Crisis in the Banking Sector

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Crisis in the banking sector

The current crisis and the Great Depression

Theories and the crises:

Several theories exist connected to the financial crises that have happened since the banking system was established. Some of them tried to explain the reasons and the origin of them however none of these theories could provide an acceptable solution how to prevent the crisis. To determine the continuity in the timeline and the spread of the crisis it was not enough to create just an economic comparison. The analysts set some mathematical and other type of model to investigate the behavior of the market.

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The two mostly accepted models of banking panics are the Diamond and Dybvig model and the Calomiris and Kahn model. These models were set in the 1990’s as the reflection of the systematic banking crisis since 1970.Both of the two theories were accepted the fact that the banks’ liabilities are more liquid than its assets. In the Diamond and Dybvig model they set a hypothetical world without the banking system. The banks make contract to transform its illiquid assets.( Federal Reserve Bank of Minneapolis Quarterly Review

Vol. 24, No. 1, winter 2000, pp. 14-23, Dybvig: Bank Runs, Deposit Insurance, and Liquidity).The problems with the contract is that it doesn’t include any risk-sharing option. The deposit insurance is the only way to reduce the risk because it’s decrease the ability of the bank to transform its assets. The asymmetric information affects the liquidity demand. The final conclusion of this model is that the bank run is triggered only because patient agents believe.”This result is a self-fulfilling prophecy (panic): Because patient agents expect other patient agents to withdraw their funds early, they do the same. As a consequence too many funds are actually withdrawn, which otherwise would have not been the case. (Banking and Finance /Banking Crises.ppt/2008.12.03)”

The Calomiris and Kahn model basis is the Diamond and Dybvig model, but it is more complex (Charles W. Calomiris, Charles M. Kahn, “The Role of Demandable Debt in Structuring Optimal Banking Arrangements” in American Economic Review, Vol. 81, 1991). They introduced one other potential option that the banks follow a risky behavior and put their investors’ money into risky projects. Because the asymmetric information the investors don’t know about this step. Then, two possible things can happen; the project turns out well or not. If the project turns out negatively the bank starts to invest again. In the model the depositors can purchase information, but if is shows a negative indicator they withdraw their money. If there are a huge number of the depositors who want to withdraw the bank has serious liquidity problems and the bank panic starts. The only possible solution, according to this model, is to increase monitoring in the banking sector and strengthen the regulation to avoid moral hazard.

I. The Great Depression
1. The beginning of the Great Depression (1928-30)

The history of the Great Depression is important to analyze the main aspect of the crisis. From May of 1928 the stock market rise continuously and the average stock price increased because the FED raised its discount rate, and saw the stock market was booming and the stock price doubled, as excessive speculation. They tried to resolve this by increased monetary policy to raise interest rate and a new deflationary policy was introduced. As a consequence, a huge financial bubble evolved. In October 22, 1929 New York Times published an article; “Fisher Says Prices of Stocks Are Low”. (The 1929 Stock Market: Irving Fisher Was Right, Ellen R. Mc Grattan p.1) Then, two days later the stock market went crashing and the stock prices had fallen by 30 %: According to Irving Fisher the problem was that the people have been speculating on the small margins. It was not that the stock market was too high, but the people so enthusiastic to making money that they properly expected to make. It created debts because the people bought stocks on borrowed money. The politicians issued optimistic predictions to prevent the selling panic in the U.S. market (The causes of the 1929 stock market crash, Harold Bierman).The secretary of the Treasury, Andrew W. Melon stated: “There is no cause to worry. The high tide of prosperity will continue”. The stock market did come back in the middle of 1930, more than half of the stock that has been decline as been reversed. People thought it was over recession turned into something different.

The agriculture sector stocks continued to decline. This regressive tendency was intensive not only because the Great Depression. Massive overproduction started in the European agricultural production sector after the World War I to recover the lack of the agricultural goods. To increase the legislative protection of the domestic farmers the Smoot-Hawley Tariff Act of June 1930 raised U.S. import tariffs (U.S Department of State, The Smoot-Hawley Tariff declined the international trust and cooperation and caused some problems in international trade.

As a result of market crush bank collapsed from October 1930 until March 1933 by this time over a third of Americans bank was out of business. It continued to decline by mid 1932, the stock had declined to 10% their value in the peak 1929 and the increase in this in uncertainty from unsettled business conditions created by economic contraction made adverse selection and moral hazard problem worse in credit market. (The great crash, 1929, John Kenneth Galbraith) There was reduction in the number of intermediation due to loss of one-third of banks. This only increases adverse selection and moral hazard problem. Funds to firm with productive investment opportunities were greatly decreased due to this problem. In some sectors like manufacturing sector the production fell dramatically which was the basis of the Firm’s wage rates cuts. The level of price fell by 25% in the period of 1930-1933. Debt deflation was triggered in which net worth fell C:Documents and SettingsJudyAsztalunemployment.gifbecause of the increase burden of indebtedness borne on the firm. One sector problems affected the others. Millions of people lost their jobs. In the period of 1900-1947 two types of unemployment were made. These researches were developed the data set for the civilian labor force and for the Non-farm employees. (Historical unemployment in relation to today, A. Andrews)The employment rate declined by approximately 20% and the economic contraction and unemployment rose to 25 percent because of the decline in net worth. The result was more increase in adverse selection and moral hazard in the credit market. This was the worst ever experienced in the United States of America.

2. The FED

This system was introduced to the public as economic stabilizer in 1913 to prevent further economic crisis although Federal Reserve System was totally passive during the Great Depression. In general, the Federal Reserve controls the interest rates and the money supply (inflation).The FED is controlled by its Board members and the majority of the twelve member Constitute the Federal Open Market Committee with five Reserve Bank The Fed not only supply the money to economy, it loans the money to them at interest. Besides, it regulates the value of the currency being issued. It should have acted as the last resort to lend as that its role. For the period of 1921-1929 the FED increased the money supply by 62% .The main reasons they did nothing was they never anticipated the negative of bank failure could have on money supply and economic activity. They thought a bank failure is as a consequence of poor bank management or bad banking practice. Small banks failures were the first to be affected in the bank panics in the early stages. And since the big city bank was the most influential they saw the failure of the small banks as complacency. Some suggested that political role might have played an important role in the passivity of the Federal Reserve System at that period. The New York Federal Reserve System was the most dominant force in the 1928, and it supported the Fed in open market purchase to lend money to the banks during the bank panics. This was opposed by other powerful member in the Federal Reserve System and the New York position was out voted. There were multiple causes and many theories about the origin of the Great Depression. According the monetarist theory the Crisis is the consequence of the lack of the FED’s policy making. The level of government influence on a bank varies from one country to another let say for example, in China the government regulation is very high probably the highest in the world and in United Kingdom the government regulation is very low .It can be said that in the United Kingdom it high if we compare with the United State. So depending of which countries are comparing to another, government influence is usually different.

3. The economic decline (1930-32)

Thanks to the Tariff Act the world market suffered a huge damage but, the act was not enough to recover the U.S. economy. People starting lose their jobs, homes and their confidence to the system and they take out their money from the banks and in the end they couldn’t repay their loans. The continuous decline shows the effect in political elections in November 1930 when the representatives of the Republican Party lost their places in the Senate and their number and voting power reduced dramatically. In 1931 some new predictions appeared in the news which says that the depression would be over in the end of that year. During this year the deepening economic depression hit Europe and credit structures collapsed there. The media blamed United States for create this depression by cutting back on imports. Various conspiracy theories were voiced about the Soviet Union and some Biblical prophecy appeared too. In1932 a new presidential campaign started where Hoover and Roosevelt describe two different political aspects about the Depression. Hoover’s economic aspect based on voluntarism and individualism, but the natural economic forces and the voluntary action by business groups couldn’t work in the last 3 years. So his voters lost the trust in Hoover and he was easily beaten in the election (Burner David, Herbert Hoover: Alfred A. Knopf, New York, 1979).

4. The New Deal

Roosevelt the new president was introduced a new program called the New Deal that contained social and economic reforms in 1933. He settled up new governmental agencies with the Glass-Steagall Act. “It gave tighter regulation of national banks to the Federal Reserve System; prohibited bank sales of securities; and created the Federal Deposit Insurance Corporation (FDIC), which insures bank deposits with a pool of money appropriated from banks. (New York Times, /topics/reference/ timestopics/subjects/g/glass_steagall_act_1933/index.html )“ The senate tried to restore the people’s trust in the U.S financial system with the Glass-Steagell Act .It made a clear separation between the investment and the commercial banks .To handle the banks’ poor asset management Franklin Roosevelt declared a “bank holiday “as a result of bank panic in March 1933.The” bank holiday” regulated that the banks had to be until the governmental inspector investigation. The inspector after a monitoring process judged about the banks reopening.

Another program was started namely in that time: the Agricultural Adjustment Act which helped to increase the income of the farmers. The overproduction created corps surplus and the government pay the farms, in the frame of this program, to leave the fields fallow and not to raise pigs and lambs. (Ronald Edsforth: The New Deal: America’s Response to the Great Depression, 2000) The Act aimed to raise the value of the corps, but few months later, natural disasters destroyed almost all the corps and the machinery. To help the farmers and teach them how to measure and reduce erosion the government established the Soil Conservation Service. This program stopped in 1936 when a new agricultural act had been accepted.

The new regulation provides a possibility to the farmers to get federal subsidies. Besides of this, NIRA (National Industrial Recovery Act) had been accepted by the government to generate more jobs, strengthen the right of collective bargaining. The unemployment increased since the Great Depression had started. Based on this reason, they provided jobs in government projects such as work camps. Approximately two million people participated in this program until 1934. The unskilled workers got hard work like digging and railway repairs but they earned only a little money. National Labor Relations Act introduced new fair labor practices in 1935.The New Deal program had helped the US economy but didn’t bring the end of the Great Depression. The roots of the economic problem came from the financial insecurity and the distribution of money, because the people on relief lived from one day to another (Bernardit Bellushit, The Failure of the NRA (1975)). The investors were afraid of buying stocks and lose their money. The companies’ couldn’t sell their new products because the people spent their money to food. The inventories were full and nobody wanted to produce more and that stopped the cycle of the economy.

5. The Second New Deal

President Roosevelt decided to set a group of new economic and social measures and provided some legislative initiatives. The public and political forces lead the president to make some radical steps. . In 1936 Roosevelt won the election but the Americans wanted the government to take greater responsibility for the welfare of the nation. The Second New Deal as legislative program established some government controlled agencies and projects. He allocated billions of dollars to start and give a financial budget for the Work Progress Administration (WPA).Roosevelt nominated the social worker Harry Hopkins to be the head of the WPA. In its early years it focused on the construction programs such as build schools and government buildings. Attempt to the population of the United States it found that the one of every six people was unemployed and most of them was unskilled (https://www.u-shistory .com /pages /h1599.html). Unskilled laborers the forgotten man of past generation works at decent wages. The nation was building and repairing schools, public buildings, community centers and airports to meet the changing needs of the modern world. In one project twelve hundred men were employed to improve bowling field and construct building hangers and administration buildings. In addition to the hundreds of the unskilled laborers, many skilled workers were employed in this improvement project. Hundreds of homes have been treated from bondage of property. In New York City WPA housing demolisher project was started which improved the families living conditions. In many other cities of the country old firetraps are being demolished to make way to modern buildings. Swimming pools and parks were constructed to make more public value to the community and remove the children from the streets. In many parts of the country nursery schools were established to where almost 10 thousand children got hot meals, supervised train activities. In these projects employment has been provided 600 hundred teachers nurses dieticians and cooks. More than 300 thousand adults learned to read and write first time in their life and started to learn foreign languages from native teachers. In cooperation with the national youth administration 26500 young man and women were employed as instructors’ laboratory assistants and clerical helpers.( Historical unemployment in relation to today, A. Andrews)

Clerical white -collar workers find employment at filling and checking important land records. As part of the program of rehabilitation of the conservation of human resources a number of household training school were established by WPA. In these school girls from relief families are prepared for domestic works. Health education is an important part of the WPA program in a number health centers in large cities teaches the proper care of the children and adults. In some cities sawing rooms were established to support the poor families with clothes. Another type of permanent construction was the community stadium as a representative a large group of project provides the public gatherings all over America. Hundreds of new bridges were constructed thousands of old bridges have been repaired and made safe.

In Many cities the construction was undertaken with the cooperation of the public health agencies. The rapid growth of air traffic gives the opportunity to built modern airports and gives a job to thousand s to improve and repair the existing facilities. The increased air transportation also made necessary the development of hundreds of emergency landing fields. In cooperation with the local police departments in several cities automobile inspection stations were established to reduce the unsafe vehicles on the roads. Women who had the principle to support their families are paid for the work. And the product they made was distributed free to the families on relief (John Salmond, The New Deal: The National Level (1975). pp. 188-89). Many other type of employment was provided for women and other part-time jobs were provided in kitchen and in libraries and schools. As a result of some projects thousand of books and maps were translated. This program also contained training for adults to learn tailoring. The financial support of the administration was enough to invest into more projects like Federal Writers Projects , Federal Theater Project, Federal Art Project, National youth Administration ,to generate more jobs for white-collar workers.“Because Harry Hopkins believed that the work provided by the WPA should match the skills of the unemployed, artists were employed to paint murals in public buildings, sculptors created park and battlefield monuments, and actors and musicians were paid to perform. These white-collar programs did not escape criticism and the term “boondoggling” was added to the English language to describe government projects of dubious merit.( Jim Crouch, "The Works Progress Administration" Eh. Encyclopedia(2004)). The WAP was a long program and finally was abandoned in 1943.Social security act created a new health insurance system based on employer and employee contributions, supported by taxes

6. The SWOT Analysis of the WPA




Education to unskilled workers

Started project didn’t wanted

Various types of jobs

WPA as Financial “black hole”

Provide part-time jobs

Political influences

Jobs for Artist and Black people and Women

No ability to control the workers productivity

Improve the health care system

Opportunities :


Starting more useful projects

Instable economical environment

Decreasing political aspects of the projects

Living expenses increases, because import stop

Strengthen the economy throughout projects

Potential health problems, disease could stop projects

Developing international export-import partnerships

Other political parties critics-political intervention

Support the banking act, provide more financial security

The SWOT analysis is for compute the Strength, Weaknesses, Opportunities and Threats of a sector or a company (Mehta, S. (2000) Marketing Strategy). It is used for strategic planning to create a way to the desired goal or objective. In this case it was decided to apply this technique to set a real picture about the Second New Deal through WPA. The main aim of the current analysis is not generate alternative strategies, but to summarize the situation of WPA and the critiques in 1930’s.Starting with the strength of the WPA it can be seen that the group of different types of jobs were provided to a high-scale target area. People could achieve different skills by the WPA’s trainings and educations, and they got motivation to learn and use their knowledge in long-term. There were several weaknesses of the program from the beginning. As a governmental project the WPA needed a huge financial background to work and in some cases they only waste the money. The critiques described that some part of the program was only started to get more votes. The real leaders of the WPA had no ability to control the workers’ productivity and their effectiveness. To mention some real threats the instable economic environment remained the same. The diseases could spread faster among the workers and it may stop many constructing projects and it may indicate more financial problems in the health care system. One of the most important opportunities was to prevent more political fight and decrease the obvious political aspects of the projects. It would have been useful if they could solve the import problems. The following table above contains the main strength, weaknesses, opportunities and threats.

6.1.The external factor analysis

EFAS(External Factor Analysis Summary)

External Factors:



Weighted Score



Starting more projects





Decreasing political aspects of the projects





Strengthen the economy through projects





Developing international export-import partnerships





Support the banking act, provide more financial security






Instable economical environment





Living expenses increases, because import stop





Potential health problems, disease could stop projects





Other political parties critics-political intervention




Total Scores:




The SWOT table can be used to introduce three other type of analysis the EFAS, the IFAS and the SFAS. The External factor analysis and the internal factor analysis are calculated in a same way. The external factors (opportunities, threats) are used to show the economic background of the company or the sector. The elements of the SWOT table are the main factors of these tables. Every row contains weights and the rates and the multiplied result; the weighted score. The sum of every weight has to equal by 1, and the factors’ ratings should be between 1 and 5.The total score will be the sum of the weighted scores and it shows a real picture about the company’s position. The company is in danger if the result is less 3,5 than.

6.2 The internal factor analysis

IFAS(Internal Factor Analysis Summary )

Internal Factors:



Weighted Score


Education to unskilled workers




Various types of jobs




Provide part-time jobs




Jobs for Artist and Black people and Women




Improve the health care system





Started project didn’t wanted




WPA as Financial “black hole”




Political influences




No ability to control the workers productivity




Total Scores:




If the result is more than 3,5, the company is in safe. The internal factors (Strengths, Weaknesses) are closely related to the object of the analysis. The internal strengths and weaknesses summarize the main topics the company has to deal with. The total score is 3 and this means that the company is not in safe and for a long -term basis the management has to handle the weaknesses to strengthen the company position in the market.

SFAS(Strategic Factor Analysis Summary )




Weighted Score

Duration (in terms)







Education to unskilled workers






Jobs for Artist and Black people and Women








Political influences






No ability to control the workers productivity








Starting more projects






Decreasing political aspects of the projects








Instable economical environment






Other political parties critics-political intervention





Total Scores:




6.3. The Strategic Factor Analysis Summary

The Strategic Factor Analysis Summary (Business Policy and Strategy lecture SFAS power point presentation 2008.12.03) has an additional column, the duration that is separated into three different parts; long-term, medium-term, and short-term .The most important factors are listed here with weights and ratings to represent the main internal and external aspects of the WPA and to make a summary about the problems and possibilities. As a conclusion, based on the analysis listed below, the SFAS ‘s weighted score is 3,45.It means that the WPA could work in a long-term if the leadership could handle the problems. The WPA project stopped in 1944; therefore the main reasons did not connected to the internal factors, but only the externals. Some critiques had right the all the projects of WPA had only a political step to achieve more cotes in the elections.

7. The world’s reaction to the Great Depression (Theories)

The world reacted in a several way to the Great depression and created a lot of theories how to solve the situation. The most famous reaction was the communism, fascism and the Keynesian theory. The fascism took place in Germany, Italy and it represented a highly centralized economy. The public construction programs provided jobs for unskilled labourers to built roads, work camps and military facilities. It increased the demography of the population, but the system was highly dictatorial. According to the statistics the unemployment rate decreased dramatically from 6 million to 0.2 million people.The Communism, as a highly bureaucratic and centralized system, was one of response to the Great Depression. It focused to fully employ the people in a strictly regulated obligatory way. The Keynesian theory: It states that the fully employment is needed, but only the intervention of the government can create this possibility. It can be long -term purpose of the existence of the government. The Keynesian theory changed the way of the thinking about the unemployment. The idea of the welfare state was another solution of the crisis. The education, the minimal guarantee of a job to every citizen is the basis of a welfare system. It guarantees the minimum wages and the minimum social and healthcare system.

II. The Current Financial Crisis
1. The beginning of the Current Crisis

The current financial crisis started in 2007, but it was not until the last quarter of 2008 .Firstly, this part of the thesis going to show how it all started, the causes and those who were affected by the crisis and how they are trying to deal with the crisis. Most of the people are pointing directly to real estate as the major cause of the current financial crisis even financial institutions that not directly involve with real estate are affected. It can be seen how the subprime mortgages and unscrupulous lenders has caused the unsustainable real estate bubble which began to collapse in 2006.There was increase in homeownership in the United State to about 5 million in little more than six years thanks to the increase in subprime lending. Within these six years constructions of new house sing units grew more but this housing bubble could not grow forever. In this period the price of house went so high and rent price went so low. When the price of housing began to decrease in the late 2006 to early 2007, many subprime borrowers had very hard time to make their payment. The housing bubble or the excesses of the subprime mortgage market became even more evident when subprime mortgage lender filed for bankruptcy. All the sectors like households, businesses (including financial institutions), and government are the main participants in the financial market and hit by the crisis. The secondly related financial groups are the surplus units provide funds and while the other group that enter the financial market to obtain fund are the deficit units.

If market securities yield low returns why invest in it? Three factors can be seen to why it important to make investment in market securities these are, as we have said before the advantage to convert to cash rapidly so it can be substitute as cash. The second reason is that when a firm has excess cash let say for a month it can invest the excess cash in form of securities as not to hold too much cash in hand. The third reason is that when a firm know it going to pay a loan soon it gathers the money monthly to pay and this money could be invest in market securities before the loan is to be paid.

As it have seen when the financial crisis started the public could see that the financial system is in a deep trouble some even call it recession because the stock market came crashing and lost almost 42% of it original price. Before the peak of the financial crisis the total world stock market worth $62.5 trillion and now it $36.6 trillion so it lost $25.9 trillion. Let compare the stock market of leading countries of one day and another day and see how it doing.


May 5



S&P 500




Nasdaq Comp




Dow Jones Ind




FTSEurofirst 300




DJ Euro Stoxx 50




FTSE 100




FTSE All-Share UK




CAC 40




Xetra Dax







Hang Seng




FTSE All World $




( source New York Times May 5 2008)

There was turmoil in the all over the international financial system due to the losses in the subprime mortgage in the mid-2007.This was wide spread global crisis even thus firm not associated with the mortgage firm. This made the financial institutions very nervous and the stock market got very weak. Between July 2007 and March 2008, there was a significantly drop in the price of shares in the large, small and investment bank. A third of their value was lost. Problem got worse when banks stop trusting other banks and inter-banking was disrupted(Why economic theory is out of whack, Mark Buchanan, New Scientist, 19 July 2008). The height of the crisis was not until September 2008 when the Lehman Brothers went bankruptcy, this caused more panic not only in the financial market alone but affected the mainstream directly too. Investment managers thought investing in mortgage-backed CDO’s was as safe as government bonds. They were totally wrong half of their money was gone never to be seen again. With this huge amount of money gone their way of thinking changed too. They lost interest in making big profit they just wanted their remaining money to be safe. Everyone avoided even the lowest risk since the confidence of the financial market was shaken and banks no longer trust each other and inter-banking became a problem. And that is the point where the subprime crisis crossed the border and turned into a credit crisis. The constantly increasing number of subprime mortgage defaults led to the reappraisal of all types of risky assets. The capital market was the first to feel the effect.

The expansion of mortgage related asset-backed commercial paper (ABCP) issuance resulted in almost half of the growth in the commercial paper in the last few years. In the mid 2007 the ABCP issuance was sharply reduced because investors avoided the purchase of short-term paper in the capital market. All types of asset-backed securities and CDOs suffered a sharp drop in the issuance in September 2007.Investors now saw that these assets had more risk than they first thought ( George Soros: The New Paradigm for Financial Markets: The Credit Crisis of 2008 and What it Means ). The insurance for covering default risk using credit default swaps (CDS) became very costly which further made asset backed securities issues more difficult to sell. Capital markets basically stopped for the risky asset backed securities as a result of this. Financial institution which relies totally on the financial market for funding was severely affected. Commercial banks could no longer provide new loans because they also relied on short-term commercial paper and they could not get anymore. Investment banks that needed short-term paper in order to buy asset-backed securities, on the other hand, could no longer make payments when they were due. The lack of flow of fund in the capital and money market led to so many bad events as the threat of bankruptcy of Bear Stearns and its subsequent sale to JPMorgan Chase. Large investment banks, such as UBS, Merrill Lynch, and Citigroup had to pay the price as the substantial losses were revealed and their CEOs had to resign. In September 2008, the market almost went to totally hibernation when the threat of collapse of AIG and failure of Lehman Brother which could have paralyze the whole financial system. The world has now seen the freezing of credit at this scale before. Big company who need credit to survive and do not get have been close down and thereby increasing unemployment rate daily. Many businesses are going bankruptcy and there are no new business and no job opening. It is much harder to borrow money to buy a house. It is hard to find the funding to build a factory or renovate and buy new equipment for an existing one. Even student lending suffers.

2. The Bailout as the solution

Many politician and economist have been debating about the government bailout of the financial institutions if it was the right way to solve the current crisis, but most argue for the bailout. Most believe the bailout even though it increase debt burden on future generation that it was still the best to do because the consequence of not doing anything will be graver. One question we should ask ourselves is why give more credit when it was this same credit what got us here in the first place. Credit is a great tool if used properly, with credit we can buy a house it generate more jobs, build a company also create more jobs, buy cars also more jobs are created, and with credit we can start an investment this also create jobs. So credit is a good thing. These credits got out of control form the mortgage area people took more credit than they can afford in the hope of selling the house to make profit or wait for low interest rate. For sometimes it worked many people became rich and many more people got their own house because it was easy to get a loan for mortgage lender but soon the housing bubble went down and credit became a hard to get and many people and business could not pay their debt and lender lost a lot of money. Even with this government giving credit to save some financial institutions could still be best or only solution available. We will see how the bailout is intended to work and will government get some control of this financial institution since they got their money.

The current crisis has got to a point in which the involvement of the government is inevitable any more delay on already sensitive credit market would have been a grave mistake. Even with the government bailout the effect of the bailout is not expected to be seen early minimum three to five years to know if it really did work or not. To see if the current bailout is going to work we check out the previous government bailout history how they turned out and if it was good the government got involved. We are going to consider three bailouts from the government in previous years.

2.1 Bailout effects in the past

The first bailout we going to discuss is Lockheed they were manufactures of military aircraft and got into trouble in 1971, in August that year a law was passed by America Congress to help out big business in crisis and Lockheed was the first to get a federal loan. Lockheed had to pay all it loan its dependency on the federal loan guarantees came to an end and the government gained $112 million back.

The second bailout was that of Chrysler an auto-maker they also got in trouble in 1979, by 1980 the got a bailout from the government. By 1983, seven years before the deadline Chrysler had paid off its debt. And the government netted a profit of $660 million from the bailout.

The third bailout was Continental Illinois National Bank and Trust Company was the 8th largest bank America and it went to crisis after the purchase of $ 1 billion in energy loan and they government came to it rescued but it was not a very successful one. The government took control of the bank 80% assets by the time the bank went back to been private sector the government had lost $1.8 billion.

We have seen three bailouts by the government but this current crisis is more different than the previous once. In the past it one business that fail and then the next but this current crisis as seen most business failing at once. So if the government will have to bailout it has to do it all at once. Means it going to be massive bailout has we have seen from country to country the biggest one been American bailout. It also means that each business sector will not receive the same as the other. Examples are the bailout money for the auto car industry in America was $25billion compare to AIG who received $85 billion in credit loans.

It has seen how bailout has worked for both the business company and the government, but it can be also seen why other people are against bailout.

2.2 The main five reasons of the people who are against the bailout:

1, First reason is that the business standard for giant company will be greatly reduces because of incentivizing risk.

2, Increase in moral hazard in the name of assurance safety.

3, Promotes centralized bureaucracy by allowing government powers to choose the terms of the bailout.

4, Instills a socialistic style of government, in which government creates and maintains control over businesses.

5, Instills a corporatist style of government in which businesses use the state’s power to forcibly extract money from taxpayers.

2.3. Opinions and Expectations

Those who have supported or argue for the government bailout are probably right because with history as shown us what happen when the government failed to intervene in the 1929, crisis and we saw what happened. Even though with the massive government bailout in many countries may be since as future debt to payed it also to good to save the present because if not will not only have to pay debt in the future but also so many sacrifices. And also as we have seen in previous government bailout which most of them have worked, economist analyst have seen reasons to believe this will not be an expectations. If they are right on the future can tell but right now only a bailout from the government is the only and real option on the table.

There have been so much media coverage on this current financial crisis because it the worst crisis that has happened after the great depression in 1929-1933. And the big questions are that is the worst over? And could we prevent another major financial crisis from happening again?

Many analysts said the crisis will go worse before it gets better and many forecasted that it could be middle or end of the year 2010, that the crisis will be over, but some believes much earlier than this. Billionaire investor, Soros George in an interview on CNN believes that the stock market has not yet reaches the bottom and it will still get more worst before it gets better. It will take some years for housing price to go back to the pre-bubble level it was because the housing prices have fallen 28 percent from their peak in 2006.There have been positive rallies in the stock market and even some banks said they are doing much better than they forecasted but analyst have warned to Beware of a premature return to “normal”. The emerging markets are doing much better than the developed markets.

The reasons for this are the following:

The Chinese government announced a Rmb4000bn ($586bn) fiscal stimulus package, which led to hopes that exporters in many emerging markets would benefit from increased Chinese demand. Investors viewed emerging markets as safer because their banks were not so exposed to toxic assets and dangers of nationalization as their western counter parts. This meant that even though emerging markets fell in January, they did not fall as far as developed markets. There has been a repositioning of investors into riskier assets since early March as a number of leading banks said they were in much better shape than most in the market thought

Analyst also said that bond investor’s will more likely to put their money on this emerging market such as the Chinese and the Brazilian bond and would not touch the credit of say Hungary or Ukraine. During the G20 meeting when the pledge to put money in the IMF to finance the developing market the currency of this emerging countries have gained more against the US dollar and other highly respected currency.

Examples are the South Korean Won is up 18 per cent against the dollar, the Hungarian Forint is 14 per cent higher, the Polish Zloty, 13 per cent up and the Brazilian Real is 10 per cent higher. Now the developed markets are looking up to the emerging market to bring or reduce the effect of the crisis. As we have seen in the lasting meeting of the world leader to try to contain the financial crisis we saw the role of this emerging market played compared with few years ago. It shows how important they becoming and China was specifically asked to for bailout money from developed country.

The G7 meeting of the industrialized country was a shadow of the G20 because investors we more interested in the emerging markets, they believed that any recovery will start from there compare to the developed market.

3. Impacts of Current Financial Crisis:

We seen how the current financial crisis started and how it hurt the market generally but it has had other impact than just the financial market and the financial institution. The following parts of the thesis show the other businesses and the impact of the crisis on them. The first and most note able case is the auto company. First it can be seen the America auto crisis because it the mostly felt of all the automobile producing countries. This crisis started in later half of 2008. The crisis did not just start in later half of 2008 it was gradual process due to the increase in the oil crisis from 2003,- 2008. This made car demand reducing yearly and the demand for big SUV and pick up cars which are the main market in the United State. It was not until the second half of 2008 that the automobile financial came crushing down thanks to the credit crunch. This crisis placed heavy price on the raw materials. In October 2008, the big three (General Motors, Ford, and Chrysler) ask for government loan of $25 billion.

As of the beginning of 2009, the vehicle companies of the world are being hit hard by the economic slowdown across national boundaries. Japanese auto maker Toyota recorded it first loss since the establishment of the company in January. Auto maker around the world from Asia, North America, Europe were forced to implement new strategy to persuade customer to buy cars. Some of the strategy was given out discount even a company went further Hyundai by offering to allow customers to return their new cars if they lose their jobs.

Among other sector of the industries that have been affected by this current crisis are the electronic industries, aviation industries, and service industries.

4, Other problems -The Swine Flu Epidemic

As if the current financial crisis was not enough the break out of the swine flu made the crisis more to escalate. It shall be seen how the swine flu has contributed more to the crisis. The break out of this viral started in Mexico and spread rapidly to other countries. By this it forced countries to tight their borders as a result of this both the tourism and aviation were the most widely affected in this case. Most countries in which tourism is the main revenue for the government and were not seriously affected by the financial crisis also had a drop in the annual revenue. Like in Mexico and other Caribbean countries which depend on tourism were affected and countries that have been seriously affect by the financial crisis just made them worst. Now we not only are trying to find the cure for the financial virus but also the swine flu virus. It means the little fund the government has to get back the economy starting again some will be channel to finding the cure making the recovery of the financial crisis delayed a little longer.

5. Forecast for the year 2010

The graph below shows how the world economy has shrunk and it forecast for year 2010. The table above shows how the world economy shrunk from the beginning of the crisis. In the beginning of 2008, most of the world economies were in the positive number and by 2009, they were forecasted to move to the negative. Only the developing economy did much better and stronger and the reasons for these have been discussed in the previous chapter, that of the Japanese was the worst. For the next year the forecast shows some optimistic predictions to all economies the only exception is Japan where the decline is lower, around -0, 2%.The developing countries get a higher rate than in 2009 by 3%.The world market will be still lower than in 2008.Some predictions for the next years say that the world growth will be the same only to 2015.Other forecast only states that the world market is still in decline and it is almost impossible to make an objective prediction about the end of the crisis. The facts are that the people have lower chance to find a job and the unemployment rate will be higher. The distrust in the economy can create more and more problems than the actual situation has shown.

6. The Financial ratios:

Every bank were affected by the credit crisis ,and to show some negative effect in the banking system one of the most famous bank called Citigroup is emphasized in this paper. The financial ratios are acceptable worldwide to measure and explain the banks’ financial background. Four main part of the analysis describe the Citigroup’s liquidity, asset and dept management and its profitability through financial ratios in the last three years (Financial ratios calculation; Business Finance lecture calculation.xls 2008.11.22.)

I. Liquidity:






Net Working Capital =

CA – CL =

-$799 692 000

-$441 290 000

-$647 337 000

Current Ratio =

CA / CL =




Quick Ratio (Acid Test) =

(CA-INVT) / CL =




Cash Ratio =

(Cash+MS) / CL =




Net working capital is a financial ratio; it represents the amount of day-by-day operating liquidity available to a business. Along with fixed assets such as plant and equipment, working capital is considered a part of operating capital. It is calculated in the following way; current assets minus current liabilities (NWC= CA-CL). NWC (2008): -$799 692000, (2007) -$441 290000, (2006) -$647 337000. Net working capital is negative because the amount of current liability growing faster than the current assets. It may cause some problems to satisfy the operating expenses and the short term debts.

Current Ratio: To find current ratio, divide current assets by current liabilities (CR=CA / CL). It’s measurement of how the Citigroup able to pay its accounts payable on time. Current liabilities may rise faster than current assets and the current ratio may fall, this can be a sign of financial trouble.CR(2008):0,348667267,(2007) 0,675977596,(2006) 0,535331254. The current ratio was higher in 2007, than in 2008 and 2006.The financial crisis cut this ratio almost to the half.

Quick Ratio: Quick assets are those current assets that are quickly convertible into cash; inventories are the last liquid current assets. Quick ratio is equal to this formula; divide current assets by current liabilities minus the inventory ((CA-INVT) / CL). Acid test (2008): 0, 348667267, (2007) 0, 675977596, (2006) 0,535331254. Banks haven’t got any inventory and that is the reason of the same result of current ratio. Citigroup only have the possibility to convert its current asset to money.

Cash ratio: The most conservative liquidity ratio for judging the financial stability of a company on a short-term basis. To calculate cash ratio, add the value of the company’s cash and short-term marketable securities, and divide the total by current liabilities ((Cash +MS) / CL). CR (2008): 0,162557075, (2007) 0, 474741393, (2006) 0,332320734. As it can see, the Citigroup cash on hand to fund short-term liabilities shows a decreasing tendency.

II. Asset management:

Asset Management

Total Asset Turnover =

S / Average TA =



AR Turnover =

S / Average AR =



AR Period =

365 / AR turnover =



Inventory Turnover =

COGS / Average INVT =

Inventory Period =

365 / INVT turnover =

Total asset turnover: This ratio is intended to indicate how effectively a company is using all of its assets. Citigroup’s TAT (2008) = 0, 063015908, 0,078207758 (2007) Total asset turnover rate increased from 2007 to 2008, but the problem with this ratio is that obviously banks have lower ratios than a manufacturing companies. The financial analysts states that the company with relatively low total asset turnover has high profit margin.

Receivables Turnover and AR period: The receivables turnover ratio and the average collection period provide information on the success of the firm managing its investment in accounts receivable. Inventory turnover: The inventory ratios measure how quickly inventory is produced and sold. This financial ratio can’t be calculated here because the balance sheet don’t contain any information about the inventory.

III. Dept management:

Debt Management




Debt Ratio =

TL / TA =




Debt/Equity Ratio =

LTL / E =




Financial Leverage Multiplier =

TA / E =




Times Interest Earned =





Debt ratio: The dept ratio is calculated by dividing total dept by total assets .Debt ratios provide information about protection of creditors from insolvency and the ability of firms to obtain additional financing for potentially attractive investment opportunities. DR (2008) = 0,926937224, (2007) 0, 9480752595, (2006) 0,936431643 .The protection of creditors from insolvency is less that it was in 2007 and 2006 because the liabilities increased faster than sum of the assets

Debt / Equity ratio: This ratio also depends on the industry in which the company takes place. The high result express that the firm intend to extend its business and has been aggressive in financing. The lower ratio in 2008 is a result of the distrust in the interbank system because the banks fear to provide loans on favorable condition.

Financial leverage multiplier: A high ratio indicates possible difficulty in paying interest.

Times Interest Earned: Is calculated by Earnings before interest and taxes divided by interest (EBIT / INT).TIE (2008): -0, 622874098, 1, 021939611(2007), (2006) 1, 520502959.The huge negative different emphasizes the decreasing ability of Citigroup to generate enough income to cover interest expense.

IV. Profitability


Gross Profit Margin =

GP/S =




Operating Profit Margin =

EBIT / S =




Pre-Tax Profit Margin =

EBT / S =




Net Profit Margin =

EAC / S =




NOPAT Margin =





EBITDA Margin =





Return on Equity (ROE) =

EAC / E =




Return on Assets (ROA) =

EAC / TA =




Return on Capital (ROC) =

NOPAT / (LTL + E) =




Basic Earning Power (BEP) =





Profit margin (Net profit margin and Gross profit margin): Profit margins reflect the bank’s ability to produce a product at low cost or a high price. Profit margins are not direct measures of profitability.

1, Gross Profit Margin = 0, 8844075228(2008), 1 (2007), 1(2006) Shows what remains from sales after a company pays out the cost of goods sold. A gross profit margin of 0.884:1 means that for every dollar in sales (revenue), the bank has 88 cents to cover its basic operating costs and profit. GPM decreased during the last year.

2, Net Profit Margin = -0, 212945656 (2008), 0,022715711 (2007), 0, 146958883(2006) Net profit margin is a ratio comparing net profit after taxes to revenue. Investors can calculate the net profit margin by using the income statement. Profit margin is an indicator of a company’s pricing policies and its ability to control costs. Differences in competitive strategy and product mix cause profit margin to vary among different companies.

Basic Earning Power: This ratio shows the firm’s earnings on power before the influence and taxes. The sum of net income taxes and interest changes divided by total assets gives the BEP. This financial metric of Citigroup decreased continuously in the last three years.

Return on Assets: Measure of managerial performance is the ratio of income to average total assets, both before tax and after tax. Bank can increase ROA by increasing profit margins or asset turnover. Return on Assets (ROA) =-0,014281366 (2008) , 0,001653387 (2007) , 0,01143013 (2006) Return on assets is a common used for comparing performance of financial institutions such as Citigroup, because the majority of their assets will have a carrying value that is close to their actual market value.

Return on equity: This ratio defined as net income divided by average common stockholder’s equity. The most important difference between ROA and ROE is due to financial leverage. It measures a firm’s efficiency at generating profits from every dollar of net assets (assets minus liabilities), and shows how well a company uses investment dollars to generate earnings growth. High ROE yields no immediate benefit. ROE= -0, 195467062 (2008) 0,031840349 (2007) 0,179808487 (2006).The ROE was relatively instable in the last three years.

Return on Capital: shows how effectively the Citigroup uses its money. It’s calculated from the liability and equity and the NOPAT (NOPAT / (LTL + E).This measures the rate of return, although it became negative in 2008(-0, 020148483).

V. Market Ratios and Measures

Market Ratios and Measures

Prices source prices

Price per share (Average)




n (basic, weighted)

assume it’s a given value in every year





EAC / n =





DIV / n =




P/E ratio =





Market-to-Book Value =





Market Value Added =





Dividend Yield =





The immediate result of the crisis was the falling prices of the shares, in case of Citigroup the difference was more than $25 per share at the end of the year 2008.The average price per share is $18, 1325.The earnings per share and the dividend per share shows a decreasing tendency because of the low share prices. Payout ratio: The payout ratio is the proportion of net income paid out in cash dividends to shareholders. Market price of a share: The market price of a share of common stock is the price that buyers and sellers establish when they trade the stock. Dividend yields are related to the market’s perception of future growth prospects for firms. Dividends are always paid as a percentage of the face value of the share. When the dividend is received, it is computed as a percentage of the current market value of the share and is termed as the dividend yield. A lower P/E ratio means that investors are paying less for each unit of net income and it shows the demand of the investor to buy shares.

VI. Cash flow analysis:










(365/0) –

(365/0) –




(365/0) –

(365/0) –





CCC = IP + CP – PP =



Retention rate (b)




Internal growth rate =

ROA*b /(1-ROA*b) =




Sustainable growth rate =

ROE*b /(1-ROE*b) =




Growth rate of sales



Cash flow is essentially the movement of money into and out of the business; it’s the cycle of cash inflows and cash outflows that determine the business’ solvency. Working capital is also an important part of a cash flow analysis. It is defined as the amount of money needed to facilitate business operations and transactions, and is calculated as current assets (cash or near cash assets) less current liabilities (liabilities due during the upcoming accounting period).The result of many ratio is 0 because the Citigroup didn’t have any inventories. Computing the amount of working capital gives a quick analysis of the liquidity of the business over the future accounting period. If working capital appears to be sufficient, developing a cash flow budget may be not critical. But if working capital appears to be insufficient, a cash flow budget may highlight liquidity problems that may occur during the coming year. Citigroup’s Cash flow from operating activities was 1403,272039 in 2008.Cash Conversion Cycle: The cash conversion cycle is the number of days between paying for raw materials and receiving cash from selling goods made from that raw material. CCC=0 – meaning that this company is in good shape with no working capital needs.

7.The DOW Jones Industrial Average (DJI)

To compare the Great Depression with the current crisis this thesis firstly describes the differences between the Dow Jones Industrial Average in 1929 and 2008 .This index shows the large companies’ stock trading activities in the industrial sector. The Dow Jones average computed from the 30 largest American companies’ stock price data. When it was firstly published only 12 stock price or components was used for the calculations. Originally the DJSI was calculated from a simple formula. As it can see the graph according to the Dow Jones indexes decreased into the deepest point in 1932.

8. Conclusion:

There some similarities among the two crisis, first of all the before the crashes the price of Dow Jones index went up. The largest damages caused because the investors lost their trust in the banking system. In both cases financial bubble had created to stimulate the economy and gain more profit. The poor financial management of the banks leaded to several bankruptcies. The unemployment rate increased almost in every country and the political forces lost their power in the beginning. The politicians and the analysts tried to issue optimistic predictions about the future. In the other hand, the consumer spending didn’t stop in the last year. The depositor’s money is secured by the banks and I some cases by the government. It’s hard to make any statement about what happen next. It seems that we are only in the begging of another Great Depression. There is something in the news about global recovery, but it seems the countries have to help themselves. The U.S. nation believes that the new president can bring them the welfare, but as it can seen in the first part of the thesis, the political forces are more complex than one man can help an entire nation. Another fact is that information is the most valuable asset in the market in the moment, because the in-equivalent information system. The U.S. government decided to handle the crisis in the same way (invest into funds to create jobs) what it used in 1929, although they stated that this crisis is totally different to the Great Depression. This is something what the regular people and the media should think about. Capitalism means less government intervention in economy or what the west call free market. If this is the best form of economy growth why do we need to government to bail us out every time we are in financial crisis? Why not the government takes control of the market, since after the government bailout the government does have say or control which every industry took their money. When we compare countries in which with very tight government involvement they have been less develop for example in Venezuela , Cuba, so capitalism still seem the best way to move economy forward but bad or miss management of top executives brings the crisis. So if the government always comes to the aid of the market we could say we partial capitalism this was the reasons some people were against the bailout. If our top executives can be more competence and not greedy we can prevent another major financial crisis as this and we need no need the government for bailout and then we can be free. The final conclusion is that this crisis is more than similar to the Great Depression in many financial aspects; obviously there are some differences too.


I -II. Balance sheet and Income statement of Citigroup

Balance sheet of Citigroup(






Current Assets

Cash And Cash Equivalents

199 584 000

646 556 000

462 961 000

Short Term Investments

228 502 000

274 066 000

282 817 000

Net Receivables


57 359 000

44 445 000


Other Current Assets

Total Current Assets

$428 086 000

$920 622 000

$745 778 000

Long Term Investments

1 259 543 000

976 884 000

943 843 000

Property Plant and Equipment


27 132 000,00

41 204 000

33 415 000

Intangible Assets

14 159 000

22 687 000

15 901 000

Accumulated Amortization

Other Assets

165 272 000

168 875 000

100 936 000

Deferred Long Term Asset Charges

Total Assets

1 938 470 000

2 187 631 000

1 884 318 000


Current Liabilities

Accounts Payable

70 916 000

84 951 000

85 119 000

Short/Current Long Term Debt

382 677 000

450 731 000

450 068 000

Other Current Liabilities

774 185 000

826 230 000

857 928 000

Total Current Liabilities

$1 227 778 000

$1 361 912 000

$1 393 115 000

Long Term Debt

476 378 000

427 112 000

288 494 000

Other Liabilities

92 684 000

285 009 000

82 926 000

Deferred Long Term Liability Charges

Minority Interest

Negative Goodwill

Total Liabilities

1 796 840 000

2 074 033 000

1 764 535 000

Stockholders’ Equity

Misc Stocks Options Warrants

Redeemable Preferred Stock

Preferred Stock

70 664 000

1 000 000

Common Stock

57 000

55 000

55 000

Retained Earnings

86 521 000

121 920 000

129 267 000

Treasury Stock

-9 582 000

-21 724 000

-25 092 000

Capital Surplus

19 165 000

18 007 000

18 253 000

Other Stockholder Equity

-25 195 000

-4 660 000

-3 700 000

Total Stockholder Equity

141 630 000

113 598 000

119 783 000

Net Tangible Assets

$100 339 000

$49 707 000

$70 467 000

Income statement of Citigroup





Total Revenue

130 005 000

159 229 000

146 558 000

Cost of Revenue

20 271 000

Gross Profit

109 734 000

159 229 000

146 558 000

Operating Expenses

Research Development

Selling General and Administrative

69 368 000

59 960 000

52 988 000

Non Recurring

1 766 000

1 528 000


58 963 000

18 509 000

6 988 000

Total Operating Expenses

$130 097 000,00

$79 997 000,00

$59 976 000,00

Operating Income or Loss

-20 363 000

79 232 000

86 582 000

Income from Continuing Operations

Total Other Income/Expenses Net

Earnings Before Interest And Taxes

-20 363 000

79 232 000

86 582 000

Interest Expense

32 692 000

77 531 000

56 943 000

Income Before Tax

-53 055 000

1 701 000

29 639 000

Income Tax Expense

-20 612 000

-2 201 000

8 101 000

Minority Interest

349 000

-285 000

-289 000

Net Income From Continuing Ops

-32 094 000

3 617 000

21 249 000

Non-recurring Events

Discontinued Operations

4 410 000

289 000

Extraordinary Items

Effect Of Accounting Changes

Other Items

Net Income

-27 684 000

3 617 000

21 538 000

Preferred Stock And Other Adjustments

Net Income Applicable To Common Shares

-$27 684 000

$3 617 000

$21 538 000

III. Cash Flow Statement of Citigroup

Cash Flow Statement





Net Income

-27 684 000

3 617 000

21 538 000

Operating Activities, Cash Flows Provided By or Used In


2 672 000

2 790 000

2 790 000

Adjustments To Net Income

-6 727 000

-18 981 000

4 617 000

Changes In Accounts Receivables

88 979 000

-15 529 000

12 503 000

Changes In Liabilities

-113 554 000

-36 090 000

131 622 000

Changes In Inventories

Changes In Other Operating Activities

152 457 000

-7 237 000

-173 057 000

Total Cash Flow From Operating Activities

96 143 000

-71 430 000

13 000

Investing Activities, Cash Flows Provided By or Used In

Capital Expenditures

-2 541 000

-4 003 000

-4 035 000


1 929 000

-47 013 000

-201 777 000

Other Cashflows from Investing Activities

-76 999 000

-11 361 000

1 606 000

Total Cash Flows From Investing Activities

-77 611 000

-62 377 000

-204 206 000

Financing Activities, Cash Flows Provided By or Used In

Dividends Paid

-7 526 000

-10 778 000

-9 826 000

Sale Purchase of Stock

77 083 000

-1 554 000

-5 327 000

Net Borrowings

-56 283 000

63 404 000

101 122 000

Other Cash Flows from Financing Activities

-37 811 000

93 422 000

120 461 000

Total Cash Flows From Financing Activities

-24 537 000

144 494 000

206 430 000

Effect Of Exchange Rate Changes

-2 948 000

1 005 000

645 000

Change In Cash and Cash Equivalents

-$8 953 000

$11 692 000

$2 882 000

IV. Citigroup historical prices




r Citigroup(%)

r S&P500


































1 267,38






1 280,00






1 400,38






1 385,59






1 322,70






1 330,63






1 378,55






1 468,36






1 481,14






1 549,38






1 526,75






1 473,99






1 455,27






1 503,35






1 530,62






1 482,37






1 420,86






1 406,82






1 438,24






1 418,30






1 400,63






1 377,94






1 335,85






1 303,82






1 276,66






1 270,20






1 270,09






1 310,61






1 294,87






1 280,66






1 280,08


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The causes of the 1929 stock market crash, Harold Bierman

U.S Department of State,

The great crash, 1929, John Kenneth Galbraith

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New York Times, /topics/reference/ timestopics /subjects/g/ glass_s teagall_act _ 1933/index.html

Ronald Edsforth: The New Deal: America’s Response to the Great Depression, 2000 /pages /h1599.html

John Salmond, The New Deal: The National Level (1975). pp. 188-89

Jim Crouch , "The Works Progress Administration”, Eh. Encyclopedia (2004)

Business Policy and Strategy: An Action Guide, Sixth Edition 2001

Business Policy and Strategy lecture SFAS power point presentation 2008.12.03

Financial ratios calculation; Business Finance lecture calculation.xls 2008.11.22

The cash conversion cycle doc. Business Finance lecture 2008.02.17

Dow Jones (2008-02-11). "Dow Jones to change the composition of the Dow Jones Industrial Average

George Soros: The New Paradigm for Financial Markets: The Credit Crisis of 2008 and What it Means

Federal Reserve Bank of Minneapolis Quarterly Review Vol. 24, No. 1, winter 2000, pp. 14-23, Dybvig: Bank Runs, Deposit Insurance, and Liquidity

Banking and Finance lecture /Banking Crises.ppt/2008.12.03

Charles W. Calomiris, Charles M. Kahn, “The Role of Demandable Debt in Structuring Optimal Banking Arrangements” in American Economic Review, Vol. 81, 1991

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