Report on feasibility for investment in the construction sector Essay

Report on feasibility for investment in the construction sector - Essay Example There are 5 basic groups of ratios that are generally used for business analysis. From these, we select 1-2 ratios from each group depending upon the information provided by each company, and subsequently assess each company depending on these selected ratios. The 5 basic ratio groups are explained below: Profitability Ratios: These are defined as the ratios that are used to measure the degree of success of a business concern in terms of determining factors such as liquidity, assets, return on investment etc. Ex-Group Operating Profit. Group operating profit: Leopold A. Bernstein (1999) defines the Group as a measure of a company's earning power from ongoing operations, equal to earnings before the deduction of interest payments and income taxes. Dividend per Share: Leopold A. Bernstein (1999) explains that Dividend per share is the payment designated by the board of directors to be distributed pro rata among the shares outstanding per shareholder. On preferred shares, it is generally a fixed amount. On common shares, the dividend varies with the fortunes of the company and the amount of cash on hand, and may be omitted if business is poor or the directors determine to withhold earnings to invest in plant and equipment. Sometimes a company will pay a dividend out of past earnings even if it is not currently operating at a profit. Operating Profit: It is defined as the difference between the revenue or turnover and the costs incurred during operations ie. Total operating expenses. Turnover or turnover ratio: It simply is the amount of business done by a firm during a financial year. DETAILS OF THE STUDY For the study, some core financial ratios of each of the 5 companies were studied and tabulated as shown under: 1) Alfred Mcalpine Group operating profit has risen by 6% to 38.2m (highest so far) before exceptional charges, tax and goodwill amortization. But the profit after goodwill amortization and exceptional charge

Benefits of a Healthy Body Weight in the Elderly

Benefits of a Healthy Body Weight in the Elderly A Review Of The Benefits Of Nutritional Intervention In Improving Body Weight, BMI, Activities Of Daily Living (ADL), Decrease Functional Limitation and Healthcare Cost Among Elderly. Introduction Malnutrition is a condition in which consumption of insufficient of nutrients that are required by the body to maintain optimal function of the organs and tissues. Secondary to chronic or progressive disease, older people are vulnerable to malnutrition (Klipstein-Grobusch, Reilly, Potter, Edwards, Roberts, 1995; Watson, 1999). So it was believed that as the population of the elderly increases, cases of malnutrition among the elderly will also increase. 5-10% of non- institutionalized elderly are malnourished is shown in epidemiological studies (Posner et al., 1994). Furthermore, studies have shown that 51-61% of nursing home residents are at risk of malnutrition and 12-29% residents are malnourished (Guigoz, 2006; Suominen et al., 2005; Wojszel, 2006). Therefore, it can be concluded that malnutrition affect all the elderly no matter where they stay. The purpose of the review is to determine the effectiveness of nutritional intervention in improving nutritional status among the elder ly and reduce healthcare cost at the same time in order to prevent further increasing of malnutrition among elderly. It is relevant to nursing with the use of nutritional intervention such as oral supplementation because nurses can help the patients to monitor nutritional status and give feedback to the dietician when the patients are not compliance or the supplementations are not suitable for them to consume. Benefits of nutritional intervention Continuous intervention The first study used observational, prospective, longitudinal, cohort study which involved 378 elderly malnourished patients aged over 70 who lived in community, at home or in institutions which selected by general practitioners in France from two groups, group 1 with rare and group 2 with frequent prescription of oral nutritional supplements with contain high energy and protein. The aim of the study is to determine the impact of nutritional support on the cost and related comorbidities among elderly. Each patient was required to complete 12 months follow-up to measure the nutritional status, medical care consumption and identify malnutrition-related comorbidities. Nutritional status was adjusted using a generalized linear modeling approach and medical care costs were adjusted using a propensity score framework. Mini Nutritional Assessment (MNA) was significantly better in group 2 than 1from the first evaluation until the end of the study (P Another study was done in Amsterdam to determine the effectiveness of oral supplementation in decreasing functional limitation among malnourished elderly patients in hospital which involved 210 Dutch patients who aged 60 years and above using randomized control trial. Patients in intervention group received standardized nutritional support in hospital and continuing until three months after discharge. Telephone counseling by dietician is done to give advice and stimulate compliance to the proposed nutritional intake every other week after discharge. Patients in control group received the usual care and did not receive post-discharge nutritional support. Cost data were collected from societal perspective and measures using two cost diaries. The degree of difficulties patient experience with 6 activities such as climbing stairs, dress themselves, getting up and sitting down in a chair (score 0-6) measured by Functional Limitation Questionnaire (Kriegsman, Deej, van Eijk, Penninx Boeke , 1997). After three months follow-up, patients in control group had longer mean length of hospital stay and often admitted to other inpatient institutions compared to patients in intervention group. Patients in intervention groups were able to do more physical activities and costs spent were lower than in control group. The probability of the cost-effective for the intervention lies around 0.5 compared with the usual care which was 0.6 at maximum. After oral nutritional support was given, significant improvements in functional limitations was confirmed by the study done by Woo, Ho, Mak, Law, Cheung (1994). Need-based intervention A group of 92 elderly who aged 65 years and above in nursing home at Taiwan participated in a randomized, double blind, controlled trial which included one year follow-up to observe mortality. This study done to examine the effectiveness of need-based strategy in improving the nutritional status among elderly in nursing home. Elderly in intervention group were given routine monitoring and a warm soup which contained nutrient supplement while elderly in control group were given routine care and normal warm soup. The content in the soup and detail about the study was not told to the resident involved. The participants’ nutritional status was evaluated using MNA and the height, weight, mid-arm circumference, calf circumference, BMI was measured and calculated. The elderly in intervention group who give supplement would be suspended once either one of the â€Å"at risk† condition was corrected. Over-nutrition can be prevented and saved cost by giving supplements when it is needed. There was significantly improved body weight, BMI, mid-arm circumference, calf circumference and others in intervention group (all p Conclusion From this review, it concluded that nutritional intervention such as oral supplementation is effective in preventing malnutrition among elderly. Oral supplementation can be taken with warm soup that is easily prepared, saved costs and with no associated digestive problems. Even though overall studies used different methods implementing oral supplementations, the results clearly showed that there was improvement in patients’ body weight, BMI, ADL and nutrition status after nutritional intervention used. It is also effective using oral supplementation with routine screening such as MNA which enables early identification of those who are at risk so that an appropriate intervention can be taken. We as nurses are able to assess the patients’ nutritional status frequently using MNA by reporting any changes to the dietician and able to administer the oral supplementation ordered for the patients. Limitations for all the studies were small sample sizes used and health condition of the patients participated may change during the study which will cause the ineffective of the oral supplementation. Future research should be done in various hospitals, community hospitals and nursing homes so that results obtained will be more accurate. The study should be done with a longer follow-up to give more opportunities for the patients to improve and a more accurate cost spent can be obtained. A longer follow-up can determine the effectiveness of nutritional intervention on quality of life and physical activities accurately. 1 | Page

Lord of the flies :: essays research papers

I am writing in response to the â€Å"spring cleaning† of Library that is coming up soon. I have heard that the English Department is currently deciding which videos they should keep in the library. For the videos of Lord of the Flies, I would prefer the school to keep the 1963 version instead of the 1990 version. The 1963 version of the Lord of the Flies would be a worthier choice for the Grade 11 students who study this novel. It follows the novel that William Golding wrote as opposed to the 1990 version which it emphasizes entertainment rather than the actual story. Furthermore, the 1990 version would confuse students who are currently studying this story. The director has appended in many scenes that were not in the book. At the same time, he has left out many important episodes that should have been portrayed onto the screen to facilitate Golding’s salient message to his audiences. Moreover, the additional scenes of the new version contribute to a contradiction that would tangle up the audience if they had read his work. For example, the boys on the island built the camp and shelter first instead of the fire. There was no voting section for the choosing of leaders in the first assembly. It has no choir members among the group of boys. The boys even ate lizards in this video and had story telling during the nights. There was also an existence of a man that has got hurt seriously that had been surviving with them all along. As for the 1963 version, the director had tried to follow the original theme of the novel itself. It started off how the novel did. It goes on with scenes that are much the same as the novel. For the characters, the 1990 version gave the audience some contrastive characteristics of them. In it, Jack was extremely evil and cruel. He cut his fingers, used his blood to paint his face and his hunters faces. As for Piggy, he has no asthma at all. He had been unusually kind and caring to the younger children as well, and also being the one who tells them stories. Ralph had also been particularly virtuous in the beginning of the movie. He had been exceptionally patient with the boys. As I have told you, the older version of Lord of the Flies depict the book version to a greater degree.

Research Ethics for Social Scientists: Between Ethical Conduct and Regulatory Essay

In this case, the questions of when researchers may possibly feel that they had a responsibility to protect research subjects along with what they can do when faced with criminal behavior are addressed (191). The commentators in this case included ted Palys, john Lowman, Monique marks and Dick Hobbs. On the question of intervening on the violence incidences, Dick Hobbs points out that intervening would be counterproductive but since violence is both emotive and seductive to men intervening would be due to personal relations with one of the fighters but not on the basis of social justice (192). All the commentators were cautious of intervening because they feared it would alter the behavior which they were studying. However, apart from Dick Hobbs the rest believed that it was crucial to report the incidence if someone got seriously injured. On the issue of revealing the information they gathered in the field some suggested they would be willing to do so (Palys and Lowman), others (Dick Hobbs and Marks) argued that they would not since the information was meant for academic purposes only and testifying would elevate research profile and make it hard to perform another research on similar sites (193). All the commentators agreed that the source of funding would not affect their decisions to intervene and testify. However, Marks and Hobbs highly criticized the attempts of directing researchers’ responses to ethical dilemmas since their decisions in the field were not governed by formal codes, but were rather situational and responses cannot be determined outside the field (194, 195).   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Conclusion This reading shows that although it may not be their duty, social researchers in criminal investigation have a duty to protect the respondents especially when someone may get injured in the processes. They should do so by reporting such incidences and testify upon what happened for the purposes of social justice. References Mark, I. (2006). Case study 2. Research ethics for social scientists: between ethical conduct and   Ã‚  Ã‚  Ã‚   regulatory compliance. Sage publications, London.   

Krugman Analysis

The Story Behind Financial Deregulation a. Wild Optimism & the Deregulation Movement b. The Political Influence of the Financial Sector (and the Wealthy in General) PART II: THE SOLUTION Section 3: The Solution is Government Stimulus (and a Few Other Reforms) 7. The Solution is Government Stimulus 8. Objection #1 : Government Stimulus Doesn't Spur the Economy (and Response) ; a. Exhibit A: The Great Depression b. The Initial Stimulus Effort Was Too Small 9. Solution Specifics a. Stimulus Specifics b. Additional Federal Reserve Actions c. Housing Relief (et. L. ) 10. Objection #2: The Danger of Government Debt (and Response) ; . The Problem of Investor Confidence b. The Problem of Paying off the Debt in the Future 1 1 . Objection #3: The Danger of Inflation (and Response) Section 4: The Chances of Government Stimulus Being Implemented (and How to Improve Them) 12. Pragmatic Politics and the Coming Election a. An Obama Sweep b. An Obama Win, and a Divided Parliament c. A Rooney Victory 13. Conclusion Since the housing and financial crash of 2008, America's economy has been stuck deep in the doldrums.Indeed, GAP has remained well beneath pre-2008 levels, and employment levels have failed to recover. In an effort to resuscitate the economy, the American government tried first to Jump-start it through stimulus spending, and has now replaced this approach with greater austerity. Nothing seems to be working. For Nobel Prize winning economist Paul Grumman, though, the answer is clear: the problem is that the original stimulus effort was too small, and, since that time, the government is moving squarely in the wrong direction.Indeed, Grumman argues that America's current situation bares a striking resemblance to the stagnation of the Great Depression, and that history has taught us what to do in such situations: the overspent must take an aggressive approach to stimulate the economy into recovery. This is the argument that Grumman makes in his new book ‘End This D epression Now! ‘ Now, Grumman is not a proponent of big government spending under normal conditions. Indeed, even in a recession, German's preferred approach is to drop interest rates in order to spur consumer spending.The problem now is that interest rates are already at zero, and this has not been enough to get consumer spending off the ground, thus leaving the economy in what is called a ‘liquidity trap'. For Grumman, the liquidity trap is actually quite common in economic downturns that allow financial crashes (as is the case with the current one, and as was the case with the Great Depression), and is why such slumps tend to be deep and prolonged. According to Grumman, the best and surest way to save the economy from a liquidity trap is for the government to step in and undertake the spending that consumers won't.That is, the government must stimulate the economy back into action, until consumers can get back on their feet enough to take over for themselves. For Grum man, this is precisely what happened in America during WI, when the government's military spending served to stimulate the economy and save it from the rips of the Great Depression. Now, German's opponents will point out that the American government has already tried the stimulus approach during this downturn, and that this strategy did not work, thus showing that it cannot be relied upon.What's more, these same opponents argue that the government's debt is already enormous, and indeed dangerously high, and that further government spending at this point may well render the debt completely unmanageable, if not force the government into insolvency (which is indeed a threat that is currently being faced by several countries in the European Union). Finally, German's detractors maintain that pumping more money into the economy at this time only threatens to drive up inflation to dangerous levels, perhaps even triggering a hyperinflation spiral.Grumman, though, claims that he has answers to all of these objections. In the first place, as noted above, the author maintains that the failure of the government's first stimulus effort did not prove that this approach is ineffective, but that it simply wasn't large enough to do the trick. Second, Grumman argues that though government debt does pose a concern, America's debt is actually not that dangerous by historical tankards. What's more, since America has its own currency (unlike the countries of the European Union), it is able to print money to turn over its debt, thus preventing the possibility of bankruptcy.Finally, with regards to inflation, Grumman contends that inflation simply cannot get off the ground in a depressed economy (as the current situation would attest to), and that when it is triggered in an upturn the government can always reverse its policy, thus keeping it firmly in check. Here is Paul Grumman speaking about his new book (Part II of the interview is available on Youth): http://www. Tube. Com/watch? What follows is a full executive summary of End This Depression NOW! By Paul Grumman.PART l: THE PROBLEM Grumman begins by way of establishing the gravity of the problems that America's economy is currently facing. This can be seen in the numbers. To begin with, consider America's Gross Domestic Product (GAP). As Grumman notes, GAP indicates â€Å"the total value of goods and services that are produced in an economy, adjusted for inflation†¦ In a given period of time† (loc. 274). As such, GAP provides a general picture of how much an economy is producing, and how quickly it is growing.Between the Great Depression and the beginning of the current recession, America's GAP grew at an average rate of between 2% to 2. 5% per year (loc. 277). The biggest downturn during this time occurred between 1979 and 1982, when America's economy experienced a ‘double dip' recession-?which Grumman characterizes as essentially â€Å"two recessions in close succession that are best v iewed as basically a single slump with a stutter in the middle† (loc. 283). At the low point of this recession, in 1982, America's â€Å"real GAP was 2 percent below its previous peak† (loc. 83), meaning it basically went flat. However, the author continues, the economy rebounded very quickly in the immediate aftermath, â€Å"growing at a 7 percent rate for the next two years-?morning in America'-?and then returned to its normal growth track† (loc. 283). When we look at the latest recession, we find that the low point occurred between 2007 and 2009. When compared with the recession of the late sass's and early sass's, we find that the latest â€Å"plunge†¦ As steeper and sharper, with real GAP falling 5 percent over the course of eighteen months† (loc. 287). What's more, the American economy has not seen a strong recovery this time around, as â€Å"growth since the official end of the recession has actually been lower than normal† (loc. 287). A ll in all, the author claims, â€Å"the U. S. Economy is [currently] operating about 7 percent below its potential† (loc. 295), and has lost $3 trillion in value since the slump began (loc. 299).Most significant of all, though, is that the economy shows no signs of a major come back any time soon; thus leading Grumman to conclude that â€Å"at this point we'll be very lucky if we get away with a cumulative output loss of ‘only $5 trillion† (loc. 299). . Unemployment Is Way Up While the GAP numbers are certainly telling, the more significant numbers, according to Grumman, are those concerning unemployment. As the author reminds us, unemployment statistics cover only those who are looking for work but who can't find it, and â€Å"in December 2011 that amounted to more than 13 million Americans, up from 6. 8 million in 2007† (loc. 94). This is already a staggering number, but when you take into account all of those people who have stopped looking for work out of frustration, or who have taken part-time work out of desperation, this number balloons even Geiger: â€Å"by this broader measure there are about 24 million unemployed Americans -?about 15 percent of the workforce-?roughly double the number before the crisis† (loc. 202). And since the current slump has dragged on so long, the number of people who have been out of work long-term (meaning 6 months to 1 year, or longer [loc. 224]) has risen to levels not seen since the Great Depression.Indeed, Grumman writes that â€Å"not since the sass's have so many Americans found themselves trapped in a permanent stats of Joblessness† (loc. 228). The unemployment numbers are particularly important, the author argues, since hey bring home the human element of the story. Indeed, while GAP statistics represent the abstract loss of an entire economy, unemployment numbers reflect the loss of income of real people. What's more, unemployment not only affects income, but self-esteem as w ell: â€Å"people who want to work but can't find work suffer greatly, not Just from the loss of income but from a diminished sense of self-worth.And that's a major reason why mass unemployment-?which has now been going on for years-?is such a tragedy' (loc. 173). Adding to the tragedy here is the fact that those who are shut out of the Job market or long stretches end up being stigmatize, which can hurt their prospects of landing work in the future: â€Å"Does being unemployed for a long time really erode work skills, and make you a poor hire? Does the fact that you were one of the long-term unemployed indicate that you were a loser in the first place? Maybe not, but many employers think it does, and for the worker that may be all that matters.Lose a Job in this economy, and it's very hard to find another; stay unemployed long enough, and you will be considered unemployable† (loc. 241). While all of these factors have very such affected people who were already in the Job ma rket, it has been even worse for young people who had not yet established themselves before the recession hit. Indeed, unemployment levels among the young tend to be higher than the general population in the best of times, but in the worst of times they tend to get hit even harder. As Grumman notes, â€Å"truly , this is a terrible time to be young†¦Roughly one in four recent graduates is either unemployed or working only part-time. There has also been a notable drop in wages for those who do have full-time Jobs that don't make use of their education† (loc. 249-58). 3. The Potential Long-Term Consequences When it comes to the plight of young people, as well as those who have found themselves shut out of the Job market for an extended period, these phenomena not only affect those directly involved, but also threaten to damage the economy in the long term. This proves to be the case because, as mentioned, present unemployment, or underemployment, can threaten future opport unities.As Grumman explains, â€Å"if workers who have been Jobless for extended periods come to be seen as unemployable, that's a long-term reduction in the economy's effective workforce, and hence in its productive capacity. The plight of college graduates forced to take Jobs that don't use their skills is somewhat similar: as time goes by, they may find themselves demoted, at least in the eyes of potential employers, to the status of low- skilled workers, which will mean that their education goes to waste† (loc. 324). And lost employment opportunities is not the only way that a prolonged slump can adversely affect future economic performance.As Grumman argues, an extended downturn tends to deter businesses from investing in and expanding their operations, which can leave them in a position where they are unable to meet emend when the economy finally does turn around and demand picks up: â€Å"the problem is that if and when the economy finally does recover, it will bump u p against capacity limits and production bottlenecks much sooner than it would have if the persistent slump hadn't given businesses every reason to stop investing in the future† (loc. 328).German's claim that an extended economic downturn does in fact have significant long time repercussions is bolstered by an MIFF study that looked at previous recessions. As the author explains, â€Å"the International Monetary Fund has tidied the aftermath of past financial crises in a number of countries, and its findings are deeply disturbing: not only do such crises inflict severe short-run damage; they seem to take a huge long-term toll as well, with growth and employment shifted more or less permanently onto a lower track† (loc. 41). Even more important, for Grumman, is that there is also evidence that a concerted effort to pull an economy up out of a slump can mitigate the future damage (loc. 341). For the author, then, the message is clear: America is in the midst of a very ser ious and damaging slump; the longer the country remains in the slump, the worse things ill be in the long run. As such, we must take swift and direct action to extricate the nation from the current situation.Before we take a look at what form Grumman thinks this action should take, it well help to hear the author's assessment of the current situation, and what he thinks landed the country here to begin with. According to Grumman, while America's current situation is really quite dire, the reason why the country finds itself in this situation is really rather simple. It all has to do with demand: â€Å"why is unemployment so high, and economic output so low? Because we-?where by We' I mean consumers, businesses, and governments combined-?aren't spending enough†¦ E are suffering from a severe overall lack of demand† (loc. 453-62). Actually, this whole scenario is unfolding as somewhat of a domino effect, as is the case with all downturns. To be specific, consumers have sto pped spending, which means that businesses do not feel the need to hire more employees and/or ramp up production; and since production is down, governments are earning less revenue through taxes, and are themselves more reluctant to spend (loc. 459). So, how does a country get itself out of this kind of slump?Under normal circumstances America's Central Bank (the Federal Reserve), would pump more money into the economy, thereby lowering the interest rate (by the law of supply and demand) (loc. 554-59, 590). This has the effect of making credit cheaper, which spurs individuals to lower their savings and consumer more, thus pulling the economy out of the slump. As Grumman reports, this strategy has proven to be very effective over the years: â€Å"it worked spectacularly after the severe recession of 1981-82, which the Fed was able to turn within a few months into a rapid economic recovery -?morning in America.It worked, albeit more slowly and more hesitantly, after the 1990-91 and 2 001 recessions† (loc. 559). The problem this time around is that when the recession hit in 2008 interest rates were already at the rock bottom rate of zero percent, meaning the Fed could not lower them any further (loc. 594). Since that time the interest rate has remained at zero, but, through it all, even this has not been enough to spur consumer spending to the point where it has been able to rescue the economy from its slump.When interest rates are at zero, and people still aren't spending, you have what is called a ‘liquidity trap'. As Grumman explains, â€Å"it's what happens when zero isn't low enough, when the Fed has saturated the economy with liquidity to such an extent that there's no cost to holding more cash, yet overall demand remains IoW' (loc. 596). And for the author, this is the crux of the issue. According to Grumman, a major part of the problem this time around is that when the latest recession hit, a large number of Americans were already deep in deb t due to the housing crash, as well as other personal debt.What this meant is that even at zero percent interest a vast number of Americans could not afford to resume pending, for they had to get out of their debilitating debt first (loc. 755, 774, 2240). Nor is that the worst of it. Indeed, one of the most straightforward ways to get out of debt is to sell off your assets. But when a large number of people try to sell off their assets (including their houses) all at once, this drives down the price of the assets, thus reducing the amount of money that people can raise in order to pay off their debt, thus exacerbating the problem (loc. 63). But there's more! As the prices of assets fall, the purchasing power of money correspondingly increases (called fellatio), and this increases the relative burden of debt (for the money that you are paying back your debt with is ever increasing in value), thus complicating the matter even further (loc. 767). 5. The Root of the Problem: The Deregul ation of the Financial Sector Now, a lot has been made of the issue of how Americans came to be so indebted in the first place, for this was a major part of why the current problem is so bad.Commentators on the right tend to blame borrowers who took out loans that they were not in a position to pay back, as well as government supported agencies who provided cheap loans to under-funded home-owners (loc. 059). Commentators on the left, on the other hand, tend to put the blame on deregulation in the financial industry, which allowed banking and investment companies to take on undue risk, as well as the banking and investment companies themselves who took advantage of the situation by way of providing loans to overly-risky borrowers. Grumman himself is primarily in the latter camp.To begin with, Grumman claims that the vast majority of bad mortgage loans were made by private firms, not the much maligned government-sponsored Fannies Mae and Freddie Mac (loc. 1072); who, the author conten ds, got into the bad mortgage name only very late (loc. 1072), and not nearly to the extent that private companies did (loc. 1072). But the root of the problem, according to Grumman, is the steady deregulation of the financial industry that began under Reagan in the sass's, and that culminated with the Grammar-Leach-Bailey Act of 1999, which repealed a provision of the Glass-Steal Act.Glass-Steal was a bill passed in 1933 to deal with the ongoing Great Depression (loc. 977). The major provision in the bill was that commercial banking deposits would be insured up to a certain point by the federal government (loc. 977). This was meant o restore confidence in banks, many of whom had fallen to bank runs in the previous years (loc. 977). The issue with insuring bank deposits, though, is that this creates a moral hazard for the banks. For the banks know that they will ultimately be bailed out by the government (meaning taxpayers) if they fall into insolvency (loc. 86); and, as such, they are tempted to make overly-risky investments. As Grumman explains, â€Å"it could have created a situation in which bankers could raise lots of money, no questions asked-?hey, it's all government insured-?then put that money into high-risk, high stakes investments, curing that it was heads they win, tails taxpayers lose† (loc. 986). In order to protect against this moral hazard, the legislators behind Glass-Steal also included a provision that stipulated that commercial banks could not act as investment banks. This was meant to keep commercial bank deposits safe from overly-risky investments.As Grumman notes, â€Å"any bank accepting deposits was restricted to the business of making loans; you couldn't use depositors' funds to speculate in stock markets or commodities, and in fact you couldn't house such speculative activities under the same institutional roof† (loc. 990). In 1999, though, this provision of the Glass-Steal Act was repealed by the Grammar-Leach-Bailey A ct (loc. 1017). According to Grumman, this move was the height of irresponsibility, and was a major contributor to the extreme risk-taking environment that led directly to the financial crash of 2008 (loc. 007-1017). For the author, though, the repealing of Glass-Steal was not the only article of deregulation that prompted the crash. Indeed, he identifies several pieces of anti-regulatory legislation that also had a hand to play in triggering the whole mess, from President Carter's Monetary Control Act of 1980 (â€Å"which ended isolations that had prevented banks from paying interest on many kinds of deposits† [loc. 1003]); to President Reggae's Garn-SST. German Act of 1982 (â€Å"which relaxed restrictions on the kinds of loans banks could make† [loc. 003]); to the failure of legislators to keep up with new innovations in the financial industry, such as shadow banks (loc. 1029-42). Now, unlike some left-wing commentators, Grumman is not prepared to let consumers off the hook entirely for the debt problems that complicated the crash. Indeed, the author (following the economic thinker Hyman Minsk) argues that a big actor behind the growth of consumer debt in the recent past was a general natural tendency for people to forget about the dangers of debt during good times (loc. 733, 798-815).As Grumman explains, â€Å"an economy with low debt tends to be an economy in which debt looks safe, an economy in which the memory of the bad things debt can do fades into the mists of history. Over time, the perception that debt is safe leads to more relaxed lending standards; businesses and families alike develop the habit of borrowing; and the overall level of leverage in the economy rises† (loc. 810). As the quote makes clear, the optimism in question touched all Americans, not Just the lenders, and so all involved deserve some share of the responsibility (loc. 33, 806). 6. The Story Behind Financial Deregulation According to Grumman, though, it was u ltimately the lack of regulations that allowed this selective memory and wild optimism to become dangerous, for the regulations were essentially keeping these sentiments in check (loc. 838). Now, it may rightly be said that the same emotions that led to growing debt also influenced the legislation that allowed it to become dangerous in the end (loc. 40). But for Grumman, there were other reasons behind financial deregulation that are also important to consider.For one, even before regulations were removed from the financial sector, the government had already begun to deregulate other industries (such as air travel, trucking, and oil and gas) (loc. 999-1003). These reforms had led to significant gains in efficiency in these industries (loc. 999), and thus many were optimistic that the same approach would work in the financial sector. The problem, as Grumman points out, is that â€Å"banking is not like trucking, and the effect of deregulation was not so such to encourage efficiency as to encourage risk taking† (loc. 007). B. The Political Influence of the Financial Sector (and the Wealthy in General) Over and above the factors mentioned above, though, Grumman argues that there is a still more sinister explanation behind the deregulation of the financial sector. And this has to do with the political influence of those who benefited most from it: the bankers themselves. Take the Grammar-Leach-Bailey Act of 1999, for instance (which, you will recall, revoked a crucial regulatory provision of the Glass-Steal Act).As Grumman points out, the gassing of the Act was largely influenced by the lobbying of Citron and Travelers Group, who in 1998 had wanted to amalgamate to become Citreous, but who had encountered obstacles due to Glass- Steal (loc. 1043, 1357-65). And even before this, the political elite stood in defense of increasing deregulation, despite initial indications that the measures were problematic (loc. 1414, 1130). Indeed, as Grumman is wont to stres s, the problems posed by deregulation did not begin with the financial crash of 2008.Instead, they began to surface even in the sass's when the banking sector was first deregulated. For instance, in 1989 the Federal government was forced to shut down the thrift banking industry due to a collapse induced by bad debt (loc. 1099-1120). A desperate move that put taxpayers on the hook for $130 billion (loc. 1120). Then, in the sass's, further difficulties arose when several large commercial banks over-extended themselves â€Å"in lending to commercial real-estate developers† (loc. 1119).Finally, â€Å"in 1998, with much of the emerging world in financial crisis, the failure of a single hedge fund, Long Term Capital Management, froze financial markets in much the same way that the failure f Lehman Brothers would freeze markets a decade later† (loc. 1123). For Grumman, all of these events should have acted as clear warning signs that there was something seriously wrong with f inancial deregulation (loc. 1 125-30). So why did the political elite fail to heed the warning signs? For Grumman, this become a good deal more understandable when we appreciate how profitable deregulation was for the financial sector (loc. 142), and how much influence this sector has on government. Indeed, as the author points out, while deregulation did virtually nothing to increase the incomes of middle class families (loc. 137, 1190), the move was a great boon to the wealthy (loc. 1142, 1201), and especially the bankers themselves (loc. 1300, 1418). In addition, it's no secret that the wealthy, and the financial sector in particular, has a major influence on government (loc. 1351). This influence exists not only in the form of significant monetary contributions (loc. 346), but in the two-way cross-over between the financial sector and political office (loc. 1380, 1392). What's more, the influence of the wealthy has been increasing as the rich have gotten richer since the time wh en deregulation first took off (loc. 1388). Section 3: The Solution is Government Stimulus (and a Few Other Reforms) 7. The Solution is Government Stimulus Grumman certainly maintains that reforms in financial sector regulations are needed if the country is to avoid falling into future debacles such as it finds itself in presently.For him, though, the more important question has to do with how to get the country out of its current situation. As you will recall, Grumman contends that America's problem now is that it is in the midst of a liquidity trap. That is, interest rates are already at zero, and yet this still isn't enough to reignite consumer pending. What's more, since consumers aren't spending, businesses have no reason to hire workers and/or expand their operations, and so they aren't spending either (loc. 461). Any yet, for Grumman, this lack of spending is very much the heart of the problem.So what can be done? According to Grumman, the answer is simple: the government mus t step in and take over the role of spending (loc. 879). As the author puts it, â€Å"the essential point is that what we need to get out of this current depression is another burst of government spending. Is it really that simple? Would it really be that easy? Basically, yes† (loc. 688). German's argument is that government spending will put money into the hands of the people, who will then be able to recover enough to resume spending themselves.As consumer spending increases, businesses will increase production and hire more workers, thus fully pulling the economy out of its current slump (loc. 679). 8. Objection #1 : Government Stimulus Doesn't Spur the Economy (and Response) Now, some argue that government spending doesn't actually increase demand and spur the economy at all, since, they claim, all it really does is take resources from one sector of the economy and transfer them to another.The argument is well-rendered by Brian Riddle of the right wing thing tank the Heri tage Foundation, who Grumman quotes in his book: â€Å"the grand Keynesian myth is that you can spend money and thereby increase demand. And it's a myth because Congress does not have a vault of money to distribute in the economy. Every dollar Congress injects into the economy must first be taxed or borrowed out of the economy. You're not creating new demand you're Just transferring it from one group of people to another† (loc. 474).Now, for Grumman, this argument may hold true under normal circumstances, when banks are lending and companies are competing for resources (loc. 2369). But in a depressed economy this is not the case. Rather, in such a situation banks are not lending because safe investments net very little profit, and risky investments are, well, too risky (loc. 2369). So in a depressed economy, resources go unused by the private sector (loc. 2079). This being the case, government spending does not displace private spending; rather, it does nothing but increase d emand