European Advertising vs. American Advertising

Research Paper ARS 230 The main aspect of advertising is to ‘get more bang for the buck’, to make it aesthetically pleasing to the eye and gain the viewer’s attention. Throughout the years, advertising has varied in many ways from catchy slogans to iconic logos. Some may say there is nothing wrong with a little healthy competition, but what if one area is gaining the benefits slightly different than the others because of their boldness?American and European advertising are very different culturally as well as aesthetically. There has always been a cultural difference in the style of advertising between America and Europe, whether it is sexual content, trend or originality. A striking boldness seems to be a trending approach in Europe, while classic reason takes a hold of America. Researchers have said that one main difference between American and European advertisements is that European ads use emotional blackmailing while American ads reason for you.Both European and American advertising benefit in marketing, it is simply just a matter of effectiveness based on the audience. When comparing the two cultures of advertisement, American versus European, it is safe to say that no one approach is better, just simply different. It is compared as emotion versus product. America is focused on selling the product and comparing it to other competitors whereas Europe is more focused on the emotion and beauty of the actual advertisement. â€Å" A trend is at work that has gone much further in the United States than in Europe.The trend has been manifested in recent decades by a dramatic growth in the number of separate brands and brand variants, a proliferation that has had a deadening effect on American advertising,† (Jones). America is effective because of the number of brands that are produced and compared where Europe is more effective by staying loyal to their brands and elaborating on commercial advertising. Looking at an advertisement in Eu rope may catch your eye because of the boldness. Europe is well known for using sexual nudity to promote a product, simply because ‘sex sells’.Approaching advertising in a different light would be emotionally. In America, advertising can be described as hard selling. Hard selling is a campaign or advertisement that is direct, forceful and straight to the point. For example while watching an American seatbelt warning on Youtube, the commercial is simply based on the motto, â€Å"Click it or Ticket†, showing average people driving their cars and getting pulled over by officers and receiving a ticket and fine. The commercial is to the point and straight forward, showing almost no emotion.The approach that American marketing companies have used is effective by saying ‘If you don’t’ wear your seatbelt, then you will be forced by law to pay a fine’. Similarly compared to the American commercial is the European commercial’s motto, †Å"Heaven Can Wait†, is an emotional grasp on losing your life over not wearing your seatbelt. Although the two are trying to deliver the same idea, the European method seems to make a gentler or softer appeal to the viewer by incorporating emotion and reality into the grand scheme.The emotion, fear, is incorporated into this commercial and motivates the audience to action. We as viewers can see how both American and European advertising is very successful; it is hard not to view one as more effective. Another aspect of advertising that can differentiate the two cultures is the aesthetics of line and color. For instance, the simple crisp lines of the Nike logo, demonstrates an iconic swoosh and flat one dimensional color paired with the logo â€Å"Just do it,† that subconsciously stays in your mind and makes you feel like you can be an athlete yourself.This portrays a basic and simple, yet straight to the point kind of approach. In Europe you can see a trend of color blo cking and also an artist like logo. â€Å"The American advertisers use more words and headlines, when many European ones use more images and illustrations; they try to find images, which in the best way, without any words, will communicate ideas that stand behind them† (SYL). This can be described as verbal versus visual. There are many ways to compare the two continents when discussing advertising.Although no one culture is wrong, American advertising seems to feel more effective than European because you simply have more product. American and European advertising are both aesthetically visual and promotionally advertised. Weather the culture or continent, no product or company could be formally published without the beauty of advertisement.Bibliography University. , John Philip Jones; John Philip Jones Is A Professor At The Newhouse School Of Public Communications, Syracuse. â€Å"FORUM; Why European Ads Are More Amusing. † The New York Times. The New York Times, 07 Oct. 990. Web. 22 Oct. 2012. <http://www. nytimes. com/1990/10/07/business/forum-why-european-ads-are-more-amusing. html>. Gonzalez, Mario V. â€Å"American vs. EuropeanA  Advertising. † Marketing WebCafA ©. WordPress, 24 Feb. 2011. Web. 22 Oct. 2012. <http://marketingwebcafe. wordpress. com/2011/02/24/european-vs-american-advertising/>. â€Å"Comparison of American and European Advertising. † Comparison of American and European Advertising Style. SYL, 10 Oct. 2006. Web. 19 Oct. 2012. <http://www. syl. com/bc/comparisonofamericanandeuropeanadvertisingstyle. html>

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

Extended commentary of ‘The Darkling Thrush’ by Thomas Hardy Essay

On the title: A thrush is a bird; plump, soft-plumaged, small to medium-sized, often inhabiting wooded areas. They feed on the ground or eat small fruit – but aren’t famed for their songs. Examples include a robin. ‘Darkling’ is an archaic word for ‘a creature of darkness’ or ‘in the dark’. Hardy uses it in its latter sense – the bird appears in a very gloomy scene, at the end of the day, at the end of the year (and century, for that matter). It also has negative connotations as well, however – for obvious reasons. Potential other implications: ‘darkling’ is perhaps used to create a diminutive form of the thrush (like a ‘duckling’). Other critics have identified the title as explaining, or preparing the reader for the unexpected advent of the bird half way through the poem, appearing into the scene from nowhere. Perhaps Hardy was attempting to use an antiquitated word to further demonstrate the bird is bringing joy to a dark land, and that there exists an enormous time difference between the new century and the old? Overall Structure: Hardy uses four regular eight line iambic stanzas; in either ‘tetrameter’ or ‘trimeter’, depending on the length of the line. This meter creates a poetic lilt, with alternate stressed feet. It seems very out of place in such a depressing poem – we must question why this is. Does it reflect the hope expressed at the end of the poem, or prepares us for it? Or does it tell of an oddity within the persona; is his negative manner actually genuine – perhaps we shouldn’t accept the persona’s judgment/emotions to the same extent as he’d like us to? His choice of rhyme scheme and meter along with the harsh subject fail to match up. Themes: Time (passing of century), Isolation, Man and the Natural World. Difficult Language Notes: ‘Darkling’ – discussed above. ‘Illimited’ is an archaic form of ‘unlimited’. First and Second Stanza Notes: As usual, Hardy presents us with an image, this time of a landscape – a depressing one, at that. This poem was published at the end of the century – 31st December 1900 (Hardy was one of those people who believe that a century is complete when the hundredth year is over.) It is very cold and frosty and the day is growing to a close. It really is the end of a century. And Hardy presents us with a very clear image of death – he later personifies the Century itself as being dead. The first two stanzas are full of death-language: 1. â€Å"When Frost was spectre-gray†. A clear example of ghost imagery (‘a spectre’). This line is of interest on its own, due to the obvious personification of ‘Frost’. This is a good place to make a key note about the poem itself. Throughout, we discover a distinct Hardy-esque style; the environment is unpleasant and it demonstrates his usual antics in animism. Hardy develops complex (and often deeply personal) symbolic systems which deal almost exclusively with the natural world. The reader is made personal with non-human entities like frost and birds but avoids people – even the persona is a subject avoided in great detail. 1. Back with the ‘death imagery’, â€Å"The weakening eye of day†; a comment on the darkening sky – the day is dying. 1. â€Å"All mankind that haunted nigh† – haunted is clearly a reference to death and ghosts. Hardy is commenting on the lack of human life in his scene; they â€Å"had sought their household fires†. A further indication of the low temperature. Is it a hint that the world is ending? Or is that just a little extreme? In any case, note how the rest of humanity are seeking light in an otherwise dark environment. The second stanza contains an extended metaphor involving the dead century, but we need to examine the first stanza more before moving on. Hardy’s persona is leaning upon a coppice gate – a gate into a small woods or ‘coppice’. It is a highly ambiguous persona (another thing to explore), but he leans nevertheless. The scene is wintry, indeed, along with Frost, Winter is personified equally – â€Å"Winter’s dregs made desolate/ The weakening eye of day.† The dregs of the season indicate a very cold atmosphere; one without much colour. Clearly this has emptied the scene of any colourful sight upon which the â€Å"eye of day† weakens. The day is ending; thus dusk darkens the scene. â€Å"Tangled bine-stems scored the sky/ Like strings of broken lyres†. As before mentioned, the persona is standing in woodland, thus â€Å"Bine-stems† are tree branches. Hardy’s comparison of them to broken lyres is interesting. Lyres are a) harmonious in Classical literature and b) belong only in Classical literature. Hardy is clearly stating that the scene is not ‘harmonious’ or perhaps the ‘death-lament’ later mentioned isn’t. Or is it also a reference Hardy’s romantic passion for the past, that it was somehow better than the day in which he writes? Second Stanza Notes: The first four lines of this stanza deal explicitly with Hardy’s ‘dead Century’ metaphor. He imagines the land before him as â€Å"the Century’s corpse outleant.† Quite what ‘outleant’ means, I have no idea, (The OED has confirmed that ‘outleant’ is not, nor ever has been a word) but â€Å"his crypt [becomes] the cloudy canopy† (the cloudy sky) and â€Å"the wind his death-lament†. One need not explain it in any more detail; the implications are quite explicit. Hardy’s persona clearly didn’t approve of the past century, but had yet to indicate an emotional reflection on the future. He imagines England as a rotting corpse, essentially. However, note the use of the verb ‘seems’ – is all as it seems? However, Hardy goes on to write even more damningly of his persona’s scene. ‘The ancient pulse of germ and birth’ – the regenerative power of life, following Winter’s onslaught – ‘was shrunken dry and hard’. Nothing appears to be growing back – is this another indication of the end of the world, or certainly of an era. Hardy appears to be making the simple change of an arbitrary number into something quite different, and more serious. A degeneration of life itself. Indeed, â€Å"every spirit upon earth/ Seemed fervourless than I.† Very negative. Observe how silent the description is up to this point in the poem. There is an implied sound in both the death-lament and of broken lyres, but otherwise, the sound is non-existent. That changes soon. Here comes the VOLTA. Third Stanza Notes: â€Å"At once a voice arose among The bleak twigs overhead In a full-hearted evensong Of Joy illimited;† Hardy emphasizes a sudden change with the words â€Å"At once† – indeed, there are multiple changes which create this volta: * Note the sudden inclusion of sound – the thrush is singing! This breaks the poetic still (of death) which has held the poem so far. * The length of ‘sentence’ also changes. Note the semicolon at the end of these four lines above. Previously, each quatrain had completed with a full stop. Perhaps Hardy is opening up his poetic form to mirror the sudden movement in the lines themselves. The use of enjambment accentuates this. There are perhaps religious connotations with ‘evensong’. Much as Hardy may simply be again referring to the mundane fact that the bird is singing a ‘song’ and ‘eve’, we pray that the man is capable of higher minded comparisons. These vaguely religious nuances are maintained throughout the poem. The crucial fact is that the mood has changed, perhaps. â€Å"Of Joy illimited† suggests a pleasant image, which stands in stark contrast to the surrounding gloom. â€Å"An aged thrush, frail, gaunt, and small, In blast-beruffled plume,† Yet the mood is suddenly plunged back into the red with Hardy’s following lines. The thrush, which is, admittedly, a very odd bird to chose (not famed for their song), is an elderly figure in a storm – hence the ‘blast-beruffled plume’. In this otherwise grim situation, the reader’s immediate concern is whether the bird itself is going to survive at all! The use of â€Å"frail, gaunt, and small† mirrors the ghoulish imagery used in the first two stanzas – the thrush is alive, for certain, but perhaps the persona questions for how much longer? Note how the thrush is NOT personified. Every other element of the natural world takes an animated form, but not the bird! Why does Hardy do this? â€Å"Had chosen thus to fling his soul Upon the growing gloom.† Perhaps desperation is the key word in this stanza, but also hope. There is a powerful message in the face of this ghoulish bird; that, in spite of all the darkness and death, the thrush maintains his song. Stanza Four Notes: â€Å"So little cause for carolings Of such ecstatic sound Was written on terrestrial things Afar or nigh around,† Once again, Hardy’s use of enjambment allows for the lines to ‘bleed’ into each other – in a direct contrast to the poem’s former rigidity. Perhaps he is now gathering momentum for a change in mood? Yet, in terms of sense, Hardy appears to be doing the opposite. He states that the bird has no reason to be singing a joyful song amongst so much desolation. However, perhaps, by even considering such a fact, the persona’s own deep-rooted pessimism is beginning to shift away? On some key language points: * Note more religious emphasis: ‘carolings’ typically sing hymns at Christmas time. Hymns are definitely religious! * Perhaps there is an equally religious connotation which Hardy applies to his comments on the ‘terrestrial things’. If there is not any cause for singing about things on Earth, then perhaps, reciprocally, there is cause for celebrating the sky, or heaven? â€Å"That I could think there trembled through His happy good-night air Some blessed Hope, whereof he knew And I was unaware.† It is a rather ambiguous ending upon which Hardy chooses to conclude, but he achieves a sense of dramatic effect through it. The persona realises the presence of (a perhaps religious) hope, in the fact of utter desperation, but it is unintelligible to him. In an odd way, the reader is forced to consider whether the persona is being entirely accurate: * Can one be unaware of something, yet still able to write about it? * Does this tell us that the persona, as a Modernist, is able to perceive such an uplifting messages but unable to interpret them in such a way as to ‘release’ himself from the ‘dark’? Hardy himself was a modernist and therefore dwells upon an odd lot of ideas. Amongst them was ‘searching for hope/meaning to darkness and cruelty’. Despite being a realist, he was deeply influenced by Romantic notions (look them up) – perhaps this exploration is one of them? * The use of ‘blessed’ again implies a deified presence within the thrush’s message. Is the persona experiencing some divine inspiration?

Flexible Labor in Organizations Essay Example | Topics and Well Written Essays - 2250 words

Flexible Labor in Organizations - Essay Example The increase in workload forces the employees to search for alternate options like flexible jobs. ‘48% of UK organizations offer flexitime to their employees compared to 90% in Germany, 94% in Sweden and 92% in Finland, and just 20% offer to telework compared to 44% in Germany and Sweden, 40% in Norway and 39% in Denmark.† (The UK’s flexible labor market may no longer be a source of competitive advantage) Flexible work is the option mostly the people are looking for because of the tight working schedules of regular work. Flexible labor has its own merits and demerits both for the organizations and the employees. Most people believe that flexible labor is going to be the future trend in organizations because of the immense benefits attached to it. â€Å"In the early 1970s, one in five American workers was employed by a Fortune 500 company; by the early 1990s, the ratio had dropped to one in ten† (Laubacher & Malone) Big organizations are no longer attractive to many employees because of the tight work schedule and lack of flexibility in work. Nowadays people are more conscious about the working environment rather than the salary alone. People are already living in a stressful world. Problems from family and society along with that from the workplace have made the life of an average person miserable. They wanted to reduce the stress level at any cost and flexible work is one option for reducing the job stress considerably. â€Å"Many observers believe that highly flexible organizational forms--often called networked organizations or virtual corporations--will become increasingly common in the future. Temporary networks of very small companies and independent contractors could undertake much of the work that is performed by large organizations today†Ã‚  

Japan waste pollution Research Paper Example | Topics and Well Written Essays - 1000 words

Japan waste pollution - Research Paper Example Japan has been focused on economic development and has primarily given importance to its re-establishment in the global scenario. When we consider the economic and industrial grown, Japan has taken large strides after the World War II in an effort to become a sustainable nation, indulging in industrialization and modernization of all facilities. However, waste pollution became an issue that required to be addressed with the lapse of time. As far as agriculture is concerned, the night soil which used to be disposed into rivers were not much of a problem earlier, but became a threat after the introduction of chemical fertilizers and such. Eventually, the effects of pollution became evident and the people of Japan, who had moved to the cities, began to see the effects of pollution. The development in waste pollution treatment, including the sewerage facilities has always been slow until recent years. Now people have realized the importance of waste pollution treatment. In the past, Japan has suffered considerable loss as a result of waste pollution, including copper poisoning and cadmium poisoning through water sources, Sulphur di-oxide and Nitrogen di-oxide pollution through air. Another important form of poisoning that affected the people was arsenic poisoning which was caused by the arsenic dust from the mines, causing breathing illnesses such as asthma and bronchitis. With the increase in the number of waste pollution issues, the government decided to make some drastic changes, making strict efforts to curb pollution.

Research Methods in the Social Sciences Assignment - 6

Research Methods in the Social Sciences - Assignment Example The researcher critically analyses the advantages and disadvantages of the already conducted researches. Research Procedure: Chapter IV describes the research procedure, in which variables, concepts, universe, sampling and pre-testing etc are examined. The researcher argues in favor of his decision for choosing the universe and tool for data collection etc. Research Findings: In chapter V, the researcher describes in a detailed manner the findings of the research procedure, which are generally presented in tabular and graphic forms. Hence, the chapter is the interpretation of research findings. Summary: Sixty and final chapter is the summary of the entire research work, which also presents conclusion on the basis of research findings. The chapter also made valuable suggestions for the future studies at large. Literature review is considered to be the most imperative chapter of a research process, which actually explains the parameters of the present study by interlinking it to the previous studies have already been made on same or similar topics. Literature review critically examines the previous studies and evaluates their advantages and drawbacks as well. Literature review, according to Bourner , is highly significant for identifying gaps in the literature, to avoid reinventing the wheel , to carry on from where others have already reached, to identify other people working in the same fields, to increase your breadth of knowledge of your subject area, to identify seminal works in your area and to provide the intellectual context for your own work, enabling you to position your project relative to other work. (1996:22) Hence, literature review maintains great significance in its fold by covering various aspects being applied in the new study while conducting the entire work. Relevant li terature and studies must be analysed in a critical manner by highlighting both negative and positive aspects rather

Feasibility of a Resort in Costa Rica Research Proposal

Feasibility of a Resort in Costa Rica - Research Proposal Example Rapid growth in tourism can also create an imbalance in labour supply causing even illegal immigration and create housing problems (Cohan, 2008) Environmental Feasibility Costa Rica's president Arias has pointed out that even though achieving fiscal goals is essential, it is to be achieved in accordance with the environmental objectives (Cohan, 2008). In order to protect the natural environment Costa Rica's Government follows stringent steps. For instance, as pointed by Costa Rica Tourism (2008 c) Allegro Papagayo, a hotel on Costa Rica's Pacific Coast received orders to close down since it was polluting the environment with wastewater from the Ministry of Health, with the support of Ministry of environment and Energy and the Costa Rica Tourism Board. By applying strict measures, the country hopes to keep the tourism industry flourishing in the years to come. Government involvement and eco tourism compliance will ensure that visitors keep coming and that the ecological balance is not disturbed. Social Feasibility Tourism increases cultural awareness. It imparts a deeper sense of identity among the locals while also exposing them to globalization. For tourists, visiting new places is a way of knowing about different cultures as well. Ecotourism professes respect for other cultures. By attracting national and foreign investment and encouraging modernization and influencing the mindset of Costa Ricans, the Costa Rican Investment and Trade Development Board aims to improve the life of Costa Ricans (Strauss, 2008). Economic Feasibility Costa Rica has been described as a "real estate investor's dream" and has seen a lot of growth in real estate investment (Costa Rica Tourism, 2008 a). Recently, Hilton has entered the Costa Rica market under the... This paper presents a modern comprehensive review of the state of the tourism industry in Costa-Rica. Also the paper explores the feasibility of a construction of the new resort from economical, social and environmental points of views. The existing scenario in Costa Rica is deemed conducive for resort projects. The government has implemented a strategy to preserve what is Costa Rica’s unique selling point, namely its bio diversity, by ensuring that modernization and globalization does not occur by compromising the ecological balance. Tourism, clearly helps to create more jobs and generate higher revenues for the country. Due to its bio diversity Costa-Rica is considered an ideal spot for naturalists, eco tourists and any one who loves nature. Although a relatively new trend in travel, ecotourism is the fastest growing sector of the tourism industry - the world's largest service industry - with an average annual growth rate of 20 to 30 percent. Government involvement and eco tourism compliance will ensure that visitors keep coming and that the ecological balance is not disturbed. Tourism increases cultural awareness. It imparts a deeper sense of identity among the locals while also exposing them to globalization. For tourists, visiting new places is a way of knowing about different cultures as well. Ecotourism professes respect for other cultures. Recently, Hilton has entered the Costa Rica market under the name Hilton Papagayo Resort. It is also a member of the Certification for Sustainable Tourism Program

Country Analysis Paper on Norway Essay Example | Topics and Well Written Essays - 3250 words

Country Analysis Paper on Norway - Essay Example Good economic performances continue support to areas losing residents in Norway. The Nordic model follows both justice and aggressive apprehensions. Maintaining the main features of the settlement pattern is an eternal objective of the nation. Policies mainly target thinly populated areas, with stress on service delivery and competitiveness. Measures are based on employment oriented economic methods and service delivery balancing. Diagnosis of regional competitiveness advantages could improve the design of policy tools. Regional innovation and competitiveness policies involve a lot of aspects. The role of major urban areas in knowledge production and circulation should be better considered. Recent emphasis on city attractiveness and competitiveness, particularly in Oslo, create the basis for an open city policy. The role of small and medium sized cities needs to be better incorporated into regional innovation strategies. Place-based policy approaches can enhance the impact of regiona l competitiveness and innovation policies. Depopulation and ageing in more than half of Norwegian municipalities affect the cost of services. Population decline produces apprehensions about school closures and staffing problems.

Network Design Paper Term Example | Topics and Well Written Essays - 2500 words

Network Design - Term Paper Example Additionally, at the moment, the departments lack secure networks and hence prone to frequent virus attacks. The director of the campus is seeking to improve security, raise network bandwidth, and also consolidate the multiple LANs into one campus network whilst keeping costs minimal. The major problems identified in the current network include: High rate of collisions Slow speed due to a large broadcast domain High administrative cost due to a lack of centralized network management Lack of backup WAN connectivity Lack of data backup on servers Inadequate network security Use of manually assigned IP addresses The campus building is 40 years and 2-storeyed. Its dimensions are as follows; Length: 240 Feet Width: 95 Feet Height: 30 Feet Workstation Placement Number of Workstations Users Total WS 6 Instructional Computer labs 21 WS Student and Instructor 126 WS (based on 20 WS for students and 1 WS for instructor on each lab * 6 labs) Student Computer Lab 30 WS Student 30 WS 6 Offices 1 WS Staff 6 WS 1 Admission office 5 WS Staff 5 WS Library 10 WS Student 10 WS Library 5 WS Staff 5 WS 4 Instructional Classrooms 1 WS Instructor 4 WS Total Server ? Staff To be determined by students Network Connecting Devices ? IT Staff To be determined by students Printers ? Staff To be determined by student Printers ? Instructional To be determined by student Definition of the subnet The following subnets are adopted in the design: Each lab is to have a subnet, totaling to 6 subnets The student computer lab is to be assigned a subnet of its own Staff members in all the offices will be assigned a subnet Students in the library will be assigned a subnet One subnet will be assigned to the instructors in the lecture rooms The two servers, one of the first floor and the other in the second floor will share a subnet Definition of the network address, subnet mask, and available IP addresses to be used by the computers or devices. Network Address: 10.15.0.0 Network Mask: 255.255.0.0 At le ast 11 subnets are required, implying a need for at least 31 addresses for each subnet. The closest number of addresses offered by a subnet is 32. Nonetheless, taking into consideration the fact that all subnets require a network address and a forecast address, 30 is the appropriate number of IP addresses. Given that the student computer lab requires a minimum of 31 addresses, 64-address subnet is required. Considering availability of a whole class B network, constituting a Class A address and a class B mask, it is possible to anticipate growth on the devices used in each classroom / office and make use of a whole Class C network for every subnet. This will allocate each subnet in 256 addresses whereby 0 would is to be the network address while 255 will be the broadcast address. This leaves 254-subnet IPs available for use. Proposed Subnets: Range 6 Instructional Computer labs 10.15.0.0/24 Addresses 10.15.0.1 - 10.15.0.254 10.15.1.0/24 Addresses 10.15.1.1 - 10.15.1.254 10.15.2.0/24 Addresses 10.15.2.1 - 10.15.2.254 10.15.3.0/24 Addresses 10.15.3.1 - 10.15.3.254 Student Computer Lab 10.15.10.0/24 Addresses 10.15.10.1 - 10.15.10.254 Staff members in all offices 10.15.20.0/24 Addresses 10.15.20.1 - 10.15.20.254 Students in the library 10.15.30.0/24 Addresses 10.15.30.1 - 10.15.30.254 Instructor’s on the 5 lecture rooms 10.15.40.0/24 Addresses 10.15.40.1 - 10.15.40.254 Servers on first and second floor

Renewable Energy Research Paper Example | Topics and Well Written Essays - 1000 words

Renewable Energy - Research Paper Example Since the beginning of industrial revolution, the consumption of energy in the world has been rapidly increasing. The need for renewable sources of energy has resulted from two factors: 1. The pollution resulting from burning of petroleum fuels 2. The inevitable decrease of oil reserves The use of renewable sources of energy as opposed to fossil fuels has led to the reduced rate of carbon emission. Most of the renewable energy is not produced directly from the source for use but has to use some equipment for it to be useful. There are various types of renewable energy. The type of renewable energy used in any particular country depends on its relative geographical location. Types of renewable energy Hydropower Water is denser than air and thus small amount of water is capable of producing a good quantity of energy. Energy gained from water is in different forms; micro hydro, ocean energy, hydroelectric energy and hydro without using dams. Water has a lot of power in it and contribute s the largest percentage of all renewable energy. Its energy is produced using mechanical energy of flowing water. The water is piped through a penstock pipe which turns the generator thus producing electricity. Solar Power Solar energy is among the oldest renewable source of energy. It consists of the energy which comes from the sun inform of solar radiation. Sun energy can be used in three different ways. One of them is the use of solar cells. In solar cells, photovoltaic or photoelectric cells directly transform light into electricity. The second one is solar water heating. Here, heat from sun is used for warming water in glass panels. This glass panels are set at the top of the roof for direct heating by the sun. Therefore, there is no further need of gas or electricity for warming the water. The last is the solar furnaces. They make use of the mirror to which captures the sun radiations to small area thus producing high temperatures. The solar furnaces are commonly used for coo king food. Biomass It is the most versatile form of renewable energy. Biomass fuel includes everything starting from wood to all trash in landfill. This is currently converted into methane for producing natural dry gas. Biomass fuel is burned in boilers thus heating water which turns a stream turbine creating electricity. Recent research has shown that animal waste especially manure is being used for by the dairy forms for energy production. Wind power Wind is one of the oldest sources of energy. As source of energy it involves a very simple process. Wind turbines are used to convert wind motion (kinetic energy) to the form of mechanical energy. This is in turn used for electricity generation. According to Maczulak (2009), the energy converted the second time using he generator to electrical energy. The converted energy is again passed through a grid where it is then transferred to power stations. The best position to establish the turbines is along the coastal areas, open fields an d hill tops. The biggest wind farms that have ever existed in the world are found in West Texas. Geothermal Power This involves the process of trapping underground heat. Energy that rises almost to the surface in heat form is then built. After the heat naturally forms steam, it is thus used for turning a steam turbine hence generating electricity. The decision on the type of energy source used by each country is based on the countries economy, resources and the willingness of the citizens to corporate. For instance, as suggested

Synergetic Solutions Report Essay Example for Free

Synergetic Solutions Report Essay Just like individuals, organizations experience change as they move through life. Change can happen for a variety of reasons, but in the end organizations change how they do things and often how they are structured to better meet their goals- and very commonly, to grow (Feigenbaum, 2014). Synergetic Solutions, Inc is a $6 million company in the business of system integration-assembling and reselling leading computer brands. Two years ago, driven by the stagnating system integration market, Harold Redd, the Chief Executive Officer of Synergetic Solutions, made forays into the network solutions business of designing and implementing complex computing networks. Synergetic recently landed an order worth $1.2 million for designing a network, while orders worth $5 million are in the pipeline. Consequently, the network solution business accounts for 20% of the total revenues of the company, which stand at $6 million at present. Encouraged by this promising start, Harold Redd has made an important strategic decision. He has decided to focus on the networking solutions business and raise its revenues to 80% of total sales (Human Relations and Organizational Behavior, 2014). Internal/External Forces of Change External forces that an organization has determine the internal forces that drive the change. In order for an organization to be successful, they must be able to adapt and recognize the internal and external forces of change. The external forces of change within Synergetic Solutions are competition, technology, and customer demands. If a business wants to stay competitive, it must change the way it does business and operates. In addition, it must change what services or products it offers to its customers. Harold Redd, knew that in order for his company to stay competitive he needed to redesign his business and move from just assembling and reselling leading computer brands to the network solutions business of designing and implementing complex computing networks. Technology is continually changing jobs and organizations (Robbins Judge, 2011, Chapter 18, p.590). Technology is a positive external force of change as it improves efficiencies and processes within the company. Investing in upgrading technology also allows the organization to stay competitive as an employee will be able to be more productive. Customer demands are also another external force within  Synergetic Solutions. Synergetic recently landed an order worth $1.2 million for designing a network, while orders worth $5 million are in the pipeline (Human Relations and Organizational Behavior, 2014). In order to not lose customers to the competition, organizations need to be able to have the capabilities to fulfill their customers needs. This involves making sure that technology and tools are up-to-date as well as the employees are trained on the new processes. The internal forces of change within Synergetic Solutions are the culture, the organizational structure and increasing revenue. Organizational culture includes an organizations expectations, experiences, philosophy, and values that hold it together, and is expressed in its self-image, inner workings, interactions with the outside world, and future expectations (Organizational Culture, 2014). Because of external forces of change like technology, competition, and cu stomer demands, it causes internal forces of change within Synergetic Solutions like culture, for example. Policies, procedures and expectations within a culture sometimes have to be revised or developed because of new processes and new ways of doing business. The employees also have to be trained on these new processes or new employees with the relevant skill-sets to perform the job, will be hired. Most employees within Synergetic Solutions have a limited skill-set, in which they only have the basic computer assembling and troubleshooting skills (Human Relations and Organizational Behavior, 2014). Another internal force of change is organizational structure. Because of the conflicts occurring between the team leaders and the functional heads with regards to the projects, it was necessary to restructure the organizational structure within Synergetic Solutions. The work environment and the organizational structure was redesigned in which we moved from the present departmental structure to a new team-based structure. We realigned the employees into project teams. We allowed the employees to express their concerns with regards to projects and changes and their concerns were addressed. Because of the restructuring, there is better coordination between the team members. Another internal force of change is the goal of the CEO, Harold Redd, to increase revenues of the networking solutions business from 20% of sales to 80% of sales by the end of the next nine months. In order to successfully meet the goal of increasing revenue, change has to occur internally within the organization  ranging from improving processes to upgrading employee skill-sets. Implementing Change The factors that a leader need to consider to implement a change strategy successfully in this organization is that they need to make sure that there are clear and concise guidelines, policies, and procedures for the changes so that the employees do not revert back to their old behaviors. Another factor to consider is to make sure that the employees understand the reason for the change and have the necessary skill-sets to adapt to the change, so that they will be less likely to resist the changes. There are several change models that a leader might utilize to implement change within an organization. One change model that the leader might use to implement change within Synergetic Solutions is: Lewins Three-Step Model. Kurt Lewin argued that successful change in organizations should follow three steps: unfreezing the status quo, movement to a desired end state, and refreezing the new change to make it permanent state (Robbins Judge, 2011, Chapter 18, p.596). Within the unfreezing stag e, the company is evaluating and determining what needs to change and why it needs to change within the organization. The existing system needs to be broken down before a new way of operating can be installed (Change Management Consultant, 2014). You have to compel people to understand that the old ways cannot continue in order for the company to grow (Change Management Consultant, 2014). Because Harold Redd decided to make a strategic decision to focus on the networking solutions business, this caused changes within the organization to occur. During the transition stage, the organization starts to transition into the changes that were determined during the unfreezing stage. Within this stage, the leader is trying to show the employees how the changes will benefit them, as well as the company. Its important to communicate and keep your employees involved in the changes. Hold meetings to communicate the changes and address the employee concerns. Once the employees trust and understand the reasons for the change, they will be more willing to accept the change and adapt to it. During the refreezing stage, the changes that were made are becoming stabilized. At this stage, the employees are understanding the changes made and becom ing comfortable with the changes. You have to make sure that the changes stick, so that the employees do not  revert back to the old ways. Throughout the Lewin Three-Step Model, effective communication is important. You have to ensure that you keep the lines of communication open so that employees can voice their concerns about the changes implemented. You also need to ensure that you hold meetings to make sure that the employees are utilizing the new way of operating within the organization. Another change model that the leader might utilize is: Organizational Development. According to Robbins Judge (2011), organizational development is a collection of change methods that try to improve organizational effectiveness and employee well-being (Chapter 18, p.598). The methods value human and organizational growth, collaborative and participative processes, and a spirit of inquiry (Robbins Judge, 2011, Chapter 18, p.599). Offering incentives to the employees for competency growth and variable pay packages motivated the employees to improve their skills in order to adapt to the changes. Realigning the employees into project teams and involving the employees by allowing them to voice their concerns would improve organizational effectiveness as well. Open and effective communication is key within this model because if the employees feel engaged, involved within the process, and if they feel support from their superiors, they will be more willing to adapt to the change. Resistance to Change Resistance to change occurs because most individuals do not like change. There are several sources for resistance to change. The kind of resistance within Synergetic Solutions is: habit, security, economic factors, fear of the unknown, and threat to expertise. Most people are stuck in their way of doing things and do not like to change. When they are confronted with change, they have the tendency to respond in their accustomed ways. People with a high need of security are likely to resist change because it threatens their feelings of safety. Changes in job tasks or established work routines can arouse economic fears if people are concerned that they wont be able to perform the new tasks or routines. Change substitutes uncertainty for the unknown. Changes in organizational patterns, may threaten the expertise of specialized groups (Robbins Judge, 2011, Chapter 18, p. 593). When employees understand the reasoning and logic behind a change, they will be more committed to adapt to the c hange. One way that Synergetic  Solutions can manage resistance to change is by educating and communicating to the employees the logic behind the change. Another way is by building support and commitment. You can develop a skill-set training program for the employees that will help them with the transition of the change, so that they will not have anxiety. Allowing the employees to participate, be involved and have a voice within the change process is another way in which the leader can manage resistance. Another way is to develop positive relationships. When an employee trusts the leader implementing the changes, they will be more willing to adapt to and accept the changes. Based off this analysis and the implementation of the numerous changes, Synergetic Solutions is definitely heading toward the direction of becoming a networking design hothouse. As long as Synergetic Solutions maintains the changes implemented, they will be successful and stay competitive. To survive in market environments where change is the only constant, organizations need to be agile, flexible, and capable of adapting to change quickly (Human Relations and Org anizational Behavior, 2014). References Change Management Consultant. (2014). Kurt Lewin Three Phases Change Theory. Retrieved from http://www.change-management-consultant.com/kurt-lewin.html Feigenbaum, E., (2014). Define Organization Change. Demand Media. Retrieved from http://smallbusiness.chron.com/define-organization-change-2786.html Human Relations and Organizational Behavior. (2014). UOP; Retrieved from https://ecampus.phoenix.edu/secure/aapd/vendors/tata/sims/hrob/organization/hrob_organization_frame.html Organizational Culture. (2014). Business Dictionary. Retrieved from http://www.businessdictionary.com/definition/organizational-culture.html Robbins, S.P., Judge, T.A. (2011). Organizational Behavior (14th ed). Retrieved from the University of Phoenix eBook Collection database.