To what extent, if at all, is it true to say that Derivatives are Essay

To what extent, if at all, is it true to say that Derivatives are toxic weapons of financial mass destruction - Essay Example In the context of financial market booms and busts, derivatives are often criticized for artificially (yet inevitably) creating these cycles. For this reason, it is not unreasonable to claim that ‘derivatives are toxic instruments of financial mass destruction’, although they have their utility when employed prudently. The role played by derivatives during the 2001 dotcom bubble as well as the more recent 2008 crash of global equity markets is now beyond doubt. The sovereign debt crisis in Greece and Italy are notable examples of the dangers associated with derivatives. Yet, in an atmosphere of deregulation of financial markets, traders and merchants using this controversial financial instrument are given greater incentive to take risk. In other words, the present legal and regulatory climate encourages corporate greed and irresponsible risk-taking, which can only lead to economic crisis. As the case of the collapse of Lehman Brothers in 2008 clearly illustrates, the unrealistic ambition of CEOs of large corporations is facilitated by derivative instruments. For example, Henry Fuld, the Lehman Brothers CEO who took his company to bankruptcy, had earned $350 million as compensation in the three years before the collapse. This figure is comparable to the money earned by Henry Ford, the founder of th e Ford Motor Company in the three years leading up to the Great Depression. The deregulated economic environment of the Coolidge years is quite similar to the right-wing economic policies implemented by the Bush Administration during its 8 year tenure. It seems remarkable that in spite of several episodes of recession in the last sixty years, the legislatures of advanced economies have not been suitably amended to mitigate future recessions and stock market collapses. To be fair to derivatives, they can perform some useful economic functions. Due to augmented activities by derivative

Integrated Communication Marketing Assignment Example | Topics and Well Written Essays - 500 words - 4

Integrated Communication Marketing - Assignment Example The shareholders face a reduction in business growth, owing to the negative publicity of the company, which, reduces their profits. The management also suffers from the bad reputation as they report significant loss of business to competitors. Employees, on the other hand face the association of an immoral organization, which does not contribute positively to their self-esteem. External stakeholders include customers, the local community, as well as competitors (Strydom, 2005). The publicity of the company affects customers negatively, thus denying them an opportunity to dine at a restaurant they had previously enjoyed. The local community suffers from the immoral show that focuses on Olive Garden, which does not promote family values. Competitors enjoy the increased flow of clients to their organization as they move from Olive Garden. For casual observers of media, the â€Å"Sexiest Girls of Olive Garden† would appear as a sponsorship by the Olive Garden Company. This follows the idea that most programs search for organizations that can sponsor them, and then include their names in the event or program as a way of promoting their business to the audience. This event can be seen as one that had damage control programs in order. The overlap between the individuals who dined at the restaurant, and the people who watched the girls’ next-door show presented an effective control mechanism (Clow, & Baack, 2013). The group that dined at the restaurant consisted of more women than men. In relation to this, more women than men watched the show, thus allowing Olive Garden a perfect opportunity to gain greater publicity from the show. I disagree with this proposition as the show associated with Olive Garden was a complete opposite of the values that a family would support. Taking photos of nude people does not in any way depict the values a family should promote, hence does not attract positive publicity for the organization. If you were the public