The Recession in the UK Essay Example | Topics and Well Written Essays - 1000 words

The Recession in the UK - Essay Example This trend of borrowing also impacted UK banks and financial institutions as well, but the extent was less of course. Once the banks find the lending much lucrative with attractive returns and talks of all round developments, banks start lending to the maximum extent possible, with the notion that 'high risk implies higher returns'. In some case the banks also start lending money to high risk customers as well, in the belief that they'd be able to extract the money in any form from the borrower. This trend gradually spread to sub-prime lending practices. This type of lending is not very common around the world, but in US and UK such lending is preferred by specific categories of population, who are categorised as high credit risk population. But in recent past when sub-prime borrowers started preferring to desert their houses instead of paying back the loans, the banks found themselves under huge debt. This set in motion a chain reaction, resulting in adverse impacts on the stock market, which in turn impacted the confidence of an average investor. The ups and down in equity markets is not a new ph enomenon, but the UK equity markets have not recovered from the shake ups. With threats of failure of many reputed banks, the stock market appeared to be the only option where the investor can look for liquid cash. This started a continuous downtrend in stock markets in US and UK. Having stakes in international markets the Foreign Institutional Investors (FIIs) in turn started selling their stakes in other markets as well. The trend has been continuing. The net result inter-banking borrowing rates were hiked by banks in order to preserve maximum liquid assets for instilling confidence amongst their customers. Once the bank to bank rates were on the rise, developmental projects started taking a hit, which in turn had an impact on the marketing potential of a whole range of materials including building materials, consumer goods and services etc. With rumours of failing banks, people started taking out their deposits from banks and instead started keeping the money within their custody. This resulted in difficult situation for banks and many banks were on the verge of going bust in UK. Owing to such circumstances, government of Iceland was also forced to intervene. Glitnir bank became the first bank to be nationalised by the Iceland government (Wardell and Satter, 2008). This trend is also quite apparent the world over in many countries including US, Saudi Arabia, China, Japan etc. in order to avoid major breakdowns in the respective economies. Now people are left with less disposable incomes, as some of the investments are stuck up in stock market, some others are gone bust with drowning banks and financial institutions. With companies also resorting to job-cuts, the disposable income levels are further going down with each passing day. People having taken loans from banks and other financial institutions started finding themselves in difficult position to payback those loans. This had a cascading effect on those banks which had earlier resorted to sub-prime lending and unreasonable lending. And banks started feeling the pressure. Northern Rock started sending out SOS signals to the government of UK. Subsequently the government started measures to nationalise the Northern Rock and pump in money

Central Asian Politics - The US and the EU in Central Asia Essay

Central Asian Politics - The US and the EU in Central Asia - Essay Example The most fundamental of these concern the issues of security, geopolitics and the energy potential of the region. Security In the area of security, Central Asia was catapulted to international prominence after the September 11, 2001 terrorist attacks in America. The incident has underscored how political and economic difficulties of distant states could have repercussions in the very U.S. soil. The conflict and the authoritarian regimes the dominate Central Asia is also becoming an increasing concern for the European Union. In a white paper, for instance, it has been expressly stated that the conflicts and despotic regimes in the region could harm European interests, first in terms of security (as with the case of the US) and, secondly, in its interest in Central Asian energy resources. (Melvin 2007, p2) Failed states like Afghanistan became breeding ground of terrorists that could attack America and Europe and their interests all over the world. Central Asia is significant in this r egard. First, it is predominantly Muslim and many policymakers fear that states undergoing political and economic underdevelopment could be a fertile area for religious extremism. John Negroponte, the former director of National Intelligence, underscored this when he testified before the US Congress that, â€Å"Central Asia remains plagued by political stagnation and repression, rampant corruption, widespread poverty, and widening socio-economic inequalities, and other problems that nurture radical sentiment and terrorism.† (Blank 2007) The case of uprising in the Uzbek city of Andijon demonstrated the actual expression of the grim projections by analysts. The crisis began when a band of armed men stormed a jail and freed several prisoners. Soon, however, people started to join the fray, apparently seizing the opportunity to air grievances against the government. Wary of a full-scale uprising, the government ordered its soldiers to shoot the protesters. Hill and Jones stresse d that â€Å"there is legitimate disagreement over the number of citizens that were in the square and even the number injured and killed, but it is clear†¦ that government forces fired indiscriminately.† (p112) Fearing international reprisal, Uzbekistan closed itself up by rounding up and jailing oppositionists, expelling international media and human rights watchdog from the country and closing a U.S. military base. This experience could prove to be a dangerous precedent for the other Central Asian states, which are also facing similar socio-political difficulties. There is also the perennial challenge of the tribal/clan conflict in Central Asia. Ethnic differences and fragmented nationalist aspirations have consistently destabilized the country since their independence. The proximity of Central Asia to Afghanistan aggravates the situation further in the American perspective. What this means is that the region is highly at risk of being influenced, infiltrated or co-opt ed by the Taliban. This is in addition to the fact that foreign policy orientation could shift towards China and Russia, as in the case of Uzbekistan. Geopolitics Another important aspect in the Central Asian importance to America and Europe is its strategic location. It is bounded from all sides by global players that are significant in the respective foreign policy orientations of both. For instance, there is Russia to the north, China to the east,