01 Nov 2009

Sample Essay: Global Finance Today Be Compared To ‘Casino Capitalism’

“Financial markets today are globally alive through international telecommunication system. The fabric of modern financial environment is woven in such a system. Therefore trading and transfers of payments go on around the clock. Financial markets include foreign exchange, fixed income, and equity markets. Financial intermediaries such as banks and insurance companies have a role in it. Cultural, political, and historical back grounds and complexity and availability of technology of financial institutions differ across borders. Since the dawn of the recorded history, financial transaction was into existence.3000BC documents of Sumerian, shows the systematic use of credit in Mesopotamia. Hammurabi’s code mentioned the regulations of credit in Babylon around 1800BC. In the city state of Genoa, Banking institutions started in the twelfth century AD. Similar to the modern form, security issues were existed in the Italian city state in the middle ages. Financial features and financial derivatives are not something new. These were widely traded in the 1600s in the Amsterdam Securities exchange. This shows that financial activities such as borrowing, investing in securities, financial contracting are very old. Only the procedures in these activities have changed through the ages. Ways of clearing and settling payments to facilitate the exchange of goods, services, and assets are provided by a financial system. Pooling of funds for the subdividing of shares in firms to facilitate diversification is provided by financial system. For coordinating decentralized decision making in various sectors of economy, the required information is provided by the financial system.” (1)

The important factors of financial environment are: 1. Growth rate of GDP.2. GDP percapita measured in terms of purchasing power parity (PPP).3.Import and Export rate.4.Inflation in the economy. Such factors affect the financial activity both at the micro level and macro level of economy. (2)

Additional movement towards globalization will need rethinking the natural world and position of capitalism in meeting the objectives of mankind, including its melding with both social and political objectives and institutions. A more open world economy will not be acceptable unless there is broad agreement on objectives, processes, and “fundamental values buttressing civil societies.” (3) In the last half century, capitalism has distorted as it has moved from a focus on nationwide prosperity and authority to growth and integration of local associations of nations; and it will have to be adapted further as diverse countries are brought into an open and integrated global system-one founded on roughly similar values expressed in freedom and social justice. These changes must address the recurring problems of poverty and an inequitable distribution of benefits and burdens (including unemployment and increasing uncertainty) within and among nations.

How does globalization affect the third world countries? (4) Globalization, if allowed to genuinely progress, will unlock the economic development potential that is currently suppressed by government interventions in many of the world’s poorest countries. But economic liberalization is far from a sure thing. It needs passionate advocates that can stir up public support to overwhelm the lobbying power of particular interest groups that benefit from protectionism, such as corporate agro-businesses and steel workers. Leftist attempts to halt globalization will only help these protectionists, resulting in an uneven distribution of capitalism and thus, an uneven distribution of poverty-induced suffering. (5)

People who criticize free market capitalism focus on the arrangement of markets and their association to all institutions. The unsteadiness and instability of energetic markets can diminish the economic footing of actual lives, or in additional macro-cases can pilot the collapse of nationwide and local economies. Susan Strange (1986) refers to this instability as ‘casino capitalism,’ (6) an occurrence she links to five developments: “innovations in the way in which financial markets work; the sheer size of markets; commercial banks turned into investment banks; the emergence of Asian nations as players; and the shift to self-regulation by banks” (Strange, pp.9-10).

The competitive environment of industry can be elaborated with the help of Porter’s five forces analysis. The five forces consist of those forces close to a firm, which affect a firm’s ability to serve its customer and make a profit. The five forces are: 1.The threat of a close substitute for the firm’s product, 2.The threat of entry of new competitors, 3.competitive rivalry and its intensity, 4.customers bargaining power, 5.suppliers bargaining power. If any one or more of the forces change the firm has to relocate its market. In a financial environment based on global financial market and integrated economy the competitive forces are also having a wider reach. A firm has to think about diversification in its business to absorb the shock of the market. A proper strategic decision making is required on the part of the management to constructively explore the various aspect of the emerging global environment.

To talk about the global market volatility and the resourceful obliteration energies of the different sectors, the dimness of risk and economic indecision lurk in the backdrop of this genre of Publicity and promotion. “The danger emerges in the shape of savings anxiety, failure to innovate scientifically and technologically” (7), the lack of elasticity and pace, or being inundated by information. Paradoxically, the foundation layer most vulnerable to monetary instability is absented from these commercials. The risk experienced is by investors or by executives. But the risk itself provides the opportunity.

When we talk about the global finance at its present state we are presented with economic blood on the roads, the sea of crimson ink, the millions of dollars of worth disappeared into thin air, the individual pain and community witch-hunting, the millions or tens of thousands of populace whose houses are valued less than mortgages they have already obtained – all of it had been originated by excesses the global community was warned about. Very loudly, often and a lot earlier.

The world was warned by people with the most money in the world who have a fair idea of how the global financial casino operates and don’t have a very favourable opinion of what they are witnessing, even as they flourish. Warren Buffet, almost certainly the most successful financier of this era, when he talks about the financial speculators and manipulators operating under the polite title of “hedge funds” (8).

“In Wall Street you have this progression from the innovators, to the imitators, to the swarming incompetents,” he told the CNBC financial network last week. “And what happens is that the results achieved by the innovators enable the product to be sold by a lot of people, simply because the record of a few people was good.

“So the idea that billions, well, trillions of dollars can be managed to get above-average results while charging fees that are way higher than normal just defies logic.”

Nor does Buffet buy the logic that the world’s largest economy can avoid a recession by the simple expedient of cutting interest rates. It’s too late. The debt bubble is too big.

“By any commonsense definition, we are in a recession. On balance, most [Americans’] net worth has been heading south for a considerable period of time.

“And if you owned a house, and you had an 80 per cent mortgage on it, and 20 per cent equity a year ago, you might not have any equity now. Millions of people are in this position now.”

Plenty of them live in Australia, and are being pummelled by the Reserve Bank.

Four years ago, another billionaire, George Soros, a veteran currency speculator, wrote a book called The Bubble Of American Supremacy, in which he warned about the dangers presented by excessive debt in the housing sector: “The market in securitised mortgages is enormous, much superior than in government bonds.”

He said there was “a real flaw in the system”, which would inevitably disrupt the bond market and global lending. After four years, it has come to pass.

Soros on January 23, writing in the Financial Times, presented an article providing a clear, bleak synopsis of the field of disagreement: “The current financial crisis was precipitated by a bubble in the US housing market … Ease of credit generates demand that pushes up the value of property, which in turn increases the amount of credit available.” (9)

In conclusion I would say that global financial system today is very much in correlation to the term ‘casino capitalism’. Being in the world today is no different than any Las Vegas casino. Either you win it and make it big in the rat race of capitalism or get overtaken and swallowed whole by the individualistic nature of the free market.


1. [The Global Financial System: A Functional Perspective by Dwight B Crane page5-12]

2. [http://www.epa.gov/ocem/nacept/ green _dividends.pdf]

3. [Bohm, D. (2000), The Implicate Order and Wholeness (Boston: Ark Paperbacks, 2000)]

4. [Beck, U. (2000), ‘A Global Prospect: Beyond the Work Society,’ Global Focus 12(1): 79-88]

5. [Dingel, Jonathan. Globalization: The Third World’s Best Ally, 2005]

6. [Strange, Susan. 1986, Casino Capitalism. Publsiher: Oxford]

7. [Balasubramanyam, V. N., Salisu, M., and Sapsford, D. (1996), ‘Foreign Direct Investment and Growth in EP and IS countries’, Economic Journal 106: 92-105]

8. [Blomstrom, M., and Persson, H. (1983), ‘Foreign Investment and Spillover Efficiency in an Underdeveloped Economy: Evidence from the Mexican Manufacturing Industry’, World Development 14: 493-501]

9. [Dollar, D. and Collier, P. (2001), Globalisation, Growth and Poverty: Building an Inclusive World Economy (Washington, DC: World Bank)]

10 Oct 2008

Essays on Globalization

The term globalization is applied to many things in today’s world.  Business heralds globalization as being responsible for the rapid economic and social improvements of third world countries, yet often downplays the significance of the profits they gain by taking advantage of the lower wages and regulatory environments of those countries.  Workers in developed countries bemoan globalization as causing the loss of employment in their own countries, accusing corporations of cannibalizing the economic strength of the United States and Europe in the name of capitalist profiteering.  Sociologists grieve over the homogenization of cultural diversity and social identity resulting from globalization.  Without a doubt, only a small minority of Earth’s population hasn’t drawn some kind of opinion on globalization.

The generally accepted definition of globalization is the modern trend in the spread of knowledge, ideas, technology, financial resources and economic activities from a small-scale, localized focus to a large-scale, multinational scope.  As globalization continues, our world is rapidly transitioning from one of cultural and social diversity to a homogeny of corporate logos and the social philosophies and values imposed by “enlightened” societies who believe their social ways and values are more developed through a mix of propaganda and political pressures.  Though third world countries gratefully embrace the economic improvements globalization brings, many are beginning to ask if the homogenizing effects of globalization are too high a price for these improvements.

Globalization is an abstract concept with implications that encompasses a wide range of social, economic and political development worldwide.  The potential approaches and individual essay topics available are as diverse as our global society itself is, ranging from issues of child labor to environmental protection and from cultural diversity to information technology.

  •  One aspect of globalization has been the international campaign against child labor and exploitation.  What defines these concepts and how is the globalization of our economy affecting them?  Could child labor be considered beneficial in ways that have been overlooked?  Can child labor be addressed from a proactive/preventive focus rather than the current reactive/punitive focus and if so, how?
  •  Many nations have responded to the cultural effects of globalization in protectionist mannerisms, such as Egypt’s total ban on the export of archaeological treasures or Japan’s “Living Treasures” designation bestowed upon individuals deemed significant in preserving their national culture and heritage.  How effective are these measures?  Are they an appropriate response?  What can other countries do to protect their identities as well?
  •  Many proponents of globalization have depicted anti-globalization sentiments as nothing less than historic protectionism.  Is the depiction accurate?  If not, what are the differences?  How are the two concepts comparable or similar?
  •  Globalization by outsourcing high tech services to offshore companies has sparked a great deal of debate in our society, fueled by accusations of companies laying off tens of thousands of American workers while engaging in contracts with Indian companies to provide these same services back to the American-based company.  Is this type of globalization an ethical way to do business and how can American workers affected by it respond?
  •  Over the past three to four decades of globalization, many companies have moved their manufacturing and processing centers to third world countries, most notably countries in Asia and South America.  What has the real effects of globalization been to the communities whose employment base has abandoned them?  How have the companies themselves faired?
  • Activists against globalization claim that allowing companies to engage in wholesale exporting and globalization of their activities have made many nations more vulnerable to social, political and economic turmoil.  Is globalization a threat to American national security issues?  If so, how does it make America more vulnerable and what can be done to minimize the threat?

Issues surrounding globalization have, historically, been approached with a high level of emotionalism and propaganda.  To understand and truly discuss its impact on the global community the issue must be approached with a level of critical thinking.  Our writers are highly skilled in the arenas of research, critical thinking and writing.  They are fully qualified to assist you with your essay, report or term paper on the topic of globalization and many others.

Contact us today for more information.

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