Economics

I am a college student pursuing a degree in Economics. After this, I plan to take up a Doctoral degree in Economics at XXX University. I wanted to focus in the field of economics because I want to explore how a particular economy works and how it affects the lives of people. This interest was ignited when I went to Ghana, West Africa. For 2 months, I was a volunteer for the local orphanage. It was in this place that I witness first hand how deprivation to basic necessities such as food, water and shelter can significantly affect the way of living of many people. Because of the pervasive poverty in Ghana, I was further motivated to study the complexities of economics in order to come up with solutions that can eradicate poverty.
Moreover, I am particularly interested in studying world economy and the distribution of wealth. Because of this, I plan to become a research-oriented economist wherein I will concentrate on public finance, public policy, labor economics and political economy. Also, I want to contribute in building a more efficient and productive public policy for the equal distribution of wealth across the globe and to study public spending of the government.
In order to achieve this goal, I have taken up courses on Public Finance, Labor Economics, Advanced Mathematics and Advanced Statistics while I was in college. Also, I worked on Econometrics, Matrix Algebra, and Advanced Calculus. Through this, I was able to understand the flexibility and efficiency of public finance. To further enhance my knowledge and training in this field of study, I have joined in the Michigan Economics Society and Undergraduate Mathematics Club. I even served as a tutor in these prestigious academic organizations for a year to teach other students about microeconomics and macroeconomics. Aside from this, I also attended several informative seminars and presentations that have expanded my knowledge in economics and mathematics. With my incessant dedication in learning about economics and mathematics, I was included twice in the Deans list t at Pennsylvania State University in 2007.
Furthermore, my internship at KIEP (Korea Institute for International Economic Policy) helped me to discover how to perceive the real world through an economic perspective. I have worked alongside many prominent and experienced economists in South Korea in tackling the issue of FTA (Free Trade Agreement) with China. More so, I have also participated in several researches including The Strategy and Properties of Chinese Market (2008) and The Analysis of China-South Korea FTA Policy (2008). My main task in these two studies was collecting and organizing data. Overall, this internship facilitated my growth as an individual and as a professional. It also broadened my understanding of the processes involved in economics.
Through my hard work and commitment to learn, I was awarded as the Outstanding Mid-classman in Economics for the academic year 2007 to 2009. This achievement have further inspired me to improve the economies of nations particularly the underdeveloped and developing countries by reducing negative externalities and practicing an appropriate social insurance and tax system. In connection with this, I am very much looking forward in studying advanced public economics and conducting studies that are aimed in improving the tax system, providing efficient welfare programs and social insurances for various countries.
I believe that the faculty of the Department of Economics at XXX University is very experienced and research-oriented who can train me in becoming a knowledgeable and proficient economist. I chose this particular academic institution because it offers graduate programs in economics that are ranked in the top ten all over the United States. Given the opportunity to attend in this university, I would like to work under the tutelage Dr. Laura, Dr. Rhodes, Dr. Yoon and Dr. Poss so that I can learn from the best. Moreover, I believe that am prepared and well-equipped to take on the challenges of taking a doctorate degree and succeeding in the field of Public Finance. If I will be given the chance to take up the Doctoral program at XXX University starting this Fall 2010, it would be a great opportunity for me to prove my competencies and express my passion .

Oligopoly basically means a market that is directed by a small number of independent suppliers, which enables them to jointly exercise control over market prices, supply, and other market factors (Business Dictionary, 2009). These players provide predominantly comparable products that are mainly separated by promotional expenditure and heavy advertising. Because of their limited number, suppliers indispensably anticipate the impact of each others marketing strategies in order not to lose their market shares. Some of the good examples of oligopolies include petroleum, banking, automotive, and airline markets. In these markets, only a few big businesses dominate the market, thus making competition exceptionally complex for the new players in the industry. Accordingly, the participants in oligopoly markets can effectively create a sellers market.
I. Oligopolies Help Consumers
    In some cases, oligopolies benefit consumers in view of the fact that the product produced by this select group of independent suppliers are generally almost the same and, as a result, these suppliers, which are contending for market position, are mutually dependent with each other (Investopedia, 2009). Therefore, unlike monopolies, oligopolies sometimes trigger price wars between the suppliers. To illustrate, if a particular economy requires no more than 200 cars, and Company A produces 100 cars and a competitor, Company B, produces the other 100, then the price of cars of the two companies will likely be interdependent and, as such, will be somewhat similar. As a result, if Company A starts to sell its cars at a lower price, then it will expectedly get a greater market share thus, such situation will force Company B to likewise lower its car prices in order to maintain its market share. In this case, the consumers will benefit the most out of the price war seeing that low priced products are made available to them.
II. Oligopolies Help Income Distribution
    In an oligopoly market, only a few numbers of large independent suppliers compete among themselves. This handful of participants accounts for a moderately large market share. Oligopolies, therefore, help income distribution in view of the fact that selection of products is comparably limited, or the products and design offered by this type of market comes from an extremely limited group. In addition, independent suppliers of an oligopoly market indispensably take into consideration the reactions of their competitors to any change in output, product price, or types of non-price competition. Accordingly, because of this interdependency, the services and products of the independent suppliers are generally identical, which will likely result to equal market share and equal distribution of income. Moreover, it may also be possible that in order for the income to be somewhat equally distributed, the few suppliers may decide to undertake cartels or price fixing agreements. In view of the agreement, players can perform as if the market is nothing short of monopoly, capitalize on joint profits, and prevent revenue and price instability in the industry.

Adam Smith is one of the founding fathers of economics and he has contributed greatly to this field. The Wealth of Nations is one of his books that contributed largely in the field of todays economics. This book was published in the year 1776 and its contents are still highly valued today by economists. During the era when this book was published, competitions and free trade as means of gaining progress and encouraging innovation were not understood. The governments of that time used to give subsidies and also grant monopolies as a means of protecting merchants, manufacturers and farmers from their own countries so as to safeguard them from unfair competitions. Local cartels in that time were being operated by the gilds whereby artisans from one region or town were prohibited from going to other locations in search for work. The national and local laws also forbade the innovation and even use of machineries that were thought to be labor saving. As a result, poverty levels were high and accepted as the natural, inevitable and common to most individuals. This drove Adam Smith to come up and write his book The Wealth of Nations (Blatt, 2003).
Adam Smith, The Wealth of Nations
     Adam Smith felt that the restrictive nature of the government towards trade and economics or the mercantilist system were hindering economic development, moral and social improvement of individuals and enhancing poverty in the country. Adam argued that principles of competition and free trade could have changed this situation spurring economic growth and development, reducing poverty and even improving humankinds moral and social stance. To make his arguments vivid, Smith collected evidence from various places including China and Golconda mines where free trade had encouraged competition, leading to creation of wealth. The concepts brought up by Adam Smith laid the intellectual foundation of economic expansion brought about by free trade in the 19th century (Wiersema, 2009).
    Adam Smith measured the nations wealth by money, although money to him did not constitute or make up the wealth. He argued that this wealth was produced by the fixed assets but again those fixed assets did not make up part of the wealth. Lastly, Smith stated that fixed assets should be able to generate consumables that are subsistence enough to maintain resources and human capital. However, Smith did not include resources or consumables while measuring a nations wealth (Butler, 2001).
    To create wealth, Adam advocated for institution of superior markets mechanisms. He argued that by making the markets mechanisms superior, this would encourage free trade as well as competition thus improving innovation and contributing to the progress of a business as well as the total economy. Adam also argued that individuals aim is to maximize their profits and to do so, a person employs his capital in ways he feels are valuable. He argued that despite the limitations and imperfections of human beings, person gains expertise of his business as well as the economic needs and this expertise must be superior to that of other outsiders so as to make profit. This concept advocated for innovation and creativity as a means of creating differentiation and competitive advantage. The third argument of Adam was that government interference and restrain on both foreign and domestic commerce were foolish and dangerous. He argued that businessmen were better placed to judge the market situation than lawgiver or statesmen. Adam was also against mercantilist policies (Blatt, 2003).
Evidence of Adam Smiths principles in todays economy
    The principles of free trade developed by Adam Smith back in the 18th century are highly evident in the American economy today. American markets operate in a free market for most products where the forces of demand and supply determine the prices of commodities and services. As Adam argued, this has helped in increasing competitions in the market leading to high levels of innovation in businesses as they try to outdo competition. Competition has been essential for driving growth in most American industries leading to economic growth in the country and business development (Kilcullen, 1996).
    Adam Smith also advocated that government should not impose trade barriers to both foreign and local trade to encourage economic development and wealth creation. America today has decreased the number of trade tariffs imposed on both local and foreign traders and this has encouraged many companies to go global (emergence of multinational companies). America has entered into many trade agreements with various countries which have led to trade liberalization in the country. This is a principle contained in Adam Smiths The Wealth of Nations, although various modifications have been done on it (Wiersema, 2009).
    American economy is also characterized by private ownership of companies and businesses unlike the traditional mercantilist system criticized by Adam. As Smith argued, allowing private ownership of businesses would drive up competition and enhance development of human beings both morally and socially. This is highly evident in American economy. Individuals from all states and outside the country are allowed to freely interact and conduct business as long as such endeavors do not violate the business laws. This has encouraged exchange of ideas, innovation and healthy competition in American economy that has helped reduce the poverty level.
    To a large extent, Adam Smith seems to have favored the right of workers as he highly criticized landlords who were charging high rents for their buildings to businesses. Adam viewed labor as crucial to economic development of a country. Today, labor is also highly valued as a means of improving the overall performance of an entity (Butler, 2001).

The psychology of economic analysis is basically based on the Mathematical-Metaphorical (M-M) argument think about activities that are legal when done for free but become illegal when done for money retrieved from the freakonomics The New York Times Blog by Eric A. Morris, in reference to the taxi medallion practices when the taxi drives the passengers around it is a crime when it is done for money, but legal when not done for money ( HYPERLINK httpfreakonomics.blogs.nytimes.comhttpfreakonomics.blogs.nytimes.com) The article analyzes the argument using the Four-Part-Framework to determine the validity of this argument for better classification I will refer to the pro-medallion for the argument and the anti-medallion against the argument in the analysis of the argument. I have used the FPF to bring the understanding of how the M-M works. This is an effort to make the dynamics and nature of unemployment to be clearer. I therefore use the Mathematical-Metaphorical model surrounding the unemployment. The Shapiro and Stiglitzs Mathematical-Metaphorical Model is used in this analysis to find out the validity of the argument (Davy 22)
My argument will be opposing the blog argument, it is not a crime driving the passengers around in a taxi for the purpose of cash. the general comments in response to the blog argument were as follows its unfair to the cab operators, we must decongest the city, the cost on government regulation is higher than the benefits the cabs generate, it should be an enterprise run by the government like in Dubai, common strategies are better solved by the government institutions, it feels safe and secure when driving in a licensed taxi, its too late to reverse everything among others.
Bellow is a list of correspondences catalog
Wage-w
Unemployment- u
Job effort- e  O
Enjoyment related to work- u  w-e
Shirkingq
The solutions concept of the model
Maxe (V(e, . )) V(e, . )  VN
E(e, . ), VS E(e, . )
subject to e  0,), w  0,)

The model solution report
(For e  0, )), e  is expected to be at a positive point where e   0 if and only if 
The solution above can be interpreted on two levels
According to its own I.F terms
And according to the I.F primary subject terms
(For e  0, )), e at some point will be positive e   0 only if
The statement can be classified TRUE- it does not go against the model set-up and the mathematics relevant rules (Ravenhill 45-46).
The truth is dependent and has NOTHING in common with the mentioned phenomenon in the phase delimiting.
Here are the acrual mathematical implications of the model
When w is higher it will lead to
increase in the value of wage e,
increase in the value of Vu,
decrease in the value of shirking q,
increase in the value of r,
Increase in the value of b.
This interpretation have a direct link to the rate of unemployment, the 5th equation has numerous impacts. If the company pays enough or high wages then it means the employees will not shirk. When the critical wage (w) is on the higher side then
1)  The higher is the effort required (e)
2)  The higher is the utility expected in relation to unemployment Vu.
3)  The higher is the effort required (e)
4)  Lower is the shirking probability (q)
5)  The higher is the interest rates
6)  The higher is the exogenous rate of quitting (b)   
Lets now compare the solution to the two interpretations
    It is to double standards because we are forced by the metaphor to look at the model in 2 different perspectives and secondly because the models I.F projection on primary subject is the metaphor essence. The statement is therefore threefold it is mathematical and we can therefore only use the relevant mathematical rule, it also either be wrong or true and finally the interpretation incorporates mathematical implications. It is evident that when the catalog correspondence is actually natural then implications too are natural. On the other hand CC is an assertion that is metaphorical, therefore the interpretation can only come out plainly true ONLY to the level that we are willing to accept that CC is plainly valid.
Interpretation and hypothesis testing (Ravenhill 60)
My claim (Null Hypothesis) the higher the level of work target, the higher the wages
Hypothesis 1 the higher the level of work target, the lower or the wages remain constant (meaning that if we dont experience the hypothesis one above we reject this hypothesis and its theory). On the other side if we experience the relationship mentioned in hypothesis one then we accept the theory.
    In this hypothesis Data is collected from the feakonomics web blog. Decisions which are obtained concerning the behaviors that can be observed counts as a case of theoretical concept are in most cases arbitrary. Two problems exist here data and theory disconnect and observed situation questionable re-organization. A regression is test is done to find the hypothesis on the two problems. If we get a negative result the hypothesis is definitely rejected or claim that the tees was not done properly, there must have been some faults during the test.  In case the test gives positive results, we conclude that maybe the theory of or the hypothesis is correct. Positive results may also be because of bad data collection or bad reorganization or non sensual reorganization.
Another example of interpretation and hypothesis testing on the omenssigns study (the ancient Roman Augury)
Hypothesis 1 Emperor will not die until 5 years from now.
Hypothesis 2 The opposite.
At the end of the five years, he dies (real outcome after five years expire) the big question here is how do we interpret the outcome Compare this kind of phenomenon to political science situation on the regime longevity prediction. Using economic data and demographics to analyze this will give a prediction with survival chance of 95.
    Lets take the Augurs theory, Gods governs the world, omens reveals his state of minds and actions. According to the theory of political scientists, politics is actually a mathematical order.. Assuming that all these theories were 90 right for the last 10 years, interpreting testing results that are perceived to be good as the goodness theory evidence, need a belief in the CC goodness. On interpreting this phenomenon, Epistemology and Ontology issues come in.
    This is to basically cover the actual argument question, adequate justification and how one can actually needed justification. The ontology subject is the taxi medallion argument, people try to justify whether the government should live alone this sector of the economy for it to continue operating on its own without regulations, others argue for government regulations on the taxi industry through the medallion system of the government. The question or rather the economic facts behind this argument are basically the economic impacts of non-regulation and the economic impacts of government regulation which one holds more water This is the fundamental argument and analysis behind the essay. The analysis use the methods listed above to determine which of the two arguments according to the individuals perceptions or the feelings in their minds on the issue.
    The elements of science in the initial analysis on discourse possibility would be basically based on difference in disputes levels and the loss magnitudes in each case that is for pro-medallion argument and the anti-medallion argument. The government will be the structured pursuit in the science element, the actual facts on the ground, and how justification can be met in both stances. It should come out clear at this point that the argument is a perception on illegality of the government regulation on the taxis, one can feel that it is legal while the other will suggest that it is legal and should therefore be regulated.
The Pro-Medallions Claim
    The anti-medallion argues that lack of control on these taxi systems would mean congestion in the cities. Congestions have direct negative impact on a countrys production and ultimately the economy. There is also an argument that the government would charge a lot on licensing, taxation among others making it very expensive for the taxi operators (Robert 200).
The pro-medallion ontology   
    The facts listed below are the facts on the ground on the argument for controlled government regulation. They give the right characterization of the argument in the actual field rather than the arguments sampled from the blog.
It is actually a fact that the city is being congested by too much taxi operating in the city center.
The city congestion have direct negative impact on the economy slow movement into and outside the city which slows down the rate of transportation of goods and services in the stores, slow down in general economic production level of labor among others
the government cannot live some sensitive sectors of the economy like transport to under the control of the private sector or for the free market systems
The tourists dependence on taxi transport is not a long term economic benefit in the long run it becomes bureaucratic. Decongesting the city streets would actually improve an economys GDP drastically.
Truly we cannot argue for city congestions by the taxis to add any economic value.
    It is justifiable that the government is the only genuine source of convention in sensitive matters than any other institution. To find the government as necessary we should refer to the government legislation laws, rules and regulations and above all the constitution putting all the sensitive matters like security to the government intervention (Robert 305).
    On the analysis derived from the above, it is clear that epistemology and methodology are driven by ontology. The fact that the government is the controller of all sensitive matter relating to the country means that the taxi issue can only be solved by the government. Therefore to find a better solution to this, we must look to the government for intervention, the constitution, laws and regulations must be referred to give appropriate way forward ( Todd 43, 99-102).
The Anti-Medallion Claim   
    The pro-medallions claims that the current world fully or partly depends on the taxi systems, for transport especially by the tourist visiting country and they are not budgeting to buy their own cars for transportation in the foreign country due to saving on costs. This group of people has to be negatively impacted if the taxi sector is rather wiped out. The backbone thought of the anti-medallion argument was basically on sympathy, or sympathetic arguments for the agenda that it is simply unfair to the taxi operators who put a lot of efforts in their work.
    The anti-medallion ontology is rather not the actual picture existing in the field out there. The argument or feeling of sympathy controls everything that the anti-medallion will use to put all his arguments for war (Patricia 334). The tourists are currently not 100 dependent on the taxi system of transportation, they have organized their transportation with the various tourists agents that manages almost all of other affairs including efficient and effective transportation, and this renders the tourists argument redundant. Furthermore there seem to be a bundle in the Epistemology and the Methodology, the government regulation in fact does not exist here, it is more a methodology than it is to ontology.
Anti-medallion Epistemology and methodology
    What is considered knowledge here is the justification by sympathy on the taxi people operators and to a low extant the free market, there is no government intervention in this argument. The source of knowledge here is weak the law of demand and supply should be given a chance to take control of the situation which is already a problem to the economy. The methodology of pro-medallion argument is a free market which is basically a natural science. The theory of free market generates a hypothesis which is falsifiable and compares hypothesis predictions in a graph or chart analysis (Matsuda 55).
The Anti-Medallion Ontology
    The actual facts on the ground that is we cannot predict the outcomes in the end of everything, that is to say there are two positions congestions in the cities are actually not a problem, the system of impacts of free markets application on the taxi system may or may not be economical in the long run. There is actually agnostic limitation on perception in the anti-medallion that all the economical aspects must be driven by the law of supply and demand, a free market economy.
    The significant part of the above analyses lies in the comparison of the two elements, the pro-medallion and the anti-medallion argument as in figure 1 below.
    At this stage of the analysis it is vital to raise the questions like should regulation of the taxis exist or not, are there special and unique occurrences in the economy at some times Is the government intervention definitive are there other ways of intervention better than the government What is the importance of analyzing empirical sources of evidence And lastly what factors can we consider in classifying an argument as convincing
    in this discussion discourse is possible in ontology level for example it not contradicting in real sense when I espouse that the government say is final on all issues concerning the economy. But it is a no on the Methodology and Epistemology because there is no authoritative answer to the argument because illegality is a formation of the mind furthermore we dont have a way to adjudicate the differences.
    This brings us to the analysis and understanding of ontology, Epistemology and Methodology in the context of Rationalism Versus Empiricism and finally Induction and Deduction analysis tools. The guiding factor in our belief here is the scientific approach of economics stud are earlier beliefs about the epistemology and ontology for example trust in the government Empiricism versus Rationalism.
    according to Francis Bacon, on Empires approach, the mind cannot be set free from the daily influences from the experiences and that it is not possible to abstract from all the daily experiences, we should therefore innovate ways for appropriately using experience. We should therefore use experience in situations like the taxi medallion issue to investigate the situations involved and get a proper understanding of the situation (Northoff 33). we can therefore allocate the resources of the government in regulating the taxi industry, and economics is the right subject that does such scientifically studies, they have used the right experiences, principles in generating and governance of the experience, and it is obviously in a perfectible competitive market. In the experiments we can see that government regulations are directly correlated to the performance of the economy in the sectors, we can therefore reach the principle through induction  all government regulations on poorly performing sectors increases production and therefore numerous spillover effects (Freedman 56-90). We can also test the principle since when we encounter a GDP reduction.
    The big question or rather the puzzle is how to make sense of such a difficult phenomenon, we should in some way categorize the involved elements and come up with relationships or dynamics, we can therefore talk about the science of sympathy. Sympathy and incomprehension are associated thoughts, is there science of determining sympathy and incomprehension, and is it necessary. Rationalization can only be characterized as in outside, rational reconstruction and positive. How do we quantify sympathy then, through analysis (statistical), stories according to the experiences we have In the rationalist approach we interpret observations properly through life principles and rearranging into relationships and categories in our principles. On the other hand the empiricist approach came up with a theory from our life experiences, formulate the hypothesis and finally test it. the empiricist explanation is the identification of viable correlation occurring between the phenomenon ontology (phenomenon specification and the epistemology, methodology- relationship test and specification. according to the empiricist explanation sympathy could be on the category of the rich and the poor, the rich would not sympathize with the taxi drivers but would rather be comprehensive while the poor class would have sympathy on them (Westwood 66-67).

The term financial crisis is used broadly in many situations where some institutions which deal with monetary issues or assets suddenly lose a big part of their value.Back then in the 19th and also the twentieth centuries, most crises to do with the finance and the economy were linked with bank panics so many recessions also coincided with these particular panics. There are many other situations that are termed as financial crises, they include ss ptock market crashes, currency crises and the bursting of many financial bubbles. Thiaper aims at looking at the current financial crisis in America, it is causes, and how it has impacted the economy and families.So many economists have tried to give theories of financial crises how it starts, how it develops and how it can be prevented. There are different types of financial crisis Banking crisisDemyanyk and Van Hemert (2008) clearly explains that, there is a point when a bank suddenly experiences a rush of withdrawals by depositors, this is often called bank run. Banks in most cases lends out most of the cash they get in deposits, it is hard for them to rashly pay back all deposits if these are demanded all of a sudden, and so a run may actually leave the bank in a state of bankruptcy. This may cause the many depositors to lose their money or savings, so they are supposed to have fully taken cover by the insurance company deposit insurance. There are situations which bank runs are widespread this is termed as a systematic banking crisis. And in situations where by there is no widespread bank run but the bank is simply reluctant to lend people money since they worry that they have little funds then it is called a credit crunch. Because of this, banks are usually an accelerator to all financial crises.
There are several banks that were affected Northern Rock in 2007 and in 2008 Bear Stearms collapsed. The 1980s United States loans and savings led to a credit crunch which is taken as a major reason in the US recession of 1990-1991. Speculative bubbles and crashes (Demyanyk and Van Hemert, 2008)
It is said that a financial asset exhibits a bubble when the price it is at now is greater than the present value of the income it will attain in the future, one gets this owning to maturity. An example of a financial asset is stock and an example of future income is interest or dividends. If the buyers who participate in the market buy the assets for the sole hopes of selling them later at a higher price, instead of simply buying them for the income it will generate, this is definitely shows that a bubble is present. When a bubble is present, and further more there is a peril of crash in the asset prices buyers will go on buying so long as they expect others to buy too, and so the time the majority of people want to sell, the value will go down. Really, it is hard to tell whether an assets price equals its real value, and hence it is not an easy job to detect bubbles (Demyanyk and Van Hemert, 2008).
Economists say bubbles occur very rarely if ever they do occur. Perfect examples of bubbles and crashes in stock prices are The Japanese property bubble, the deflating United States bubble, the dotcom bubble and also the Dutch tulip mania.
International financial crisesA country which maintains a fixed exchange rate when forced to devalue its currency since it feared a speculative attack, this is known as a currency crisis. When a country fails to give back its sovereign debt, it is known as a sovereign default. Devaluation and default could both be decisions of the government, but they are perceived to be involuntary results of a change in investor order which can lead to a sudden stop in the capital flows or even an increase in capital flight.There are examples of several incidences there are some currencies that summed up in the European exchange rate mechanism they suffered a crisis in 1992-93 and so were forced to devalue or simply back out from the mechanism. Also in 1997-1998, many Latin American countries defaulted due to their debt in the early 80s. Also the Financial crisis in the Russian government in 1998 led into a devaluation and as a result it led to a default.
Wider economic crisis
Negative Gross Domestic Products (GDP) that lasts two and more quarters is known as recession. A very prolonged recession is called a depression. And a long and slow period but not necessarily negative growth is known as economic stagnation.An example is the great depression, in which many countries there was bank runs and even stock market crashes. Also the sub-prime mortgages crisis and the bursting of some real estate bubbles all round the continent led to recession in the US and other countries in between the years 2000 and 2009.Background information of the global financial crisis (2000-2009) The global financial crisis has been the worst crisis in relation to the Great Depression that emerged in the 1930s. it attributed to the failure of major businesses, declines in the consumer wealth which was valued at more than billions of the US dollar, small financial commitments incurred by governments, and further a decline in the economic activities.Many causes have been suggested, with different weights assigned to each by economists. All kinds of solutions have been implemented or are being considered so as to be implemented.The fall of a global housing bubble, which was at peak in the United States in the year 2006, caused the values of securities attached to the prices of houses to plummet after this damaged financial institutions all over the world. There were questions dealing with bank solvency, reduction in credit availability, and very low investor confidence had a huge impact on global stock markets, which undergone large loses. All economies went slow worldwide during this period and in early 2009 as credit tightened a little and decline of international trade was experienced. Critics argued that credit rating agencies and respective investors had not succeeded to strike a balance between the price and mortgage related products, and also that the government did not adjust its regulatory movements to address twenty first century financial market issues.The causes of the crisis
The most obvious and immediate cause was the upward burst of the US Housing bubble which had a peak at around 2005-2006. Very high default rates were experienced on sub-prime and also Adjustable Rate Mortgages (ARM), started to increase very fast thereafter. An increase in loan negotiations such as easy initial terms and an abnormal long-term series of rising house pricing had made borrowers to presume that difficult mortgages in belief that they would in quick time be able to finance again at more convenient terms. But at the time interest rates began to shoot and house prices started to go down moderately in 2006 to 2007 in so many parts of the United States, refinancing was now harder than they thought. Defaults and foreclosure activities dramatically went up as easy initial terms expired, the home prices failed to shoot up as anticipated, and ARM rates of interest reset higher (Demyanyk and Van Hemert, 2008).In the years before and which went to the start of the crisis in2007, major amounts of money flowed into the United States from fast growing in oil producing countries and Asia as a whole. The inflow of money made it quite easy to keep interest rates in the US too low i.e. from 2002 to 2006, which attributed to easy credit conditions, leading to the US housing bubble. Loans off all types (e.g. credit card, mortgage, and even auto) were easy to get. Also as part of the booms (i.e. housing and credit), the amount of financial license called Mortgage Backed Securities (MBS) and Collterized Debt Obligations (CDO), which got their values from mortgage payments and even housing prices, this greatly went up. This kind of financial innovation made institutions and other investors all over the globe to invest in the Housing market of the United States. Major global financial institutions that had borrowed funds and invested in sub-prime MBS got big loses as the housing prices went down. Failing prices resulted also in houses worth less than the actual mortgage loan, making a financial incentive to get into foreclosure.
Still when the credit bubbles built, some of factors made the financial system to expand and become very fragile. Policymakers didnt realize the increasingly crucial role played by institutions dealing with finances like investment Banks and Hedge funds, they are also known as Shadow Banking System (SBS). Some economists believe that these financial institutions had become as vital as the Commercial depository banks in giving credit to the United States economy, but these didnt comply with the same rules.  
These mighty institutions and also other banks which are regulated assumed major debt burdens while giving the loans and didnt have a good enough financial cover to accept big loan defaults. These defaults were similar to MBS loses, these loses forced the ability of financial institutions to give, slowing economic activity (Demyanyk and Van Hemert, 2008). Concerns of the stability of key financial institutions forced central banks to give money to facilitate lending and even further bring back faith in the paper markets that accustomed commercially, which are integral to giving funds to Business operations. The government bailed out major institutions and decided on implementing economic strategy programs, which needed a lot of financial commitments.
Growth of the Bubble
In between the years 1997-2006, the price of the normal American house increased by around 123. During the two decades coming to an end in 2001, the national median price of a home ranged from 2.9 to 3.2 times median household income. This ratio went up to 4.1 in 2004 and 4.7 in 2006. This housing bubble resulted in some owners of homes to finance again their homes at even lower rates, or simply financing consumer spending by seeing out mortgages the second time which is covered by the price appraisal.
In a certain award show, called Peaboy Award program, correspondents of NPR argued that a large pool of cash sought higher yields than those offered by the United States Treasury bonds early in the decade. More so, this pool of money had poorly doubled in size from around 2000 and 2007, still the supply of safe income generating investments hadnt become big that fast. . Investment banks on Wall Street tried to give an answer the demand using the MBS and CDO, which were given safe ratings by the credit rating agencies (CRA). In reality, Wall Street linked this large pool of money to the mortgage market, with very big fees coming up to all those in the chain of supply, from the many mortgage selling broker dealing with the loans to the very of small banks that actually did the funding to the broker, to the big investment banks behind them. By approximately around the year 2003, the supply dealing with mortgage started at traditional lending standards which had been already satisfied.
However, the very strong demand for CDO as well as MBS continued and started to drive down lending standards, so as the mortgages still could be sold together with supply chain. . Finally, this speculative bubble proved to be unsustainable.Easy credit conditionsRelatively Low interest rates encourage borrowing. From around 2000 and 2003, the federal funds by the Federal Reserve had lowered the rate targets from 6.4 to 1.1. The reason for this was to soften the results of the collapse of the dotcom bubble and the 11th month of 2001 attacks by terrorists, and also to fight the perceived risk of deflation (Woods, 2009).Also the pressure exerted on the interest rates was made by the U.S high and rising current account deficit, which took up together with the housing bubble in that year of 2006. Economists explained how trade deficits required the United States to borrow money from other countries, which bid up bond prices and made the interest rates low.They explained that between the years 1996 and 2004, the US current account deficit increased by almost 650 billion, from 1.5-5.8 of Gross Domestic Product (Woods, 2009). Giving funds to these deficits needed the US to be lent huge amounts of money from other nations a lot of the funds were mainly needed from countries with trade surpluses, and mostly from large economies that come from Asia and oil exporting countries. There is what is known as a balance of payments, and this identity needs that a nation having and operating a current account deficit must also have a capital account surplus of the same amount. Hence big and growing amounts of foreign funds flowed into the US to help finance its imports. This made demand for many types of financial assets, highering the prices of those assets while decreasing interest rates. Investors from other countries had some money to lend and this was simply because there personal savings rates was high or, or just because of high oil prices. They further referred to this as a saving glut. A flood of funds reached the US financial markets. Governments from other countries supplied funds by purchasing US Treasury bonds and so neglected a lot of the impacts of the crisis which were direct (Bernanke, 2007). US government used the money got from other countries to give finance consumption or to put up prices of some financial assets and housing. Institutions dealing with finances invested heavily on mortgage securities with their funds.
Sub-prime lendingas Woods (2009) explains the term sub-prime is used to refer to the quality of some borrowers credit, who has weak credit histories and a smaller risk of loan default than other major borrowers. The value of United States sub-prime mortgages was estimated at around 1.4 trillion as of February 2007, with over 7.6 million first-lien sub-prime mortgages outstanding (Demyanyk and Van Hemert, 2008). to add to the easy conditions of credit, it is known that all pressures from the government played a major role to increase the amount of sub-prime lending during the years before the crisis. Major United States banks and sponsored businesses by the government (Fannie Mae) played a major part in the expansion of higher risk lending.Predatory lending
Predatory lending refers to the act and use of unscrupulous lenders, to get into not safe secured loans for inappropriate purposes. A classic bait and switch method was introduced by nationwide marketing and advertising at quite low rates of interest for house re-financing. Those kinds of loans were written in contracts that were extensive, and switched with other loan products that were expensive on the actual day of closure. At times the advertisements would be stated as 2 or 1.8, still interest would be charged, here the buyer would be given an Adjustable Rate Mortgage also known as ARM- the interest charged is bigger than the paid interest amount (Demyanyk and Van Hemert, 2008). The credit consumer may not notice the amortization which was negative now but he may notice long after the loan transaction is over.
Deregulation
According to major critics, the regulatory framework did not match the innovations financially, just like the real need of Shadow Banking System (SBS), also the importance of off balance sheet financing. In some of the cases known, either the laws changed or the enforcement adjusted it in some parts of the system. Major examples includeIn  11th Oct, 1982, then the President (Reagan Ronald) decided to sign into law the Garn St Germain depository Institution Act, that started the process of Banking deregulation that assisted contribution in loans and savings crisis that occurred in the late 1980s and early 1990s crisis of finances of 20072009.
Woods (2009) asserts that in 1997, FED Chairman Alan Greenspan, fought to maintain the derivatives market unregulated. The Presidents working Group gave advice on financial markets, the United States head personnel, i.e. the president and congress just allowed the regulation of the over the counter (OTC) derivatives market that was when they put to act the commodity futures modernization Act of 2000. Some derivatives like credit default swaps-CDS are a time used to hedge against some various credit risks. The amount of credit default swaps outstanding moved to 100 fold from the years 1998 to 2008, with assumptions of the amount of debt covered by credit default swap contracts, that is as from December 2008, ranging from US34 to 48 trillion. The amount of OTC derivative value moved to 684 trillion by July 2008 (Woods, 2009).
Financial innovation and the complexity
Financial innovation is a term used to refer to the development of financial material set to make the clients happy, like offsetting various risk exposure or to help with getting finances. Good examples related to the crisis include ARM, the bundling of sub-prime mortgages into mortgage backed securities (MBS) or a times collateralized obligations (CDO) for resale to investors. The use of these products and more others really expanded in the years up to the crisis. These material products are different in ways of complexity and the way they can be estimated in terms of value using books of finance.
In accurate price of risk
Pricing of risks is the way compensation is required to be incremented by investors for having additional risks, this may be estimated by fees or other times using the interest rates. For many reasons, participants in the market didnt accurately measure of kinds of risks associated with financial innovation like MBS and CDO or get to know the impact on the whole stable condition of the financial system. Just an example, the way they price models for CDOs shows clearly that the risks level didnt show as they introduced it to the new system. There is the recovery rates average for high quality CDOs which is about 33 cents on the dollar, and the recovery rate for mezzanine using CDOs has been about 5 cents for a dollar. These big losses have made t0he balance sheets of banks all over the world making them have very small capital to keep on operating (Muolo and Padilla, 2008).
Commodity bubble
After the falling of the housing bubble, the commodity price bubble was created. The oil price was just about to triple from 55 to 145 from 2007 to 2008, just before the start of the crisis that took place in the late 2008. Economists have a strong debate on the actual causes which also include the flow of cash from investments like housing into other commodities to speculation and policies dealing with money or the increase feeling of material which is raw being scarce in economies that are growing fast. This makes those markets to have bigger participants like the increase of the Chinese in Africa. Also an increase in the prices of oil seems to make a larger share of consumers spend gas, this creates a pressure on the economic growth in the countries importing oil, and this makes wealth go to oil producing states.
Financial Markets Impacts Impacts on financial institutionsWoods (2009) explains that, the IMF estimated that the large United States plus the banks in Europe lost over 1.1 trillion in assets and also from bad loans from around January 2007 to around the eleventh month of 2009. The losses accrued are estimated to top 2.7 trillion from 2007-2010. The banks in the United States had an estimate of about 1.0 trillion losses and the European banks were estimated to reach about 1.7 trillion. The IMF estimated that United States banks were about 65 by their losses and the British Euro-zone banks were just 35 (Muolo and Padilla, 2008).
One of the victims was the Northern Rock, which was a British Bank. The very good nature of the business it did made it be able to request from the bank of England security. After being given, there was a bank run in the middle of September, 2007. Vince Cable who was then the chancellor of Liberal Democratic Shadow, made calls to make the institution to nationalize. These calls were ignored at first. And in February 2008, the government of Britain having not succeeded to get a private sector buyer, decided to relent and so the bank was in the hands of the public. The problems in Northern Rock were a clear indication of other similar problems to befall banks and other financial institutions later.
The very first time the kinds of companies affected were those that directly dealt with home construction and even mortgage finances such as Countrywide financial and Northern Rock, since they were not in a position to get finances via credit makers. Above 90 lenders of mortgages we re-known bankrupt in the period of 2007 and 2008. Bearing concerns and suggestions that investment Bank Bear Stearns would fall led to its fire sale to JP Morgan. The full height of the crisis was during the year of 2008 in the months of September and October.
There were some major institutions that were operational but acquired under duress or at times were under government takeover. These institutions were among others Lehman Brothers, Merrill Lycnch, Fannie Mae and even AIG.
Effects on the global economy Global effectsA group of experts have suggested that if the liquidity crisis keeps on, it is possible that an overlap of recession or worse is to happen. There were fears of doubt that the further development of the crisis could lead to a fall in the world economy. The crisis is most definitely going to have a huge effect on the banking industry since the loans and savings meltdown. The investment bank UBS clearly on October 6th 2008 stated that in this year there would be a global recession which could mean to recover it can take at least 2 and a quarter years.       
The UK had begun an injection into the banking system, and the worlds central banks were having there interest rates to assist the borrowers. The type of bank injection is known as system injection and the UBS stressed that the US should implement such system. They further noted that the major advantage of implementing such a system is to solve the crisis.
In Iceland, the economic crisis had three banks at its involvement. Comparing to its economical size, the banking collapse is the biggest affected by any country in the whole of history.
Demyanyk and Van Hemert (2008) explain that, around the end of October, UBS had a brief look at the events the coming recession was to be seen as the very worst since 1981 and 1982 with downward growth of the economy in 2009 in US, Eurozone, UK and Canada. To recover it in 2010 will also be limited.
US Economic Crisis Effects
The GDP i.e. the Gross Domestic Product went down at an annual rate of about 5 in the last quarter of 2008 and even the very first quarter of 2009. The unemployment rate actually went up by 10.3 by the month of October 2009, this is the highest ever since 1983. the hours per work in a week ratio went down to about 35. This is also the lowest ever since the government started getting data in 1964 (Demyanyk and Van Hemert, 2008)
Responses to the crisis
Short-term and Emergency Responses
There are steps taken for the banks all over the world to expand there money supplies in order to overcome risks of a deflationary spiral- lower wage against higher unemployment rates. This would lead to a decline in global consumption.
The government has also enacted some fiscal packages by borrowing and spending to have away the reduction in the area driven by the private sector demand made by the economic crisis.
Woods (2009) explains that, the global financial system was about to collapse due to the credit freeze. The Federal reserve and other financial institutions were immediate and dramatic in responding to the calls of the crisis. Just around the last quarter of 2008, there are various financial institutions that purchased about 2.6 trillion of government debt. This was the largest monetary policy action in the world history. The governments in both European nations and US raised the capital of their bank systems nationally by about 1.7 trillion they bought newly issued preferred stock in the big banks.
Governments in a whole have played a good role in curbing the crisis as they have bailed out a good number of firms that were incurring large financial obligations. Up to now some United States government agencies have committed so much money in trillions of dollars in loans, asset purchase, guarantees etc.
Long-term responses
The president of the United States, Barrack Obama and other main advisers began number of regulatory proposals in the month of June 2009. These proposals address very key issues like consumer protection, bank financial cushion, executive pay, expanded regulation of the shadow banking system and enhanced authority for the Federal Reserve.
Also a number of regulatory changes have been proposed by experts in economy, politics, journalism, business and all kinds of leaders to make the impacts be as low as possible and the current crisis and even prevent it from ever recurring (Woods, 2009).
Some proposals of solutions were said and noted but have not been implemented. These include
Start resolution methods for closing financial institutions that have troubles in the shadow banking system like investment banks.
Regulate companies or institutions that are bank-like.
Institutions that are too big and may fail should be broken up.
All insolvent banks should be nationalized.
Minimum down payments for home mortgages of about 10 should be. Required.

For many years, economists have been convinced that their discipline is a  scientific  one. That is, it relies solely on the disinterested mathematical formulations of the discipline itself and is therefore free from any moral, theological or cultural baggage. The thesis of the work under review is that this freedom is a myth the economic theology of all modern economists is that economics has no moral baggage and is purely a positivist approach to all things economics. What this myth does is ultimately blind those who both study economic life as well as live within  its nexus to the real condition of their society and their selves.   
    The  Adam  in the title refers to Adam Smith, the founder of what might be called systematic economics. Adam Smith systematized a much older notion concerning the personal and the social interest. The basic and simplified premise here is that this gap has been closed in that, under free competition, the person who seeks his self interest (financially speaking) will, in his need to convince consumers to use his services, be as pleasant and civilized as possible. Under free competition, the sins of personal greed are wiped away in social utility in the drive to gain profits and market-share, even the most selfish human being will act in the best manner possible so as to attract as many customers as possible. The real argument that Foley makes, however, is that this is a myth, and there is no real evidence that economic activity works out this way.
    Therefore, by the time one finishes the work, two stark propositions stand out First, that all economic activity is based around some idea of the good, some moral assumptions that serve to canalize economic life. Secondly, that the capitalist system worldwide cannot be called a  progressive  system, and in fact, cannot be seen as a system at all. Its results have been too uneven for that (227).
    More specifically, the main problem with capitalism is the huge gaps that exist among rich and poor states, as well as rich and poor classes within states. The rise of the bourgeois, the middle classes, sought to, so to speak, justify their actions through holding that their work was the  natural  mode of economic production and sought free markets for their trading activities (150-151). One of the central insights here is that this gradual  scientification  of economics serves largely as a cover that hides the real evil of class society, and that capitalist relations have no mechanism for equalizing (more or less) economic reward.
    While in the 1860s until the great depression, economics became a science, a science centered around self interest and its resultant social utility. The same can even be said of the Marxists, since, speaking simply, the self interest of the working class clashes with the self interest of the propertied class. This clash of self interest will lead, eventually, to a socialist society (133ff). In terms of economic growth, both the socialist and capitalist models are more or less equal, as the USSR, despite all its totalitarianism, modernized itself in a very short time. Both socialism and capitalism remain very unpredictable systems of production. The bias of the marginalist economists here is that all forms of economic life can be modeled, and economic science is thus dependent on these models. But models assume a regularity and a process of these systems that just is not present (157).
    Expanding the authors thesis then a little bit, the real question is the regularity of any economic system based on the transference of ego to social good.  The argument is that the models used by modern economists are in fact assumptions about how things should work, or even more amorphous, attitudes about the economic system that the economist wants to see adopted. What is easy to miss in this large work is that the real issues concern systematizing economic life and modeling it. Foley holds that it cannot be done, and the nature of modeling economic life has more to do with the biases of the writer than the actual way people think about economic life.
    All of this then comes down to the following issue if economic life is truly amoral, and yet few advocate pure amorality for all social life, then one is left with the very difficult and problematic situation where economic life stands in stark contrast to what the great majority of people hold to be socially moral action. In other words, while most hold to some version of social ethics, this ethic quickly dissipates as soon as one begins speaking of economics. Economics is the science of the ego, and a science that holds that the ego should be as unrestrained as possible (at least according to the SmithRicardo thesis). But who holds to this in all other areas of social action This is the problem. Economics seems to get a free pass in the moral realm that is not given to any other form of social action (32-33).
    The bulk of the work, despite its historical character, is exploring this contradiction. No economist of note since Smith has held anything else than the idea of personal interest, whether this be the isolated ego or the state or the class. Hence, all economic theory has this one problem in common   it seeks to understand, not control, the unfettered will. But in its more famous application to market economics, the assumption is that such unfettered wills will eventually lead to a stable equilibrium among production, demand and prices. What Foley argues is that there is no real basis for this assumption and again, it is based on faith. In the 20th century, socialism as an alternative mode of modernization has swept large portions of the globe, especially in the third world. The economic success of statist systems as Hitlers Germany of Stalins Russia, coming on the heels of the Depression began to worry people about the stability of the capitalist idea. The depressions and panics from the 1860s onward strongly suggested that the models of the marginalist economists were wrong, and there was no long term stability to be had in the capitalist system. Even more, it was also the case that the state had proven itself as worthy in the economic arena as the corporation had. The real force of mystification however, remained self-interest. The pursuit of self interest seems to negate any serious examination of the social whole (112 and 158). What developed in its place was a sense that one needed to accept current evils that will eventually be adjusted for in the future. Hence, the providential role of the self regulating economy became an object of faith, but an object that served to blind those to the condition of their own society.
    To reduce economic life to that of a  hard science  was the real move of the 20th century discipline. But this  hard science  served only the ideological needs of advanced capitalism. It sought to ignore moral concerns by holding that the current structure of economic relationships were a part of the self regulating whole. Nevertheless, the state was always called in to regulate many aspects of the economy throughout this period, throwing doubt onto the  self regulating  claims of what we now call the  neo-classicists.  Historically, from the destruction of the nobility to the centralization of state power over a large area, the state has been a central actor in the free market, a historical fact that modular economics continues to deny. The state is not the enemy of the free market, but is the enabler of the free market. It is the state that enforces contrasts, that has created the conditions for the market to develop and it is the state that destroyed the old enemies of the middle class, urban order. Today, the state is inherently part of the economy, seeking regulation in order to show some mercy to the poor. In a startling section, Foley quotes both Malthus and Ricardo as they sought to force the poor into an early death so they did not reproduce. This reproduction would have been economically inefficient, and hence, their deaths were a good things. Both Malthus and Ricardo opposed all poor laws of any kind, on the grounds that the poor, though who failed the struggle for economic survival, should be permitted to starve and freeze so that they would not flood the market with unskilled labor (84-85).
    This work is certainly worth reading. It is refreshing to see economics not shown as a cold, calculating series of equations and software programs. Economics is really about a moral attitude towards life. It is a philosophical discipline as much as it is a scientific one. It is part of the moral fabric of society for better or worse. There is no reason to hold that an institutionalized amorality in economics will not bleed into other areas of life such as the church, family life or respect for elders. Ego-centrism in economics has become a part of all areas of life, leading to disastrous results. The ego is the only real end in modern societies, which for Foley, comes from the utilitarian biases of economics as a discipline. The moral problems of capitalism will remain as long as the system goes from boom to bust, destroys the environment (in certain cases) and maintains a tiny class of billionaires. There is nothing systematic about capitalism   it is, as Hayek described, the mere clashing of interests. Clashing egos is the wellspring of progress (206). But is the clashing of egos creating progress in the family, or in poetry This becomes a problem. Does the clashing of ego serve to justify the control of the majority of social wealth by a handful of powerful families and firms

After the recession of 2009 and the creation of the European Currency and Union, there will be significant changes that will take effect worldwide, and in the US and European continent. The creation of the euro signalled the shying away of  Europe from the importation of the dollar as its reserve. It should be noted that the US dollar is the export commodity of the United States which makes its economy as what it is today. Europe finally realized this and, without much funfare, silently  separated itself from the exploits of the american curency which is, and still being used as reserve by other countries, used as the monetary reserve of all countries dependent on imports and exports. This move creating the, now, stronger euro paved the way for European integration.
    The control of NATO in European soil by the Americans is another area where change will occur. The imperialist tenor of America will be trimmed down and controlled in Europe by the European Community. Europe, as Europe, requires a continental military cooperation itself.
    Trade and commerce will also be another area where the definition of American and European business will see a definitive change where both will polarize to their own poles. As the world is generating economic information, countries that will utilize these information to the solution of economic problems will merit massive embellishment. Vested interest will be mastered and selfish intent can no longer be allowed to deceive and prevail.
    It is a known fact that there are only two resources in the world to use for our economic engagement to satisfy human wants the human and the environ. In order to resolve the issues of poverty, war, disease, scarcity and the ills that the market economies have created, the direct utility of the the human to utilize the environment to satisfy human wants scientifically in the true egalitarian essence is no longer a utopic idea. It is the only available idea to arrive at an economic embellishment without disregard to all men and the environment. If and when this information is dissimenated and decided upon by the rest of the world for utility, the American framework will reinvent itself. Europe will be a vastness of potential and America, its own. That is where the difference will be visible, unless the whole of mankind decides to party Its about time...