The Collapse of Lehman Brothers Incident Analysis
经济学essay代做 In the previous assignment, we discussed the case of Lehman Brothers. The reason why I selected this case is because it created
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Introduction 经济学essay代做
In the previous assignment, we discussed the case of Lehman Brothers. The reason why I selected this case is because it created a multiplier effect, a domino effect which in turn affected many other institutions. The bankruptcy of Lehman Brothers was a shock to many, including the people from other countries. Looking back, it can be deduced that many mistakes were made by different parties who were involved in the case. It could have easily been avoided, and the economic downturn could have been prevented, had right actions been taken at the right time.
Lehman Brothers followed a high risk, high growth business model, which allowed it to grow tremendously. However, the cause of the fall of the biggest investment bank of the United States of America, can be traced back to 2006 when the company started to offer loans to people without proper documentation and credit ratings. Credit ratings determine how well a person will be able to pay back on his or her mortgage, thereby, securing the bank’s position and ensuring that it is able to make profits, and get back the money that has been loaned. 经济学essay代做
This is the primary reason why the sub mortgage crisis occurred in the first place.
In order to increase the returns loans were given to people even without proper documentation, which resulted in increased defaults, and many people failed to return the money they borrowed. The liabilities of the company increased, until finally, even its assets were not able to sustain the company. Lehman Brothers finally had to file for bankruptcy on September 15, 2008.
Lehman’s operations were being supervised by a number of governmental and industry organizations, after Bear Sterns filed for Bankruptcy, including its primary regulator, the Securities and Exchange Commission (SEC), the Chicago Mercantile Exchange (CME), which regulated certain derivatives, the Office of Thrift Supervision, which supervised Lehman’s thrift subsidiary, and the New York Federal Reserve Bank (NYFED) (Wiggins, Pointec, Metrick, 2014). 经济学essay代做
This event resulted in an economic crisis all over the world, especially in countries whose currency was directly pegged with dollars. As the value of dollar depreciated, the exchange rate fluctuated as well, leading to economic crisis in other countries as well. This was an event that could have been avoided, however, the authorities and agencies evaluating the performance of Lehman Brother’s failed to raise the alarm on time.
Thesis 经济学essay代做
The bankruptcy of Lehman Brothers could have been avoided had the authorities involved taken the right course of action, it was their moral obligation to do so, but they failed.
Ethical Theory
The ethical theory which I have selected in order to analyze the case at hand is that of Virtue Ethics. It states that an action is right, if and only if, it is similar to how a virtuous agent, purely out of habit and character, decides to do (Rosalind Hursthouse, 1999). I stand by the moral opinion that when the companies and agencies who conducted the audit and analysis of Lehman Brothers accounts, and books, did not highlight the issues that the company was facing.
Morally, these should have been highlighted and authorities should have been informed much in advance. Then this entire fiasco could have been avoided and the company would not have had to file for bankruptcy. Therefore, I am of the opinion, that the actions of all agencies were incorrect, and it is not something that a virtuous person would have done. These actions were incorrect and ethically wrong. 经济学essay代做
Another reason why I feel that this theory strongly supports my reason is because there were multiple courses of action which could have prevented the downfall of Lehman Brothers, and thus the economy.
The government could have bailed the bank out or even more money could have been injected into the economy to control the trickledown effect. However, no such preventive measure was taken by the parties involved. This resulted in the worst case scenario that could have been prevented, and eventually led to an economic relapse, that affected the entire world.
Comparative Analysis 经济学essay代做
In comparison of virtue ethics, I will be discussing deontology theory. It states that the nature of the act itself, regardless of the consequences, is of relevance (Onora,O’Neill). From this premise, it can be presumed that Kant never believed in how the consequences would affect the majority, rather he focused on the nature of the act.
If the nature of the act was deemed good by the majority. Then the act was considered to be good. However, one argument against this theory is that the nature of the act can be different according to the person who is acting on it. This is governed by a person’s beliefs. And thus, it can differ from person to person.
In the case of Lehman Brothers, this theory would state that the nature of the act, i.e. the actions of the parties, agencies, and government organizations involved. Therefore, their actions count regardless of the consequences. Which should not be the case, as their lack of due diligence resulted in an economic pandemonium. Which affected not just the United States of America. But also the entire world. In my opinion, deontology not only supports the actions taken by the parties involved. But also does not take into account the resulting outcomes. Therefore. This theory is flawed in nature, and virtue ethics, offers a better understanding of how the companies went wrong.
Conclusion 经济学essay代做
While it is quite easy to look back to a situation and reflect on things, provide solutions as to things could have changed or been different. However, I do believe that there are times when some outcomes are beyond our control. The case of Lehman Brothers is a great example for us to learn from, and offers us guidance as to how being too focused on generating profits can results in problems. The focus should always be on sustaining the business, instead of growing it to such an extent that it collapses.
References
Case Study: The Collapse of Lehman Brothers, retrieved 2-2-2018 from;
https://www.investopedia.com/articles/economics/09/lehman-brothers-collapse.asp
Rosalind Hurthouse, Virtue Ethics and Human Nature, retrieved 2-2-2018 from;
http://www.humesociety.org/hs/issues/v25n1-2/hursthouse/hursthouse-v25n1-2.pdf
Rosalind Z. Wiggins, Thomas Piontek, Andrew Metrick, 2014, The Lehman Brothers Bankruptcy, retrieved 2-2-2018 from;
http://som.yale.edu/sites/default/files/files/001-2014-3A-V1-LehmanBrothers-A-REVA.pdf
Onora O’Neill, Kantean Ethics, Deontological Ethics, retrieved 2-2-2018 from; 经济学essay代做
http://gbelic.org/courses/intro/lectures/lecture-7-deontology.pdf
Taylor and Francis, Kant’s Deontological Ethics, retrieved 2-2-1018 from;
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