How Does Music Function As A Social Commentary Research Paper

How Does Music Function As A Social Commentary - Research Paper Example American cultural history, ethnic studies, folklore, and even musicology have increasingly placed music in American social and cultural context. American culture describes how race and ethnicity, gender, and class have influenced the performance and production of music. It has illuminated issues as diverse as ethnic and regional identity, the degree of agency among artists, and Cold War politics. Despite some shortcomings in its application, such music continues to offer Americans much material regarding the many connections between music and American culture. On the one hand, the ruling elites use music to communicate their political values to the general population and to legitimize their rule. In this sense, music is used to encourage politically acceptable behavior. At the same time, music is also a medium for encouraging certain modes of socially acceptable behavior. On the other hand, music is used by people in structurally subordinate positions to comment on social problems; t o express their dissatisfaction with the state of society and resistance to hegemony and the ruling order. Music as a cultural form is thus appropriated for different ends by two different groups in society (Ibid, 283-285).

Mass Media and Economic Development Essay Example for Free

Mass Media and Economic Development Essay Mass media has always been one of the pillars of modern society. With its wide range and base, it is indubitably, the most effective and efficient way of mass information dissemination. Yet, instead of mass media being a primary tool for education, it is mostly being used as a medium for entertainment; to show bland, superficial products with little, or no educational value. So, attempting to connect mass media with economic development would seem as disjoint as climate change and my inability to make good analogies. Surprisingly, this is what the last speaker, from The Public Sphere talked about. The forum cites economic literacy as the main contribution that mass media can make to economic development. Defining economic literacy as the ability to identify, analyze and evaluate the consequences of individual decisions and public policy, the speaker, Mr. Omar Dumdum of NEDA, goes in to explain the ineffectiveness of economic education in secondary school; therefore, mass media should take the primary responsibility of promulgating economic literacy, to promote economic development. This can be done, according to Mr. Dumdum, through better economic news writing and reporting, making economic news understandable for the general population, and information dissemination campaigns. There will be some difficulties encountered, of course, as Economics is wrought with technical terms that cannot be easily simplified, but, if information campaigns are done in tandem with better reporting, results can be achieved. Personally, I do think it is possible and feasible. Being someone who believes in the power of mass media to reform society, I think mass media could enhance the net economic literacy of the Philippines, which would, hopefully, increase Filipino participation in crucial economic activities, resulting in inclusive economic development. But of course, mass media has internal flaws that prevent this from happening. For one, it bears the inability to make economic news/information exciting, or even understandable. If not for my privileged secondary and tertiary education, I would not know anything about our countrys economic status, as I regularly skip the Business section of the papers, because it is simply boring. Economic reporting tends to be too technical, or elitist, so much so, that for the average Filipino citizen believes that the economic opinion of his/her neighborhood barber is more valid and believable compared to the TV guy in a suit. I am not dismissing the opinion of Manong Barber as incorrect or irrelevant (he might be an economist, who knows), but this points out the preference of Filipinos to opinion-based economic information, over rigorous, empirical economic reporting. And, so I have mentioned, we Filipinos are not entirely at fault. We cannot be blamed for giving more importance to comprehensible information than jargonic gibberish. Also considering the fact that public opinion greatly influences economic policies in our country (i.e. sin tax bill), this, all the more makes the medias role in promoting economic development crucial. I do agree with Mr. Dumdums proposed approach of information campaigns being conducted simultaneously with better news reporting, because better enws reporting alone would not fulfill the expected impact of mass media in the economic literacy of our society. In conclusion, I think that the mass media, is indeed, an important element in aiding the development of a Philippines as a globally competitive economy. It is not enough, however to merely educate people about the Economics and the economic condition of our country at present. Public policies, political will, exhaustive analyses and correct decisions are also parts of the solution to the enigma that is Philippine development. And, in these, mass media can only contribute so much; mass media cannot improve the Philippine economy alone.

Impact Of Recession On Business Of British Airways Commerce Essay

Impact Of Recession On Business Of British Airways Commerce Essay The global economy is experiencing problems ever since. There have been notable economic recessions in international business history. These recessions were managed in a variety of ways depending on the strategies which were implemented on a business-to-business basis. Each international company have intensified their efforts in order to come up with a variety of strategies which are geared towards the implementation of business policies and practices aimed towards the reduction of the impact of economic problems in the performance of their business. Depending on the extent of damage that the recession has caused the financial performance of a particular company, they have differing efforts in terms of redirecting their strategies and goals just to be able to combat the adverse effects of this economic downturn. Some efforts have proved to be effective. Unfortunately, some proved to be not effective which even forged some businesses to shut down or to merge with other businesses in o rder to battle the survival of the fittest in the environment of the worlds toughest businesses. In the field of economics, the term economic recession is described to an incident in the situation of a country wherein the gross domestic product reflects a negative growth in a period of at least two consecutive quarters  [1]  . Given the fact that the United States is the global leader when it comes to the consumption of goods and services, once this country experiences the phenomena of the recession, such will send shockwaves to the global economy and will inevitably affect the other countries in the world. When the United States experienced the phenomenon of the economic recession, many countries have been affected and their economy also experienced a downturn as the financial crisis hit their respective areas and shows effects which are negative to the business. Furthermore, in a scholastic work published by Leamer (2008), he stated that it is not enough that we only take a look at the two consecutive quarter negative growth of the gross domestic product in order to define recession. In his work, he mentioned that recession according to the National Bureau of Economic Research refers to that situation wherein there is a significant decline in activity spread across the economy, lasting more than a few months, visible in industrial production, employment, real income, and wholesale-retail trade. Such definition of the concept of economic recession takes a broader look on the phenomenon rather than paying dedicated attention on the decline of the nations gross domestic product. There are other academic works which contest the inclusion of only the gross domestic product in understanding economic recession. The occurrence of recession is not primarily concentrated only on one sector of the economy that is why there is a need to take a look at economy-wide measures in order to fully understand the theory which lies beneath such economic activity. The committee also holds that there are four indicators which wil be useful in understanding economic recession including employment, personal income less transfer payments, and volume of sales of the manufacturing and trade sectors, and industrial production.  [2]  This concept strengthens the assumption that understanding the occurrence of economic recession cannot be full by only looking at the gross domestic product, rather it also entails an understanding of other economic variables which may prove to be just as useful in understanding recession. The occurrence of every recession in the global economy can be characterized by the painful increase in the rate of unemployment and a decline in the personal income of the citizens of the nation  [3]  . Such aspects should not be disregarded in order to understand the realizable signs to claim that the economy is in trouble and it is in fact experiencing the occurrence of recession. In 2001, when economists claim that the United States is experiencing economic recession, such signs have been visible in their business performance. Although the occurrence of such has been hard to accept, there is no way but to do so to move on with global business. As mentioned earlier, to fully combat recession, various strategies have been formulated in order to improve business performance with the objective of bringing in additional profit for the company to provide a better living on its employees. While some efforts have proved to be useful, it is very unfortunate that some caused more troub le and resulted with a number of companies shutting down, especially the small ones and those which were hardly hit, causing a big number of employees to have lost their jobs. In the course of this paper, the researcher will study the concept of recession, including the variety in its definition and the signs which will be indicative of the economic trouble. While studying the concepts which underlie recession, the researcher will study the case to the situation faced by the British Airways, one of the worlds providers for air travel. Just like any other businesses, it cannot be denied that British Airways also experienced recession. The paper will examine how the company faced these problems, including the strategy which it has formulated to combat recession and also the long term effect which were brought about by the recession. RESEARCH PURPOSE As what has been mentioned, economic recession is a global phenomenon. The United States is a global leader in business, any economic downturn in the country will send shockwaves all over the world, affecting every local market. The main purpose of this research is to take a closer look on the impacts of global recession in the economy of United Kingdom, specifically in the business performance of British Airways. In the course of the research process, adhering to its main purpose, various economic indicators will be studied to know how it leads to the occurrence of economic recession. Furthermore, the core of the study will be focused on the business of British Airways and will look at how recession affects its global business in terms of sales, profitability, and sustainability of the business in the global market. RESEARCH QUESTION To fully understand the study, the researcher will be guided with several questions which will shape the foundation and backbone of this paper. The research questions will guide the researcher to be able to achieve desired results of this study. One of the questions which the research will try to answer will be those associated with recession itself including how it occurs, historical background, what are the signs and indications that the economy is indeed experiencing recession, and its variety of effects on different businesses globally. Moreover, with much more intensive focus, the research intends to answer question regarding the business performance and status of British Airways in the global market. The study will answer questions including those associated with the indications that the business of British Airways is indeed affected by economic recession and what are the efforts including business strategies and redirection of business practices done by the company to combat the inevitable effects brought about by recession. The main question which the research will consider will include main focus on the significant effects of recession with British Airways in terms of sales, profit, and sustainability. RESEARCH STRATEGY AND DESIGN The design of research which will be utilized in the conduct of this study will be a conclusive research. The researcher opted for this research design because of the belief that such design will be the most useful and most appropriate in the process of gathering relevant information and in provision of the effects which the occurrence of economic recession has brought in the business of British Airways. The conclusive research is a formal and structured research in which data will be subjected to quantitative analysis  [4]  . By quantitative analysis, the research will make use of presentation of relevant figures especially those related to sales and profit in order to fully grasp the effect of recession in the business. Moreover, the type of conclusive research which will be utilized in the study is descriptive research. Descriptive research is one of the two types of conclusive research wherein the major objective is the description of something, which normally refers to marke t functions or characteristics. In the case of this study, the researcher will describe the characteristics of the market of British Airways as reflected by the obvious results of economic recession. This will be made possible by providing a picture of the current situation of the company in the global landscape. The major assumption in which the research will operate is that these characteristics are brought about by the inevitable effects of global economic recession in every international business. It will include the description of various groups related to the critical operation of the business such as the consumers, salespeople, organizations, and the market areas. Through a description of these relevant groups, the researcher will find it easier to provide a look at the effects of recession as shown by the people who were affected the mostly by the occurrence of such situation. Such research design is also expected to provide an association of to until what degree is marketin g variables associated with such economic situation. The research strategy will attempt to answer the 6 Ws which are associated with the conduct of a descriptive, conclusive research. The first is concerned as to who were considered the market of the business, which pertains to the bulk of passengers flying through British Airways. Another one will be what information are relevant and can be obtained on these passengers such as on why, if ever, they no longer fly the said airline. The research strategy will also attempt to delve into when such incident began to happen, where, and why it leads to such situation. Lastly, the chosen research design will also provide information as to the ways in which the company combats the recession. RESEARCH METHODOLOGY The research methodology will include data collection and analysis which will provide a better understanding of the issue at hand. Because of the difficulty of obtaining first hand information from the groups which are directly concerned with British Airways including its market of passengers and the authorities or business divisions which are associated in the performance of business, the data will mainly come from secondary sources which will provide the backbone of the study. The primary sources of information will be useful in this study because they can provide first hand information on the problem because they have a direct connection to the business. Nonetheless, such will be hard to obtain and will entail dedicated time to be extracted. With that, the researcher opted to make use of secondary data sources which will also provide the same quality of information as primary data. The secondary data which will be collected in the purpose of this study will include those information extracted from secondary sources such as books, academic journal, scholastic articles, and information which will be derived from the website. It will include sources such as annual company reports and financial statements which will show relevant quantitative information which will prove the claim that the occurrence of economic recession has indeed affected the business operation of the company. This information were previously collected and used for other problems, other than the topic of the researcher. Nonetheless, to be assured that the use of such data is valid, the researcher will see to it that those data were used on studies which are of the same context as to that of this research. These data will be carefully analyzed, including methods to verify the veracity of the sources and steps to assure that the data are genuine and indeed reflective of the situation of the compan y. There is a need to careful select the sources so as to be assured of relevant information usage. A thorough analysis of these data will assure the researcher of a more coherent study with findings which are true. The data will be analyzed to derive information relevant to the economic situation and to input actual variables in business operation. If these data are not carefully analyzed, a weak research will result. With that, the researcher will put an utmost importance to data analysis to be assured of reaching the purpose and objectives of this study as these data try to answer the relevant research questions. VALIDITY AND COHERENCE Aside from a careful analysis and presentation of information relevant in the completion of this research, the researcher also puts an unwavering emphasis on the validity and coherence of the information. This means that the data which will be presented must reflect only what is relevant or essential in the study that is, economic recession and will omit information which are invalid, or those which are related to variables other than recession. The data must be also coherent with the purpose of the study to avoid deviance from the topic at hand. REVIEW OF RELATED CONCEPTS AND THEORIES Currently, British Airways is celebrating 90 years of flying with pride, providing its wide array of clients with excellent services on their flights resulting to ultimate customer satisfaction. To fully understand the current business of British Airways, it is also of utmost importance that we take a closer look at its extensive history. The very beginning of the rich history of this airline can be traced back as early as the beginning of the history of civil aviation pioneering on the days after thee First World War. After a period of 90 years since the worlds first schedule air service which happened on August 25, 1919, there have been a lot of changes in terms of air travel. Each decade was marked by new innovation and developments which brought British Airways into its current position in the global market. The first decade of the operation of the company was marked by launching the worlds very first international scheduled air service which flew between London and Paris. The se cond decade, however, was characterized by the merging of Britains four major fledging airlines to provide a better service to the flying public. On the other hand, the third decade was marked by the merging of small air transport companies in the United Kingdom to form the British Airways Limited which became the primary competitor of the merger formed by the four companies during the second century. Furthermore, on the fourth, fifth, and sixth decade up to the present of the companys operation, more and more innovations had been on the rise to make the airlines known in the global market in terms of provision of excellent air services  [5]  . It is said that British Airways is United Kingdoms largest international scheduled airline with flights to 148 key destinations globally at best located airports. It is also said to be one of the leading scheduled premium international airline in the world. The principal business of the company is in the airport in Heathrow, which is one of the premiere airports in the world and serving a relatively large geographical area. During the end of the year 2009, it is said according to company statistics that they have already flown a total of 33 million passengers in different key destinations globally. During the same year, the company said that they have earned nearly a total of  £9 billion in revenue which was almost 2.7% higher than the revenue which they have generated in the previous year. The traffic of passenger is said to have accounted to 87.1 per cent of the total revenue, 7.5 per cent is attributed to airline cargo and 5.4 pr cent is constituted from other business activitie s of the airline  [6]  . The main activities which were carried out by British Airways in the course of its business operation include undertakings on both local and international scheduled air services involving carriage of the traveling public, and freight and mail and provision of ancillary services. The fleet of the company operates in different places in the global landscape with 38 networks in the America, 9 in the United Kingdom, 67 in Europe,12 in Middle East and South Asia,15 in Africa and 7 in Asia Pacific. These networks of operation of British Airways only go to show that the company has intensified operations all over the globe. Such also connotes that once economic trouble comes along the way of their operation, it is indeed inevitable that the global operation on these locations will also be dramatically affected  [7]  . The occurrence of global recession has affected global markets and brought about bad performance for every global business. One of the most significant years in which the recession was felt in the global market was during the year 2001. When the World Trade Center bombing happened, the economy of the United States suffered and it sent shockwaves to different local economies which affected the global market as well. The effects brought about by recession did not only last during that year. Until the present, the effects of the said recession can still be felt by some while others have already recovered from the economic downturn in terms of realizable increase on their sales and profit. During the first month of 2009, it was declared that Britain was experiencing recession  [8]  . While some are actually trying hard to escape the adverse effects of recession, unfortunately for Britain its effects were highly realized and very visible in their economy. This was said to be one of th e most unfortunate events in the history of the countrys economy since the 1990s where it experienced the adverse effects of the episode of economic recession. When the British economy was declared to be officially in recession during January 2009, the Office for National Statistics announced that the gross domestic product of the countrys economy showed a decline of 1.5 per cent during the last quarter of the year 2008 and a .6 per cent drop during the previous quarter. Following the definition of recession, which connotes two quarters of consecutive drop in the gross domestic product of the country, such statistics would have been enough to show that indeed the British economy is suffering from a recession, just like most economies in the global landscape. Prior to this occurrence of recession, the biggest drop in the gross domestic product of Britain is said to be during the 1980s. The recession brought about in Britain is said to be because of the direct result of the credit crunch in the global market in which manifestations were seen and felt as early as August 2007 and seen to be worsening during the autumn of 2008. The central probl em is said to be the banks operating in Britain which is said to have invested their reserves into assets which were assumed to be illiquid, unsafe, and worthless. This uncertainty in the economic situation is said to be damaging into different businesses in Britain for reasons including: lack of credit opportunities which resulted into the companies weakened abilities to hire workers, make new investments, and start innovative projects. This prompted various economic activities to slow down and cut back on the two main drivers of growth which include investment and employment  [9]  . Although recession was just declared in Britain during the year 2009, the early effects of such economic occurrence have been already felt by British Airways during the year 2001 in which the economic downturn in the United States have sent shockwaves towards other economies in the globe. During the 2001-2002 Annual Report which was released by British Airways, it acknowledges the fact that they have been on a bad year of operation as shown by their sales and profit margins. In the statement of the chairman of the company during that year, it showed that the company incurred a pre-tax loss of 200 million pounds compared to the previous year in which they registered a profit amounting to 150 million pounds. To add to the consequences of the economic downturn, no interim dividend has been paid and the Board also recommended not paying any final dividend because they have been operating on a loss. The disappointing financial report in their annual operation that year did not at all surp rised the shareholders for it was somewhat expected because of the obvious situation in the global economy. That year was also regarded as the worst in their operations, although it has not been the most difficult by far for the management. On that same year, the people working behind the company were also affected. There has been a significant 20 per cent reduction in the workforce of the company brought about by thee economic crisis. Nonetheless, this reduction was done on a voluntary basis such as through elected severance and early retirement  [10]  . Moreover, also on the annual report for the year 2002, the Chief Executive Officer of British Airways strengthen the assumption that the company is experiencing financial crisis as brought about by the global recession. They considered that year to be the toughest in the history of their business and they also considered it as an impact of the terrorist attack in the United States affecting the general of the global economies. In their efforts to bring back the company in the landscape of profitability, they have formulated various strategies and policies which are all geared towards a better business performance in the upcoming years. They have formulated various activities in order to practice cost efficiency and used technology in order to develop a more convenient way for the public to be bale to book their flights  [11]  . When the economy of Britain was declare to be experiencing recession during January 2009, in the Annual Report released by the British Airlines the occurrence of such has also been acknowledged as shown by their business performance on that given operating year. The company also recognized that the global airline industry is highly and fiercely competitive subject into heavy global regulations, and highly exposed to the changes which were evident in the behavior and confidence of the consuming public. They are even more challenged with the current economic situation that is an economy which was suffering highly from the consequences of the occurrence of recession. The sharp declines in growth can also be highly associated with record prices in oil and commodity and the unprecedented financial crisis bringing about global recession. One of the most significant effects of recession in British Airways is seen on the market to which it caters. The most significant impact of recession in the airline company is reflected by its premium passengers who cut back sharply their travel spending in order to save money. Statistics shows a significant 2.8 per cent decrease in the traffic of premium passengers in British Airways. This is said to last longer because a recent survey showed that almost 47 per cent of businesses will incur fewer travels abroad in order to save. In addition to this, more passengers are opting to spend the holidays in the comfort of their own homes to cut back on costs  [12]  . Furthermore, in a statement which was released by the Chief Financial Officer of British Airways, he acknowledges the fact that during the previous year that their record profitability has put them into a condition in which they can combat economic slowdown. However, with the recession greeting the year 2009, it proved otherwise as they have suffered from dramatic losses in terms of sales and profit making them face the sharpest downturn in the course of the history of their business. When they have incurred profit in the previous year, they said that they are in a good position to combat economic downturn and the perpetual increase in the price of fuel. Unfortunately such did not come true and they instead suffer from the consequences of the poor condition of the economy in the global landscape. In order to control the effects of recession, measures to be able to combat market, credit, capital, and liquidity risks have also been implemented. The over-all management of these risks is focused on the unpredictability of the financial markets as it seeks to minimize the adverse effects brought about by the occurrence of recession. More efforts have been extended by the management to be bale to combat the adversity of recession and to bring back profit in the operation of the business of Britush Airways  [13]  . The business of British Airways during the turbulent time of economic recession can be better understood by taking a closer look at the key performance indicators of the business. Because of the unprecedented downturn in economic conditions, the company was not able to meet their financial target. In terms of their financial operating margin, a loss has been incurred attributed to soaring fuel prices and the economic recession  [14]  . In December of 2008, the International Air Transport Association a 2.5 billion dollars in terms of loss for the airline travel industry to be brought about by decrease in traffic because more people or travelers are cutting down on their costs because of the economic crisis. These were brought about by current economic conditions. After the economic downturn brought about in 2001, the airline industry recovered during the year 206 but that does not seem to be for long because eon January of 2009, recognizable losses in terms of profit have been incurred. Many of the worlds leading airlines, including British Airways, have been in poor financial health and are not well-equipped to combat the global recession.  [15]  The financial loss for the year 2008-2009 has been very drastic for the companys management and made them formulate strategies in order to combat the downturn. However, even though they are experiencing losses, they have not formulated any policy related to increase in air fare. The management believes that doing so will not help increase sales, rather it will just lower demand  [16]  . In the balance sheet which was released by the Annual Report of the British Airways, the total assets for the year 2008 totaled to 11,229,000 million pounds which was relatively lower compared to 11,938,000 million pounds during the year 2008. Moreover, their cash and cash equivalents for the year 2009 only totaled to 219 million pounds as against in 2008 where it was 433 million pounds  [17]  . These significant declines as reflected in the companys annual financial statements are enough testimonies to the fact that British Airways, just like any other company in Britain is indeed in the turmoil of economic recession. The management of British Airways acknowledges the fact that it has been a very difficult year for the financially but they are doing well financially. For the operating year 2008-2009, the company was able to incur a loss before tax amounting to 401 million pounds as compared to its profit before tax of 922 million pounds in the previous yea  [18]  r. In order to manage sustainability of business performance, the company is also geared towards various measures. One of which is to strengthen their name through their brand reputation. Their brand, being of significant commercial value, is taken well care so that it can be prevented from erosion and destruction from the publics perspective. Competition is also highly managed in order to achieve sustainability. The management ahs acknowledged the fact that indeed competition is very fierce in their industry. With that, they have formulated conscious efforts in order to get ahead of the competition and find their edge in the market. Moreover, other issues which were addressed in order to manage sustainability include employee relation, debt funding, management of environmental conditions, fuel prices and currency fluctuation, and deregulation among others  [19]  . In order to potentially manage sustainability despite an economy suffering from recession, the future direction of Brit ish Airways is also geared towards environmental related strategies which they hope will also increase their performance. The efforts of the company are focused towards adding value and enhancing their reputation in the global landscape while getting the trust of the shareholders and stakeholders in achieving a sustainable business  [20]  . Furthermore, to be able to combat the effects of such economic downturn, it is just but normal for British Airways and other businesses to invest on their intensive and conscious efforts to bring back profitability to the business. In the undeniably incredibly tough environment in which the airline operates, a dedicated focus is given towards pulling the business through the immediate crisis as it embarks on immediate preparations for better economic times. They have developed strategies which were mostly based on an upgraded customer service, competitive cost base, corporate responsibility, perpetual plans for growth, and other strategies which aim to improve the way they do business  [21]  .

Islam Does NOT Advocate Terrorism Essay -- ISIS, Terrorism 2015

A few years ago, an extreme offshoot of al-Qaeda proclaimed itself a caliphate in the Middle East. Today, the entire world has witnessed ISIS commit brutal crimes against humanity, including beheadings and other horrific acts of violence as well as its unlawful seizure and destruction of public and private property in Iraq, Syria and beyond. Because of this, many people think that Islam requires fighting non-Muslims, killing, invading other lands, etc. All these thoughts about Islam are totally wrong. Islam does not advocate any form of terrorism. Islam is not responsible for any terror operations done by any movements that relates itself to Islam. According to the text mentioned in the Holy Quran, killing a person is like killing all humankind, and saving a person is like saving all humankind. I wonder how could some people think that a religion that includes this text in its religious book is responsible for such crimes. The problem is not Islam itself, but the way people understand Islam and the way Muslims represent Islam. In fact, I think that many people should focus more on what’s the reason behind the spread of terrorism among Muslims, instead of focusing on the religion or country that produces these movements. In other words, they must realize tha... ...otect themselves against those who try to attack Muslims. Unfortunately, many Islamic extremists all over the Islamic world, especially Saudi Arabia, misunderstand this concept or try to use this concept as a justification to their bad practices against civilians in other western countries. In fact, I would prefer discussing the Lesser Jihad in a separated blog post incorporating Al Qa’eda as a terror movement who interpret Jihad the way they want. Works cited: Cook, David. â€Å"The Greater Jihad and the Lesser Jihad.† Understanding Jihad. Berkeley and Los Angeles: The Regents of the University of California, 2005. 35-39. Print.

Harshad Mehta Scam

Harshad Mehta scam: Harshad Mehta  was an Indian stockbroker and is alleged to have engineered the rise in the BSE stock exchange in the year 1992. Exploiting several loopholes in the banking system, Harshad and his associates siphoned off funds from inter-bank transactions and bought shares heavily at a premium across many segments, triggering a rise in the Sensex. When the scheme was exposed, the banks started demanding the money back, causing the collapse. He was later charged with 72 criminal offenses and more than 600 civil action suits were filed against him.He died in 2002 with many litigations still pending against him. 3. 1 Ready Forward Deal (RF): †¢ The crucial mechanism through which the scam was effected was the Ready Forward deal. †¢ The Ready Forward Deal (RF) is in essence a secured short term (typically 15 day) loan from one bank to another bank. The lending is done against Government Securities exactly the way a pawnbroker lends against jewelry. †¢ In fact one can say that the borrowing bank actually sells the securities to the lending bank and buys them back at the end of the period of the loan at (typically) a slightly higher price. It was this RF deal that Harshad Mehta and his associates used with great success to channel money from banking system. 3. 2 The Mechanics of the Scam: As explained above, a ready forward deal is, in substance, a secured loan from one bank to another.To make the scam possible , the RF had to undergo a complete change. In other words it practically had to become an unsecured loan to broker. This was wonderfully engineered by the brokers. To give a better understanding of the mechanism, the whole process has been segregated into 3 different parts. . The settlement process 2. Payment cheques 3. Dispensing the security 1. The settlement Process: ? The normal settlement process in government securities is that the transacting banks make payments and deliver the securities directly to each other. ? Dur ing the scam, however, the banks or at least some banks adopted an alternative settlement process which was similar to the process used for settling transactions in the stock market. ? In this settlement process, deliveries of securities and payments are made through the broker.That is, the seller hands over the securities to the broker who passes them on to the buyer, while the buyer gives the cheque to the broker who then makes the payment to the seller. ? In this settlement process, the buyer and the seller may not even know whom they have traded with, both being known only to the broker. ? There were two important reasons why the broker intermediated settlement began to be used in the government securities markets. ? The brokers instead of merely bringing buyers and sellers together started taking positions in the market.In other words, they started trading on their own account, and in a sense became market makers in some securities thereby imparting greater liquidity to the mar kets. ? When a bank wanted to conceal the fact that it was doing an RF deal, the broker came in handy. The broker provided contract notes for this purpose with fictitious counter parties, but arranged for the actual settlement to take place with the correct counter party. 2. Payment Cheques: ? A broker intermediated settlement allowed the broker to lay his hands on the cheque as it went from one bank to another through him.The hurdle now was to find a way of crediting the cheque to his account though it was drawn in favor of a bank and was crossed account payee. ? As it happens, it is purely a matter of banking custom that an account payee cheque is paid only to the payee mentioned on the cheque. In fact, exceptions were being made to this norm, well before the scam came to light. ? Privileged (corporate) customers were routinely allowed to credit account payee cheques in favour of a bank into their own accounts to avoid clearing delays, thereby reducing the interest lost on the amo unt. Normally, if a customer obtains a cheque in his own favour and deposits it into his own account, it may take a day or two for the cheque to be cleared and for the funds to become available to the customer. At 15% interest, the interest loss on a clearing delay of two days for a Rs. 100 crores cheque is about Rs. 8 lakhs. ? On the other hand, when banks make payments to each other by writing cheques on their account with the RBI, these cheques are cleared on the same day. ? The practice which thus emerged was that a customer would obtain a cheque drawn on the RBI favoring not himself but his bank.The bank would get the money and credit his account the same day. ? This was the practice which the brokers in the money market exploited to their benefit. 3. Dispensing the security: ? The brokers thus found a way of getting hold of the cheques as they went from one bank to another and crediting the amounts to their accounts. This effectively transformed an RF into a loan to a broker r ather than to a bank. ? But this, by itself, would not have led to the scam because the RF after all is a secured loan, and a secured loan to a broker is still secured. What was necessary now was to find a way of eliminating the security itself! There are three routes adopted for this purpose: 1. Some banks (or rather their officials) were persuaded to part with cheques without actually receiving securities in return. A simple explanation of this is that the officials concerned were bribed and/or negligent. A more intriguing possibility is that the banks' senior/top management were aware of this and turned a Nelson's eye to it to benefit from higher returns the brokers could offer by diverting the funds to the stock market. One must recognize that as long as the scam lasted, the banks benefited from such an arrangement.The management of banks might have been sorely tempted to adopt this route to higher profitability. 2. The second route was to replace the actual securities by a wort hless piece of paper – a fake Bank Receipt (BR). This is discussed in greater detail in the next section. 3. The third method was simply to forge the securities themselves. In many cases, PSU bonds were represented only by allotment letters rather than certificates on security paper. And it is easier to forge an allotment letter for Rs. 100 crores worth of securities than it is to forge a 100 rupee note!Outright forgery of this kind however accounted for only a very small part of the total funds misappropriated 3. Bank Receipt: ? In an RF deal, as we have discussed it so far, the borrowing bank delivers the actual securities to the lender and takes them back on repayment of the loan. In practice, however, this is not usually done. Instead, the borrower gives a Bank Receipt (BR) which serves three functions: ? The BR confirms the sale of securities. ? It acts as a receipt for the money received by the selling bank. Hence the name – bank receipt. ? It promises to deliver the securities to the buyer.It also states that in the meantime the seller holds the securities in trust for the buyer. ? In short, a BR is something like an IOU (I owe you securities! ), and the use of the BR de facto converts an RF deal into an unsecured loan. The lending bank no longer has the securities; it has only the borrower's assurance that the borrower has the securities which can/will be delivered if/when the need arises. BRs issued without Backing of Securities: ? As stated earlier, a BR is supposed to imply that the issuer actually has the securities and holds them in trust for the buyer.But in reality the issuer may not have the securities at all. ? There are two reasons why a bank may issue a BR, which is not backed by actual securities: 1. A bank may short sell securities, that is, it sells securities it does not have. This would be done if the bank thinks that the prices of these securities would decrease. Since this would be an outright sale (not an RF! ), the ban k issues a BR. When the securities do fall in value, the bank buys them at lower prices and discharges the BR by delivering the securities sold. Short selling in some form is an integral part of most bond markets in the world.It can be argued that some amount of shortselling subject to some degree of regulation is a desirable feature of a bond market. In our opinion, an outright sale using a BR, which is not backed by securities, is not harmful per se though it violates the RBI guidelines. 2. The second reason is that the bank may simply want an unsecured loan. It may then do an RF deal issuing a â€Å"fake† BR which is a BR without any securities to back them. The lending bank would be under a mistaken impression that it is making a secured loan when it is actually advancing an unsecured loan.Obviously, lenders should have taken measures to protect themselves from such a possibility During the scam, the brokers perfected the art of using fake BRs to obtain unsecured loans fr om the banking system. They persuaded some small and little known banks – the Bank of Karad (BOK) and the Metropolitan Cooperative Bank (MCB) – to issue BRs as and when required. These BRs could then be used to do RF deals with other banks. The cheques in favour of BOK were, of course, credited into the brokers' accounts. In effect, several arge banks made huge unsecured loans to the BOK/MCB which in turn made the money available to the brokers. 4. Breakdown of the Control system in scam: ? The scam was made possible by a complete breakdown of the control system both within the commercial banks as well as the control system of the RBI itself. ? We shall examine these control systems to understand how these failed to function effectively and what lessons can be learnt to prevent failure of control systems in the future. ? The internal control system of the commercial banks involves the following features: 1. Separation of Functions:The different aspects of securities tr ansactions of a bank, namely dealing, custody and accounting are carried out by different persons. 2. Counterparty Limits: The moment an RF deal is done on the basis of a BR rather than actual securities, the lending bank has to contend with the possibility that the BR received may not be backed by any/adequate securities. In effect, therefore, it may be making an unsecured loan, and it must do the RF only if it is prepared to make an unsecured loan. This requires assessing the creditworthiness of the borrower and assigning him a â€Å"credit limit† up to which the bank is prepared to lend.Technically, this is known as a counterparty limit. 5. Other Aspects of the scam: ? There are several aspects of the scam which are closely related to the securities markets, but which are different from the operational aspect of the markets. ? These pertain to information that can cause significant changes in the prices of securities as well as the information supplied by the commercial ba nks on their financial performance. ? On each occasion the coupon rate was increased by 1/2%, thereby raising the coupon rate from 11. 5% to 13% during this ten month period.The major implication of raising interest rate on new borrowings is that it would trigger a fall in the market prices of the old loans which are pegged at the old (lower) interest rates. The price of the 11. 5% Government Loan 2010 dropped by 3% to 5% with each coupon rate hike. If anyone has advance information about these changes in the coupon rates, he could make enormous amounts of riskless profit by short selling the old securities just before the announcement of rate hike and buying back (covering his position) after the prices have fallen. ? Somebody who took a short position of Rs. 00 crores before the coupon hike of September 1991 could have made a profit of Rs. 15 crores, practically overnight! Since several persons in the Finance Ministry and the RBI are likely to be aware of the impending hike in the coupon rate, the chance of leakage of this all important information is always there. ? There have been several allegations in this regard. However, it will probably be very difficult to prove with any degree of certainty that there was insider trading based on information about coupon rate changes, because of the size of the market. With a daily trading volume of Rs. 3000 – 4000 crores, it would have been very easy for anyone to take a position (based on inside information) of Rs. 500 or even Rs. 1000 crores without anyone suspecting anything untoward. 6. Impact of the scam: ? The immediate impact of the scam was a sharp fall in the share prices. The index fell from 4500 to 2500 representing a loss of Rs. 100,000 crores in market capitalization. [pic] ? Since the accused were active brokers in the stock markets, the number of shares which had passed through their hands in the last one year was colossal.All these shares became â€Å"tainted† shares, and overnight they became worthless pieces of paper as they could not be delivered in the market. Genuine investors who had bought these shares well before the scam came to light and even got them registered in their names found themselves being robbed by the government. This resulted in a chaotic situation in the market since no one was certain as to which shares were tainted and which were not. ? The government's liberalization policies came under severe criticism after the scam, with Harshad Mehta and others being described as the products of these policies. Bowing to the political pressures and the bad press it received during the scam, the liberalization policies were put on hold for a while by the government. The Securities Exchange Board of India (SEBI) postponed sanctioning of private sector mutual funds. ? The much talked about entry of foreign pension funds and mutual funds became more remote than ever. The Euro-issues planned by several Indian companies were delayed since the ability of In dian companies to raise equity capital in world markets was severely compromised. Harshad Mehta Scam Harshad Mehta scam: Harshad Mehta  was an Indian stockbroker and is alleged to have engineered the rise in the BSE stock exchange in the year 1992. Exploiting several loopholes in the banking system, Harshad and his associates siphoned off funds from inter-bank transactions and bought shares heavily at a premium across many segments, triggering a rise in the Sensex. When the scheme was exposed, the banks started demanding the money back, causing the collapse. He was later charged with 72 criminal offenses and more than 600 civil action suits were filed against him.He died in 2002 with many litigations still pending against him. 3. 1 Ready Forward Deal (RF): †¢ The crucial mechanism through which the scam was effected was the Ready Forward deal. †¢ The Ready Forward Deal (RF) is in essence a secured short term (typically 15 day) loan from one bank to another bank. The lending is done against Government Securities exactly the way a pawnbroker lends against jewelry. †¢ In fact one can say that the borrowing bank actually sells the securities to the lending bank and buys them back at the end of the period of the loan at (typically) a slightly higher price. It was this RF deal that Harshad Mehta and his associates used with great success to channel money from banking system. 3. 2 The Mechanics of the Scam: As explained above, a ready forward deal is, in substance, a secured loan from one bank to another.To make the scam possible , the RF had to undergo a complete change. In other words it practically had to become an unsecured loan to broker. This was wonderfully engineered by the brokers. To give a better understanding of the mechanism, the whole process has been segregated into 3 different parts. . The settlement process 2. Payment cheques 3. Dispensing the security 1. The settlement Process: ? The normal settlement process in government securities is that the transacting banks make payments and deliver the securities directly to each other. ? Dur ing the scam, however, the banks or at least some banks adopted an alternative settlement process which was similar to the process used for settling transactions in the stock market. ? In this settlement process, deliveries of securities and payments are made through the broker.That is, the seller hands over the securities to the broker who passes them on to the buyer, while the buyer gives the cheque to the broker who then makes the payment to the seller. ? In this settlement process, the buyer and the seller may not even know whom they have traded with, both being known only to the broker. ? There were two important reasons why the broker intermediated settlement began to be used in the government securities markets. ? The brokers instead of merely bringing buyers and sellers together started taking positions in the market.In other words, they started trading on their own account, and in a sense became market makers in some securities thereby imparting greater liquidity to the mar kets. ? When a bank wanted to conceal the fact that it was doing an RF deal, the broker came in handy. The broker provided contract notes for this purpose with fictitious counter parties, but arranged for the actual settlement to take place with the correct counter party. 2. Payment Cheques: ? A broker intermediated settlement allowed the broker to lay his hands on the cheque as it went from one bank to another through him.The hurdle now was to find a way of crediting the cheque to his account though it was drawn in favor of a bank and was crossed account payee. ? As it happens, it is purely a matter of banking custom that an account payee cheque is paid only to the payee mentioned on the cheque. In fact, exceptions were being made to this norm, well before the scam came to light. ? Privileged (corporate) customers were routinely allowed to credit account payee cheques in favour of a bank into their own accounts to avoid clearing delays, thereby reducing the interest lost on the amo unt. Normally, if a customer obtains a cheque in his own favour and deposits it into his own account, it may take a day or two for the cheque to be cleared and for the funds to become available to the customer. At 15% interest, the interest loss on a clearing delay of two days for a Rs. 100 crores cheque is about Rs. 8 lakhs. ? On the other hand, when banks make payments to each other by writing cheques on their account with the RBI, these cheques are cleared on the same day. ? The practice which thus emerged was that a customer would obtain a cheque drawn on the RBI favoring not himself but his bank.The bank would get the money and credit his account the same day. ? This was the practice which the brokers in the money market exploited to their benefit. 3. Dispensing the security: ? The brokers thus found a way of getting hold of the cheques as they went from one bank to another and crediting the amounts to their accounts. This effectively transformed an RF into a loan to a broker r ather than to a bank. ? But this, by itself, would not have led to the scam because the RF after all is a secured loan, and a secured loan to a broker is still secured. What was necessary now was to find a way of eliminating the security itself! There are three routes adopted for this purpose: 1. Some banks (or rather their officials) were persuaded to part with cheques without actually receiving securities in return. A simple explanation of this is that the officials concerned were bribed and/or negligent. A more intriguing possibility is that the banks' senior/top management were aware of this and turned a Nelson's eye to it to benefit from higher returns the brokers could offer by diverting the funds to the stock market. One must recognize that as long as the scam lasted, the banks benefited from such an arrangement.The management of banks might have been sorely tempted to adopt this route to higher profitability. 2. The second route was to replace the actual securities by a wort hless piece of paper – a fake Bank Receipt (BR). This is discussed in greater detail in the next section. 3. The third method was simply to forge the securities themselves. In many cases, PSU bonds were represented only by allotment letters rather than certificates on security paper. And it is easier to forge an allotment letter for Rs. 100 crores worth of securities than it is to forge a 100 rupee note!Outright forgery of this kind however accounted for only a very small part of the total funds misappropriated 3. Bank Receipt: ? In an RF deal, as we have discussed it so far, the borrowing bank delivers the actual securities to the lender and takes them back on repayment of the loan. In practice, however, this is not usually done. Instead, the borrower gives a Bank Receipt (BR) which serves three functions: ? The BR confirms the sale of securities. ? It acts as a receipt for the money received by the selling bank. Hence the name – bank receipt. ? It promises to deliver the securities to the buyer.It also states that in the meantime the seller holds the securities in trust for the buyer. ? In short, a BR is something like an IOU (I owe you securities! ), and the use of the BR de facto converts an RF deal into an unsecured loan. The lending bank no longer has the securities; it has only the borrower's assurance that the borrower has the securities which can/will be delivered if/when the need arises. BRs issued without Backing of Securities: ? As stated earlier, a BR is supposed to imply that the issuer actually has the securities and holds them in trust for the buyer.But in reality the issuer may not have the securities at all. ? There are two reasons why a bank may issue a BR, which is not backed by actual securities: 1. A bank may short sell securities, that is, it sells securities it does not have. This would be done if the bank thinks that the prices of these securities would decrease. Since this would be an outright sale (not an RF! ), the ban k issues a BR. When the securities do fall in value, the bank buys them at lower prices and discharges the BR by delivering the securities sold. Short selling in some form is an integral part of most bond markets in the world.It can be argued that some amount of shortselling subject to some degree of regulation is a desirable feature of a bond market. In our opinion, an outright sale using a BR, which is not backed by securities, is not harmful per se though it violates the RBI guidelines. 2. The second reason is that the bank may simply want an unsecured loan. It may then do an RF deal issuing a â€Å"fake† BR which is a BR without any securities to back them. The lending bank would be under a mistaken impression that it is making a secured loan when it is actually advancing an unsecured loan.Obviously, lenders should have taken measures to protect themselves from such a possibility During the scam, the brokers perfected the art of using fake BRs to obtain unsecured loans fr om the banking system. They persuaded some small and little known banks – the Bank of Karad (BOK) and the Metropolitan Cooperative Bank (MCB) – to issue BRs as and when required. These BRs could then be used to do RF deals with other banks. The cheques in favour of BOK were, of course, credited into the brokers' accounts. In effect, several arge banks made huge unsecured loans to the BOK/MCB which in turn made the money available to the brokers. 4. Breakdown of the Control system in scam: ? The scam was made possible by a complete breakdown of the control system both within the commercial banks as well as the control system of the RBI itself. ? We shall examine these control systems to understand how these failed to function effectively and what lessons can be learnt to prevent failure of control systems in the future. ? The internal control system of the commercial banks involves the following features: 1. Separation of Functions:The different aspects of securities tr ansactions of a bank, namely dealing, custody and accounting are carried out by different persons. 2. Counterparty Limits: The moment an RF deal is done on the basis of a BR rather than actual securities, the lending bank has to contend with the possibility that the BR received may not be backed by any/adequate securities. In effect, therefore, it may be making an unsecured loan, and it must do the RF only if it is prepared to make an unsecured loan. This requires assessing the creditworthiness of the borrower and assigning him a â€Å"credit limit† up to which the bank is prepared to lend.Technically, this is known as a counterparty limit. 5. Other Aspects of the scam: ? There are several aspects of the scam which are closely related to the securities markets, but which are different from the operational aspect of the markets. ? These pertain to information that can cause significant changes in the prices of securities as well as the information supplied by the commercial ba nks on their financial performance. ? On each occasion the coupon rate was increased by 1/2%, thereby raising the coupon rate from 11. 5% to 13% during this ten month period.The major implication of raising interest rate on new borrowings is that it would trigger a fall in the market prices of the old loans which are pegged at the old (lower) interest rates. The price of the 11. 5% Government Loan 2010 dropped by 3% to 5% with each coupon rate hike. If anyone has advance information about these changes in the coupon rates, he could make enormous amounts of riskless profit by short selling the old securities just before the announcement of rate hike and buying back (covering his position) after the prices have fallen. ? Somebody who took a short position of Rs. 00 crores before the coupon hike of September 1991 could have made a profit of Rs. 15 crores, practically overnight! Since several persons in the Finance Ministry and the RBI are likely to be aware of the impending hike in the coupon rate, the chance of leakage of this all important information is always there. ? There have been several allegations in this regard. However, it will probably be very difficult to prove with any degree of certainty that there was insider trading based on information about coupon rate changes, because of the size of the market. With a daily trading volume of Rs. 3000 – 4000 crores, it would have been very easy for anyone to take a position (based on inside information) of Rs. 500 or even Rs. 1000 crores without anyone suspecting anything untoward. 6. Impact of the scam: ? The immediate impact of the scam was a sharp fall in the share prices. The index fell from 4500 to 2500 representing a loss of Rs. 100,000 crores in market capitalization. [pic] ? Since the accused were active brokers in the stock markets, the number of shares which had passed through their hands in the last one year was colossal.All these shares became â€Å"tainted† shares, and overnight they became worthless pieces of paper as they could not be delivered in the market. Genuine investors who had bought these shares well before the scam came to light and even got them registered in their names found themselves being robbed by the government. This resulted in a chaotic situation in the market since no one was certain as to which shares were tainted and which were not. ? The government's liberalization policies came under severe criticism after the scam, with Harshad Mehta and others being described as the products of these policies. Bowing to the political pressures and the bad press it received during the scam, the liberalization policies were put on hold for a while by the government. The Securities Exchange Board of India (SEBI) postponed sanctioning of private sector mutual funds. ? The much talked about entry of foreign pension funds and mutual funds became more remote than ever. The Euro-issues planned by several Indian companies were delayed since the ability of In dian companies to raise equity capital in world markets was severely compromised.

John Lennon Quote Essay

John Lennon Quote Essay John Lennon Quote Essay Word Count: 250+ According to John Lennon, â€Å" Life is what happens while you are making other plans†. Little do you all know this is true because what goes on while you are sitting there minding your own business? Life does not stop when you stop, life moves on and never stays the same. There may be some people out there who really do think that the world revolves around them, but little do they know its all just a lie. And honestly you never know what you miss because every second that you close the door, a million more open for you to explore. Quite frankly life will never again be the same as we know it because every mille-second, something changes whether it be a person whom you think you have known all your life or a person that you might meet in your mere future. The changes will add up quickly, and no matter how hard you try nothing can ever stay the same. You never know something so dramatic may change in an instant or it could take some time. For instance transfe rring high schools last November was a big leap for me, I can not tell you enough how hard it was to get used to not being around the people I grew up with. Although, now I have friends here that I can count on to have my back yet I wills always have friends from my previous school that will always be there too. I never knew how difficult things were until I was the one making the big sacrifice and leaving all I had ever known behind me. I never would have thought about moving or not graduating with all