Introduction In the morning of September 15th 2008 something incredible happened in Wall Street, one of the most important newspapers, the Wall Street Journal, came out with a dramatic front page stating : “Lehman faces mounting pressures” and another sub article stating: “Lehman struggles to shore up confidence”. The real moment when Lehman Brothers went officially in bankruptcy protection was in the night before at 1:45 AM. The crisis was not do to the failure of Lehman Brother but it was the moment when it became sure that the crisis would have reached global proportions. It was the event that opened the eyes of every economist and shacked the financial system. Lehman Brothers was number 4 in the worldwide rank of the largest investment …show more content…
Business ethics are often guided by law, while other times provide a basic framework that businesses may choose to follow in order to gain public acceptance.” (investopedia) Ethics are the main values a person uses to make decision making and main activities. When we talk about ethics at a corporate level ,organizations have implemented a code of ethics to ensure the stability with policies and decisions. It is important that the ethical philosophy implemented within a company is effective because it could cause a loss in reputation or even productivity In the case of Lehman Brothers the organization failed to respect the code of ethics and the investment policies,due to this,a poor ethical environment resulted within the …show more content…
An effective leader will try to make his goal the same as his workers or use a persuasive communication strategy in order to convice the workers to do what the leaders want as a goal. Throughout the last centuries many leaders have ruled countries and some writers have divided the leaders into good and bad or effective and non-effective. An effective leader is a person that has a lot of passion in what he/she does,they have ambition and also a vision of a better place to live with a better society. On the other hand a non-effective leader even,if charismastic,if he/she uses the power to a personal benefit is a manipulator. A leader who manipulated an entire country is for example Adolf Hitler when he came in power with his party. There is an interesting experiment that can explain the cruelty that happened during the Nazi time. The experiment was made by Stanley Milligram in 1961. The experiment showed that normal people have a high probability to follow orders given an authority figure even if the case is killing another
If there was ever a word to describe the events that led up to the financial crisis of ’08, “Moral Hazard” would fit the bill perfectly. Moral hazard happens in financial terms when the success of a particular transaction is very heavily dependent on the performance of a particular party’s obligations, but where a particular party has no interest or incentive to carry out that obligation diligently. Let’s for instance take the example of a loan worth $720K, which was given to a strawberry picker earning around$14K/year to acquire a certain piece of property in the early 2000’s . In this case moral hazard was there and existed because the loan company intended to sell the loan forward to the credit rating agencies due to the inability of the
The Dodd-Frank Wall Street Reform and Consumer Protection Act was the federal government’s reaction to the financial crisis of 2008. The Dodd-Frank act symbolized the government’s regulatory stamp on the banks in the United States . This regulation from the Dodd-Frank Act set the goal to lower dependency on the bank federally by setting up regulations and tampering with companies that are deemed “Too Big to Fail”. Before the enactment of the Dodd Frank act, it took many obstacles to produce the content provided which sparked from the issue at hand with the financial downward spiral and the decisions as well as actions from overseers such as: the Secretary of the Treasury Hank Paulson and the presiding president George Bush. Two men emerged
What’s horrifying for a businessman is to see the stock market crash. On Tuesday, October 29, 1929, the United States stock market suddenly and completely collapsed. A renowned historical disaster, Black Tuesday, is attributed by many historians to be the start of the worst financial crisis in U.S. history, The Great Depression. The Great Crash itself had a devastating impact. Hundreds of banks failed, and because bank deposits were uninsured, their depositors lost some or all of their money.
This shows that overnight panics can be the initial catalyst for longer economic downturns. The panic of 1907 shows further links between financial distress and failure among financial intermediaries specifically trust companies, and the poor performance of the nonfinancial firms that depended on them for loans and other financial services. This shows that there needed to be some form of a central bank to help mitigate these panics. More importantly the panic of 1907 had many severe effects, “industrial output fell 17% in 1908, and real GNP fell by 12%”
The forty-six billion the Fed gave to lenders was two-hundred times more than the daily average. The quick infusion of cash was a far cry from normal Fed operations. On the day of the 9-11 attack, the S&P 500 dropped 4.9% and continued to go down causing markets to crash in less than a weak. The Federal Reserve’s quick and decisive action, however, helped the markets return to normal in just over 19 days. This action helped keep the U.S economy stable and prevent an economic
So the banks were left empty handed. This vicious cycle that struck hundreds of business resulting in bankruptcy, and yet another warning sign to the Stock Market
The biggest enemy to the end of the financial crisis and the beginning of an economic recovery is Treasury Secretary Henry Paulson himself. Lets forget for a minute that the decision by Paulson and Bernanke to let Lehman Brothers fail was the precipitating event leading to credit markets freezing up and the first round of financial panic. Since then, the two have been working diligently to correct this collosal mistake. But separating actions from words, we see that words are in fact much more potent. Since the end of September, every time Henry Paulson has opened his month, the Dow has dropped on average 196 points.
Someone that I would consider an effective leader is Stephan Harper, Canada’s Prime Minister, I do not have a personal connection to Stephan Harper but I believe that he has made a difference as a leader in Canada. Harper communicates well and always keeps the public up to date on his beliefs and values. Harpers openness gives his followers confidence in his decisions for our country.
The implementation and education of the ethical decision-making model promote moral awareness and company values that can mitigate ethical dilemmas to an extent. The aftermath was devastating for Wells Fargo not just economically but for its image. The corporation can introduce this model in training courses for new hires and current employees. Also ensuring management comprehends the prominence of ethical decisions and are aware that they are the wheels of the car, therefore, lead by example. If the corporation initially had prioritized ethical values and decision-making evaluations at every level of the business, this scandal could have been prevented at least its magnitude.
Leaders can be good or bad, but do people have to be either a good or bad leader to be effective? This leads to an important question--what makes an effective leader? An effective leader has to have firm control over who they are leading, sometimes through the use of fear or confusing language, or even through repetition of specific words and empathy, as seen in the novel 1984 and the speech “Four Freedoms”. In the text 1984, the government who is the leader is effective by using the method of fear.
1.1 ELON BACKGROUND OF MUSK Elon Reeve Musk is a Canadian American businessman, engineer, and innovator born in South Africa, June 28th 1971. Elon Musk is one of the most notable innovators of the 21st century. Elon’s academic achievements in regards to higher studies began with 2 Bachelor’s Degrees, 1 in physics and the other in economics, and he would, soon after, enroll in Stanford university to begin a PhD. However, Elon dropped out of the course after a mere 2 days in order to pursue entrepreneurial activities in the fields of sustainable improvements in standards of living, space exploration and much more. 1.2 MUSK AT TESLA
The only good thing to come out of Lehman’s collapse was that the US regulators had to tighten up regulations and limit the chance of such a crisis happening again. This will bring back investors confidence in Wall Street and keep the economic wheel turning.
In order to identify red flags for risk management from various financial risk ratios, models, and traditional ratios for Bear Stearns and Lehman Brothers, we list our calculation results below. Based on our calculation, Bear Stearns got 15 red flags, which occupied 68% of total red flags, while Lehman Brothers 12 red flags, occupying 55% of total red flags. These two numbers were high even compared with other investment banks, and companies committed fraudulent activities. In summary, both Lehman Brothers and Bear had high possibility of going bankruptcy.
This statement is supported by Bennett (2014) wherein ethics clearly defines what is the right and wrong things and shapes what kind of behavior the business should act on. For the sense of business according to Joseph (2013), ethics are constructed and decided by each business and underpins decision that an employee makes. When it comes to the business’ environment, a well-constructed ethics is a key for a considerate and responsible decision making in a business (Bennett, 2014). Business Ethics is very important inside the company, it will show the moral standards that a company or business have whether it is right or wrong and good or bad.
The earlier opinion stated that a business cannot be ethical, but this opinion is not used anymore in the modern business. Today business has belief that they must be responsible for social since they live and operate within a social structure. The key factors that make business ethics is important at the quarter of the 20th century are corporate social responsibility, corporate governance, and globalized economy. The culture of an organization, or else we can call it as the philosophy of an organization which is related with ethics have a great relationship with the performance of a business in long and short term. As a business is manage by human being, the people who manage a business