Economics

Federal Reserve also known as the Federal Reserve System is the United States formal system of central banking. It was established in 1910 and through the Federal Reserve Act of 1913 it was enacted as a constitutional monetary institution. The Act came to be following bank runs and panic particularly the 1907 panic. The responsibilities and roles of Federal Reserve have expanded   over time and the systems structures have also evolved to encompass numerous responsibilities. The Great Depression is one of the many occurrences which have contributed significantly in changing and shaping the system to what it is today. This work will explore the specific roles played by the Federal Reserve with emphasis on open market operations, discount and federal funds rate and the required reserve ratio and depository expansion. The application of the above monetary regulatory tools in the economy today will also be discussed.

Open market operations
This is defined as the basic tool used by the Federal Reserve to regulate bank reserves supply. It therefore encompasses the sales and purchase of financial instruments which in many cases involves issued securities by the Federal Agencies, the US Treasury, and enterprises which are government sponsored. Under the supervision of FOMC, open market operations are undertaken by the trading domestic desk of Federal Reserve Bank. The Federal Reserve Bank uses the open market operations to regulate the amount of money in circulation in the economy. It therefore involves taking money out and putting money into the banking system.

In order to take money out of the banking system, the Federal Reserve sells government securities to the banks. Government securities are simply a piece of paper with the details that the government owes a certain sum of money to the bank. Hence, the Federal Reserve drains money from the banking system by issuing such securities. With less money in reserves, banks are discouraged from lending to the public which ensures that the amount of money in the hands of the public reduces.  In order to inject more money into the economy, the government buys the securities sold to banking system which increases the strategic reserves of banking institutions. With more money in the strategic reserves, banks are encouraged to lend to the public which increases the money in the hands of the public. The term open market is used to refer to this tool because different dealers compete for prices in an open market.

Discount and Fed Funds Rate
Feds Funds rate is defined as the rate of charges for overnight loans which banks advances to each other. The reserves are held by Fed and therefore banks can decide to lend to each other drawing funds from Fed. The Feds Funds Rate is not determined by Fed but it is actually determined by the market. On the other hand, discount rate is the rate of interest set by Fed for any amount of money borrowed by member banks in an overnight.  The objective of using a discount rate is to encourage member banks to use other alternative means of funding and only use the discount rate option as the last resort. By using the two rates above, Fed helps to stir up economic activities. For example, when the economic activities are slow or on a downward trend, Fed lowers the two rates above to encourage the public to borrow making it easier for businesses and consumers to build and buy. Hence, more money is injected into the hands of the public. On the other hand, when economic activities are on a higher note, Fed raises the rates above to discourage the public from borrowing and thus money is drawn from the hands of the public. This helps in curbing inflation, depression and recession.

Required Reserve Ratio and Depository Expansion
This is another instrument used to regulate money supply in the economy. It is defined as the balance that depository institutions are required to hold which they also trade in the financial market through lending to the public and borrowing from the Fed Reserves. The responsibility of setting the required reserve ratio is bestowed upon the Board of Governors. The purpose of having the required reserve ratio is to ensure that the banking system has sufficient funds to advance to the public as loans in order to stimulate the economy as well as remaining profitable in the business. In the same regard, Depository Expansion is used for the purpose of ensuring that banks can handle large amounts of money from the public as deposits. This ensures that excessive money in the hands of the public ends up in the banks as deposits to curb inflation.

In the current economic situation, Fed can successfully use the above tools to stimulate economic activities. It is worth noting that the country is recuperating from the effects of recession characterized by slow economic activities.  In this respect, expansionary monetary policies which entail buying of securities from the banking system through open market operations in order to inject more money into the economy, lowering discount and Fed Funds Rate to encourage the public to borrow money from banks in order to buy industrial goods and lowering the reserve ratio to ensure that banks use more money in their reserves to lend to the public are some of the measures which can be undertaken to address the current economic situation in the country. It is imperative to note that money is the mostly used medium of exchange in the market and hence injecting more money into the hands of the public today would encourage the public to buy more capital and consumer goods. Hence production would also be stimulated bringing back the economy on a stable path.

In conclusion, the three monetary regulatory tools above are used by Fed to ensure that stable prices of goods and services are achieved in the economy. In addition, they are also used to achieve maximum production of goods and services in order to create more employment. It is important for the policy makers today to understand the proper working of the above tools in order to utilize them to stimulate economic activities to end the effects of the recession.  

From 1970 to 1993, we can observe an exponential growth in almost all the categories of national health expenditure. Some of the categories have initial year growth rate even exceeding 100, hence showing the doubling and tripling of expenditure figures. Growth rates of nursing home care, home health care, prescription drugs and program administration have gone as high as 127, 529, 161 and 169 respectively. However after 1997, the expenditure in all the categories was increasing at moderate rates but they are on the rise constantly. As we approach the year 2003, we observe the decrease in growth rates of most of the categories except public health activities which has grown at 164. The level of total NHE, NHE per capita and NHE as percentage of GDP has increased YoY but their growth rates have stabilized at 5.76, 4.43 and 2.68 respectively, showing a slump in the growth rates.
The cost of healthcare has increased because of extensive utilization by people however the price of medical care services can also strongly be related to the research and development costs and efforts. This is the era of extensive scientific research where millions of dollars are committed and success rate is very low. Every 4 of 5 researches in medicines fail. The research which gets successful is patented hence the company gets monopoly in controlling prices. (U.S. Health Care Today, 2010)
NHE as percentage of GDP has doubled because of two factors. First is the ageing population of US. According to statistics, the US population grew at 1.2 while people above 65 grew at 2 and those above 75 grew at 2.8. Secondly, increasing number of US population is getting obese. In 2003, 34 of the population is obese as compared to 13 in 1960. Obesity is associated with heart diseases, cancer and diabetes.

Considering the trends, we can observe decrease spending in prescription drugs as many drugs are given the over the counter status. Moreover people are more inclined to buy low cost generic drugs. We also observe drastic increase in public health activities because of increased subscription in Medicaid and Medicare program due to ageing population. This increase in public spending will also boost spending in nursing home care, home health care and hospital care.

Information asymmetry in the healthcare marketplace
Information asymmetry is a scenario in which a portion of the healthcare participants has correct information while the other falls short of information.  For example, a doctor could be aware of patients health status while the patient may fall short of this information.  In this case, transactions may be incomplete.  There are different models of information asymmetry. For example, there could occur adverse selection in which the ignorant party lacks information on health hazards associated.

Patients at times end up making uninformed decisions like the failure to take preventive care on their health status without the knowledge of its effect in the long run.

In such a case, since the agents could be aware of the patients state of health and the precautions expected, the patient may get no insurance repayments for the negligent act he committed. However in some instances, the moral hazard on the side of the patient may indicate higher cost of medical care.
The insurer is responsible for ensuring that the cost coinsurance is kept as low as possible. Unfortunately, in most case they only act on the basis of value based cost sharing with ignorant patients instead of advising the patients on the true costs and benefits of different forms of health care offered by different medical practitioners.  Information dissemination is easier for the insurer and cheaper than sharing cost with the patients.

Scales are also set to show the levels of treatment required for certain patients (Philip, 2004). In case the provider may not provide the required care, then they will be faced with higher cost implications towards the coverage of the same.

Business ventures will present with them revenue and costs. But ultimately they will yearn to break even. In breaking even rarely do we consider environmental depletion costs. Uranium mining in Saskatchewan has been these odds by policy. While global warming is a global concern, Uranium mining has indeed polluted the environment but reduced the encroaching effects of the same. Uranium has provided an emission free source of energy. As I endear to put you in the picture about source of energy, I need caution that it has abounding side effect. Uranium mining has two dangerous emissions. Radon largely associated with lung cancer. Unfortunately cancer has no treatment. While reactive iodine is associated with redundancy in child growth if they get to the womb. Therefore as we discuss, we should not lose sight of this. Like any existing venture, and like a coin, when tossed it does settles on the head or tail.

Uranium had had no value until the 20 and 21st century. It has two properties that its discovery put to utility. Uranium is radioactive and fissionable in nature. Its fissionability aspect is utilized in energy production while radioactivity is used in production of nuclear weapons. It marginal utility is derived from these two aspects. Besides the iodine mined out of uranium is used in the salt making process. This iodine added in salt helps in the prevention of goiter. Radium is normally used in the radiotherapical process of burning cancerous cells. This three uses justifies the fact for the continued mining of uranium.

The government has such an elaborate framework that ensures all the concerns that arising from the mining of Uranium is dully and adequately addressed. The framework is such that before the mining process picks off, an environmental consultation and planning process in undertaken as an appraisal measure. So elaborate the appraisal is such that all the stakeholders are dully involved in the decision making process. The regulatory and appraisal framework is provided hereunder

Government framework on the mining of Uranium in Saskatchewan
The above schedule shows the governments commitment towards ensuring that as gains are reached and profits made the general human welfare in terms of health remains high.

The Key in any countrys economic policy is wealth creation and creation of employment to its citizens. Before mining is undertaken exploration, is done. This process of exploration costs the mining companies 52.7 millions. The reclamation process costs 6.9 millions. Capital expenditure is estimated to cost 344 millions. In total the preliminary process costs 403.6 millions. A large proportion of the said amount is paid to the locals in labor costs. The incomes of the residents of Saskatchewan are therefore increased economically raising the citizens marginal propensity to consume and the subsequent marginal propensity to save (invest).

The government of Saskatchewan is then paid royalties and taxes. This is done at three levels the provincial governments, local government and the federal government. Total taxes and royalties paid are 247.1 millions. The proportions are represented in the chart hereunder.

EMBED MSGraph.Chart.8 s
The chart shows how the government receives taxes and royalties at different levels. If this income is distributed equally to citizens then the per capita income of the residents of Saskatchewan is relatively high. Well these amounts are paid to government. The ultimate economic implication here is that the government then invests these monies in the development of the infrastructure roads, electricity and telecommunication. The welfare of the general citizenry is improved drastically. Besides the amounts being spend on charities is equally high, in a way this helps create employment in charitable institutions. Education forms major policies in most economies given that the uranium industries contribute to this important course I feel it is a worthwhile venture.

The scholarships offered try to address the issue of bringing about equality through supporting the marginalized subsequently the workers in this sector of the economy have their marginal propensity to consume and save increased. In earnest therefore the entire uranium mining process becomes very economical. The consumer increased ability to consume means the government is most likely going to earn even high revenue in form of value added tax. These are clear indicators that the mining industry not only benefits the citizens of Saskatchewan but also Canada and the entire world. Currently there are three major uranium mining centers within Saskchewean province Eagle Point, McArthur River and McClean Lake. Saskatchewan is the largest uranium producer in the world currently. Saskchewean accounts for the worlds 30 uranium supply annually. The mined uranium is normally sold to electrical company producing companies in Canada, Europe, Far East and the United States. The Saskatchewan uranium firms are expected compete with other firms effectively over the world.

Tietenberg, T  Lewis, L. (2009). p 62
Evidently, the mining is benefiting the entire world and it is relatively environmental friendly

Natural resource economies
Global warming is threatening the world climate. The ozone has been highly depleted. This is mainly caused by increased emission of carbon dioxide into the atmosphere. These carbons are mainly from industries that use coal as their main if not soul source of energy. While uranium has a number of relative disadvantages, it is worthwhile noting that these disadvantages are combatable. The tailings for example, can be collected centrally and put to effect use. An effective mechanism should be invented to ensure the tailing do not have their way into the atmosphere and water. They are these tailings that when taken in through water or inhalation may bring cancer. In view of this such a policy would be much relieving to the economy.

While it is conceivable that the entire mining process has effects on the environment as has been mentioned above, the effects are to a large extend controllable through an extensive environmental policy. Wherein, mining industries should be obliged to ensure the tailing do not have their way into rivers and other water sources. Besides, the miners should be provided with protective devices such as can assist control inhaling of radon gas. And still, where it can not be controlled 100 then there should be a time limit for one to serve in the mines. Such policy will reduce the amounts of radon one may take in at the time of leaving the mines. Consequently, the companies should e compelled by government to initiate an elaborate insurance scheme for workers and a pension scheme. The governments policy of non involvement in the uranium industry should not imply a strict hands-off policy. If this has to be the case then strong regulatory measures need to be put in place. Such are the concerns of the Canadian leadership

By not acknowledging the full health consequences of uranium mining the government offloads the responsibility to compensate or provide justice to the Den First Nation. To date consultations with government are still underway with anticipated costs for remediation in the millions of dollars. An agreement about cause and affect has not yet been reached.

(Joan Russow  HYPERLINK httpPEJ.org httpPEJ.org)
Ultimately, therefore there should be political and economic consensus, on the uranium mining policy. Rather, companies should not be driven by profits but by social welfare.

It is worthwhile noting that the Canadian industries put employee welfare as a major priority, besides they also ensure the emission are as per the optimum set level. On the backdrop of these I feel strongly the uranium mining industry in well manned and have cost effective policies in place. There are as many linkages between the environment and the economy as there are the uses of uranium and uranium products. Analyzing the costs incurred from the table below it is clear the environment issues are well taken care through mitigation policies

Table showing expenditure revenue against expenditure in Saskatchewan
Revenues 1985619956 000s current C   of total revenues  expenditures
Royalties 203672 49
Surface lease fees 1289 0
Property taxes 11609 3
Mineral properties 5420 1
CCT  CCT surcharge1 79382 19
Taxes 101277 24
Total revenues 414210 100
Spending
Environment 8685 16
Energy and mines 5513 10
Labor 1245 2
Education 1771 3
Economic development 1612 3
Highways 20997 39
Other departments2 6926 13
Other expenditures 7574 14
Total spending 54324 100
Revenueexpenditure analysis            1985619956 Current C
Total revenues in constant (1995) C                                                                        444757
Total expenditures in constant (1995) C   58743
Net benefits in constant (1995) C   386014
Ratio of revenues to expenditures     7.57
1 CCT  Corporate Capital Taxes.2 Other department includes Justice, Health, Finance, Indian and Mtis Affairs, Northern Affairs, Public Service Commission, SaskWater and Executive Council.
Source Saskatchewan Environment and Resource Management, Final Report, Information from the Government of Saskatchewan requested by the Federal Provincial Panel on Uranium Mining in Northern Saskatchewan for the Cigar Lake and McArthur River Projects, Regina

To begin with, the mining of uranium does create employment to the resident of North Sask. These employees are paid either wages or salaries. The income they get is used to purchase foodstuffs, clothes, machinery and other essentials. To each the government gets revenue, unless it is a Zero-rated good. In earnest, they do contribute to the government Gross Domestic Product. Besides the savings these residents make are used in investment prospects, these investments translate into job creation for those not in employments yet. Secondly, government is paid taxes and royalties by the mining companies, these monies are utilized in the development of roads, telecommunication, water, sewage, health facilities, educational institution and other vital infrastructure. The developed infrastructure will trigger foreign investments which translate to job creation. Yet still the very hard-earned income is expected to treat ailments brought about by the opportunity. For instance where cancer is contracted the cost is so high. High costs are associated with the initial treatment and are the burden born by the cancer patients  who survive throughout the year. (26,042) is incurred in the first quarter, and then another nine months worth of maintenance care costs (0.75  11,325  8,494) during the remainder of the year are incurred. The total cost of treatment for the first year incurred by the patients who survive is therefore 26,042  8,493  34,535.

Patients who succumb to lung cancer during the first year of the disease have to contend with the initial treatment cost as well as a subsequent terminal care costs for the remaining 3 months of their lives (because those who die are assumed to die midyear). Total   costs   during   the   first   year   post-diagnosis   in   this   case are   therefore 26,042  (0.5  30,112)  41,098. (Baker et al., 1989, p14).
These costs are relatively high, however, a good and effective preventive measure should be put in place to avoid getting into these costs. Baker asserts that there is a high likelihood of preventing cancer and there is no need to wait to meet all these costs.

Additionally, given that the energy from uranium is relatively cheap, then this is the way to go. Coal energy produces a lot of emissions into the atmosphere thereby contributing to the depletion of the ozone layer. This is not only a threat to humankind but also other living organisms. If we adopt uranium energy the implication is that there are going to be reduced likelihood that there will be earthquakes, tsunamis, droughts, unpredictable rain patterns and unprecedented flooding. All these have caused far reaching and unfathomable calamities. Whence, the general adoption of uranium energy will be a relief. Nuclear weapon will be demonized by all, particular where they are used without following the internationally laid down procedures and treaties. Nevertheless which country does not want to protect itself Armament by any standards should only be for the sake of precaution and not for war as such. Provided the world order today remains then the nuclear armament will be remain a key factor in armed policies.

Unemployment is a major vice in developing economies. The fact that Saskatchewan has been able to put this important mineral to use is worthwhile. Through weathering, the tailings would still have its way into the water system, thereby bringing about likelihood of contraction of cancer. Given that the very cause of cancer is being put to effective use, it becomes cost effective. The opportunity cost here is definite. One will prefer being in employment, regardless of the risks. With this public opinion particularly by the lower class in society, it becomes the obligation of the government to protect its civilians.

In conclusion, just like other business ventures, mining of uranium has few negative effects. These effects range from causing of cancer, causing of redundancy in new born babies to nuclear weapon threat. However it has a conglomeration of uses that are quite cost effective and environmental friendly. First, the use of nuclear energy has an almost negligible side effect. Besides, this type of energy is relatively cheap compared to thermal and hydro energy sources. The uranium mining industries create employment to a large segment of Canadians (Aboriginal) and other residents. Through the aforementioned employment, the industry is a source of income for most residents. The income also is resultant from the sale of land, royalties from leases and rent from premises. Ultimately therefore the benefits of mining uranium outwit the costs hence the justification for the continued mining of uranium Saskatchewan.

The Human Development Index is the measure of the well-being of a country through parameters set by the World Bank. Parameters such as the levels of poverty, the efficacy of the education system and the standards of living are used to gauge the HDI of a country. The HDI has some problems in the way it is calculated. For instance, some data that is difficult to measure cannot be represented and used to judge the HDI of a country. An example is the inequality in a country. There is no measure of inequality that can be used to judge how a country is developed. The other is such things as respect for human rights and how free the country is in terms of political freedom. Therefore, a misrepresentation of actual data might occur and defeat the purpose of the final data.

Two countries that violate the common features of developing countries are Brazil and Vietnam. As a country, Brazil has reported record growth in the last one and a half decades after their consistent economic crises in the early nineties. This resulted in one of the highest employment rates in the world with about 97million people employed leaving only around fifteen percent to be unemployed. Vietnam on the other hand ranks above countries that are more developed than it and have higher per capita income. This might be attributed to the methods and parameters used in the calculation of HDI.

The Harrod-Domar model takes on assumptions that have faced a lot of criticisms. For instance, it makes an assumption that investors are only attracted to the output of a region. Another assumption is that the countries that suffer insufficient finances can borrow to cover where they lack. This is not only dangerous but it is also very restricting due to the fact that most developing countries are tie down by foreign debt. Therefore, a good measure to map the growth of a country should include the factors that drag its economy down like corruption levels, the ease at which businesses can be registered and started and finally the unrecorded resources of a country and its value like the labor force of a country.

Even though ecological experts propose that disasters should be less viewed as a random occurrence without potentiating factors, it is hard to completely believe that such convergence of possible causative factors are direct incidences resulting from inhumane actions of man to its own ecosystem. Even though one does not always suffer the consequence of its action but such consequence rarely escapes repercussion. Repercussion of risk can thus be said to be transmissible. With this understanding, it will be justified to accept the expert position that environmental disasters are by-products of man-made hazards and vulnerable practices.

Embedded environmental risk in a geographical location is economically perceived as a result of inherent socio-cultural and political underdevelopment. This in turn reflects in the general perception of value placement by comparing such area to other developed site. In recognition of possibility of careless spread of disaster, there is a warning from Millennium Declaration on environmental disaster to guide against extinction of ecosystem by making concerted efforts at reducing the prevalence of natural hazards and man-driven actions that increase the risk. The presence of an environmental risk is a big threat to hard earn gains of development these include political stability, social and economic buoyancy, and educational progression, infrastructural and technological advancement. As such, there is a significant role played by the presence of environmental risk on existence of structural holdings  house.

House and land are tangible assets that are transmissible by controlled regulations. Such regulations are coordinated by central agency with understanding of factors influencing the placement of value on transmissible properties. Among other influencing variables, susceptibility to environmental risk seems to be the most important factor that dictates market value of a house (building and property can be used interchangeably) on comparative scale. This research work shall therefore examine various negative impacts environmental risks have on house value. We shall in the course of the discussion cross examine both natural and man-made actions that serves as both direct and indirect factors in predicting house value. Emphasis shall also be made to see how soon house value market will adjust itself to normal market worth in the presence of compensation or execution of control policies to correct the posed risk. Through a research work done in this paper, we shall deduce some vital circumstances that subject an environment to risk and how much of value they cost property owner. The thesis proposes that such loss in house value resulting from impact of environmental risk is irreparable regardless of measures by any agency or authority at controlling the risk since time is a major determinant of value season.

Introduction
The impact of environmental risk on house value refers to factors of infectivity from the surroundings that rather mostly effect declining value of housing property than increasing it. The value of a house is a function and reflection of healthy environment which determines the context of  sellers and buyer bargain, thus negotiating a common ground for selling of property to a price the seller is willing to give out and that in which buyer is willing to offer. This approach of determining mutual agreement between buyer and seller is used by the economic researchers in extracting impact of environmental risk on property. A model named hedonic price model can assist in value quantification. Economic researchers deal factors such as size, construct, location and environment that have influence on purchasing power to appraise economic worth of a property (Carruthers, et al, 2006).

Economic research that concerns itself with the hedonic studies engages in environmental risk assessment for several reasons. First would be to analyze how much the worth of the property decline due to the environmental damage and externality, also to determine how much would an individual experiencing the damage would be compensated. Secondly the externality can be determined by the demand curve where it gives a graphical representation of the behavior in quality good environment that gives an idea to the researcher of the impact on the benefits of reducing externality (Carruthers, et al, 2006).

The impact of perceived risk on property value has both important economic and legal implications because polluters are often tackled on the ground of nuisance law by their neighbor for causing loss of property value. Compensation for property value diminution assists in estimating the perceived risk expenses. Sometimes this is done indirectly base on the abstract nature of public risk perceptions (Mccluskey, et al, 2001).

Risk impacts due to environmental uncertainty depend on the organizational or industrial location, customer strength base, and regulatory agency in charge  also it is the shareholders prospect to get involved in the monitoring and management of environmental risk, with the aim of reducing to the bearable minimum  the expected loss and raising higher the eventual yield in profit (Emerging Environmental Risks A Global View, n.d).

Irrespective of diversity of investors ownership, a common issue thus arises for stake holders the concern relates to the environmental risk associated with their company and organization. Also property of business or the household value are subjected to diminishing value from environmental risk since infected water, industrial wastes, eject of chemical pollutes from the industrial exhaust into the environment, among others  de-value the property when they create health risk issues (Emerging Environmental Risks A Global View, n.d).

Today, methods of measuring risk were developed for the reason of setting principles or standards for management and secure level of protection from exposure to dangerous environmental hazards. In between the developed techniques was the perception of conservatism. This involves intentional increase in estimation of risk, in order to in order to cater for certain intensity that seems to be unsure of security cover. The innovative uses of risk examination which deal with evaluation of risks from dissimilar hazardous exposure, different kind of risk and, risks due to different public settings, are incorporated in conventional risk examination strategy (Emerging Environmental Risks A Global View, n.d).

Risk appraisal is a technique of risk management whereby systematic sequence is employed to make instructive conclusions. Risk appraisal for carcinogens is of important considerations in environmental regulation risk estimation for non-cancer health professional and other environmental risk advance higher in the degree of importance. Risk appraisal plays a vital role in certain structural establishment in order to evaluate the rate of diminishing values toward ecological management as in drafting of standard of building evaluation before purchase.

Setting up cleaning goals at superfund place and setting up standards for insect killer residues on food. Broader approach use of risk examination and risk positioning will help overcome conservatism. As more people are using risk appraisal and opposing benefits are intimately observed position movements will become apparent that conservatism deforms the procedure. Better consideration on risk appraisal by the general public, journalists and legislators can lead to better examination and the setting up a progressive course for decreasing environmental risk and value appreciation. (Emerging Environmental Risks A Global View, n.d)

Contrast risk means that the technique set up to a certain degree in averting the risk posed due to environmental hazards has not been tolerated. In order to provide control to environmental health danger experts need to assist people in the society in the understanding of environmental danger pose to physical existence of structures and for industry to create genuine risk-reducing contamination plan. To evaluate the correct picture of the dangerous risks, or contaminants strong action is needed. (Emerging Environmental Risks A Global View, n.d)

It is being understood that clean water which is naturally endowed is in a way instrumental to moderating risk exposition and thus, boost house value. Factors having impact on creating an enabling environment for productivity depends upon many services such as the practice of cleaning and avoidance of bad landscape, pollution in water that has an impact of house value create health environment gives an egoistic look to the environment of the area. We are at danger of moving retrogressively in developmental ladder when we unconsciously accept options of available polluted water which has a detrimental impact. The danger is not additionally unconnected with the rare chance of unforeseen natural disaster that could happen with inaccurate prediction.

Literature Review
It has been researched that experience gained by real estate evaluators in evaluating the worth of contaminated property being affected by environmental threat is crucial in determining the extent of impact same on house value. Since house value is being commonly affected in most of the areas where these risks exist, it is not really easy to directly determine the actual worth in most appraisers carried out. Community participation is important in examining the impacts of environmental risk on property value assessment in the economic marketplace. The lesser the risk outcome of a house in marketplace assessment, the better the purchasing power for both seller and buyer. Examining with this assumption in mind guarantees a dependable result from whatever method is used in environmental evaluation. Wide accessibility of information, statistics and figures about the numbers, types and site of properties expected to be affected by environmental threat improved knowledge, data and information about the overall health risks suspect by various environmental situations. The use of time andor time coefficient is of great importance to many works done by experts relating to this study. It has permitted real estate proprietor, lenders, developers, sellers, buyers and evaluator to turn out more recognizable entities with procedure for suitable examination of the prospective impact of environmental risks on house value (Richard, 1996).

In evaluation of value worth, sigma is introduced to assist in weighing corresponding extent of risk. The word stigma is used in estate management to connote the impact of increase risk of property value diminution stemming from reduced perception of profitability of use. This is in association with reduced strength for marketability and financial return. Such examples of potential threat (risk) that devalue property include noisy environment, soil contamination due to past or existing practices on the environment, dusty atmosphere, water contamination, naturally endowed aesthetics atmosphere, land landscape and land stability (Chalmers and Roehr, 1993). The importance of community to evaluation of house value is connected with what is known as public perception under stigma. Though a subjective assessment, it is very important in that it reflect on the social orientation attached to house value, this is in accordance to a report claiming that stigma is actually value loss of property due to the presence of risk perception that brings about market resistance to property (Chan, 2001). In stigma, there is what is known as uncertainty whereby negative insignificant factors are also considered.

Related studies have been carried out by numerous researches to measure the objective and subjective impacts of undesirable environmental risk on land use and thus affecting the overall market bid for building mounted on such land (Farber et. al, 2001). Important variables considered include distance of a house from potential hazard or risk. There has been additional suggestion that availability of comprehensive report also influences the vulnerability of market value volatility. The length of distance from the source of risk creates a degree of fear that influences the choice of value placement on a particular building. Such risk is said to be a source of toxicity to existence of it surrounding building. In house value studies conducted some years ago, impacts of location of a building has an enduring effect for many years as such, it is important when estimating to recognize this and make a projection based on outcome of analysis. In a survey of tax assessors in Illinois, opinion was sought as to the impact of Environmental Protection Agencys priority list on local house values and whether or not it has any effect on appreciation rates. Outcome of a poll first suggested a lowered appreciation value for house where tax assessor is of priority. Secondly, the effect of environmental risk with the presence of an incinerator, as an example further decreased the expected increase in appreciation of susceptible building as time elapse. Further deduction had it that the rate of decline in the appreciation value of a building is directly proportional to the closer the distance of the site to the source of risk. Through a model analysis, evidence of decreasing value rate was provided by calculating financial data collected on the reason for repeated sales and income capitals accrue over years (Kiel and McClain, 1995). The yearly estimate fall is around 3.0 percent annually, this is in relation to the usual increase in land value expected with increasing environmental development.

Another closely related study found out the possibility of adjustment to equilibrium price or value over a long period of time. The study which was conducted in Dallas County on property value appreciation in the face of environmental hazardous waste also using the repeated figures from sales, McCluskey  Rausser (2003) resolved that residential houses close to risk site is certainly subjected to decreasing values following release of information on the site. The moment of devaluation is found to be prolonged and thus, masked out the possibility of occupier witnessing the moment of value equilibrium. Data on equilibrium period was hard to collate since occupants lifespan probably do not outlive the existence of such building for mathematical prove. It was discussed in this report that only variation report on housing appreciation rate over a long period can supply information for examination of adjustment process. It added that in the examination of how market adjusts to the reality of risk-free existence of such a site in the absence of any over the years, the distance coefficient in the cross-sectional hedonic equation is not instructive, further submitting that the coefficient will not seize to be significantly negative as the risk is being viewed as an externality (McCluskey  Rausser 2003).  Ritchert in a study (1997) observed that a good evaluation of property values requires incorporation of liquidity examination to study the possibility of heralding equilibrium and to gauge local knowledge into the worth or value of such property.

Moreover, housing values were compared in two different areas with specific variability of site. One in an industrial landfill, and the other in a control area but close to source of environmental risk such as hazardous waste. The house in the industrial landfill area stays longer in marketplace than the other in control area. At a particular period of interval, there is relative equality in the extent of market stay for purchase of both houses from the two areas. Thus, one can confidently submit that value differs based on environmental risk susceptibility. This is what some experts report as market attaining new equilibrium in the face of environmental risks. One can equally argue that since the time interval before equilibrium is achieved varies, the equilibrium reached is not absolute because there should have been a supposed simultaneous increase in the value of that building with longer stay in the marketplace. This is what should be obtainable when environmental risk impacts are eliminated or when put under control.

In the same vein, property values have been assessed using the effect of two externalities influence on stigma vis--vis environmental and neighborhood externalities. Environmental externality concerns itself with the presence of toxic waste around a building, at some notable distance to it. The issue here is the danger of environmental health disturbance which do not augur well with a satisfactory occupancy by inhabitants. The second is neighboring externality. It interprets how the residents composition in the surroundings is affected by the purported impacts of the existing environmental risk in that area.  All these influence house value. It was also recognized that changes in the neighboring building which does not exclude normal development, influence the value of a building. This is in addition to the existing hazardous environment. The changes include increase in quality or perception of social status, decrease or increase in crime rate, among other. Therefore, McCluskey and Rausser argued that neighboring externality provides a source of stigma that influence value of buildings and not solely the environmental risk or hazard. Dale et al (1999) though failed to construct a written frame work to distinguish value variation as been influenced by long term and short term stigma, he argued that following proper control there is no such long term sigma association with environmental risk, hence no long term effect of house value (Texas as a case study). Findings from Dale et al (1999) claimed to be evidenced from insignificant reactive response to remediation program by Environmental Protection Agency whereas from the coefficient of proximity of distance ot risk source, McCluskey Rausser (2003) measured a significant stigma response to information about environmental waste location.

Negative and Positive Impacts of Environmental Risks
The invoice for our climate-changing emissions will include more droughts, floods and other natural disasters. We need to climate proof our farms, our infrastructure and our livelihoods in order to minimize our vulnerability to future disasters
 
Achim Steiner, UNEP Executive Director
Range of activities engaging in environmental risks that has earned either direct or indirect impact on real estate and land use directory. We usually classify environmental risk as originally coming from such stuff as groundwater contagion or soil contagion by hazardousdangerous materials (Richard, 1996).

Few examples of environmental risk affecting values of the property include, pollution in the lakes or river badly affected that it makes water not suitable drinking near a building, effluence or fumes in the air, noise developed through a nearby motor-way or airport will cause a diminishing effect on house value on one hand, and increase on the other hand thus influencing the state of real estate worth ratio. Also substance carried through the tanks such include chemicals which are harmful to the environmental through oil fallspill out or railroad affects the neighboring environment. This in turn will have a great impact to the property valuation in real estate. (Richard, 1996)

While evaluating land contamination for value appraisal, appraiser needs to bear in mind the existence of both value adding factors and value diminishing contributors. All usage of hazardous risky or unsafe substancematerials will not cause a contagion after all. As such, not all of the contagions or contaminants will result in environmental risk that can affect or damage the whole environment though they both have degree of impacts on property. Most of them can actually be considered as risk to the environment with tendency to devalue the value of properties or nearby housing structure in the market place.

The main focus of the evaluator of property value is to determine the cost of the property with reference to the risk associated both without and within the house property. The focus of real estate is to virtually quantify effect of the presence of environmental risk on people affected living in a house meant for residential advancement. This is done by assessing the nature, state, timing and damageability of the hazardous materials, how fast they spread and what factors can control them in order to avoid or decrease the risk pose to occupants in such environment. Amount estimate is also calculated for possible control measure to be instituted in the management following purchase of the house.

Stigma is associated with property value that has an impact on public perception due to the risk created on such property by virtue of the belonging environment. In a generalize way stigma is determined or defined as an unfavorable public observation in relation to a property that is insubstantial or not directly quantifiable (Richard, 1996). In most of the real estate evaluation assignments, the price of cleanup or cover up for the losses are said to have moderate consideration for while quantifying value cost in the assessment of environmental impact on the value of the house. The additional task for value evaluator is to give opinion on the impact the attaching stigma will have on the value of a building when subjected to the marketplace for investors consideration, this include the cost of cleanup (Richard, 1996).

Impacts of Water Pollution on House Value
Environmental contamination or liabilities were initially considered with regards to the pollution in the surroundings and in the environment which was easily observed as it causes a feeling of irritation that many face severe problems of breathing difficulty and therefore it is easily detectable. As the concern for a better locality with less air pollution arose many began to consider real estate or property in a surrounding with less surface water pollution as it causes problems of unavailability of drinking water for consumption and restricted availability of recreational use of water bodies.

Another type of pollution which was ignored for years before discovery is groundwater pollution as it was not easily detectable by everyone because it is off scene. This later became a major issue and a much known environmental contamination and health risk when groundwater started to be used as the supply for drinking and other aseptic uses where characteristics of odorless, tasteless and clarity of water was needed by many industrial outfit. Since groundwater is now being used by everyone for significant purpose, the safety of the source has therefore attracted everyones attentions as a major raw material with highest level of vulnerability to environmental hazards. The existence of building close to this site throws a big blow to the well being of the people around this area thus, a diminished value of real estate assessment of such property. It therefore, portends a great environmental risk for both industrial and residential plans. Investors shy away from trouble that can incur them maintenance expenses (Missimer, 1996). For companies with water as a major resource, such building around that area can never be considered for acquisition when there is a need for business expansion since more expenses will be incurred on treating the water to achieve purity of content and quality. Examples of such industries include juice or food industries, alcohol companies, et cetera. A building that is persistently rejected owing to its citation around poorly controlled environmental of underground water pollution will continually witness a reduced value. Compared to other similar housing structures but with different location, fall in price is the quantifiable outcome of such impact of environmental risk on the value of the house.

Value Reduction due to Poor Landscape
In this section, landscape is concerned with the scenery around a house. One of these is the site of wrong citing of industry around a swampy area with inaccessible road transport system. One could also have unprofessional erection of shopping mall on expressway but provision for car park is not made. Besides the susceptibility of this shopping mall to low patronage turn out, there is increased susceptibility to crime commission by gangsters without immediate security arrest or monitoring. Such house for valuation will definitely scores low due to environmental risk of crime susceptibility. The citation of building for certain purpose in a very remote area where there is poor traffic volume and human density will have a reduced value when such building is being considered for some business or residential outlook. In this type of building, usually a state of equilibrium will arise in the later year when the actual value ought to have shot up. One may term it delayed value appreciation. A house value is first dependent more often on the landscape the internal outfit. For example, a seven star hotel constructed in a remotely bushy area with poor security measure will only undergo a gradual appreciation in value in relation to developmental staging. When other neighboring structures are in place, the building can then be considered of having a value proportional to the nature of activities taking place around the building. A residential apartment situated in the proximity of social infrastructures and other recreational facilities with definitely have a greater value estimate in market place than another building without any facility. Since most occupations take place within busy certain areas where industries, banks, government ministry, schools, among others are established, the location of residential building in this environment competes with similar expectation of productivity as of the other buildings. Due to the ease of accessibility to infrastructures, there is a far more increase in purchasing value for residential house in this vicinity compared to others outside this area.

Risks Reducing House Value When use as Collateral for Loan Acquisition
This is another negative impact of environmental risk on house value when it is intended for use as collateral. Under many environmental regulations and laws the potential for liability and the unpleasant possible effect of environmental risks and contaminations on the property value or house value has turned out to be an important factor in assessing the transactions of real estate for issuing loans on the basis of security (Missimer, 1996).

The need to obtain loan amidst obvious environmental risks or contamination can have an unfavorable and unpleasant effect on the property or house value and on the value of real estate collateral. In many cases, circumstances may abandon the right of the insured institution from the real estate collateral. Furthermore, the insured institution can also be made responsible for the environmental cleanup of the property or real estate acquired by the insured institution. Therefore, the loan made to the borrower will be exaggerated, in such an event, by many times the initial borrowed amount or the loan. It is also possible in an event or a case where real estate or the property is not considered as security for collateral. (Missimer, 1996)

Each lending institution has its own environmental risk program designed. Senior environmental risk specialist should be appointed for the implementation of the environmental risk program by the board of directors of the concern lending institution. (Missimer, 1996)

Instituted environmental risk program will be different for those lending institutions which offer loans to higher risk industries or those borrowers who have obvious environmental hazards in their surroundings than those lending institutions offering loans to lower risk industries (Missimer, 1996).

Environmental Contamination and its Impact on Market Value and Property Assessments
The introduction of governmental regulations to overhaul significant effected of environmental risk on property value was such a welcome approach. Government compensates in term of reducing tax on the house susceptible to risk in order to level up the value disparity and entice interested investor or buyer. In some other case, there is placement of government subsidy on price of purchase of property in area where there is environmental risk. This encourages buyer to save some dollars against the cost of cleaning up. In turn, buyers purchase the property in readiness for self plan to reduce existing environmental risk (Garippa et al, n.d.).

To determine the value of the properties, courts throughout the United States are practicing the approach of setting up a methodology for estimating the contaminant property. At times in the past the courts throughout the United States hesitate in the reduction of tax to the property that was influence by environmental externality because the reduction in the contaminant property is opposing to the policies in the environmental protection legislation.  The focus of tax assessment is to understand and look at the cases that were highlighted recently in the courts of United States, where they are related to environmental externality and the impact of same on estimated value of the houseproperty. Court of the United States pay attention to most recently focused judgment related to the contaminant instead of assessing all the previous court decisions on this subject. (Garippa et al, n.d.)

Assessment of Property Value with Environmental Risks
The research work on the impact of environmental risk on house value is incomplete without discussing how the value is assessment. There are several challenges faced in managing environmental risks related to the value of a house or the property. One should require involvement of specialists to help find out the value of house or property exposed to environmental risks in the surroundings for expert knowledge. Thus, the time required to take decision for finalizing a deal and assessing the environmental risks in the surroundings will be delayed, it may require few months or years. This could result in negative effect of a pending transaction (Pritchard, 2000).

Experts technique used for managing risks have been proven effective. For instance, obtaining detail information about the site by an expert ensures that necessary vital data are reckoned with including house location and activities through to housekeeping, health and safety level, the basic aspects through property surveys, its valuation on yearly progression, quantity surveying of content, etc. All these information help form a constructive point to start assessing and analyzing the environmental risks near a house and  or property as the case may be (Pritchard, 2000).

The information about the environmental risks near a property or house can be obtained through one of the following methods.

Through physical evidence of the nature of environmental risk. In other words, one may obtain information about the site through direct observation.

One may also ask for information about environmental risks from the other people in the surroundings or who live nearby.

Through a thorough study of environmental risks in the particular site and in its vicinity following permission documents issued by the governing or federal authority for permission to do so.

These observations, interviews and thorough studies will enable one to obtain necessary details and information about the current environmental management controls and will provide you an indication of the enduring controls of site risks, perils and hazards (Pritchard, 2000).

Furthermore, through above procedures the information or details received will form a profile of site risks for data collection for a possible elimination by appropriate agency. On the basis of this profile we can assign a risk category to the property or house which will have an effect on its value. There are five categories of risks amongst which one is assigned to any site.

1. Potentially significant  in such cases it is recommended that expert involved should visit the site of the property or house and produce a report through his  her observations and thorough study with respect to the chronological contaminative exploration of the property or house.

2. Higher than average  this is same as the case of potentially significant in which it is recommended that the specialist of an environmental risks management should visit the site of property or house and produce a report through his  her observations and thorough study with respect to the chronological contaminative exploitation of the property or house. However, the complexity of the situation here is less compared to that of potentially significant category.

3. Average  those sites under this category are placed on one year review cycle. However, it is expected that the resolution of site specific recommendations should be achieved before one year.

4. Lower than average  sites here are placed on two year review cycle. However, it is expected that the resolution of site specific recommendations should be achieved before the completion of second year.

5. Likely to be insignificant  those sites which are categorized under this category are placed on three year review cycle. However, it is expected that the resolution of site specific recommendations should be achieved before the completion of the third year.

Other Environmental Risks
Health problems are associated with environmental risk this include risk of cancer, inhuman natural disaster and death. They have some significant impacts on house value since the environmental factors such as dangerous chemicals, oil, eventually polluted water resulting from their effects on the people living in the surroundings of prone area. Not all of the risk and dangerous materials have the same amount of health risk, thus there is degree of influence individual has on property value in the marketplace.

The procedure and techniques used to determine projected impact of environmental risk on devaluation of property was focused in the edition of a report tagged economics and appraiser. Attention was drawn towards the subject to determine the contaminated property with the price of sale of such property. The proposed idea was conveyed to a survey team to measure the environmental risk based market observation (Goliath, 2004). Cost of environmental risk is said to be the increment cost that is incurred in term of financing, investing purchasing or taking the ownership of the property with peculiarity of its environmental situation. The doubt or ambiguity assumed as a risk relates to the form of risk and to the extent at which there exist environmental contamination. In case of increasing in environmental externality, contamination and infectivity, the unfavorable observation and perception developed in the market further de-value the property in the marketplace. The environmental risk perception in the market place results in an unfavorable effect on the market due to the observed externality. Conducting a simultaneous interviews and surveys can give an objective data for proper documentation. As discussed above, the value of the property in the marketplace is determined by the perceived environmental risk and for the reduction of the value of the property in market place is more justified in the presence of more than one method of analyses used in analyzing the property worth. Formulation analyses for definite measurements include case study analyses paired sales analyses and income capitalization analyses (Goliath, 2004).

Further Discussion
Environmental risk influence the cost value of the house as it as an additional increment of the money associated with the location effected from the contaminated environment. Economic researchers name the model as hedonic price model that is used to determine the factors such as size, construct, location and environment that has an influence on decline of house property value. The impact of perceived risk on property value has an important economic and legal implication because pollute are recognize under nuisance law to cater for losses in property value. Risk impact due to environmental uncertainty depends on the organization or industry location, customer base, regulatory administration and also its shareholders prospect. Risk appraisal is a technique of using systematic sequence to make informed conclusions. Risk appraisal plays a vital role in ecological control as this sets standards for water used for its safety. To evaluate the correct picture of the dangerous risks, or contaminants strong action is needed. It is being understood that the clean water is a direct and indirect function of industrial productivity this is reckoned with among other factors in assessing available environmental risks for house value estimation. The factors that have impact on creating an effective environment depends upon many valuable services such as practicing of cleaning, avoidance of bad landscape and control of waste to prevent water pollution in an inclined areas where water flows freely. All these impact mostly a diminishing return on house value. Creation of health environment additional gives an egoistic look to the environment and thus, summing up the value worth.

The consideration made by real estate evaluator in an attempt to understanding the worth of a property constitutes both the natural and man-made environmentally influenced risk factor. Since man-made factor is a continuous activities made obvious with physical evidence, community perception and professional analysis can give a quick report of depreciation. This is unlike natural source of environmental risk whereby, on geographical expert can actually forecast into the future. In making such forecast, evidence is drawn from two or three occasions or analysis of similar occurrence with areas having commonality of earth properties in terms of longitudinal and latitudinal location from the sun, distance from the ocean, prevalence weather changes within a particular period.

Conclusions
The fact is clear here that there will always be a course for both foreseen and unforeseen environmental risk as a result of natural or man-made action. The short summary of economic implication from real estate is the simultaneous influence on house value. House values will definitely react in proportion to the degree of risk impact. The extent of reaction witness is also a function of available detail information. The immediate reaction is usually a decrease in value. Though it does to a certain degree, the value does not increase to corresponding normal price when the environmental risk is controlled. Hedonic progression equally fails to accurately predict future adjustment, expert claimed. Furthermore, the coefficient of distance which determines the degree of risk to building site and the corresponding value fall can only be relevant when there is a stable shift or following the completion of the adjustment process.

In conclusion, one could observe that house value are more for those ones farther from source of environmental risk compared to the nearer houses. This is a pointer to the fact that public perception of stigma surrounding the more affected house is higher and is of consideration by evaluator. The impact of natural disaster on house value is hard to quantify due to episodic nature of such occurrence which may not surface for thousands of years. Though one can also make a projection that the farther the generational gap between those that witness the last episode of a natural disaster around an area, the more the building in that site gain or earn restoration of diminished value.

Regardless of the amount of compensation package, a prediction in property value adjustment does not favour a complete remission of value lost even though market value of such house adjust quickly than when the risk is not compensated for. The public and individual perception of negative externalities surrounding a building also affects value estimation subjectively. This influences individual placement of worth and results in variation of quotation for similar building. In summary, a lost house value is rarely regained no matter the effort made. Any appreciable gain would have been an additional overall gain. Hence, the thesis stays firm that loss in house value resulting from impact of environmental risk is irreparable regardless of measures by any agency or authority at controlling the risk since time is a major determinant of value season.

Although the Chinese economic growth can be traced several hundred centuries back, but the financial impact of modern China, preceding the communist revolution and the modern era provide useful insights into the factors that have made Chinese economy resilient to the worst scenarios. Instead of focusing on the multiple historical periods, it is viable to study the contemporary macroeconomic affects in the periods from 1911 to 1937, before the outbreak of World War II and the last seven years leading to the current global recession.

Chinese Economy in 1911-1937
Historians confirm that the economic history of the modern China began in 1911 with the fall of Qing Dynasty. During those four decades, only Nanjing decade between 1927 and 1937 is considered a relatively peaceful period. Otherwise, the Chinese economy faced turbulent events including a small scale civil war and occupation of Manchuria by the Japanese forces. As soon as Qing dynasty disintegrated and not until Chiang Kai Shek managed to take control to implement economic reforms, China suffered heavily due to collapse of the central government resulting in various warlords proclaiming control over vast territories. After 1911, warlords had immense powers. Their appetite for money was insatiable which resulted in them printing more money than that was needed. These local chieftains would also levy heavy taxes on local population to generate funds for an otherwise fledgling economy. Experts argue that it was not the local criminal gangs that devastated Chinese economy but rampaging soldiers of warlord Army who would threaten local peasantry with dire consequences if their demands were not met (Ma, 2002).

Whereas these events may seem catastrophic, interestingly scholars also maintain that these so called sovereign, warlord provinces, became the paramount reason to the onset of industrialization. According to the prominent scholar of Chinese economic history, Debin Ma (2002), analysts like John Chang, Du Xuncheng and Thomas Rawski provided evidence of the rapid growth in the period between World War I and II. John Changs study on industrial output index of China revealed a healthy 10 growth. Similarly, calculations from Du Xuncheng suggest that nominal annual industrial investment by Chinese nationals from 1914-1925 was 11 times greater than a comparable time period of 1840-1911. Still, other somewhat controversial figures by Thomas Rawski proposed that per capita GDP growth between 1911 and 1936 can be compared to growth in contemporary Japan. These findings were presented at the Global Economic History Workshop at Istanbul in 2005 which further theorized that such growth figures can be explained by the influence of Western imperialist factors.

According to the theory, Western powers did not colonize China to full extent but relied on acquiring trading rights, leased territories and treaty ports thus offering substantial growth opportunities with very limited intervention from warlords. The treaty port cities of Shanghai, Canton, Tianjin and Wuhan are excellent examples of such a phenomenon. Shanghai in 1930 is a prime case of this phenomenon unfolding. At the time, it was a multinational hub of finance and business, reflecting tremendous growth. Historical accounts of areas around The Bund, Jiujiang Road and Suzhou Creek portray very high municipal standards. It is estimated that in 1933, Shanghai alone produced 40 of the national manufacturing output and absorbed 34 of the total direct investment including 67 in manufacturing. Shanghais industrial gross output value, according to various reputable indexes, expanded at a rate of 9.5 from 1895-1936. Comparative figures for Japan lapsed at 7.6 (Ma, p. 9). Historians also note that the effects of this development were not restricted to these port cities but spilled across neighboring regions which sometimes consisted of hundreds of square kilometers.
In this regard, economist have used exchange rate figures to reach at a conclusion that in 1933 lower Yangtze region of  China, constituting thousands of kilometers, had a higher per capita income than the entire Chinese population as well as Korea and Japanese controlled Manchuria. Lower Yangtze regions had a value of 950 NDP as compared to 573, 680 and 690 for that of China, Korea and Manchuria, respectively. Although, these income figures were lesser than Japan and Taiwan but the another similar study concludes that the standard of living in Lower Yangtze must be similar to Japan in 1900 and 1910 due to much higher levels of industrial outputs as compared to rural China, in general (Allen, Robert, Jean  Debin, 2007).

During Nanjing decade, from 1927 to 1937, president Chiang paved the way to address rural China problems by providing reforms such as rural reconstruction movement that aimed to change the Chinese countryside by introducing educational foundations, village projects and the establishment of special government zones. In 1931, against Japanese invasion of Manchuria, this movement was prominent in maintaining the stability across China. Another similar idea, New Life Movement, was aided by the wife of President that tried to bolster a Nation which was seemingly derailed by corruption, factionalism and opium addiction. Some of the rules included courtesy to neighbors,   keeping streets clean and conversation of energy. It will not be an overstatement to suggest that Chinese domestic industry gained a significant advantage due to World War I because of a sudden demand of Chinese products and reduction of imports. In textile industry, this is evident by an increase in needle machines from 482,192 in 1913 to 647,570 in 1918 reaching up to 1,248,282. Likewise bread factories went up from 57 to 131 (Sun, 2000, p.1089).

Amid these development strides, the City states and their neighboring regions were better able to cope with disasters than rural China. For example, the Chinese economy suffered greatly due to the effects of great depression and Japanese invasion of Manchuria but despite these adverse economic conditions, Chinese GDP reached its peak in 1932 at 28.8 billion. In contrast, the rural income fell 57 percent from 1931 to 1934 as agricultural good from West were being dumped in China leading to fall in agricultural prices. Consider the import of 15 million bushels of grain in 1932 compared to less than a million in 1928 and 21 million bushels of rice in 1931 to 12 million in 1928 (p.1059-1071). Actually, these facts substantiate the fact that Chinese city states played a major role in the prosperity of its inhabitants and those of the nearby regions due to their dependence on industry rather than agriculture. Therefore, a comparison of living standards of China and Europe, between WW I and II, suggests that rate of growth in China did not decline but instead it could not keep up with rapid growth in Europe.

Chinese Economy in the Period 2003 - Present
Chinas growth since 2003 is evident by an increase in GDP which has swelled from 1.6 Trillion to 4.33 Trillion in 2008 and Purchasing power parity from 4,157K to 8,734 in 2009 (Google Public Data). Experts believe that a high growth rate is necessary to generate 15 million new jobs, annually. In 2003, Chinese Communist Party proposed wide ranging amendments to the constitution emphasizing the need to decrease income distribution, establishing stronger private property rights, reducing unemployment and protecting environment. Subsequently, these amendments were approved in 2004. Closer looks at these amendments reveal that they are strikingly similar to the reforms carried out during the early nineteenth century and periods between WWI and II. In nineteenth century China, as discussed there was a significant difference between income of rural China and major cities difficulty in establishing property rights and the introduction of New Life Movement to increase awareness of the environment.

The 11th five year program 2006-2010 is quite similar in intention, aimed at a harmonious society that would bridge the income gap among Chinese. This program also includes such environmental concerns as reducing energy intensity by 20, a value which is two times greater than its neighboring economy, India. Concerning inequality, China still needs to come in terms with the growing income gap between the coastal provinces and poor inland regions. Note that this was also a significant factor in 1920s where coastal towns such as Shanghai, Wuhan and Tianjin amassed wealth as compared to rural China. Presently, UN estimates that 135 million people in China live on less than 1 a day and 35 on less than 2 (China). According to the first economic survey of China, OECD suggested that income gap can only be reduced if Government makes it easier for people to move from countryside to cities and amend land rights. The debate on land rights is an ongoing process which runs tandem with property rights issue. OECD further notes that recent government policies had great impact on the buildup of private investment as more than 50 of Chinese GDP is now derived from privately controlled enterprises. However, it recommends that the amount of capital required to start a company remains high which can only be brought down by implementing new bankruptcy codes, revised company law and stronger protection of property rights. Although the current economic growth had significantly reduced the national debts but banks are still state owned, therefore, the future impacts of reforms in financial sectors remain a concern.

Responding to the global financial crisis of 2008-2009, the Chinese government has introduced a landmark Economic Stimulus Package of nearly 586 billion. World leaders have welcomed this package and declared that it would not only help China but also support the global efforts to evade the global recession. Key areas that will benefit from this package are housing, rural infrastructure, transportation, health and education, environment, industry, disaster rebuilding, income-building, tax cuts, and finance. To this date, transparency remains a cause of concern for investors in China. The corruption perception index puts China 79th out of 180 countries when most developed countries retain top 20 positions. The actual CPI score is 3.6 with a confidence level ranging from 3.0 and 4.2. Such statistics imply that modern China needs to overhaul its internal financial structure. Rebuilding efforts from destruction in Natural disasters such as the 2008 Chinese winter storm, Sichuan Earthquake and South China floods are a part of this stimulus plan.

Comparing this package to the progressive Nanjing decade under Chiang Kai Shek reveals that only health  education, tax cuts and disaster rebuilding are new components which differentiate the way the contemporary Chinese government is dealing with economic problems in their respective eras. The induction of Hong Kong has also revitalized Chinese economy further as this colony supports nearly 33 of foreign capital flows to China. Although economic situation was never dire in the years leading to the Japanese invasion in 1937, China remained in the grip of the internal instability and the lack of the centralized government. Modern China has to deal with global financial crisis but it can be argued that circumstances are much better providing opportunity for current Chinese government to advance at a rate which may not have been possible in the Nanjing decade.

Recession refers to a period when there is a contraction in the business cycle. During this period, the economic activities are usually on a slow down. During this period, the average spending of the population is usually on the decline. 2008 was the year when the United States economy was undergoing turmoil. In the month of September of that year, the Federal National Mortgage Association together with the Federal Home Loan Mortgage Corporation was declared bankrupt. Mortgage lenders thus lacked a secondary market where they could sell the subprime mortgages which they had already written. Institutions which relied on home mortgages as a base for their purchase of securities had no otherwise but to feel the pinch of the collapse of such institutions (Guryan, 2009).

The collapse of such great financial institutions marked the beginning of the global recession. This did not take place immediately but instead it followed a series of occurrences culminating in the global recession. The GDP was in the course of decline, dropping by approximately 1.6 percent between third and fourth quarters of the year 2008. This led to a general decrease in employment by approximately 1.6 percent. Though, employment was declining between the second and the third quarter, it was slight and this could be explained by the tax rebates stimulus effect which had disappeared. During this period, output was on the rise despite the lack of employment. This can be perceived to be impossible, but it can be explained by the fact that labor productivity had increased. When the labor productivity increases, production levels can be maintained even with lower number of employees (Sondra, 2008).

Many companies reduced the number of employees they had to enable them reduce their financial expenditure. The companies feared that they could be hard hit by the effects of recession to the point of collapse. Consumers had changed their trends as most people only restricted their spending to basic commodities and many other commodities were considered luxury. The manufacturing companies had to reduce their production rate due to the lack of ready market. In some cases, the wages for those people who were still in employment greatly reduced. Employment must have played a very key role in the 2008-2009 recessions. While employment played a key role in the recessions, other factors also played part in the initiation of the recessions. The most notable were the decline in stock investments prices, the housing sector as well as the banking industry (Guryan, 2009).

A number of banks had collapsed and others were at the brink of collapse. These banks had engaged themselves in the markets of real estate. This was considered a risky investment as the housing prices are susceptible to frequent changes in value. Initially, there had been a boom in the housing industry and investment in this sector was considered lucrative. Between 2007 and the year 2008, housing prices fell and the banks lost in the cause of this price drop. Mortgage backed securities explains the link between the housing markets and the banks. The owner of such securities has a stake on the mortgage repayment by the borrower. When banks give a loan with the house as a security, the banks transfer this ownership to mortgage agencies. The bank can also combine many loans to form mortgage-backed security which can then be purchased by the investors (Hetzel, 2009).

When many loans are bunched together as a single security, there is a considerable lower risk of loss compared to the case where there is only one loan which the borrower fails to pay. These loans are sold at an average price hence good loans sold at an average price is like a loss to the banks while bad loans sold at an average price are a source of profit. Initially, banks used to reap a lot of benefits from this investment. Rating agencies that were responsible for gauging the credit worthiness of the borrowers charged some fee to give a better rating to those who sell mortgage-backed securities. With a higher rating, they were able to make a greater profit than should be the case. When people lost their employment, they could no longer sustain the repayment of the mortgage loans they had borrowed. Their houses were taken away from them. The stock market was at the brink of collapse and the prices of houses had declined. This translated into heavy loses for the banks. The banks were running out of cash and their clients became very worried. Everybody rushed to the banks to withdraw their cash. That is the way the country plunged to these recessions. The recessions spread to have effects all over the world (Sondra, 2008).

Employment recession could only be ended by ensuring that demand was high. A stimulus package was initiated to increase demand for commodities which would in turn push up production and ultimately lead to more employment opportunities. With an increase in employment, there was enough money to be invested in the banks people could invest in the stock market as their confidence grew. Government invention played a key role in reversing this trend.

The Federal Reserve was established in 1913 when Congress passed the Federal Reserve Act, also known as the Glass-Owen Bill.  It would serve as the central bank of the United States of America.  This was created in response to the initial financial crisis that took place in 1907 where there was widespread panic and bank runs.  In this capacity, the Federal Reserve, or the Fed for short, has the power to oversee the monetary policies of all banks in the United States such as influencing monetary and credit conditions to ensure stability in prices and moderate interest rates that would last in the long run to protect the credit rights of consumers, contain the systemic risks in the financial markets and providing financial services to the US government as well as foreign governments that do business with the US.  The means to do this is the creation and use of an elastic currency, as well as means rediscounting commercial paper in order to keep the economy stable (Federal Reserve Bank of New York).

Given these responsibilities in overseeing the finances of the nations and its global neighbors, the Fed was mandated to be independent to keep it from being controlled by a select group with vested interests since part of its mandate is to protect every citizen with a bank account from unfair or reckless business practices and trading in the financial markets.  As a matter of fact, no public official is allowed to sit in the Board of the Fed.  In addition, it does not make a profit.  Furthermore, its organization has a system of checks and balances to ensure no single element will dominate the others.

Considering the expenditure approach, GDP has four components private consumption, investment, government spending and net exports. Any changes in these four components adjust the GDP, such as increasing the private consumption will shift the GDP level upwards. When private consumption, investment and net exports increase, it actually increases aggregate demand in the economy. Consequently to accommodate increase in demand, output in the economy is increased and hence the GDP. However when government spending is considered, this effect is somewhat ambiguous.

The effect of increased government spending on GDP is somewhat short term whereas in the long term the effect is nullified by two theories crowding out and Ricardian Equivalence. Government finances its increased spending through either debt or taxes. When government takes up debt in the financial market, it increases the interest rates. The increase in interest rate has negative effect on investment component of the GDP. The companies and small businesses hold all their expansionary projects and are discouraged to take additional loan because of higher interest rate. The decrease in private investment counteracts the increased government spending and hence in the long term the GDP level stays the same.

Now suppose the government finances its spending deficit through increase in taxes. The general public will anticipate the tax increase and will try to save their excess money to pay their future taxes even though the tax increase occurs in the long run. The assumption is that the capital markets should be efficient enough to allow people to borrow and save at their will. When people decrease their spending (correspondingly increase the saving), the consumption component of GDP decreases and consequently counteracts the increased government spending. The result is that the aggregate demand remains the same and hence the GDP level. This theory is known as Ricardian Equivalence. The conclusion is that the government spending alone is not enough to control GDP. The consumption and investment should be changed accordingly in order to adjust the GDP.

According to Eurostat, the European Union statistics agency, there was a 7.7 percent unemployment increase in Europe. This increase occurred in October 2008 amongst the 15 nations that share the Euro. This was the highest level of unemployment in a period of two years that was accompanied with a sharp drop in growth. As compared to a 3.2 percent sink of the annual inflation rate in October, the 2.1 rate in November culminated in the plunge of prices. With lower inflation rates, the European Central Bank reduces interest rates which encourage growth. In spring and summer of 2008, there was a shrink in growth particularly in the second and third quarters due to the global financial crisis. As a result, the Euro area went into a recession.  In real terms, this means job losses  lots of them and more to come (AP par, 3).

The EU statistics agency said that about 12 million people in the Euro area were jobless in October 2008. There was also a revised unemployment rate of up to 7.6 percent in September 2008. In all the 27 European Union states, 17 million people were jobless in October 2008. This is a 0.1 percent increase. With the labor market expected to be worse in 2009, according to the EUs executive commission, the rate of unemployment in Europe could rise up to 8.4 percent. At the end of 2007, the unemployment rate was 7 percent. Spain is leading in the unemployment rate with 12.8 percent. This is due to the bursting of a housing bubble and the effects of the global economic downturn on the tourism industry.

As the European Commission called on the EU governments to take measures that encourage growth, the rate of unemployment is expected to decrease. A decrease in the inflation rates could also decrease the unemployment rate in Europe.

Summary of the Article
According to CNN, the uncontrollable drop of the American economy since the recession in 2007 caused the unemployment rate to surge up from 6.7 to 7.2 in November 2008. While recession is taking its toll, approximately 2.6 million Americans lost their job by the end of the year. As noted, it was considered as the highest figure of total job losses for over six decades (Goldman Worst year for jobs since 45).

Statistics provided by CNN showed that unemployed Americans in 2008 rose by 632, 000 to 11.1 million. Furthermore, an increasing number of part-time workers have grown by 715, 000 to 8 million. The reason for this sudden increase is not because of the employees choice per se but these workers cannot actually find an available full-time job. Moreover, job losses were also widespread in a variety of industries. Manufacturing and hospitality industries alone let go of approximately 171, 000 employees and even during the holiday season retailers have cut back 66, 000 workers in December 2008 (Goldman, Worst year for jobs since 45).

Given the staggering economy, the government had sought to intervene. The Obama administration formulated and signed into law the 787 stimulus package in an attempt to boost the economy and save America from its complete downfall. This economic package specifically would grant tax breaks to individuals and couples and give financial aid to failing industries. It also sought to minimize the unemployment rate since people would be given jobs later on. Furthermore, victims of recession were also given certain economic benefits, health care coverage and even food stamps in order for the administration to make sure that these people were also taken care of by the government (Obama Stimulus lets Americans claim destiny) .

Opinion towards the Article
In sum, the article proved to be very efficient considering that concrete and reliable statistics were given to further explain the condition of the American economy last year. The status quo was clearly presented thus it depicted an image that recession indeed affected a large number of the American population. Furthermore, it somehow sent a message that recession was a major economical and societal issue that needed immediate solution.

Introduction
National debt refers to the money owed by the government. National debt can be internal or external. Internal debts are owed to the people and organizations within the country. External debts are owed to foreign lending organizations. Government borrows on short term (for a short duration) or on long-term basis. There are various tools of borrowing internally, for example, bonds, securities, direct borrowing among others (Davis, p. 32). Due to the increasing effects of global economic recession that was experienced recently, governments are increasing their national debts to cater for the increasing expenditure on unemployment benefits and to reconstruct industries which collapsed during the period. The reduced tax receipts have forced governments to increase their national debts to fill the gap created by the reduction in tax payment (Wormell, p. 239).

The problems of having a national debt which keeps getting bigger
Increasing national debt increases the tax burden to the taxpayers. National debt is repaid from the income collected from taxpayers. Taxes create a huge burden to the citizens of a country. Increasing the debts creates an additional burden to the tax payers. Citizens to a country may lack confidence with the government when taxes increase. A good tax system should not over burden the tax payers (Taylor, p. 314).

National debts affect the value of the currency used in the economy. When a country borrows money, it spends it in financing national projects. This increases the money in circulation within the economy. Inflation increases as the prices of commodities persistently increase. Increasing national debt causes devaluation of the national currency. This is caused by the increase in value of the currencies from other nations operating in the global money market. Devaluation of the currency affects the performance of national activities and the burden of the debts increases (Harris, p. 191).

Trade deficits increase with increase in national debts. Trade deficit is the difference between the exports and imports. When a country increases its national debts, it uses most of its income from exports to repay the debts. This decreases the value of the exports and increases the value of imports. Increase in trade deficits affects the balance of payments to a nation. National debts affect the international trade since countries have a restriction on the amount to borrow and the payment patterns (Wormell, p. 233).

Increase in national debt increases the interest expense paid to the creditors (Carvounis, p. 197). The debts should be paid at a given interest at a given period of time. The interest expense is computed as expenditure in the national budget. This expense withdraws money from the economy since it is not a direct expense. The people of a country do not benefit from the interest expense but increases the tax burden. Increasing national debts increases tax burden to the taxpayers (Harris, p. 211).

Many countries have experienced debt crisis due to the increase in the national debt. Dubai crisis has been created by over reliance on national debt to finance national projects. The country has encountered a national crisis since the economy has been unable to repay the debts. The creditors have declined the offer to freeze repayment of the debt for six years. Most of the economic activities have been adversely affected. Unemployment has increased due to low national investment (Taylor, p. 312).

Conclusion
National debts should be used only when there is a crisis in the economy. There are many bad effects of national debts than the benefits to a country. The government should use other tools of funding activities since national debt create a big problem to the national economy.