The reasons that caused Lehman Brothers to collapse

The reasons that caused Lehman Brothers to collapse The bankruptcy of Lehman Brothers was a result of the investment banks exposure to the 2007-2010 financial crisis. In fact, the demise of the investment bank would come to symbolize the crisis. Therefore, in order to understand the Lehman Brothers bankruptcy, a consummate understanding of the 2007-2010 financial crisis is requisite. As such, an examination of crisis will serve as introductory. Several factors contributed to the fall of Lehman Brothers. Perhaps most important, however, was the period of deregulation that preceded the crisis. Arguably, the period of deregulation started during the Reagan Era. Reaganomics, the lassiez faireeconomic policies advocated by the former president, may have served as the starting point for the deregulatory climate that ensued for the following two decades. Either way, the following two decades witnessed an overriding belief in the virtues of deregulation. In 1999, President Clinton signed the Gramm-Leach-Bliley Financial Services Modernization Act into law. The act repealed portions of the Glass-Steagall Act (Banking Act of 1933). The Glass-Steagall Act prohibited universal banking. Universal banking is defined as a single institution acting as an investment bank, a commercial bank, and an insurance company(Investopedia). The repeal of Glass-Steagall allowed for harmful activity on the part of several financial intermediaries, including Lehman Brothers. For example, commercial banks played a crucial role as buyers and sellers of mortgage-backed securities, credit-default swaps and other explosive financial derivatives. Without the watering down and ultimate repeal of Glass-Steagall, the banks would have been barred from most of these activities (Demos 3). Several other factors contributed to the financial crisis, including:subprime lending, credit conditions, financial instruments, and an increase in home prices. Many subprime mortgages were predatory in nature. Often, the borrower had little chance of repayment. As mortgages were often bundled and sold, lenders were less concerned with a borrowers ability to repay the mortgage. In addition, over 80% of subprime mortgages were adjustable-rate mortgages (ARMs)(Lee).A combination of declining home prices and higher reset rates for ARMs caused delinquencies to increase dramatically. Subprime lending was fueled by low interest rates. After September 11, 2001, the Fed lowered rates. In periods of low interest rates, lending becomes more profitable. As such, banks were pressured to increase subprime lending. By 2006, subprime loans accounted for 20 percent of all mortgage loans (Kratz). The use of financial innovation to create complex financial instruments (derivatives) played a significant role in both subprime lending and the financial crisis. For example, banks sold mortgages, through the securitization process, to investors, in order to finance subprime lending. Asset-backed securities (ABSs) were a common securitization arrangement. A portfolio of income-producing assets (loans) is sold by the originating banks to a special purpose vehicle and the cash flows from the assets are then allocated to tranches (Hull 190). The securitized loan is then sold to investors as an ABS. The process is depicted below. ABS CDS In addition, another derivative, a credit default swap (CDS), was designed to provide insurance to protect against default. CDSs allowed investors to synthetically bet against the asset-backed securities. The process is akin to multiple people buying insurance on the same house (Demos). As such, when mortgages began to default, causing the value of ABSs to decline, the losses to insurance agencies were magnified. The combination of all three of the aforementioned factors caused a remarkable increase in home prices. Low interest rates encouraged borrowing. In addition, many subprime borrowers believed home prices would continue to appreciate in perpetuity. As such, subprime borrowers acquired ARMs. ARMs were a product of the financial innovation mentioned earlier. Between 1997 and 2006, the amalgamation of these factors resulted in a 124 percent increase in home prices (SP/Case-Shiller). Market Making In order to better understand the collapse of Lehman Brothers, it is necessary to examine the functions and practices of an investment bank. The sales and trading desks at investment banks had primarily acted as market makers. Market makers are a broker-dealer firms that  accept the risk of holding a  certain number of shares of a particular security in order to facilitate trading in that security (Investopedia). In other words, market makers provide liquidity to markets by quoting both bid and offer prices. In contrast,investment banks eventually began proprietary trading. Proprietary trading involves taking positions in assets, as opposed to profiting from the bid-offer spread (market making). Lehman Brothers, through proprietary trading, had large levered positions in both subprime mortgages and mortgage-backed securities. When the value of these assets began to decline, the firms equity was wiped out and the bank became insolvent. Proprietary Trading Collapse On September 15, 2008, Lehman Brothers filed for chapter 11 bankruptcy. This was the largest bankruptcy filing in U.S. history. The bank declared a debt of $613 billion, bond debt of $155 billion and $639 billion worth of assets. The demise of Lehman Brothers was caused by a combination of the rejection of bailout from the government, lack of a willing buyer, and the mortgage crisis. The reasons behind the government rejection of a Lehman Brothers bailout are hotly contested. Prior to Lehmans bankruptcy, the government had saved both American Insurance Group (AIG) and Bear Sterns from a similar fate. According to Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke, the government failed to bailout Lehman Brothers for two reasons. First, the government lacked legal authority to intervene. Second, Lehman had insufficient capital. The Federal Reserve could only make a loan, Bernanke explained, if collateral supported ità ¢Ã¢â€š ¬Ã‚ ¦Giving Lehman a loan then would be lending into a run, Bernanke feltà ¢Ã¢â€š ¬Ã‚ ¦ The assessment was that if there was a run, which there would be . . . all we would have accomplished would be to make counterparties whole and not succeed in preventing the collapse of the company (dailyfinance.com).Many theorize that the government didnt save Lehman Brothers in order to teach market participants a lesson. However , Bernanke refutes, I speak for myself, and I think I can speak for others, that at no time did we say, We could save Lehman, but we wont. Our concern was about the financial system, and we knew the implications for the greater financial system would be catastrophic, and it was (dailyfinance.com). Lehman Brothershad potential buyers in bothBank of America and Barclays Capital. However, without government assistance,both Bank of America and Barclays Capital walked. Lehman was forced into liquidation. September 16, 2008, the day following Lehman Brothers file for bankruptcy, Barclays signed a definitive agreement to acquire certain parts of Lehman as well as their New York headquarters building. The deal was revised days later for Barclays to acquire the core business of Lehman Brothers including their $960 million Midtown Manhattan office skyscraper and 10,000 employees for $1.35 billion. With few other options, Lehman had little choice but to acquiesce. On September 22, 2008, Nomura Holdings Inc. acquired Lehman Brothers franchise in the Asia Pacific region including multiple locations and 3,000 employees. The mortgage crisis played a significant role in the collapse of Lehman Brothers. Lehman was a major player in subprime lending. Lehman was a leader in both mortgage lending and loans securitization of mortgages. Subprime lending and securitization represented an increasing large portion of Lehmans revenues. As such, the firm was irrevocably linked to the mortgage market. When mortgage default rates began to rise, demand for MBSs decreased. Lehman was stuck with billions of dollars of toxic assets on its balance sheet. Lehman would eventually close its mortgage lending operations. The following year, due to holding on to large positions in subprime and other lower-rated mortgage tranches, Lehman faced significant losses. By 2007, Lehmans leverage ratio (measurement of risk) also increased tremendously to 31:1 putting them in a very vulnerable position because they were too thinly capitalized for the leverage used. This was allowed because they were not subject to the same regulations as depository banks. Deregulation allowed for Lehman to take those increasingly risky positions. Market Effects Lehman Brothers bankruptcy filing on September 15, 2008 caused the DJIA to drop over 500 points (-4.4%). September 15, 2008 marked the biggest one day drop since the markets reopened following September 11, 2001. The DJIA would eventually lose an additional 43% of its value, erasing more than US$ 1 T in market capitalization. World stock market indices suffered a similar fate. The FTSE All-World Index would eventually lose 2400 points (44% of its value). The prospect of Lehman liquidating $4.3 billion in mortgage securities sparked a selloff in the commercial mortgage-backed security (MBS) market. Several money and institutional funds had significant exposure to Lehman. BNY Mellons institutional cash fund and the primary reserve fund (an MMMF) both fell below $1 per share due to exposure to Lehman. The Net Asset Value (NAV) of MMMFs normally stays constant at $1 because investment products usually do not produce capital gains or losses (Investopedia). This event was referred to as the breaking of the buck. Overall systematic risk increased drastically as a result of the bankruptcy filing. Due to the increase in systemic risk, there was a US$ 737 B decline in collateral outstanding in the securities lending market. In addition, the TED Spread, the spread between U.S. treasury rates and LIBOR rates, increased almost 400 basis points. Essentially, the dramatic increase in the TED spread was due to overwhelming uncertainty. LIBOR rates incorporate a small amount of credit risk; U.S. Treasury rates are seen as virtually risk-free. The uncertainty caused the rate differential between a small amount of credit risk and risk-free to widen. After the Lehman Brothers bankruptcy filing, in order to address the escalating crisis, the government created the Troubles Assets Relief Program (TARP). TARP was designed to purchase both assets and equity from financial intermediaries (FIs). The purpose of its design was threefold. First, by purchasing assets, the government hoped to remove toxic assets from the banks balance sheets. Second, by increasing equity positions, TARP recapitalized the troubled banks. Third, TARP was also implemented to encourage inter-bank lending. Opinion The bankruptcy of Lehman Brothers was preventable. The preventability of the Lehman Brothers bankruptcy is primarily due to three factors. First, corporate culture is dictated by upper-level management (this is especially true in top-down hierarchical organizations). At Lehman Brothers, CEO Richard Fuld created a culture of risk taking. A corporate culture that reflected conservatism could have prevented the banks demise. Second, as a corollary, tougher risk management policies could have prevented risk taking behavior. For example, by historical measures, Lehman had a tremendous used a tremendous amount of leverage. As mentioned, a 3 percent decline in asset prices would wipe out the firms equity. A leverage cap could have been used to prevent the overuse of leverage. Third, the weak economic climate was disastrous for Lehman. Lehman had large positions in the mortgage market. When the market began to decline, those positions went against the investment bank. To prevent the three factors, the firm should have hired a CEO that advocated a less risky business strategy. In addition, reduce employees compensation based on profit generation. The firm could have also employed a more market neutral trading strategy. In doing so, Lehman would have avoided insolvency. As mentioned, several ways exist to prevent the failure of the investment bank. However,all the above approaches Lehman CEO Richard Fuld are tailored to Lehman Brothers unique situation. They may or may not, however, be industry-wide or socially beneficial.To prevent another financial crisis and, therefore, the failure of financial institutions, we must align the self-interests of those institutions with societal interests. The following are recommendations for aligning the above interests: à ¢- Long-term Incentive Structure à ¢- Fiduciary Responsibility à ¢- Promote Financial Education à ¢- Prevent the Manipulation of Social Interests We need to develop a long-term incentive structure to prevent executives trying to capture profit upfront at expense of the company and/or societys long-term interests. We could design a longer-term incentive structure that employees will be compensated for their performance over longer periods of times other than the currently yearly compensation. Also we could design compensation program make the compensations based on certain activities callable in the future, if the loss of the company is deemed directly related to the those activities that the compensations are based on. Fiduciary responsibility should be mandatory and financial institutions should be held legally accountable. We need to require full disclosure of conflict of interest, not only in the event that two parties have a direct interest conflict, but also full disclosure when companies providing a financial service have different opinions than the clients current position. In addition, we should expand the concept of full disclosure. We propose making academic researchers disclose the benefit they are getting from financial institutions, including board positions and monetary compensation. Promote education of the general public. Specifically, implement finance classes in public high schools, ensuring all students are aware of market basics. In addition, make firms provide optional education on specific products to clients. Lastly, we must reduce or eliminate attempts to make social interests subservient to self-interests. This concept could apply to all industries. We could limit the funding of lobbyists a firm could hire, and highly restrict the political donations from large firms.We must also eliminate the links between government regulators and market participants, eliminating the conflict of interest between corporations and society. In general, the aforementioned actions are attempts to align self-interest with the social interest. Self-interest, the invisible hand in the successful free market system, must be made to serve the interest of the society. Conclusion This report has examined the following: the Lehman Brothers bankruptcy, the bankruptcys causes, the culpable parties, market effects of the bankruptcy, and risk management errors relating to the bankruptcy. In addition, the opinion section of the paper answers the question, Was the bankruptcy preventable? In summary, on September 15, 2008, the Lehman Brothers filed for bankruptcy. It was the largest bankruptcy filing in U.S. history. Several causes forced Lehman into bankruptcy. Of primary importance, however, was the investment banks exposure to the subprime mortgage market. Deregulation and risk management errors allowed Lehman to increase that exposure. Lehmans CEO Richard Fuld, Treasury Secretary Henry Paulson, and Fed Chairman Ben Bernanke are each culpable. Mr. Fuld is responsible because he created a culture of risk taking and pay based on short-term performance. Henry Paulson and Mr. Bernanke could have saved the bank and chose to do otherwise. We believe this event was entirely preventable. As mentioned, the banks exposure to the subprime mortgage market was, ultimately, its downfall. If more stringent risk management policies had been in place and Lehmans corporate culture had been more conservative, the banks exposure to the crisis would have been reduced. Reduced exposure would have undoubtedly increased Lehmans chances for survival. A singular theme continuously appeared while we conducted our research and, consequently, appeared throughout this report. That theme is greed. Greed is defined as excessive or rapacious desire, especially for wealth or possessions. Unquestionably, human greed contributed to the 2007-2010 financial crisis. Both financial intermediaries and individuals erred. For example, AIG reported record profits in 2007. Unfortunately, the insurer earned those profits by taking on enormous amounts of Off-Balance-Sheet risk. These OBS liabilities (contingent liabilities) resulted in an $85 B government bailout of the firm. Individuals speculated on home prices by refinancing mortgages. Often times, these loans were secured by home equity. When home prices declined, the mortgages went underwater.Mortgage defaults soared. In both cases, greed blinded the market participants. Lehman Brothers wasnt impervious to the rapacious desire either. Leverage is the use of either borrowed money and/or derivatives to multiply gains and losses. The multiplication of gains and losses (greater volatility) implies an increase in risk. Recklessly increasing risk demonstrates an excessive desire for wealth.Therefore, leverage metrics (ratios) can be used tomeasure greed. Prior to the crisis, Lehmans leverage ratios soared. Viewing a single financial product, event, action, or asset bubble as the sole cause of the crisis is overly simplistic. Greed served as a catalyst for each. By ignoring this fact, we are doomed to repeat our mistakes.

May Fourth Movement

China is moving into the modern world with such speed that it is understandable that there are inevitable time warps. But such anomalies point to the transcendent questions of what China is and where is china going. These questions are crucial to us because in the twenty first century China is a significant player in world affairs; if we hope to deal intelligently with China and its people we must understand their past and present. Revolution was one of the most important problems facing individual Chinese and China as a nation. Focusing on the New Culture/May Fourth Movement (1915-1923) and how its salient features, dominant themes were to influence successive generations of educated Chinese. Beneath the surface during the decade of military struggle China was stirring. A new generation, who had still been learning of their letter when the Empire disappeared, was coming of age. Their experience of the politics of their elders was uninspiring. They were ready for new loyalties and new ideas. The centre of new thought was Beijing University. It was based on the Tong Wen Guan, which had been transformed into a university by the 1898 reformers; and it was only one of their reforms to survive. In 1916 the liberal scholar Cai Yuanpei had become its president. He encouraged debate and built staff representing every shade of opinion. While China’s own culture remained the foundation of education it was studied critically. Typical was the work of Gu Jiegang, the young historian who applied to the classics the methods he has already used in his studies of the colloquial drama, treating the classics as accretions of tradition. The most influential writer at Beijing was Chen Duxiu. In his journal ‘New Youth’ he encouraged his contributors in an open minded search for radical solutions to the nation’s problems. He preached science and democracy as the basis of renewed national strength. He launched a head on attack on Confucianism, dismissing it as irrelevant to the modern world. Above all, he brusquely dismissed the central dilemma which faced china, the choice between preserving her culture and preserving her existence as a nation. In an essay which persuaded new way called ‘New Year 1916’, Chen Duxiu rhapsodized: The epoch in which you are living, what epoch is this?†¦.. To live in the present world, you must raise your head and proudly call yourself a person of the 20th century and not confine yourself to the following the 19th. For evolution of human civilization is replacing the old with the new, like a river flowing on, an arrowing flying away, constantly continuing and constantly changing. (pg. 208) Another example from, Hsu (2002) suggest Chen Duxiu called for the destruction of conservatism in order to make room for constructing a new culture. We indeed do not know which of our traditional institutions may be fit for survival in the modern world. I would rather see the ruin of our traditional ‘national quintessence’ than have our race of the present and future extinguished because of its unfitness for survival†¦. The world continually progresses and will not stop. All those who cannot change themselves and keep pace with it are unfit for survival and will be eliminated by the processes of natural selection. Therefore, what is the good of conservatism (pg. 498). Chen Duixu’s bold attack on traditionalism opened up a new vista in the musty intellectual world, and quickly won him an enthusiastic following the educated youth. A third young member of the Beijing staff was Hu shi recently returned from America. He had studied first under liberty bailey at Cornell, then at Columbia under the philosopher John Dewey, whose central tenet, that truth as we can know it is no more than inductively verified prescriptions for change, was an idea whose relevance to china seems very obvious to the new generation. Dewey’s pragmatism gave Chen Duxiu’s appeal for open-minded, radical thought a philosophical foundation. The spark which lit this tinder came as usual from a threat to China’s integrity. China’s main object in joining the Allies in the First World War was that, Germany were defeated, German privileges in Shandong province would be abolished. This had been promised, but at the same time the Allies had, in contradiction, agreed that Japan should inherit these privileges. As Japan had the power to assert her claims and China had not, the peacemakers of Versailles had only Hobson’s choice as to which promise they would keep. By the spring of 1919 the situation was known in China; but the government of Duan Qirui had already gladly concurred – a phrase which became notorious – in Japan’s claims and left the Chinese delegation at Versailles without instructions. On 4 May 1919, 3000 students from Beijing University and various other institutions held a protest march. Their example touched off national movement demonstrations, strikes of workers and a boycott of Japanese goods. The government responded by repression. The merchant community organized a run on the banks, and the government gave in. China did not sign the peace treaty. The Shanghai Student Union issued the following rationale for their actions: Throughout the world, like the voice of a prophet, has gone the word of Woodrow Wilson, strengthening the weak and giving courage to the struggling. And the Chinese have listened, and they too have heard†¦. They have been told that in the dispensation which is to be made after the war, unmilitaristic nations like China would have an opportunity to develop their culture, their industry, their civilization unhampered. They have been told that secret covenants and forced agreements would not be recognized. They looked for the dawn of this new era; but no sun rose foe China. Even the cradle of the nation was stolen. (pg. 7) Ten thousand attempted to march in a demonstration in the city on May 7. The Shanghai Student Union launched a boycott against the Japanese goods. Students sent from Beijing reported on government repression in the capital and further fired up the anger of Shanghainese. Whereas the Beijing unrest had continued to centre on teachers and students, in Shanghai by late May the nationalistic, fever had spread to businessmen, merchants and labourers. This was the May Fourth Movement. It predicated changes which had until then been only potential. A united front of intellectuals, merchants, and workers had defeated the government in defence of national interests. This was, its participants felt, democracy in action, successful in the streets while in parliament the nation’s representatives had been bribed into acquiescence in treachery. The youth of the nation, in colleges and schools in all major cities, threw itself into politics, confident in the ability to lead ordinary citizens. They opened workers night schools, wrote and published popular newspapers, and created trade unions. They joined the Guomindang in such numbers that for the first time its membership in China exceeded its membership in the overseas Chinese communities. Yet the effects of the May Fourth Movement were the greatest in the cultural sphere. For some years a few individual intellectuals had argued that the classical form of written Chinese, hitherto used for all serious writings, should be replaced by the more colloquial written form, whose use in the past had mainly confined to the popular literature of novels and plays. Of the literate population of China only a small minority could read classical form with ease. If the new ideas which the radicals sought to propagate in China were expressed in colloquial form they would reach a wider, and a non-elite audience. Until the resistance in 1919 this change had been all but universal. Now, suddenly the literary revolution was accomplished almost overnight, at least as far as the new generation were concerned. From then on they wrote about politics, economics, and philosophy, they wrote poetry, and they expressed their new passions for the nationalism and socialism, in baihua – plain language. The use of baihua became the shibboleth of radicalism. This was the change almost significant for the democratization of culture as the replacement of Latin in Europe by the vernacular languages after the resistance. Confucianism was rejected by the new generation, but, as in any revolutionary change in thought, the rejection was far from complete. In the first place the Confucian classics were still the vehicle by which children were taught to read and write; while the new generation might repudiate Confucianism as a guide to action in the modern world they were still too devoted to their cultural heritage to relinquish the classics as the basis of education. In the second place it is easier to repudiate a system of ideas intellectually than to change behaviour accordingly; even now Confucian attitudes strongly influence behaviour in China; hierarchy and patron-client relationships, face savings, family solidary avoidance of conflict, are still dominant characteristics of Chinese society. However, the intellectual dominance of Confucianism ceased. Before 1917 socialist ideas had little influence. Socialism as a reaction to the problems of modern industrial society did not seem relevant to China, whose problems arose from the absence of industry. Only when in 1917 a socialist revolution occurred in Russia, a country sufficiently backward to be comparable to China, was the question of the relevance of socialism to China raised. Before then, while there existed in China the vague distaste for the idea of capitalism usual in premodern countries, the strongest revolutionary feeling was directed not against capitalism imported from the west but against China’s own authrian social system, which was based on familial authority. It is not surprising therefore that, before 1919, anarchism was more popular than socialism among the young radicals. China’s anarchist movement had begun among Chinese students in France. There, during the First World War, a small group of anarchists published a journal called ‘New Society’. In Japan another group published ‘Natural Justice’. Two other students, Li Shizeng and Zhou Fuhai, translated Kropotkin’s mutual aid, and other anarchist works were also translated. The main anarchist organisation was a society for the promotion of virtue, which attracted some early members of the nationalist party, including the left wing leader Wang Jingwie. Its decline was a rapid as it was rise, however and by 1919 most of the influence was spent; of the young anarchist only one, Zhou Fuhai, joined the communist party, and he soon left. The three other leading spirits of Chinese anarchism moved indeed to the right as they grew older, and eventually became elder statement of the Guomindang. Yet the fact that there is no continuity of persons to be discerned between the anarchist and the communist phases of the rebellion of Chinese youth does not necessarily mean that anarchist ideas played a role in the history of Chinese communism. Anarchist ideas profoundly influenced the mass line policies of Mao Zedong; and in so far as anarchism versus authoritarism echoes the ancient Chinese Daoist Legalist polarity, the contrast can never be far from the subconscious, if not the conscious, thought of Chinese social theorists. Regardless of these different viewpoints, the fact remains that the May Fourth Movement was essentially a socio-politico-intellectual revolution aimed at achieving national independence, individual emancipation, and creation of a new culture through critical and scientific re-velation of the national heritage and selected acceptance of foreign civilization. Leaders of the movement regarded a radical change in the thought base as a prerequisite to successful modernisation and national regeneration. Old ethics, customs, literature, social relations and economic and political institutions came under disparaging attack to make way for the new. Yet a new culture was slow to emerge. The New may Fourth Movement had been far more effective at destroying the past than at constructing the future. Nonetheless, three main achievements are disputable. First, the literatury revolution led to the establishment of the Plain Language in 1920 and the rise of a new literature in vernacular style- based on humanitarianism, romanticism, realism, and nationalism. Literature now assumed a didactic role of instilling social consciousness in the public- from literary revolution to revolutionary literature. Second, the influx of diverse foreign ideas and ideologies caused the emergence of two opposing views on social reconstruction and national regeneration: the pragmatic, evolutionary method expounded by Hu Shih and pater partially accepted by the Nationalist party; and the Marxist revolutionary approach adopted by the Chinese Communist Party. The ontemporary history of China from 1921 onward is primarily a story of the struggle between these two parties and their different approaches. Third, the intensification of nationalism stimulated the rise of a Young China, extremely sensitive to its perilous position in the modern world and jealous of guiding its own destiny. Such an attitude generated psychological reconstruction and national confidence which partially compensated for sense of inadequacy and inferiority that had built up over the decade s. The result was a violent reaction against foreign imperialism and an intense drive to end the unequal treaties. Yet, in the historical perspective, for all its bombastic characteristics, the intellectual revolution succeed primarily in introducing Western thought and destroying Chinese traditionalism, rather than creating new systems of though and new schools of philosophy. The confirmed purpose of forging a new culture through critical re-evaluation of Chinese and Western civilizations stirred up a series of debates and polemics without really creating a new culture as such. Nonetheless, a foundation had been laid to adapt foreign ideas and institutions creatively to the Chinese situation. Whether by the evolutionary or revolutionary route, the ultimate goal remained the same; national salvation through the creation of a New China-thoroughly modernized, yet distinctly Chinese. Overall, successive generations have been influenced by these past themes which will take China into the future.

Centripetal Force

A the centripetal force which is equal to the Tension on the Holon string, which is pulling against the spring force which is our centripetal force when our radius is constant. The normal force is always pulling up, and the force of gravity always pulling down, they are cancel each other out in this situation.So even though we are adding more mass it does not have any effect on the centripetal force. Equation relating the net force (FCC) to the speed (v) of an object moving in uniform circular motion. F c = This equation shows that the net force required for an object to move in a circle is directly proportional to the square of the speed of the object. For a constant mass ND radius, the FCC is proportional to the speeds. VA 2 The factor by which the net force is altered is the square of the factor by which the speed is altered.Subsequently, if the speed of the object is doubled, the net force required for that object's circular motion is quadrupled. And if the speed of the object is halved (decreased by a factor of 2), the net force required is decreased by a factor of 4. We find the result of our experiment dose agrees with above. In our experiment we keep radius constant so our force stays the same, and as we increased mass on each trail we see our velocity keeps decreasing gradually. Centripetal Force A the centripetal force which is equal to the Tension on the Holon string, which is pulling against the spring force which is our centripetal force when our radius is constant. The normal force is always pulling up, and the force of gravity always pulling down, they are cancel each other out in this situation.So even though we are adding more mass it does not have any effect on the centripetal force. Equation relating the net force (FCC) to the speed (v) of an object moving in uniform circular motion. F c = This equation shows that the net force required for an object to move in a circle is directly proportional to the square of the speed of the object. For a constant mass ND radius, the FCC is proportional to the speeds. VA 2 The factor by which the net force is altered is the square of the factor by which the speed is altered.Subsequently, if the speed of the object is doubled, the net force required for that object's circular motion is quadrupled. And if the speed of the object is halved (decreased by a factor of 2), the net force required is decreased by a factor of 4. We find the result of our experiment dose agrees with above. In our experiment we keep radius constant so our force stays the same, and as we increased mass on each trail we see our velocity keeps decreasing gradually.

Federalism and Economic Empowerment of Indigenous People in Gambella - Free Essay Example

Sample details Pages: 3 Words: 754 Downloads: 6 Date added: 2019/02/15 Category Politics Essay Level High school Tags: Federalism Essay Did you like this example? 2.7.6. ENTREPRENEURSHIP DEVELOPMENT INSTITUTE To enhance the economic empowerment of the citizen the Government established an Entrepre-neurship Development Institute (EDI) in order to enhance technical, marketing and trade devel-opment skills. The EDI will oversee all skills enhancement initiatives under the National Economic Empowerment Policy. However, this institute will not directly be involved in offering training but will develop curricula that will be used by various learning institutions. The institute will be under the management of one of the higher learning institutions such as the University Dares Salaam (UDSM), the Institute of Finance. (United Republic of Tanzania January, 2014 P.23) 2.7.7. ESTABLISHMENT OF SPECIAL ECONOMIC EMPOWERMENT FUNDS The Government establish and make use of various Funds to bring about effective implementa-tion of the economic empowerment initiatives. These include the Mwananchi Empowerment Fund; the Credit Guarantee Fund; the Privatizations Trust Fund; and the Rural Electrification Fund; established after thorough studies and consultations, in order to support the implementation of economic empowerment initiatives. The Government contributes to the Funds not directly involved in their management the government appointed bank to manage the Funds. (United Re-public of Tanzania January, 2014 P: 24) Don’t waste time! Our writers will create an original "Federalism and Economic Empowerment of Indigenous People in Gambella" essay for you Create order 2.7.8. RAISING SKILLS AND KNOWLEDGE LEVELS A low level of skills, education and lack of resources, limit the effective participation of many countries in economic activities. A low level of education is amongst the reasons why some citi-zens’ continue to embrace inhibitive customs and traditions that are inimical to development. The absence of an Economic Empowerment Policy was amongst the reasons for the stale met. In this regard, the Government has resolved to put in place an Economic Empowerment Policy that will serve as a roadmap for the participation of the majority of the citizens of in all sectors of the economy. Weaknesses that make most borrowers not creditworthy include lack of knowledge and experience in preparing bankable projects as well as lack of collateral and equity funds to start business (United Republic of Tanzania January, 2014 P:14) 2.8 ETHIOPIA EXPERIENCE 2.8.1 THE RELATIONSHIP BETWEEN ECONOMIC GROWTH, EMPLOYMENT AND POVERTY REDUCTION: Policy and reform measures introduced since then have led to an economic transformation and private sector participation. A privatization program embarked upon in 1994 has resulted in the privatization over 250 public enterprises. The government has committed itself to eradicating poverty. The strategies worked out and implemented by the government have already begun to bear fruit as evidenced by over 11% average economic growth in the last five years (women empowering humanity, 2000) The economic progress has put the country among the top performing economies in sub-Saharan Africa, particularly among the non-oil producing country. The country has vision to attain a middle-income status within 20 years. Macroeconomic data indicate that Ethiopia is well placed to meet the Millennium Development Goals (MDGs) at the end of 2015. One of the goals attached to the growth performance of the economy is achieving Goal 1 of the Millennium Development Goals (MDGs). One of the key channels through which this goal would be realized is through job creation that is remunerative. Pursuing broad based growth through focusing on agriculture and rural development has been at the centre of Ethiopia’s po-verty eradication agenda. (p.5) 2.8.2 THE ROLE OF AGRICULTURE IN ECONOMIC DEVELOPMENT Agriculture plays many roles in the economic development of the country. The role of agriculture include providing additional food for rapidly expanding population, expanding the market for industrial product, providing additional foreign exchange for the country, mobilizing government revenue from the rural area and increase income of the rural people. (Teshome Adugna, 2012) Providing additional food- the first role of agriculture is to provide additional food for rapidly expanding population. When output expands with an increasing productivity, it increases the income of the farmers. Rise in per capital income leads to substantial rise in the demand for food. Providing employment opportunity– the role of agriculture is to provide employment opportunity to the labor force in the country. In Ethiopia agriculture provide 85% of em-ployment oppotchaptery. As agricultural productivity and farm income increase –nonfarm rural employments expand and diversify. Landless and marginal farmers are primary engage in non agriculture activities. Some activities in which they are engage in are manufacturing of textile, handcrafts, leather and mental working; construction of house and others building. Increasing income of the rural people- lastly, increase in rural income as a result of the agricultural surplus tends to improve rural welfare. Peasants start consuming more food especially of higher nutritional value in the form of superior quality cereal, eggs, ghee, milk, fruits etc. Thus an increase in agriculture surplus has an effect on raising the stan-dard living of the rural people