Hedge funds Essay Example for Free

Hedge funds Essay In order to better understand how hedge funds played a role in the recent crisis affecting the financial market, it is important to first understand how hedge funds work. Hedge funds are similar to mutual funds in that money is pooled from investors and then invested in selected financial instruments in order to gain a positive return. Hedge funds however are not monitored by the Securities and Exchange Commission since the securities they issue are considered as private offerings. In order to get the maximum return for their investors, hedge funds often employ strategies like investing in ventures that have high risk. One way of doing this is through derivatives. Derivatives are financial instruments that gets if values from the value of a particular underlying asset like bonds, exchange rates and commercial real estate loans. Another way that hedge funds obtain good returns is by employing the strategy of arbitrage. This is actually just exploiting the pricing inefficiencies with respect to certain related assets. A hedge fund for example can buy shares of a company from one exchange and then sell them to another which ensures profit. Aside from the strategies it implements, hedge funds typically face large risks themselves. This is because hedge funds are highly leveraged. Hedge funds borrow money that is greater than what was originally invested. It is not unusual therefore for a hedge fund to borrow $20 for every $5 that it gets from an investor. So how does all this fit in the recent crisis faced by the financial market? In order to answer that, one has to look at how subprime lending works. The basic premise of subprime lending is to provide loans to people who are not qualified to obtain them in the first place. These borrowers did not qualify due to some factors like credit history and income level, to name a few. In the past, when banks loaned money, it was the one who faced the possibility of default termed as a credit risk. Current practices in the financial market however have allowed banks to sell these mortgage payments as well as the credit risk involved to investors. This method is known as securitization. As a result, instead of having to face the credit risk alone, banks are now able to â€Å"spread† these risks to a large number of investors. The problem arose when lenders, who had initially obtained loans on the idea that they would be able to refinance them on more favorable terms, were now faced with higher interest rates. Consequently, prices of real estate dropped which lead to foreclosures and defaults. As a result, banks and other financial institutions were faced with losses leading to the financial crisis. Now as the banks continued to distribute the credit risks, these investment were considered high risk and high yield. Which of course made them lucrative for hedge funds. Thus as the risks related to these securities increased, it made them more viable to be placed with investors that had high leverage. Hedge funds became a likely source of investors since being unregulated, they had no need for capital requirements. Thus when these funds were unable to sell the subprime mortagages, especially since they were hoping to only hold it for a short time, they went out of business which actually contributed to the crisis. To get a better picture, let us look at two strategies employed by hedge funds already mentioned earlier. First is derivatives, particularly credit default swaps. Credit default swaps, or CDS as they are often called, are insurance contracts that are used to protect bondholders in the likelihood of default. CDS are considered as two-party contracts since a company that incurs a loss will be able to gain a profit somewhere else ensuring that there is no actual loss. Recent market practices however have allowed CDS to be used either speculatively or even as insurance to a specific credit risk. The problem thus arose when there was uncertainty as to who would pay for these losses. Such was the case with Lehman Brothers. Hedge funds, which are highly leveraged to start with, put investments in Lehman. It is possible that due to these investments, Lehman was also able to invest in CDS. When Lehman was unable to sell its CDS, it was eventually forced to file for bankruptcy. Another practice of hedge funds that could have contributed to the crisis is securitization. The market practice of allowing securitization also allowed the banks to put the debt that is associated with these same securities into SIVs or structured investment vehicles. SIVs are considered as entities that are in off-balance sheets. Because of these status, the increase in risk meant and increase in yield. Hedge funds therefore were drawn to these since by not being in the books, the requirement for capital reserve was circumvented. Former Federal Reserve Chairman Alan Greenspan is even quoted to have said that it was the securitization and not the loan that was the cause of the crisis. While we can conclude that hedge funds contributed to the current financial crisis, they are not the sole factor and possibly not the originator. Hedge funds by themselves also have positive impacts on the market. Because of their strategy of having arbitrage, they are actually helping reduce or even eliminate the mispricing that is currently prevalent in the markets. Despite being highly leveraged, hedge funds can actually provide the needed liquidity for companies. This was seen when the hedge fund Cerberus bought the ailing Chrysler company allowing for jobs to be saved. The practice of hedge funds investing in high risk investment have become a good source of risk transfer as well as diversification. While the crisis may not signal the end of hedge funds, only time will tell if they are truly a help to the market or a mistake. References: U. S. Securities and Exchange Commission. Hedging Your Bets: A Heads Up on Hedge Funds and Funds of Hedge Funds. Retrieved November 8, 2008, from http://www. sec. gov/answers/hedge. htm Research RECAP. (2007, December 21). Role of Hedge Funds in Subprime Crisis Examined. Retrieved November 8, 2008, from http://www. researchrecap. com/index. php/2007/12/21/role-of-hedge-funds-in-subprime-crisis-examined/ Federal Reserve Bank of New York. (2004, November 17). Hedge Funds and Their Implications for the Financial System. Retrieved November 8, 2008, from http://www. ny. frb. org/newsevents/speeches/2004/gei041117. html/

Free Speech, Censorship, and Self Determination Issues in Protests against the Chinese Government :: China Government Research Politics Papers

Free Speech, Censorship, and Self Determination Issues in Protests against the Chinese Government Introduction As a Chinese American, I have long admired the African American culture that spawned the civil rights movement. Here was a people buffeted by a history of discrimination that asserted its equal rights as men and women. Whether advocating nonviolence and integration or separation and violence if necessary, these men and women used and asserted their freedom of speech on the streets, in writings, and on the airwaves. Today we see China growing rapidly in economic power yet shaken by protests by workers displaced by the closings of state owned enterprises and migrant workers treated as second class citizens. We see organizations, from the Chinese Democratic Foundation to the Falun Gong, advocating and asserting human rights. The Chinese government has been relentless in "nip(ing) those factors that undermine social stability in the bud, no matter where they come from."(7) Many human rights organizations and dissident organizations have turned to the Internet to protest these government actions and to communicate, inform, and advocate their message to both the Chinese people and to the rest of the world. As a believer in protests and freedom of speech and someone who wants Chinese culture to grow, I should be a staunch supporter of these organizations and their actions. Yet, I am torn. What's Happening In China China is undergoing rapid and violent change. China has the fastest growing economy in the world, growing at 9.1% clip in 2003. SFGate recently reported on Shanghai novelist Mian Mian whose tale exposing an underground of rock, drugs, and promiscuity is reminiscent of America in the 60's. The number of Chinese Internet users is estimated at close to 80 million. A new generation of artists have appeared on the scene, wryly commenting on China's rapid change. China, nominally communist, seems freer than ever before and its future looks bright. Yet, you also hear reports of corruption, of large and growing underclass, and renewed repression. It seems that partly fueling China's engine of growth is a near inexhaustible supply of cheap and desperate labor spawned by the closing of state owned enterprises (S.O.E.s) and an impoverished rural population. These hardships have spawned a migrant labor population, estimated to swell to 100 million this year, that has flooded urban centers looking for work. These workers are denied education, medical care, pensions, are locked out of most jobs, and are vulnerable to labor abuses.

Plant Biotechnology

Define plant biotechnology. Using examples discuss how it is different from traditional / conventional methods plant breeding. Plant biotechnology has been defined as the integrated use of biochemistry, microbiology and engineering sciences in-order to achieve technological application of micro-organisms and cultured tissue cells in the transfer of genetic traits from one crop species to another to obtain transgenic plants that are of beneficial use to human kind (Lawrence . W; 1968).Heldt H and Heldt F (2005) defines plant biotechnology as the art and science to produce a genetically modified plant by removing genetic information from an organism, manipulating it in a laboratory and then transferring it into a plant to change certain of its characteristics. . Plant breeding is the science and art of improving crop plants through the study and application of genetics, agronomy, statistics, plant pathology, entomology, and related sciences (Kuckuck et al; 1991).Increased crop yield is the primary aim of most plant-breeding programs; advantages of the hybrids and new varieties developed include adaptation to new agricultural areas, greater resistance to disease and insects, greater yield of useful parts, better nutritional content of edible parts, and greater physiological efficiency. Humans have been improving crops for yield and other characteristics since the advent of agriculture. Plant biotechnology involves processes such as genetic engineering which involves the direct addition of foreign gene/genes to the genome of an organism.It is a type of genetic modification. Traditional plant breeding also modifies the genetic composition of plants. It involves techniques such as crossing and selection of new superior genotype combinations. Firstly traditional methods tend to breed plants that can sexually mate with each other. This limits the new traits that can be added to those that already exist in that species. Secondly when plants are crossed, many traits are transformed along with the trait of interest. Whereas genetic engineering, on the other hand, is not bound by these limitations.It involves the removal of a specific fragment of DNA from one plant or organism and transferring the genes for one of a few traits into another. No crossing is required hence the sexual barrier between species is overcome. It is more specific in that a single trait can be added to a plant (Bajaj . Y; 2001). According to Rost . T. I et al (2006), another difference between traditional plant breeding and plant biotechnology is the number of genes transferred to the offspring in each case. Plants contain approximately 80 000 genes which recombine during sexual hybridization.The offspring may therefore inherit around 1000 new genes as a result of this recombination. This is equivalent to a 0. 0125 % change in the genome. By contrast when a specific gene is transferred into a plant, there is a 0. 0025% change in the genetic information of the plant, it is argue d that plant biotechnology provides a more precise approach to crop improvements than sexual hybridization. Plant biotechnology through genetic engineering can cause harmful toxins to be produced by transformed plants, though it is still unclear whether it is due to the technique itself on the nature of the foreign gene.The introduction of a gene that it is known to encode a toxin in one organism will induce a similar effect when introduced into a different organism (Raven P. H et al; 1992). There has been a case where a transgenic soybean containing a gene from Brazil nuts elicited an allergic reaction in some people. The gene from Brazil nuts had been well characterized and its product known to cause an allergy, hence extensive laboratory tests. This illustrates why rigorous characterization of a gene is required before permitting its introduction into a novel species.However there is also the potential of toxic product being produced as a result of conventional methods of crop im provements. For example, in sweet potatoes where vegetative propagation is done, potato varieties with increased pest resistance have continually been selected as giving a higher crop variety. Those varieties contain high levels of natural pesticides, called glucoalkaloids. However these compounds are toxic to animals, so could have harmful effects when eaten.This demonstrates that the nature of the novel feature should be open to debate rather than the method by which it is introduced (Lawrence . W; 1968). The traditional methods of crop improvements are limited by the sexual compatibility of the plants involved; whereas with plant biotechnology through genetic engineering any characteristic from any organism of any species can be introduced into a plant. Plant breeders therefore have access to a much wider gene pool than they have using traditional crossing methods to develop a new variety.For example a rice gene responsible for defense against a disease causing fungus can be tran sferred to a banana susceptible to that disease. The intent is to protect the genetically modified banana from that disease and thereby reduce yield loss and number of fungicide applications. Another example is that genes introduced into plants to provide a resistance to the herbicide Round Up was isolated from bacteria. An insecticidal toxin used as a crop spray was also extracted from bacteria. Genetically modified maize is been grown which expresses this type of proteins.One major difference between traditional plant breeding and plant biotechnology; genetic engineering/ modification is that, while extensive restrictions are in place to limit the development and release of genetically modified varieties, those developed by sexual hybridization and mutagenesis are under no restrictions (Raven P. H et al; 1992). A major concern surrounding the cultivation of genetically modified crops is the possibility of cross pollination between transgenic and related crops.While this is clearly possible for some species, but not all crop species have native wild relatives with which they are sexually compatible meaning that the possibility of the production of â€Å"super weeds† is not possible. Plants such as carrots are allowed only to flower for seed production meaning that cross-pollination during normal commercial cultivation is unlikely. In plant biotechnology plants can be grown in artificial medium requiring less land mass to produce large amounts of crops in less time. Although it seems like a great alternative to the earlier methods, it can also be devastating.By growing plants at a faster rate there is a possibility of losing the essential vitamins and nutrients that are important for us. Transgenic plants are still a relatively new field and no concrete evidence for any of this existing but it is growing concern (Bajaj . Y; 2001). Heldt . H and Heldt . F (2005) says, the techniques of traditional breeding are very time-consuming. By making crosses, also a large number of undesired genes are introduced into the genome of the plant. The undesired genes have to be â€Å"sorted out† by back-crossing.Using plant biotechnology which involves the use of Restriction Fragment Length Polymorphism it greatly facilitates/substitutes conventional plant breeding, because one can progress through a breeding program much faster, with smaller populations and without relying entirely on testing for the desired phenotype. RFLP makes use of restriction endonucleases enzymes which recognize and cut specific nucleotide sequence in DNA. The cut fragments are separated according to size by gel electrophoresis and made visible by hybridizing the plant DNA fragments with labeled DNA probes.The closer two organisms are related, the more pattern of bands overlap. With conventional breeding, the pool of available genes and the traits they code for is limited due to sexual incompatibility to other lines of the crop in question and to their wild relative s. This restriction can be overcome by using the methods of genetic engineering, which in principle allow introducing valuable traits coded for by specific genes of any organism (other plants, bacteria, fungi, animals, viruses) into the genome of any plant. According to Rost . T. I et al (1992), transgenes are inserted into the nuclear genome of a plant cell.Recently it has become possible to introduce genes into the genome of chloroplasts and plastids. Transgenic plants have been generated using methods such as agrobacterium-mediated DNA transfer, direct DNA transfer, particle bombardment and electroporation. References 1. Bajaj . Y. (2001). Transgenic Crops. Berlin. Springer. 2. Heldt . H and Heldt . F. (2005). Plant Biochemistry. 3rd edition. California. Elsevier. 3. Kuckuck . H; Kobabe G. and Wenzel G. (1991). Fundamentals of plant breeding. New York. Springer-Verlag. 4. Lawrence . W. (1968). Plant breeding. London. Edward Arnold Publishers Ltd. 5. Raven P.H, Evert . R. F and Ei chron . S. E. (1992). Biology of Plants. 5th edition. New York. Van Hoffman Press Inc. 6. Rost . T. l. , Barbour . M. G. , Stocking . R. C. and Murphy . T. M. (2006). Plant Biology. 2nd edition. California. Thomson Brooks/Cole. CHINHOYI UNIVERSITY OF TECHNOLOGY NAME: Tanyaradzwa R Ngara REG NUMBER: C1110934J COURSE:Plant Biotechnology COURSE CODE: CUBT 207 PROGRAM:BSBIO Assignment: Define plant biotechnology. Using examples discuss how it is different from traditional / conventional methods plant breeding [25marks].

Immigration Restrictions Essay - 930 Words

Total inhalation of immigration would not be a healthy choice for the United States. However, setting out for stricter laws to become a citizen is in need. There are over 11.7 million illegal immigrants in the United States (poll 2011). Therefore, having restrictions on immigration overall can help the economy grow, security at airports, docs, borders, and on the streets would not only lessen the illegal immigrants around the country, but supply more jobs for Americans. Illegal immigrants not only live in the U.S, but are supplied jobs in which were made for American workers. Naturalization Act of 1870: Control Naturalization Process and penalization of fraudulent practices. The Chinese Exclusion Act (1882) allowed the U.S. to suspend†¦show more content†¦(R. Stell) This is to help bring jobs back to the Americans and crack down on illegal immigrants. The Immigration and Nationality Act (INA) of 1952 brought all the various immigration laws together in one organized act. In 2009, out of all immigrant households, legal and illegal, with children (under 18) 57 percent used at least one welfare program, compared native households with children that came in about 39 percent. Fifty-two percent of households with children headed by legal immigrants were estimated to used at least one welfare program in 2009, compared to 71 percent for illegal immigrant households with children. Illegal immigrants generally receive benefits on behalf of their U.S.-born children. Due to low education levels more than half of the working immigrant households with children still accessed the welfare system during 2009 (Camarota). Cutting down on the amount of immigrants into the country can help to increase benefits for American citizens. This includes but is not limited to: food assistance, Medicaid, cash assistance, and public and subsidized housing. Security purposes would decrease the amount of unidentified immigrants. In 2011, ICE removed more than 396,000 individuals. 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