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

Credit Crisis - Essay Example What most people understand is that greedy banks encouraged people to take out loans that they could not afford to pay, and now they are looking at a windfall of foreclosures since the people are falling way behind their mortgages. What completely befuddles everyone is the fact that how can a singular unit of the mortgage business cause so much chaos How could the whole subprime mortgage business send stock markets plummeting, leave Bear Stearns in ruins, and send the country's economy into a rapid downward spiral Apparently, the confusion is not limited to consumers alone. Even seasoned financial and investment professionals are seemingly in the dark as well. It seems that the financial crisis has shown Wall Street habitus several hitherto unheard of instruments. A good example would be a "liquidity put", a contract so obscure that even the best analysts in the industry had never heard of it. As it is, the housing crisis traces its beginnings roughly a decade ago when real estate seemed like a real steal. Conditions were favorable - an influx of global investments into the mortgage business made it very easy to get a housing loan. The suddenly flush marketplace had mortgage rates plunging, and numerous new innovations were introduced to entice more buyers. The problem was, these same investors were demanding higher... These loans would offer low initial rates as a come-on, and would later saddle homeowners with significantly higher rates as the loan progressed. These investments were then put together into the formerly obscure "Collateralized Debt Obligation" - a highly leveraged instrument which promised big gains and came with tremendously high risk. Simply put, these investors were making $100 million bets with only $1 million of their own money. If their investment rose to $101 million, they earned $1 million. The risk involved was very high, and the peculiar thing was so many institutions ended up getting a piece of it because the U.S. housing market seemed like a sure thing. For instance, banks apparently sold very complex insurance policies on the mortgage debt. With so many parties involved, it is no surprise that once the bubble burst everyone was on the hook. Hence the freefall that has embroiled the financial markets for nearly a year now. Personally, I feel that it would be helpful for people to be well-informed about the housing crisis. It is one of the most pertinent and talked-about topics of the day, and yet it seems that oftentimes people do not know the real score. This is a very serious issue with potentially serious repercussions, and knowing what precisely is going on would be a tremendous plus in making better informed fiscal decisions in the future. As the article conceded however, given the complexity of the financial instruments involved this may be easier said than done. If Wall Street professionals are having a hard time with it, everyone else may be hard-pressed to know what a "liquidity put"

Black Segregation Essay Example | Topics and Well Written Essays - 1250 words

Black Segregation - Essay Example In the year 1954 the Court of United States pronounced its verdict as concerns the landmark case of Brown v. Board where it provided that the racial segregation of children based on the rule of â€Å"separate but equal† as directed by the provision of the 1896 Plessy v. Ferguson that was later overturned was considered as an infringement of the Equal Protection Clause of the Fourteenth Amendment. The Supreme Court hence declared the separate educational facilities as essentially unequal and unconstitutional. The ruling on Brown v. Board of Education case helped to combat the activities of the state in funding and facilitating aspects of segregation that had been corroding the ethical codes of the society. It also served to give the civil movement groups a voice and motivation to fight for the rights and privileges of the discriminated groups (Renzulli, 2006). In history, the root cause for the segregation of blacks and whites in America dates back to the mid 19th century. It primarily began with the passage of Jim Crow laws after the Reconstruction Era ended. These laws were largely common among the southern states but later spread to regions of the Southwest. The separation was primarily ascribed to various aspects of public life as well as in learning institutions and other public facilities and resources. Jim Crow laws hence prohibited blacks from sharing schools, churches, restaurants and other public amenities with their white counterparts. The Supreme Court of America in the ruling on Plessy v consequently upheld this law.