uwe Bower, Declan Costello, Jan in ‘t Veld, Lars Jonung, Gabor Koltay, Willem Kooi, Gert-Jan Koopman, Martin Hradisky, Julia Lendvai, Mauro Griorgo Marrano, Gilles Mourre, Michal Narozny, Moises Orellana Pena, Dario Paternoster, Lucio Pench, Stephanie Riso, Werner Roger, Eric Ruscher, Alessandra Tucci, Alessandro Turrini, Lukas Vogel and Guntram Wolff. The report benefited from extensive comments by John Berrigan, Daniel Daco, Oliver Dieckmann, Reinhard Felke, Vitor Gaspar, Lars Jonung, Sven Langedijk, Mary McCarthy, Matthias Mors, Andre Sapir, Massimo Suardi, Istvan P. Szekely, Alessandro Turrini, Michael Thiel and David Vergara. Statistical assistance was provided by Adam Kowalski, Daniela Porubska and Christopher Smyth. Adam Kowalski and Greta Haems were responsible for the lay-out of the report.Comments on the report would be gratefully received and should be sent, by mail or e-mail, to: Paul van den Noord European Commission Directorate-General for Economic and Financial Affairs Directorate for Economic Studies and Research Office BU-1 05-189 B-1049 Brussels E-mail: paul. [email  protected] europa. eu vi CONTENTS Executive Summary 1. 2. 3. A crisis of historic proportions Vast policy challenges A strong call on EU coordination 1 1 1 5 Part I: Anatomy of the crisis 1. Root causes of the crisis 1. 1. 1. 2. 1. 3. Introduction A chronology of the main events Global forces behind the crisis Introduction Great crises in the past The policy response then and now Lessons from the past 7 8 8 9 10 2. The crisis from a historical perspective 2. 1. 2. 2. 2. 3. 2. 4. 14 14 14 18 20 Part II: Economic consequences of the crisis 1. Impact on actual and potential growth 1. 1. 1. 2. 1. 3. 1. 4.Introduction The impact on economic activity A s ymmetric shock with asymmetric implications The impact of the crisis on potential growth Introduction Recent developments Labour market expectations A comparison with recent recessions Introduction Tracking developments in fiscal deficits Tracking public debt developments Fiscal stress and sovereign risk spreads Introduction Sources of global imbalances Global imbalances since the crisis Implications for the EU economy 23 24 24 24 27 30 2. Impact on labour market and employment 2. 1. 2. 2. 2. 3. 2. 4. 35 35 35 37 38 3. Impact on budgetary positions 3. 1. 3. 2. 3. 3. 3. 4. 41 41 41 43 44 4. Impact on global imbalances 4. 1. 4. 2. 4. 3. 4. 4. 46 46 46 48 50 Part III:Policy responses 1. A primer on financial crisis policies 1. 1. 1. 2. 1. 3. Introduction The EU crisis policy framework The importance of EU coordination 55 56 56 58 59 2. Crisis control and mitigation 62 vii 2. 1. 2. 2. 2. 3. 2. 4. Introduction Banking support Macroeconomic policies Structural policies Introduction Crisis resolution policies Crisis prevention Introduction The pursuit of crisis resolution The role of EU coordination 62 62 64 71 3. Crisis resolution and prevention 3. 1. 3. 2. 3. 3. 78 78 78 80 4. Policy challenges ahead 4. 1. 4. 2. 4. 3. 82 82 82 85 References 87 LIST OF TABLES II. 1. 1. II. 1. 2. III. 1. 1. III. 2. 1. III. 2. 2.Main features of the Commission forecast The Commission forecast by country Crisis policy frameworks: a conceptional illustration Public interventions in the banking sector Labour market and social protection measures in Member States' recovery programmes 71 27 27 58 63 LIST OF GRAPHS I. 1. 1. I. 1. 2. I. 1. 3. I. 1. 4. I. 1. 5. I. 1. 6. I. 1. 7. I. 2. 1. I. 2. 2. I. 2. 3. I. 2. 4. I. 2. 5. I. 2. 6. II. 1. 1. II. 1. 2. II. 1. 3. II. 1. 4. II. 1. 5. II. 1. 6. II. 1. 7. Projected GDP growth for 2009 Projected GDP growth for 2010 3-month interbank spreads vs T-bills or OIS Bank lending to private economy in the euro area, 2000-09 Corporate 10 year-spreads vs.Gove rnment in the euro area, 2000-09 Real house prices, 2000-09 Stock markets, 2000-09 GDP levels during three global crises World average of own tariffs for 35 countries, 1865-1996, un-weighted average, per cent of GDP World industrial output during the Great Depression and the current crisis The decline in world trade during the crisis of 1929-1933 The decline in world trade during the crisis of 2008-2009 Unemployment rates during the Great Depression and the present crisis in the US and Europe Bank lending standards Manufacturing PMI and world trade Quarterly growth rates in the EU Construction activity and current account position Growth composition in current account surplus countries Growth compostion of current account deficit countries Potential growth 2007-2013, euro area 18 24 24 27 29 30 30 31 15 16 16 16 8 8 9 10 10 12 12 15 viii II. 1. 8. II. 1. 9. II. 1. 10. II. 2. 1. II. 2. 2. II. 2. 3. II. 2. 4. II. 2. 5. II. 2. 6. II. 2. 7. II. 2. 8. II. 2. 9. II. 2. 10. II. 2. 11. II. 2. 12. II. 3. 1. II. 3. 2. II. 3. 3. II. 3. 4. II. 3. 5. II. 3. 6. II. 3. 7. II. 3. 8. II. 4. 1. II. 4. 2. II. 4. 3. II. 4. 4. II. 4. 5. III. 2. 1. III. 2. 2. III. 2. 3. III. 2. 4. III. 2. 5. III. 2. 6. III. 2. 7. III. 2. 8. III. 2. 9. III. 2. 10.Potential growth 2007-2013, euro outs Potential growth 2007-2013, most recently acceding Member States Potential growth by Member State Unemployment rates in the European Union Employment growth in the European Union Unemployment and unemployment expectations Unemployment and hours worked Change in monthly unemployment rate – Italy Unemployment expectations over next 12 months (Consumer survey) – Italy Change in monthly unemployment rate – Germany Unemployment expectations over next 12 months (Consumer survey) Germany Change in monthly unemployment rate – France Unemployment expectations over next 12 months (Consumer survey) – France Change in monthly unemployment rate – United Kingdom Unemployment expectations over next 12 months (Consumer survey) – United Kingdom Tracking the fiscal position against previous banking crises Change in fiscal position and employment in construction Change in fiscal position and real house prices Fiscal positions by Member State Tracking general government debt against previous banking crises Gross public debt Fiscal space by Member State, 2009 Fiscal space and risk premia on government bond yields Current account balances Trade balance in GCC countries and oil prices The US trade deficit The Euro Area trade balance China's GDP growth rate and current account to GDP ratio Macroeconomic policy mix in the euro area Macroeconomic policy mix in the United Kingdom Macroeconomic policy mix in the United States Central bank policy rates ECB policy and eurozone overnight rates Central bank balance sheets Fiscal stimulus in 2009 Fiscal stimulus in 2010 Output gap and fiscal stimulus in 2009 Fiscal space and fiscal stimulus in 2009 31 31 32 35 36 3 7 38 40 40 40 40 40 40 40 40 41 42 42 42 43 44 44 45 46 49 50 51 52 65 65 65 66 66 66 67 68 68 69 LIST OF BOXES I. 1. 1. I. 2. 1. II. 1. 1. II. 1. 2. II. 1. 3. II. 1. 4. II. 4. 1. III. 1. 1.Estimates of financial market losses Capital flows and the crisis of 1929-1933 and 2008-2009 Impact of credit losses on the real economy The growth impact of the current and previous crises Financial crisis and potential growth: econometric evidence Financial crisis and potential growth: evidence from simulations with QUEST Making sense of recent Chinese trade data. Concise calendar of EU policy actions 11 17 25 28 33 34 49 57 ix III. 2. 1. III. 2. 2. III. 2. 3. III. 2. 4. Measuring the economic impact of fiscal stimulus under the EERP EU balance of payments assistance Labour market and social protection crisis measures: examples of good practice EU-level financial contributions 70 73 76 77 x EXECUTIVE SUMMARY assively liquidated their positions and stock markets went into a tailspin. From then o nward the EU economy entered the steepest downturn on record since the 1930s. The transmission of financial distress to the real economy evolved at record speed, with credit restraint and sagging confidence hitting business investment and household demand, notably for consumer durables and housing. The cross-border transmission was also extremely rapid, due to the tight connections within the financial system itself and also the strongly integrated supply chains in global product markets. EU real GDP is projected to shrink by some 4% in 2009, the sharpest contraction in its history.And although signs of an incipient recovery abound, this is expected to be rather sluggish as demand will remain depressed due to deleveraging across the economy as well as painful adjustments in the industrial structure. Unless policies change considerably, potential output growth will suffer, as parts of the capital stock are obsolete and increased risk aversion will weigh on capital formation and R&D. The ongoing recession is thus likely to leave deep and long-lasting traces on economic performance and entail social hardship of many kinds. Job losses can be contained for some time by flexible unemployment benefit arrangements, but eventually the impact of rapidly rising unemployment will be felt, with downturns in housing markets occurring simultaneously affecting (notably highly-indebted) households.The fiscal positions of governments will continue to deteriorate, not only for cyclical reasons, but also in a structural manner as tax bases shrink on a permanent basis and contingent liabilities of governments stemming from bank rescues may materialise. An open question is whether the crisis will weaken the incentives for structural reform and thereby adversely affect potential growth further, or whether it will provide an opportunity to undertake far-reaching policy actions. 2. VAST POLICY CHALLENGES 1. A CRISIS OF HISTORIC PROPORTIONS The financial crisis that hit the global econ omy since the summer of 2007 is without precedent in post-war economic history. Although its size and extent are exceptional, the crisis has many features in common with similar financial-stress driven recession episodes in the past.The crisis was preceded by long period of rapid credit growth, low risk premiums, abundant availability of liquidity, strong leveraging, soaring asset prices and the development of bubbles in the real estate sector. Over-stretched leveraging positions rendered financial institutions extremely vulnerable to corrections in asset markets. As a result a turn-around in a relatively small corner of the financial system (the US subprime market) was sufficient to topple the whole structure. Such episodes have happened before (e. g. Japan and the Nordic countries in the early 1990s, the Asian crisis in the late-1990s). However, this time is different, with the crisis being global akin to the events that triggered the Great Depression of the 1930s.While it may be appropriate to consider the Great Depression as the best benchmark in terms of its financial triggers, it has also served as a great lesson. At present, governments and central banks are well aware of the need to avoid the policy mistakes that were common at the time, both in the EU and elsewhere. Large-scale bank runs have been avoided, monetary policy has been eased aggressively, and governments have released substantial fiscal stimulus. Unlike the experience during the Great Depression, countries in Europe or elsewhere have not resorted to protectionism at the scale of the 1930s. It demonstrates the importance of EU coordination, even if this crisis provides an opportunity for further progress in this regard.In its early stages, the crisis manifested itself as an acute liquidity shortage among financial institutions as they experienced ever stiffer market conditions for rolling over their (typically shortterm) debt. In this phase, concerns over the solvency of financial instituti ons were increasing, but a systemic collapse was deemed unlikely. This perception dramatically changed when a major US investment bank (Lehman Brothers) defaulted in September 2008. Confidence collapsed, investors The current crisis has demonstrated the importance of a coordinated framework for crisis management. It should contain the following building blocks: †¢ Crisis prevention to prevent a repeat in the future. This should be mapped onto a collective 1 European Commission Economic Crisis in Europe: Causes, Consequences and Responses udgment as to what the principal causes of the crisis were and how changes in macroeconomic, regulatory and supervisory policy frameworks could help prevent their recurrence. Policies to boost potential economic growth and competitiveness could also bolster the resilience to future crises. †¢ Crisis control and mitigation to minimise the damage by preventing systemic defaults or by containing the output loss and easing the social hardship stemming from recession. Its main objective is thus to stabilise the financial system and the real economy in the short run. It must be coordinated across the EU in order to strike the right balance between national preoccupations and spillover effects affecting other Member States. Crisis resolution to bring crises to a lasting close, and at the lowest possible cost for the taxpayer while containing systemic risk and securing consumer protection. This requires reversing temporary support measures as well action to restore economies to sustainable growth and fiscal paths. Inter alia, this includes policies to restore banks' balance sheets, the restructuring of the sector and an orderly policy ‘exit'. An orderly exit strategy from expansionary macroeconomic policies is also an essential part of crisis resolution. The beginnings of such a framework are emerging, building on existing institutions and legislation, and complemented by new initiatives.But of course policy makers in Europe have had no choice but to employ the existing mechanisms and procedures. A framework for financial crisis prevention appeared, with hindsight, to be underdeveloped – otherwise the crisis would most likely not have happened. The same held true to some extent for the EU framework for crisis control and mitigation, at least at the initial stages of the crisis. Quite naturally, most EU policy efforts to date have been in the pursuit of crisis control and mitigation. But first steps have also been taken to redesign financial regulation and supervision – both in Europe and elsewhere – with a view to crisis prevention. By contrast, the adoption of crisis resolution policies has not begun in earnest yet.This is now becoming urgent – not least because it should underpin the effectiveness of control policies via its impact on confidence. 2. 1. Crisis control and mitigation Aware of the risk of financial and economic meltdown central banks and governments in the European Union embarked on massive and coordinated policy action. Financial rescue policies have focused on restoring liquidity and capital of banks and the provision of guarantees so as to get the financial system functioning again. Deposit guarantees were raised. Central banks cut policy interest rates to unprecedented lows and gave financial institutions access to lender-of-last-resort facilities.Governments provided liquidity facilities to financial institutions in distress as well, along with state guarantees on their liabilities, soon followed by capital injections and impaired asset relief. Based on the coordinated European Economy recovery Plan (EERP), a discretionary fiscal stimulus of some 2% of GDP was released – of which two-thirds to be implemented in 2009 and the remainder in 2010 – so as to hold up demand and ease social hardship. These measures largely respected agreed principles of being timely and targeted, although there are concerns that in some cases measures were not of a temporary nature and therefore not easily reversed.In addition, the Stability and Growth Pact was applied in a flexible and supportive manner, so that in most Member States the automatic fiscal stabilisers were allowed to operate unfettered. The dispersion of fiscal stimulus across Member States has been substantial, but this is generally – and appropriately – in line with differences in terms of their needs and their fiscal room for manoeuvre. In addition, to avoid unnecessary and irreversible destruction of (human and entrepreneurial) capital, support has been provided to hard-hit but viable industries while part-time unemployment claims were allowed on a temporary basis, with the EU taking the lead in developing guidelines on the design of labour market policies during the crisis.The EU has played an important role to provide guidance as to how state aid policies – including to the financial sector – could be shaped so as to pay respect to competition rules. Moreover, the EU has provided balance-of payments assistance jointly with the IMF and World Bank to Member States in Central and Eastern Europe, as these have been exposed to reversals of international capital flows. 2 Executive Summary Finally, direct EU support to economic activity was provided through substantially increased loan support from the European Investment Bank and the accelerated disbursal of structural funds. These crisis control policies are largely achieving their objectives.Although banks' balance sheets are still vulnerable to higher mortgage and credit default risk, there have been no defaults of major financial institutions in Europe and stock markets have been recovering. With short-term interest rates near the zero mark and ‘non-conventional' monetary policies boosting liquidity, stress in interbank credit markets has receded. Fiscal stimulus proves relatively effective owing to the liquidity and credit constraints fa cing households and businesses in the current environment. Economic contraction has been stemmed and the number of job losses contained relative to the size of the economic contraction. 2. 2. Crisis resolution ontext, the reluctance of many banks to reveal the true state of their balance sheets or to exploit the extremely favourable earning conditions induced by the policy support to repair their balance sheets is of concern. It is important as well that financial repair be done at the lowest possible long-term cost for the tax payer, not only to win political support, but also to secure the sustainability of public finances and avoid a long-lasting increase in the tax burden. Financial repair is thus essential to secure a satisfactory rate of potential growth – not least also because innovation depends on the availability of risk financing. †¢ Macroeconomic policies. Macroeconomic stimulus – both monetary and fiscal – has been employed extensively.The chal lenge for central banks and governments now is to continue to provide support to the economy and the financial sector without compromising their stability-oriented objectives in the medium term. While withdrawal of monetary stimulus still looks some way off, central banks in the EU are determined to unwind the supportive stance of monetary policies once inflation pressure begins to emerge. At that point a credible exit strategy for fiscal policy must be firmly in place in order to pre-empt pressure on governments to postpone or call off the consolidation of public finances. The fiscal exit strategy should spell out the conditions for stimulus withdrawal and must be credible, i. e. ased on pre-committed reforms of entitlements programmes and anchored in national fiscal frameworks. The withdrawal of fiscal stimulus under the EERP will be quasi automatic in 2010-11, but needs to be followed up by very substantial – though differentiated across Member States – fiscal conso lidation to reverse the adverse trends in public debt. An appropriate mix of expenditure restraint and tax increases must be pursued, even if this is challenging in an environment where distributional conflicts are likely to arise. The quality of public finances, including its impact on work incentives and economic efficiency at large, is an overarching concern. †¢ Structural policies.Even prior to the financial crisis, potential output growth was expected to roughly halve to as little as around 1% by the While there is still major uncertainty surrounding the pace of economic recovery, it is now essential that exit strategies of crisis control policies be designed, and committed to. This is necessary both to ensure that current actions have the desired effects and to secure macroeconomic stability. Having an exit strategy does not involve announcing a fixed calendar for the next moves, but rather defines those moves, including their direction and the conditions that must be sat isfied for making them. Exit strategies need to be in place for financial, macroeconomic and structural policies alike: †¢ Financial policies.An immediate priority is to restore the viability of the banking sector. Otherwise a vicious circle of weak growth, more financial sector distress and ever stiffer credit constraints would inhibit economic recovery. Clear commitments to restructure and consolidate the banking sector should be put in place now if a Japan-like lost decade is to be avoided in Europe. Governments may hope that the financial system will grow out of its problems and that the exit from banking support would be relatively smooth. But as long as there remains a lack of transparency as to the value of banks' assets and their vulnerability to economic and financial developments, uncertainty remains. In this 3European Commission Economic Crisis in Europe: Causes, Consequences and Responses 2020s due to the ageing population. But such low potential growth rates are li kely to be recorded already in the years ahead in the wake of the crisis. As noted, it is important to decisively repair the longer-term viability of the banking sector so as to boost productivity and potential growth. But this will not suffice and efforts are also needed in the area of structural policy proper. A sound strategy should include the exit from temporary measures supporting particular sectors and the preservation of jobs, and resist the adoption or expansion of schemes to withdraw labour supply.Beyond these defensive objectives, structural policies should include a review of social protection systems with the emphasis on the prevention of persistent unemployment and the promotion of a longer work life. Further labour market reform in line with a flexicuritybased approach may also help avoid the experiences of past crises when hysteresis effects led to sustained period of very high unemployment and the permanent exclusion of some from the labour force. Product market ref orms in line with the priorities of the Lisbon strategy (implementation of the single market programme especially in the area of services, measures to reduce administrative burden and to promote R and innovation) will also be key to raising productivity and creating new employment opportunities.The transition to a low-carbon economy should be pursued through the integration of environmental objectives and instruments in structural policy choices, notably taxation. In all these areas, policies that carry a low budgetary cost should be prioritised. 2. 3. Crisis prevention particular in China, into the world economy. This prompted accommodative monetary and fiscal policies. Buoyant financial conditions also had microeconomic roots and these tended to interact with the favourable macroeconomic environment. The list of contributing factors is long, including the development of complex – but poorly supervised – financial products and excessive short-term risk-taking.Crisis p revention policies should tackle these deficiencies in order to avoid repetition in the future. There are again agendas for financial, macroeconomic and structural policies: †¢ Financial policies. The agenda for regulation and supervision of financial markets in the EU is vast. A number of initiatives have been taken already, while in some areas major efforts are still needed. Action plans have been put forward by the EU to strengthen the regulatory framework in line with the G20 regulatory agenda. With the majority of financial assets held by cross-border banks, an ambitious reform of the European system of supervision, based on the recommendations made by the High-Level Group chaired by Mr Jacques de Larosiere, is under discussion.Initiatives to achieve better remuneration policies, regulatory coverage of hedge funds and private equity funds are being considered but have yet to be legislated. In many other areas progress is lagging. Regulation to ensure that enough provisions and capital be put aside to cope with difficult times needs to be developed, with accounting frameworks to evolve in the same direction. A certain degree of commonality and consistency across the rule books in Member States is important and a single regulatory rule book, as soon as feasible, desirable. It is essential that a robust and effective bank stabilisation and resolution framework is developed to govern what happens when supervision fails, including effective deposit protection.Consistency and coherence across the EU in dealing with problems in such institutions is a key requisite of a much improved operational and regulatory framework within the EU. †¢ Macroeconomic policies. Governments in many EU Member States ran a relatively A broad consensus is emerging that the ultimate causes of the crisis reside in the functioning of financial markets as well as macroeconomic developments. Before the crisis broke there was a strong belief that macroeconomic instability had bee n eradicated. Low and stable inflation with sustained economic growth (the Great Moderation) were deemed to be lasting features of the developed economies.It was not sufficiently appreciated that this owed much to the global disinflation associated with the favourable supply conditions stemming from the integration of surplus labour of the emerging economies, in 4 Executive Summary accommodative fiscal policy in the ‘good times' that preceded the crisis. Although this cannot be seen as the main culprit of the crisis, such behaviour limits the fiscal room for manoeuvre to respond to the crisis and can be a factor in producing a future one – by undermining the longer-term sustainability of public finances in the face of aging populations. Policy agendas to prevent such behaviour should thus be prominent, and call for a stronger coordinating role for the EU alongside the adoption of credible national medium-term frameworks.Intra-area adjustment in the Economic and Monetary Union (which constitutes two-thirds of the EU) will need to become smoother in order to prevent imbalances and the associated vulnerabilities from building up. This reinforces earlier calls, such as in the Commission's [email  protected] report (European Commission, 2008a), to broaden and deepen the EU surveillance to include intra-area competitiveness positions. †¢ Structural policies. Structural reform is among the most powerful crisis prevention policies in the longer run. By boosting potential growth and productivity it eases the fiscal burden, facilitates deleveraging and balance sheet restructuring, improves the political economy conditions for correcting cross-country imbalances, makes income redistribution issues less onerous and eases the terms of the inflation-output trade-off.Further financial development and integration can help to improve the effectiveness of and the political incentives for structural reform. at the Heads of State Level in the autumn of 2008 â €“ for the first time in history also of the Eurogroup – to coordinate these moves. The Commission's role at that stage was to provide guidance so as to ensure that financial rescues attain their objectives with minimal competition distortions and negative spillovers. Fiscal stimulus also has cross-border spillover effects, through trade and financial markets. Spillover effects are even stronger in the euro area via the transmission of monetary policy responses.The EERP adopted in November 2008, which has defined an effective framework for coordination of fiscal stimulus and crisis control policies at large, was motivated by the recognition of these spillovers. †¢ At the crisis resolution stage a coordinated approach is necessary to ensure an orderly exit of crisis control policies across Member States. It would not be envisaged that all Member State governments exit at the same time (as this would be dictated by the national specific circumstances). But it would be important that state aid for financial institutions (or other severely affected industries) not persist for longer than is necessary in view of its mplications for competition and the functioning of the EU Single Market. National strategies for a return to fiscal sustainability should be coordinated as well, for which a framework exists in the form of the Stability and Growth Pact which was designed to tackle spillover risks from the outset. The rationales for the coordination of structural policies have been spelled out in the Lisbon Strategy and apply also to the exits from temporary intervention in product and labour markets in the face of the crisis. †¢ At the crisis prevention stage the rationale for EU coordination is rather straightforward in view of the high degree of financial and economic integration.For example, regulatory reform geared to crisis prevention, if not coordinated, can lead to regulatory arbitrage that will affect location choices of institutions and may change the direction of international capital flows. Moreover, with many financial institutions operating cross border there is a 3. A STRONG CALL ON EU COORDINATION The rationale for EU coordination of policy in the face of the financial crisis is strong at all three stages – control and mitigation, resolution and prevention: †¢ At the crisis control and mitigation stage, EU policy makers became acutely aware that financial assistance by home countries of their financial institutions and unilateral extensions of deposit guarantees entail large and potentially disrupting spillover effects. This led to emergency summits of the European Council 5European Commission Economic Crisis in Europe: Causes, Consequences and Responses clear case for exchange of information and burden sharing in case of defaults. The financial crisis has clearly strengthened the case for economic policy coordination in the EU. By coordinating their crisis policies Member States heighten the credibi lity of the measures taken, and thus help restore confidence and support the recovery in the short term. Coordination can also be crucial to fend off protectionism and thus serves as a safeguard of the Single Market. Moreover, coordination is necessary to ensure a smooth functioning of the euro area where spillovers of national policies are particularly strong.And coordination provides incentives at the national level to implement growth friendly economic policies and to orchestrate a return to fiscal sustainability. Last but not least, coordination of external policies can contribute to a more rapid global solution of the financial crisis and global recovery. EU frameworks for coordination already exist in many areas and could be developed further in some. In several areas the EU has a direct responsibility and thus is the highest authority in its jurisdiction. This is the case for notably monetary policy in the euro area, competition policy and trade negotiations in the framework of the DOHA Round. This is now proving more useful than ever. In other areas, ‘bottom-up' EU coordination frameworks have been developed and should be exploited to the full.The pursuit of the regulatory and supervisory agenda implies the set-up of a new EU coordination framework which was long overdue in view of the integration of financial systems. An important framework for coordination of fiscal policies exists under the aegis of the Stability and Growth Pact. The revamped Lisbon strategy should serve as the main framework for coordination of structural policies in the EU. The balance of payment assistance provided by the EU is another area where a coordination framework has been established recently, and which could be exploited also for the coordination of policies in the pursuit of economic convergence. At the global level, finally, the EU can offer a framework for the coordination of positions in e. g. the G20 or the IMF.With the US adopting its own exit strategy, press ure to raise demand elsewhere will be mounting. The adjustment requires that emerging countries such as China reduce their national saving surplus and changed their exchange rate policy. The EU will be more effective if it also considers how policies can contribute to more balanced growth worldwide, by considering bolstering progress with structural reforms so as to raise potential output. In addition, the EU would facilitate the pursuit of this agenda by leveraging the euro and participating on the basis of a single position. 6 Part I Anatomy of the crisis 1. 1. 1. ROOT CAUSES OF THE CRISIS INTRODUCTIONThe depth and breath of the current global financial crisis is unprecedented in post-war economic history. It has several features in common with similar financial-stress driven crisis episodes. It was preceded by relatively long period of rapid credit growth, low risk premiums, abundant availability of liquidity, strong leveraging, soaring asset prices and the development of bubbles in the real estate sector. Stretched leveraged positions and maturity mismatches rendered financial institutions very vulnerable to corrections in asset markets, deteriorating loan performance and disturbances in the wholesale funding markets. Such episodes have happened before and the examples are abundant (e. g.Japan and the Nordic countries in the early 1990s, the Asian crisis in the late-1990s). But the key difference between these earlier episodes and the current crisis is its global dimension. When the crisis broke in the late summer of 2007, uncertainty among banks about the creditworthiness of their counterparts evaporated as they had heavily invested in often very complex and opaque and overpriced financial products. As a result, the interbank market virtually closed and risk premiums on interbank loans soared. Banks faced a serious liquidity problem, as they experienced major difficulties to rollover their short-term debt. At that stage, policymakers still perceived the c risis primarily as a liquidity problem.Concerns over the solvency of individual financial institutions also emerged, but systemic collapse was deemed unlikely. It was also widely believed that the European economy, unlike the US economy, would be largely immune to the financial turbulence. This belief was fed by perceptions that the real economy, though slowing, was thriving on strong fundamentals such as rapid export growth and sound financial positions of households and businesses. These perceptions dramatically changed in September 2008, associated with the rescue of Fannie Mae and Freddy Mac, the bankruptcy of Lehman Brothers and fears of the insurance giant AIG (which was eventually bailed out) taking down major US and EU financial institutions in its wake.Panic broke in stock markets, market valuations of financial institutions evaporated, investors rushed for the few safe havens that were seen to be left (e. g. sovereign bonds), and complete meltdown of the financial system b ecame a genuine threat. The crisis thus began to feed onto itself, with banks forced to restrain credit, economic activity plummeting, loan books deteriorating, banks cutting down credit further, and so on. The downturn in asset markets snowballed rapidly across the world. As trade credit became scarce and expensive, world trade plummeted and industrial firms saw their sales drop and inventories pile up. Confidence of both consumers and businesses fell to unprecedented lows. Graph I. 1. : Projected GDP growth for 2009 6 4 2 0 -2 -4 Nov-07 CF-NMS EC-NMS Jan-08 May-08 Mar-08 CF-UK EC-UK Jul-08 Sep-08 CF-EA EC-EA Nov-08 Jun-09 Aug-09 Aug-10 % -4. 0 -4. 3 Oct-09 Oct-10 -6 Feb-09 Sources: European Commission, Consensus Forecasts Graph I. 1. 2: Projected GDP growth for 2010 6 4 2 0 -2 -4 Nov-08 CF-NMS EC-NMS Jan-09 May-09 Mar-09 CF-UK EC-UK Jul-09 Sep-09 CF-EA EC-EA Dec-09 Feb-10 Jun-10 Apr-10 % -6 Sources: European Commission, Consensus Forecasts This set chain of events set the scene fo r the deepest recession in Europe since the 1930s. Projections for economic growth were revised downward at a record pace (Graphs I. 1. 1 and I. 1. 2).Although the contraction now seems to have bottomed, GDP is projected to fall in 2009 by the order of 4% in the euro area and the European Union as whole – with a modest pick up in activity expected in 2010. 8 Apr-09 Part I Anatomy of the crisis The situation would undoubtedly have been much more serious, had central banks, governments and supra-national authorities, in Europe and elsewhere, not responded forcefully (see Part III of this report). Policy interest rates have been cut sharply, banks have almost unlimited access to lender-oflast-resort facilities with their central banks, whose balance sheets expanded massively, and have been granted new capital or guarantees from their governments.Guarantees for savings deposits have been introduced or raised, and governments provided substantial fiscal stimulus. These actions giv e, however, rise to new challenges, notably the need to orchestrate a coordinated exit from the policy stimulus in the years ahead, along with the need to establish new EU and global frameworks for the prevention and resolution of financial crises and the management of systemic risk (see Part III). that point most observers were not yet alerted that systemic crisis would be a threat, but this began to change in the spring of 2008 with the failures of Bear Stearns in the United States and the European banks Northern Rock and Landesbank Sachsen.About half a year later, the list of (almost) failed banks had grown long enough to ring the alarm bells that systemic meltdown was around the corner: Lehman Brothers, Fannie May and Freddie Mac, AIG, Washington Mutual, Wachovia, Fortis, the banks of Iceland, Bradford & Bingley, Dexia, ABN-AMRO and Hypo Real Estate. The damage would have been devastating had it not been for the numerous rescue operations of governments. When in September 2008 L ehman Brothers had filed for bankruptcy the TED spreads jumped to an unprecedented high. This made investors even more wary about the risk in bank portfolios, and it became more difficult for banks to raise capital via deposits and shares. Institutions seen at risk could no longer finance themselves and had to sell assets at ‘fire sale prices' and restrict their lending.The prices of similar assets fell and this reduced capital and lending further, and so on. An adverse ‘feedback loop' set in, whereby the economic downturn increased the credit risk, thus eroding bank capital further. The main response of the major central banks – in the United States as well as in Europe (see Chapter III. 1 for further detail) – has been to cut official attributed to a common systemic factor (see for evidence Eichengreen et al. 2009). 1. 2. A CHRONOLOGY OF THE MAIN EVENTS The heavy exposure of a number of EU countries to the US subprime problem was clearly revealed in the s ummer of 2007 when BNP Paribas froze redemptions for three investment funds, citing its inability to value structured products. 1 ) As a result, counterparty risk between banks increased dramatically, as reflected in soaring rates charged by banks to each other for short-term loans (as indicated by the spreads — see Graph I. 1. 3). ( 2 ) At (1) See Brunnermeier (2009). (2) Credit default swaps, the insurance premium on banks' portfolios, soared in concert. The bulk of this rise can be Bps 500 400 300 200 100 0 Jan-00 Graph I. 1. 3: 3-month interbank spreads vs T-bills or OIS Default of Lehman Brothers BNP Paribas suspends the valuation of two mutual funds Jan-01 Jan-02 EUR Jan-03 Jan-04 USD Jan-05 Jan-06 JPY Jan-07 Jan-08 GBP Jan-09 Sources: Reuters EcoWin. 9 European Commission Economic Crisis in Europe: Causes, Consequences and Responses interest rates to historical lows so as to contain funding cost of banks.They also provided additional liquidity against collateral in ord er to ensure that financial institutions do not need to resort to fire sales. These measures, which have resulted in a massive expansion of central banks' balance sheets, have been largely successful as three-months interbank spreads came down from their highs in the autumn of 2008. However, bank lending to the non-financial corporate sector continued to taper off (Graph I. 1. 4). Credit stocks have, so far, not contracted, but this may merely reflect that corporate borrowers have been forced to maximise the use of existing bank credit lines as their access to capital markets was virtually cut off (risk spreads on corporate bonds have soared, see Graph I. 1. 5). Graph I. 1. : Bank lending to private economy in the euro area, 2000-09 16 14 12 10 8 6 4 2 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Source: European Central Bank institutions incentives to sell to the government while giving taxpayers a reasonable expectation that they will benefit in the long run. Financial inst itutions which at the (new) market prices of toxic assets would be insolvent were recapitalised by the government. All these measures were aiming at keeping financial institutions afloat and providing them with the necessary breathing space to prevent a disorderly deleveraging. The verdict as to whether these programmes are sufficient is mixed (Chapter III. 1), but the order of asset relief provided seem to be roughly in line with banks' needs (see again Box I. 1. ). Graph I. 1. 5: Corporate 10 year-spreads vs. Government in the euro area, 2000-09 450 350 basis points 250 150 50 -50 Corp AAA rated Corp A rated Corp composite yield Corp AA rated Corp BBB rated y-o-y percentage change house purchases households Non-financial corporations -150 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Source: European Central Bank. 1. 3. GLOBAL FORCES BEHIND THE CRISIS Governments soon discovered that the provision of liquidity, while essential, was not sufficient to restore a normal functionin g of the banking system since there was also a deeper problem of (potential) insolvency associated with undercapitalisation.The write-downs of banks are estimated to be over 300 billion US dollars in the United Kingdom (over 10% of GDP) and in the range of over EUR 500 to 800 billion (up to 10% of GDP) in the euro area (see Box I. 1. 1). In October 2008, in Washington and Paris, major countries agreed to put in place financial programmes to ensure capital losses of banks would be counteracted. Governments initially proceeded to provide new capital or guarantees on toxic assets. Subsequently the focus shifted to asset relief, with toxic assets exchanged for cash or safe assets such as government bonds. The price of the toxic assets was generally fixed between the fire sales price and the price at maturity to giveThe proximate cause of the financial crisis is the bursting of the property bubble in the United States and the ensuing contamination of balance sheets of financial instituti ons around the world. But this observation does not explain why a property bubble developed in the first place and why its bursting has had such a devastating impact also in Europe. One needs to consider the factors that resulted in excessive leveraged positions, both in the United States and in Europe. These comprise both macroeconomic and developments in the functioning of financial markets. ( 3 ) (3) See for instance Blanchard (2009), Bosworth and Flaaen (2009), Furceri and Mourougane (2009), Gaspar and Schinasi (2009) and Haugh et al. (2009). 10 Part I Anatomy of the crisis Box I. 1. 1: Estimates of financial market losses Estimates of financial sector osses are essential to inform policymakers about the severity of financial sector distress and the possible costs of rescue packages. There are several estimates quantifying the impact of the crisis on the financial sector, most recently those by the Federal Reserve in the framework of its Supervisory Capital Assessment Program, w idely referred to as the â€Å"stress test†. Using different methodologies, these estimates generally cover write-downs on loans and debt securities and are usually referred to as estimates of losses. The estimated losses during the past one and a half years or so have shown a steep increase, reflecting the uncertainty regarding the nature and the extent of the crisis.IMF (2008a) and Hatzius (2008) estimated the losses to US banks to about USD 945 in April 2008 and up to USD 868 million in September 2008, respectively. This is at the lower end of predictions by RGE monitor in February the same year which saw losses in the rage of USD 1 to 2 billion. The April 2009 IMF Global Financial Stability Report (IMF 2009a) puts loan and securities losses originated in Europe (euro area and UK) at USD 1193 billion and those originated in the United States at USD 2712 billion. However, the incidence of these losses by region is more relevant in order to judge the necessity and the extent of policy intervention. The IMF estimates write-downs of USD 316 billion for banks in the United Kingdom and USD 1109 billion (EUR 834 billion) for the euro area.The ECB's loss estimate for the euro area at EUR 488 billion is substantially lower than this IMF estimate, with the discrepancy largely due to the different assumptions about banks' losses on debt securities. Bank level estimates can be used in stress tests to evaluate capital adequacy of individual institutions and the banking sector at large. For example the Fed's Supervisory Capital Assessment Program found that 10 of the 19 banks examined needed to raise capital of USD 75 billion. Loss estimates can also inform policymakers about the effects of losses on bank lending and the magnitude of intervention needed to pre-empt this. Such calculations require additional assumptions about the capital banks can raise or generate through their profits as well as the amount of deleveraging needed.As an illustration the table below presents four scenarios that differ in their hypothetical recapitalisation rate and their deleveraging effects The IMF and ECB estimates of total write-downs for euro area banks are taken as starting points. Net write-downs are calculated, which reflect losses that are not likely to be covered either by raising capital or by tax deductions. Depending on the scenario net losses range between 219 and 406 billion EUR using the IMF estimate, and roughly half of that based on the ECB estimate. Such magnitudes would imply balance sheets decreases amounting to 7. 3% in the mildest scenario and 30. 8% in the worst case scenario (period between August 2007 and end of 2010). Capital recovery rates and deleveraging play a crucial role in determining the magnitude of the balance sheet effect.Governments' capital injections in the euro area have been broadly in line with the magnitude of these illustrative balance sheet effects, committing 226 billion EUR, half of which has been spent (see Chap ter III. 1). Table 1: Balance-sheet effects of write-downs in the euro area* Scenario (1) (2) (3) Capital 1760 1760 1760 Assets 31538 31538 31538 Estimated write-downs IMF 834 834 834 ECB 488 488 488 Recapitalisation rate 65% 65% 50% Net write-downs IMF 219 219 313 ECB 128 128 183 Decrease in balance sheet (leverage constant) IMF -12. 4% -12. 4% -17. 8% ECB -7. 3% -7. 3% -10. 4% Change in leverage ratio 0% -5% -5% Decrease in balance sheet (with delevraging) IMF -12. 4% -16. 8% -21. % ECB -7. 3% -11. 9% -14. 9% * Billion EUR, EUR/USD exchange rate 1. 33. Source : European Commission (4) 1760 31538 834 488 35% 407 238 -23. 1% -13. 5% -10% -30. 8% -22. 2% 11 European Commission Economic Crisis in Europe: Causes, Consequences and Responses As noted, most major financial crises in the past were preceded by a sustained period of buoyant credit growth and low risk premiums, and this time is no exception. Rampant optimism was fuelled by a belief that macroeconomic instability was eradicate d. The ‘Great Moderation', with low and stable inflation and sustained growth, was conducive to a perception of low risk and high return on capital.In part these developments were underpinned by genuine structural changes in the economic environment, including growing opportunities for international risk sharing, greater stability in policy making and a greater share of (less cyclical) services in economic activity. Persistent global imbalances also played an important role. The net saving surpluses of China, Japan and the oil producing economies kept bond yields low in the United States, whose deep and liquid capital market attracted the associated capital flows. And notwithstanding rising commodity prices, inflation was muted by favourable supply conditions associated with a strong expansion in labour transferred into the export sector out of rural employment in the emerging market economies (notably China).This enabled US monetary policy to be accommodative amid economic bo om conditions. In addition, it may have been kept too loose too long in the wake of the dotcom slump, with the federal funds rate persistently below the ‘Taylor rate', i. e. the level consistent with a neutral monetary policy stance (Taylor 2009). Monetary policy in Japan was also accommodative as it struggled with the aftermath of its late-1980s ‘bubble economy', which entailed so-called ‘carry trades' (loans in Japan invested in financial products abroad). This contributed to rapid increases in asset prices, notably of stocks and real estate – not only in the United States but also in Europe (Graphs I. 1. 6 and I. 1. 7).A priori it may not be obvious that excess global liquidity would lead to rapid increases in asset prices also in Europe, but in a world with open capital accounts this is unavoidable. To sum up, there are three main transmission channels. First, upward pressure on European exchange rates vis-a-vis the US dollar and currencies with de facto pegs to the US dollar (which includes inter alia the Chinese currency and up to 2004 also the Japanese currency), reduced imported inflation and allowed an easier stance of monetary policy. Second, so-called â€Å"carry trades† whereby investors borrow in currencies with low interest rates and invest in higher yielding currencies while mostly disregarding exchange rate risk, implied the spillover of global liquidity in European financial markets. 4 ) Third, and perhaps most importantly, large capital flows made possible by the integration of financial markets were diverted towards real estate markets in several countries, notably those that saw rapid increases in per capita income from comparatively low initial levels. So it is not surprising that money stocks and real estate prices soared in tandem also in Europe, without entailing any upward tendency in inflation of consumer prices to speak of. ( 5 ) Graph I. 1. 6: Real house prices, 2000-09 190 180 170 160 150 140 130 120 110 100 90 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Index, 2000 = 100 United States United Kingdom Source: OECD euro area euro area excl. Germany 500 400 300 200 100 0 03. 01. 00 12. 10. 00 Graph I. 1. 7: Stock markets, 2000-09 300 200 100 0 27. 07. 01 14. 05. 02 25. 02. 03 05. 12. 03 22. 09. 04 05. 07. 05 12. 04. 06 25. 1. 07 07. 11. 07 22. 08. 08 DJ EURO STOXX (lhs) Source: www. stoxx. com DJ Emerging Europe STOXX (rhs) Aside from the issue whether US monetary policy in the run up to the crisis was too loose relative to the buoyancy of economic activity, there is a broader issue as to whether monetary policy should lean against asset price growth so as to prevent bubble formation. Monetary policy could be blamed – at both sides of the Atlantic – for (4) See for empirical evidence confirming these two channels Berger and Hajes (2009). (5) See for empirical evidence Boone and Van den Noord (2008) and Dreger and Wolters (2009). 12 Part I Anatomy of the crisis cting too narrowly and not reacting sufficiently strongly to indications of growing financial vulnerability. The same holds true for fiscal policy, which may be too narrowly focused on the regular business cycle as opposed to the asset cycle (see Chapter III. 1). Stronger emphasis of macroeconomic policy making on macro-financial risk could thus provide stabilisation benefits. This might require explicit concerns for macro-financial stability to be included in central banks' mandates. Macro-prudential tools could potentially help tackle problems in financial markets and might help limit the need for very aggressive monetary policy reactions. 6 ) Buoyant financial conditions also had microeconomic roots and the list of contributing factors is long. The ‘originate and distribute' model, whereby loans were extended and subsequently packaged (‘securitised') and sold in the market, meant that the creditworthiness of the borrower was no longer assessed by the originator of the loan. Moreover, technological change allowed the development of new complex financial products backed by mortgage securities, and credit rating agencies often misjudged the risk associated with these new instruments and attributed unduly triple-A ratings. As a result, risk inherent to these products was underestimated which made them look more attractive for investors than warranted.Credit rating agencies were also susceptible to conflicts of interests as they help developi