• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Is it fair to blame investment bankers for the global downturn ?

Extracts from this document...

Introduction

´╗┐Is it fair to blame investment bankers for the global downturn? It seems to be quite easy to jump on the ?bank-wagon? and blame investment bankers for the current global economical downturn. The current downturn in question is one which is generally accepted by the financial industry to have started in 2007, and was officially dated December 2007 by the National Bureau of Economic Research (NBER).The question is, whether this industry and its bankers are the root cause, and if so, could they have avoided it? The word ?bankers? can imply different meanings to different people, so to clarify, when I use the word ?bankers? in this text, I am referring to investment bankers. The first article I analysed is by Jonathan Wang, Ph.D., and entitled ?Real Causes For US Financial Meltdown and Global Recession? (March 2009). Wang is the President of Amlink, a multi-million dollar company which provides links in trade and politics between China and the United States of America (USA). He is based in Michigan, USA. I will be comparing it to John Gapper?s ?Promises that proved ultimately empty? (January 9th 2012)[1]. Gapper is the assistant editor and chief business commentator for the Financial Times newspaper and website. He is based in New York, USA. Wang has an opinion that the bankers are unaccountable as the blame is with the governments whereas Gapper has an antipodal view in line with the assessment Wang gave, stating ?it was within banks where the crisis emerged and where its heart still lies?. ...read more.

Middle

In the United States he was awarded the Best Columnist Citation by the Society of American Business Editors & Writers; and in the UK he was award with the Best Business Columnist at the Comment Awards. He also has a degree in Philosophy, Politics and Economics from Oxford University. Both articles have strengths and weaknesses, and it is better to analyse these sections rather than attacking the author (ad hominem). The chain of argument in both articles has been constructed quite rigidly, and allows the statements made by the respective authors to reach their necessary conclusions. Wang concludes that increasing tax on the top income groups becomes necessary as the government must focus on stabilization rather than expansion. His main reasoning for this is ?when the share of total income going to [the] top 10% reached 50%, the capital market crashed in the United States?. He also has an intermediate conclusion that the ?Government?s improper interventions in the capital market before both episodes of crisis had accelerated the extreme inequalities and ultimately intensified the crisis.? Wang reasons that ?It is the extreme inequality that has resulted in the great depression in 1929 and again caused the global recession today?. This is fallacy of the single cause as the recession in 1929 has three are three general theories on what caused the 1929 depression, Keynesian, Monetarist & Austrian. ...read more.

Conclusion

His perspective of social inequalities is only US based but I can understand his assumptions that expansion was high and the consequence of this led to social inequalities. This has happened elsewhere, such as during the Chinese Mao era of 1949-1976, in particular during the Great Leap Forward (1958-61). Gapper?s perspective has persuaded me that he is of more expertise than Wang as he is so influential in finance media. His analysis was concise and constructive. He quoted many important figures in his article including an executive director of the Bank of England; Chairman of the Financial Services Authority; and a Professor of Entrepreneurship at MIT Sloan school. His arguments are quite strong however he does go a stage of a circular argument where he should be concluding his article. His evidence did strengthen my perspective however Wang?s comments led me to read more into financial theories, especially of those surrounding the 1929 Great Depression. He managed to intrigue me into the history of the financial world and I do believe that 1929 and 2007 are very similar in the cause, but the cause is the banking industry, not the housing market. Wang has only commented on the United States but his views may apply worldwide however his lack of evidence weakens his perspective as it is too narrow. My final conclusion is that investment bankers were the major, not the only, cause of the global downturn which started in 2007, and we have to share the blame for the current economical state ________________ [1] [2] [3] ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our AS and A Level UK, European & Global Economics section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related AS and A Level UK, European & Global Economics essays

  1. Where does the World Trade Organisation fit in the overall scheme of international public ...

    Finally, investment rules are already built into the WTO: strongly in GATS through "commercial presence" (mode three of supply); also in TRIPS; and weakly on the goods side in the agreements on TRIMS and Subsidies and Countervailing Measures. Before negotiations start, the Ministerial Declaration charges the Working Group on the

  2. Free essay

    does uk housing market warrant government intervention

    Due to low wages often attained by people early in there career not be able to match the sky-high mortgage repayments. This problem is only likely to worsen; in Sussex the average yearly wage increase of 25-30 year olds is 3%.

  1. Comprehensive Anatomy of China

    Most of the country's inhabitants (92 percent) are considered ethnic Han Chinese. Approximately 5,000 years ago people began settling the plains and plateaus of northern and central China. These people eventually absorbed the residents of southern China 2,000 years ago, which spawned a shared culture and the people known today as Han.

  2. Peoples' republic of China

    When the foreign controlled operations are sited in one of the special economic zones, no export tariffs are levied by the government of the PRC (Crane, 1990, p. 84). Goods further imported into the PRC are subject to tariffs in some instances.

  1. Analyse the Strengths and Weaknesses of Spain by 1516

    Although some nobles maintained control of regional politics, which was a big threat to the crown as they had no standing army, whereas most nobles kept retainers. An example of when the crown and nobility worked together to ensure the stability of the country was the Granada between 1482 and 1492.

  2. Flower Industry in Netherlands

    Though domestic consumers are less demanding, they play a very important role in the consumption of lower quality and surplus production to support the industry. * Strong and sophisticated demand from other European countries As a member of EU, Dutch flowers can flow freely without tariffs in most wealthy markets within Europe.

  1. 'An economic giant but a political dwarf': Is this a fair assessment of Germany ...

    They simply allowed the USSR to shift its own borders and those of Poland 200 miles to the east and established four zones of occupation to be ruled by 'four-power' authority. Before the end of 1955, such zones and the four-power authority over Austria would largely be dissolved, to allow

  2. Business Risk Analysis Global Business Plan for Global Builders - Manufactured Low Income Housing ...

    External credit will remain dispensable to Argentina for a period of about two years. In 2001, after 2 years of stagnation, caused by the financial crisis of emerging markets and the Brazilian devaluation, the Government has launched an economic plan aiming to invigorate the economy, based on two main concepts:

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work