Shanghai Business Environment

Enterprises that want to invest in China can stumble over an array of regulations that do not give them free choice of where they wish to locate. This situation has been changing, and China's membership in the World Trade Organization (WTO) should act as another catalyst to make the investment climate freer in several industries. Enterprises can look forward to making decisions on where to locate within China based on factors that they would use in the more-familiar open environment. To appeal to businesses, cities need a good IT infrastructure, strong leadership, incentives, and â€Å"livability† (see Figure A).Figure A The size of China's market and Western enterprises' desire to get close to it means that Chinese cities do not generally compete for foreign investment with cities in other Asia/Pacific countries. Outside the manufacturing sector, most enterprises locate in China because they want to sell to China. Of all China's cities, Shanghai has gone furthest toward the s uccess factors for a global â€Å"smart city. † Its ambition to become a major financial center and player on the international stage by 2015 has fueled this drive. History has also given Shanghai many advantages.It is probably the most outward-looking of any Chinese city and has a strong political voice in Beijing. The latter has allowed Shanghai to lead the way in many initiatives because China's political leaders often use the city to test out new ideas. As a result, many initiatives that started in Shanghai have now spread elsewhere in China. Shanghai's characteristics Livability To most Western expatriates, Shanghai is perhaps the most livable of Chinese cities. The city continues to make strides to improve (e. g. , announcing new rules to allow foreigners to buy property for the first time).Measured against other big cities such as Singapore, Hong Kong, or Sydney in the Asia/Pacific region, Shanghai still scores low. From a global perspective, livability is one of Shang hai's weakest areas. However, livability has a large subjective component, and what appeals to Western tastes may not rank as important to the skilled Chinese workforce that an enterprise might what to attract. Incentives Shanghai has traditionally enjoyed a sizable chunk of foreign investment into China, in part because of its position as a testing ground for reform.In some cases, China has forced foreign investors to set up in the city first. This advantage will diminish, and Shanghai will need to learn to play on a more-level playing field. The city has committed to spending, by 2005, 150 billion yuan (one-third of its total industrial investment) on expanding its high-tech sector. This investment targets software and integrated circuit manufacturing, and the city will provide some tax breaks for new operations and help for self-employed software designers. Keeping costs low is key in attracting new business.Shanghai will have to balance the inevitable rise in labor costs with su itable business incentives. Leadership Shanghai's leaders know where they want to go during the next 10 or 15 years and what basic things they need to do to get there. However, they did not develop this vision in partnership with business or the community. Rather, as a command economy, decisions have been made by a select few behind closed doors. Thus, its leaders have greater ability to get things done quickly than leaders in democratic societies often have.Cities such as Shanghai can complete projects without long internal or public debate over infrastructure projects that might take years in the planning stages in other countries and involve a myriad of agencies. Shanghai has benefited tremendously (certainly compared to the rest of China) from the pedigree of its leaders. President Jiang Zemin and Premier Zhu Rongji are former leaders of Shanghai and have strongly supported the city. However, Shanghai knows that spending does not necessarily produce results.Ten years ago, it sta rted pouring money into redeveloping the riverside Pudong district into an area of towering skyscrapers, designed to be China's version of Manhattan. Within a city of 16 million people, Pudong ended up as a ghost town. Slowly, occupation levels have risen, but largely because the central government has â€Å"twisted the arm† of foreign enterprises rather than use real incentives. Infrastructure Many of the city's hopes revolve around an ambitious project to link all of Shanghai to a giant high-speed data network, known as the Shanghai Infoport.Scheduled for completion in 2010, the project stands out not just for its scale but also for its attempt to bring together many strands of existing infrastructure (telecommunications and cable television especially) into one cohesive network. If it succeeds, Shanghai will be among the few cities in the world to have achieved such a feat. Five main projects will rely on the Infoport's high-speed infrastructure: 1. Shanghai Information In terchange Network: A â€Å"giant intranet† for Shanghai with links to many kinds of information 2.Shanghai Society Security Network: Designed to offer e-payment and checking and to facilitate the use of smart cards 3. Social Electronic Data Interchange Network for Foreign Trade: An export/import data exchange for foreign trade 4. Social Community Service Network: Focused on the residential community 5. Gold Card and Commercial Value-Added Network: Linking banks' automated teller machines (ATMs) and payment systems With 3. 2 million users, Shanghai claims to have the largest cable TV network of any city in the world, and this local-access network has a central part in Infoport.Shanghai's connections in national government played an important role in keeping the project on track. Although cable TV networks in the rest of China were barred for a period from offering Internet or telecommunication services, Shanghai received a special dispensation to upgrade its cable TV networks to do just that. The municipal government claims that 1 million residents can now reach interactive services through their televisions. It wants the entire network to be interactive by 2004.In addition, Shanghai Telecom (part of China Telecom) is rolling out digital subscriber line services and installing the necessary in-building cabling to offer Ethernet broadband access. Mayor Xu Kuangdi talked recently of every home having broadband access by 2004. At the same time, Shanghai Telecom has worked on improving the quality of the core network to be ready for the deluge of new data traffic the Infoport will bring. By year-end 2000, it completed work on what it claims is the world's largest local ATM network. Shanghai now uses a total of 320,000 kilometers (198,848 miles) of fiber-optic cable, with more than 4,000 optical nodes.Shanghai Telecom says it has deployed optical fiber in more than 90 percent of the city's residential areas. Shanghai's challenges Building an infrastructure re presents only part of making the Infoport work. The real test is whether people will use it. Only in the last few months have the first real customers logged on, so it's a little early to tell what the response will be. Cost may prove one prohibiting factor, and the local government may have to consider deep subsidies to encourage more than just the wealthiest people to sign up. Content also remains a question.Experience from elsewhere in the world, especially Singapore, a world-class smart city where government has tried to link itself to all the people, shows that the bulk of a city's population generally does not have much interest in such projects. They may want video-on-demand, but filling out tax documents online doesn't really excite them. Bottom line Other Chinese cities, notably Beijing, have begun some of the initiatives under way in Shanghai and are rapidly improving their information infrastructure. Shanghai will likely continue to stand out as China's smartest city, acc ording to Gartner's success factors.Shanghai's early start and its ability to exploit openings created by the central government's policies will likely keep the city at the forefront of innovation for some time. Shanghai's advanced, if incomplete, IT infrastructure makes it a good place for Western enterprises to locate central operations in China. In addition, Shanghai is a good place in which to experiment with business-to-business and business-to-consumer projects requiring advanced IT infrastructure in hopes of rolling them out to the rest of the country when the infrastructure permits.

What Are the Key Ideas Behind the Risk Thesis

Undoubtedly, insecurity, fear and risk have come to dominate more mundane aspects of our everyday life. Social policy theorists, such as Paul Johnson defines social risk as ‘The probability weighted uncertainty that derives from the changing and dynamic world in which people lives. ’(quoted in Alcock et al. 2008:21). In the following essay the concept of ‘risk society’ will be explored even further in order to examine the key ideas of the risk thesis and how those relate to social policy and the welfare state. After some light has been shed on historical notions of risk, the focus of the essay will move to a contemporary society. Here it can be clearly seen to what extent risks have evolved in relation to the times we live in and this will be especially explored in the terms of individualization, unemployment, health, terrorism and environmental concerns. Risks theorists have outlined three main discourses in European thought upon risk. According to Giddens (1999), all previous cultures were characterized by Pre-Renaissance thoughts. It can be argued that risks were seen as the products of fate, destiny and will of the gods. However, nowadays the idea of risk is strongly linked to modernity, defined by authors such as Beck and Giddens as ‘the process and institutions of industrialization. (quoted in Kemshall 2002:4). As a result of modernization, there are not only ‘external risks’, coming from the impact of nature upon us, but also ‘manufactures risks’ which are products of human activity, for instance environmental risks or even social ones because our personal futures are increasingly open and therefore, it is possible for individuals to assess the calculability of risk taken. On the other hand, it can be suggested that post- modernity has challenge the ‘myth of calculability’, because as Giddens states: ‘post- modernity offers little help as to which options should be selected. (quoted in Kemshall 2002: 5). Sociologists such as Beck and Giddens clearly examine the fact that the movement form pre-modern societies to modernity and late modernity have lead to greater uncertainties in our contemporary society such as poverty, unemployment and ecological disasters. Undoubtedly we live in a ‘risk society’. Beck (1992) argues that the successful development of technology helps us to produce enough to meet people’s essential needs, however it creates a ‘boomerang affect’ because as Beck points out technology and science create more problems than simply solving them. It can be argued that those who benefits form production and consumption suffer its consequences. To support his theory, Beck provides us with many emperical evidences which illustrate the problem of risk society. It is true that thanks to development in agriculture, the rich countries no longer have problems with shortage food, but the plentiful supply of processed food has created consequences of health problems such as obesity. Similarly, atomic energy helps to produce energy supplies but it creates serious health risk because of nuclear waste and accidents such as those more recently (oil spill in America) and those in the past (Chernobyl nuclear reactor disaster). Particularly, Beck outlines the fact that those disasters are global concerns, rather than local and affect all people, regardless of age or class, because you cannot protect yourself against them by having a high income. In the term of unemployment, Beck also argues that it affects all classes. For example the financial crisis of United Kingdom in 2007-2010 affected not only working class but also middle class people. Therefore social inequality is individualized because people experience risk as individuals rather than a members of a particular class. Drawing upon ideas of Beck and Giddens, Nettleton and Burrows (1998) argues that increased risks in our contemporary societies made individuals to be more ‘encouraged to make life-style choices and life-planning decisions. ’(cited in Kemshall 2002:43. For example, education become increasing important is shaping our future as we know that by having high qualification there is more opportunity to have better- paid job. The increasing of consumerism in our societies made people to pay more attention to money as it provided higher standards of living. The fact that there are more uncertainties in employment and even higher educated people struggle to find jobs, it is necessary for people to move out and thus, geographical mobility allows individuals to move form jobs to jobs on global scale. Therefore, people experience this as individuals rather than members of class. Nettleton and Burrows also argue that those uncertainties in employment which create fear f losing a job and consequences of living in bad conditions, led people to be more aware of the future and secure themselves in the fulfilment of their basic needs by investing money, creating saving accounts and paying private insurances. However is it true that all classes are able to afford it? Nevertheless, people experience the environmental risk to the same extent but it doesn’t mean that the notion of class is less unimportant in the risk society thesis. Beck wrongly assumes that there is the decline of class, because class differences still continue to affect life expectancy and people experiences unemployment in different ways. For example, it is obvious that people who have higher status within society can afford better life and even of they are about to lose a job, their better qualification give them an opportunity to find a job much more quicker than lower status person. It can also be argued that the development of the technology has a result in declining of manufacturing industry which was the basis of working class identities and it has left them struggling to find new job in the face of high unemployment. Moreover, working class people are more at disadvantage because as a result of cultural and material deprivation, they do not have an opportunity to do better at education and thus gain better qualification and pursuit themselves in the job career perspectives. Colin Gill (1985) argues that technological and scientific change and deindustrialization ‘threatens to reduce in the workforce in numerous occupations’ such as warehouse workers, postal staff or mineworkers. Karl Marx (1978) also argues that working class are more likely to be unemployment as a result of capitalists system. Sociologists argue that the risk of unemployment and the effect of unemployment affect both society and personal feelings. Sinfield (1981) argues that unemployment ‘devalues or debates the standard or quality of life in society’. (gouted in Haralambos 2004: 670). He (1981) argues that high unemployment reduced the chance of equality of opportunity being achieved and people feel less secure and may have their standards of living threatened. The other social effects relate to lack of sense of identity of people who lose their jobs, sense of obligatory activates that works provides, lack of a sense of purpose and freedom and control outside work creates the possibility of engaging time leisure activities that are costly. On the other hand, the personal effects of unemployment affect health and financial income. Some argues people’s health is more affected by unemployment because the statistics show that unemployment men have higher death rates compared to employment ones. People also experience greater risk of depression and stress, which has a result in many health problems such as high blood pressure, heart attacks or cancer caused by smoking. Loss of financial income means that people live in bad conditions. Council’s houses are often small and located in marginalized districts. People are more likely to be at risk of poverty which affects both material and cultural deprivation. For example, recent Government figures show that children form low income families are more likely to eat less fruits than their counterparts. Overall, unemployment restricts people’s possibilities to secure the basic needs such as food, good housing or health treatments. However the successful use of National Health Service over the last 50 years, adapt the needs of health care to demographic changes. NHS provide people with free access to health care, but people with better income status are able to afford private medical insurance and use the private sectors which provide more effective health services. As Clark et al points out, ‘this has been paralleled by a ‘result culture†¦. Consumer choice and right have also contributed to public expectations, in the terms not only of access of treatment, but also of its timeliness and excellence. ’ (quoted in Kemshall 2002:55). Thos all evidences prove the fact that Beck’s theory based on the idea of decline of class in the contemporary society, is invalid. As we see people experience the risk in different ways as some of them are affected most than others. Particularly, lower income people are at greater risk of poverty due to unemployment. Now the purpose of the essay needs to move one to the idea of social policy as social risk management. Looking at the historical notion of social policy as risk management the 18th and 19th century Britain have introduced many policies to cope with risk, for example, the introduction of compulsory elementary schools for children of all classes in 1880, self-help organizations (saving banks) and Charity Organization Society or the Poor Law. Jordan (1998) argues that the new politics of welfare: ‘Third Way’, ‘emphasizes equality of opportunity rather than outcome and rights to education and training rather than benefits†¦. It provides for ‘genuine’ needs to be met, with far stricter testing for the authenticity if the claims from unemployment and disability. ’ (quoted in Kemshall 2002:32) According to Jordan (1998), this new politics of welfare state is increasingly associated with ‘New Labour ‘and Blair. The new programme of Third Way is based on key factors such as social justice, social responsibility and obligations, the labour market as a mechanism for achieving social justice and based on reward for merit and an emphasis upon meritocracy. Thus, as Kemshall (2002 :37) argues ‘social policy reform and programmes are now pursued through the labour market and the social engineering of ‘opportunities’ to contribute [through] education and workplace. Social investment in human capital is viewed as more economically productive and efficient that retrospective alleviation of individuals need through a state benefits system. ’ The Labour government introduced a number of new designed policies which are based on the idea of encouraging unemployment back into works. It was done through the introduction of New Deal scheme which was based ‘Gateway’ advice, where young unemployment people have been offered four options (for example, full time education or employment in voluntary sectors). If people refused them, they lost the right to benefits. The introduction of minimum wage and Job Seeker Allowance was also to encourage people to back to work. As Kemshall (2002: 37) states ‘a social policy of ‘Third Way’ actively [promoted] risk taking and a positive attitude to risk has gained currency, and is advocated as the most effective response to the dilemmas of ‘risk society’. However Keefe and Hordley (2002) pointed out that ‘whether Labour policies will succeed in continuing to keep unemployment low remain to be seen. Levels of unemployment were beginning to creep up again by 2003. (quoted in Haralambos 2004:669). Similarly Giddnes argues that the welfare state is ill equipped to meet the risks set by economic globalization and a needs centred welfare state is based upon the pooling risk, rather than the pooling of resources. According to Giddens there is still much focus on benefits and the dependency of ‘need culture’ is seen as a barrier to economic flexibility. The purpose of the essay was to identify the key idea of the risk thesis and how those relate to social policy. Considering both historical and contemporary perspectives on ‘risk society’ we can clearly see the patter of changes of the notion of risk over the time. The work of the sociologists such as Beck and Giddens helps us to understand the difference between ‘external’ and ‘manufactures’ risk as well as they outline the argument that risk is more associated with modernity and late modernity. The essay is based of the idea of risk which is due to individualization and unemployment. Undoubtedly, our contemporary societies are less stable so the fear of unemployment dominates our lives as it affects our standards of living. However risk society thesis are criticised on several ground, such as those of Beck as his theory fails to recognize the fact that people are differently exposed to modernization risk. Beck fails to recognize the relationships between risk distribution, conflict and inequality, by wrongly assuming that individuals as equally concerned by risk. As Taylor Gooby states ‘Membership of the working class is associated with a much higher risk of fall in living standards and also ‘The risk society is class ideology masquerading as social theory: It serves the interests of those already privileged in a more flexible society by obscuring the needs and aspirations of the more vulnerable who already bear most of the burdens of social change’. Taylor-Gooby, 1999). Form my point of view; the concept of risk is relevant to social policy, because policies are regarded as risk management. It can be clearly seen in the historical outline and new politics of ‘Third Way’ programme as it demonstrated us how social policies try to tackle the unemployment. However the description of contemporary society by Beck and Giddens left us to critically question some certain aspect and the theory should reflect the ‘idealistic’ rather than ‘materialistic’ nature of the concept of risk.

Do Ex-Military Make Good Police Officers Essay Example | Topics and Well Written Essays - 4000 words

Do Ex-Military Make Good Police Officers - Essay Example The essay "Do Ex-Military Make Good Police Officers?" examine this question identifying which factors will contribute to success within the two types of organizations: military and police. There are certainly parallels between the attributes which make for a successful career in either the military or the police force. However, a successful military record does not necessarily equate to a successful career in law enforcement. The general attributes, such as honesty, integrity, and discipline are commonly valued in both career positions. However, some of the skills in the second group are not necessarily valued in the military. For example, the ability to observe and remember detail has little to do with many functions of military personnel. The ability to assess situations and decide on a course of action is also of little value in many military positions, where instant obedience to the rule might be more valuable. Another factor in police work is the size of the groups, which are generally much smaller than those in the military. Many military positions seek to create groups of very similar people when large groups of very similar people are needed for power. Most groups on police forces are more demanding of dynamic interaction and cross training of team members. The behavior of a military group is expected to be extremely disciplined and nearly thoughtless after orders are given. The groups need to work like well-oiled machines. Individual thought would actually get in the way.

Professional Orientation and Practice Coursework

Professional Orientation and Practice - Coursework Example The bid to privatise the sector was triggered by the 2003 Railway Act, allowing for private management of the services (Cassady, Maillart, Bowden & Smith 1998). The UK railway tracks are public owned and maintained by Network Rail; however, privately owned rail tracks also exist in tourist areas. To help manage the train services, the government appoints train-operating companies (TOCs). TOCs are awarded franchise to offer train commuter services depending on the validity of the license given. This means that a given TOC can only operate within certain time limit as dictated by the licenses awarded. Now, TOC that provide that are licensed to offer these services are many in number (Tobin 2012). Nevertheless, the increasing cost of trail fares has been a major concern within the sector, within many opting to use other alternatives (â€Å"Britain Has Worlds Highest Rail Prices – Survey 1997†). Competition brought about by the many TOCs has brought the need by individual b usinesses involved to put in place measures to ensure stability and profitability. On this matter, many TOCs franchised to offer their services are seeking ways of reducing costs in order to appeal and attract more customers. In order to maintain sustainability, TOCs operating within the United Kingdom believe that the best way is to maintain the existing fleet. Major part of the revenue is used in maintaining the fleets and carrying out inspection of infrastructures like rail tracks. Therefore, much train operating companies hold on to the fact that maintain ace is a priority in the sector. Presently, rail infrastructure has greatly been improved as is evident by the increase in speed train (Tobin 2012). Just as mentioned above, the major challenge lies with the need for each company to come up with measures to improve service delivery. For this reason, each of the companies is in a process of finding the best decisions that would offer competitive edge over the rest (Chaudhuri & S uresh 1995). TOC- London Midland Background London Midland is one of UK’s train operating companies, having an 867.4 kilometers of rail to cover. The main train operations of the company are carried out within the West Coast Mainline. It is also important to note that its franchise expires in June 2017 after it was extended from the initial date of September 2015. According to the information available in the company’s website, London Midlands Express and London Midland City are the main brands that are used in operations. London Midland makes its money from the sales of tickets to passengers. Now, customers are charged ?25 for every 100 miles of travel. According to the plans by the company, 60,000,000 passenger miles should be served per year, something that translates to 600,000 passengers per year. However, achieving this is guaranteed, as many potential customers prefer other means of transport because of uncertain economic times brought about by the recession. Th e company needs to make a decision whether to raise or lower the tickets by ?5. In order to bring the issue into perspective, it would important to note that London Midland company has numerous competitors like Cross Country, Euro star, East Coast, First Hull Trains, and Scot Rail, among others, and must thus make decisions that stand to boost its chances to survive in the market. Lowering the price by ?2

Entry Strategy Essay Example | Topics and Well Written Essays - 2750 words

Entry Strategy - Essay Example The economic and political factors are inter-related and it becomes difficult to identify only the economic or only the political factors separately (Altinay, 2005). The micro-environment is the internal environment which comprises of the corporate goals and objectives, the corporate strengths and weaknesses and the service factors. In addition to these, the location is equally important (Ekeledo & Sivakumar, 1998). Zhao and Decker (2004) contend that size of the firm, the technology transfer if required, the cultural distance, the market size, risks and uncertainties, sectoral barriers, and the international experience also influence the entry strategy. Taking these factors into account, the market entry strategy for ABC in India and Ireland would be recommended.   While market entry is generally through exports, licensing, joint venture or opening of wholly owned subsidiaries, in the hospitality sector the mode of entry is different. In this sector direct ownership or any form of equity partnership is not preferred in countries with high economic or political risks, and of the level of economic development is low (Altinay, 2005). If the risks are high entry modes with low resource commitment is preferred. Franchising and management contracts are the most preferred modes of entry in the hotel sector in international expansion. In both these formats capital-intensive assets and knowledge-based assets can be separated.  Service firms may enter foreign markets using a variety of modes but control is the most vital factor.

Financial Analysis for Planet Fitness Assignment

Financial Analysis for Planet Fitness - Assignment Example es identified under after 42 in the 25th, 50th and 75th percentile in relation to the total annual turnover ranked Clubs were classified by the gross annual revenues in the order from lowest to highest(IBIS World, 2015). Also excluded are the data for enterprise clubs Planet Fitness which is holding as â€Å"outliers", that is, both the position of the worst performing companies (with a gross annual income of 471,219.05 $) and the Club of the most powerful (with an annual gross income of $ 3,649,651.37) (IBIS World, 2015). Especially achieved in terms of gross annual income of the best performing sector, the company does not believe that these results are typical of a Planet Fitness business (Hoover’s Inc, 2015). Membership Sales - EFT / Cash $ 1,189,094. The main source of income Planet Fitness club membership fees (IBIS World, 2015). Membership fees are usually paid in cash or by electronic funds transfer (EFT), and are usually paid monthly. A fitness center is also an additional profit obtained through an annual membership fee and annual maintenance fees. Membership shall remain constant, while the other offered periodically throughout the year. The "Black Card" is the permanent membership package;. It is a 12-month contract The "Black Card" is offered at $ 19.99 / month with an annual fee of $ 39 paid once a year requires June with the "Black Card" is free tanning included, drinks half price, free massage chair use access to another club Planet Fitness and the ability to host a free to bring his clubhouse (IBIS World, 2015). Advertising packages are offered at different times of the year and a franchisee is able to adapt the package to their club based on the benefits that come with the package (Taylor, 2014). Retail: $ 9.773. Add beverage sales, tanning lotions and glasses, Planet Fitness, clothing and helmet. Planet Fitness Photo of interior LiconTotal Income: $ 1,198,867 (Hoover’s Inc, 2015). Of the 42 corporate locations (1) 31 business websites (or

Patriot Act Essay Example | Topics and Well Written Essays - 1250 words

Patriot Act - Essay Example Hence, to weed out terrorism / breeding grounds of terrorism wherever it is found around the world so that such ugly situation may not engulf the United of States of America or other allies in the world. The mentioned act was approved by both the houses of peoples representatives i.e. Senate and the House of Representative on 26th October, 2001 (Whitehead & Aden, 2002). The previously mentioned act empowered law enforcement agencies / intelligence agencies to track out terrorist net work aims at to gather maximum information about their activities. This enables cited agencies to deal with the terrorist with iron hands. The concerned authorities of USA taking into account the increasing terrorist activities reviewed and amended the money-laundering act accordingly to stop flow of funds to such organization who promotes terrorism to accomplish their nefarious designs. So far, the action taken by the United States of America is to ban such organization as well as freezing of their funds in connivance with the countries that are in league with America against war on terror (Whitehead & Aden, 2002). The strict American Laws make it impossible for a suspected terrorist to enter in the US for sabotaging the national assets / endangering the life of common citizens. The new act enhanced the capability of law enforcement / intelligence agencies to fight terrorism in an effective manner (Whitehead & Aden, 2002). The patriot act in fact provides protection to American people against domestic and foreign terrorism. It describes the official version of domestic terrorism. According to which any person who have ill intention to harm human life falls under the ambit of above act. Hence, by virtue of this act, law enforcement and intelligence agencies may obtain search warrant from federal judge wherever terror related activities are found on the surface. This is an easy way to investigate the matter by streamlining and exchanging communication between agencies (Ball, 2004). H owever, the act in question specifically focuses on the surveillance of terrorism activities in order to prevent international terrorism. In case terrorist caught red handed, an exemplary punishment should be awarded to him to deter others. He / she should be tried in a competent court of law for punishment in accordance with law. The use of modern gadgets in promoting domestic / international terrorism cannot be ignored (Doyle, 2001). The policy makers while drafting policy must take into account the rights of citizens that have conferred to them by the constitution and the bills of rights. American policy makers must respect the Constitution to protect American rights. It protects the rights of every citizen irrespective of their cost, creed and profession, whether he / she are a part timer or full time policy makers who enjoy the benefits of given rights even in the war time (Ball, 2004). After the act of terrorism on the mentioned date of the year 2001, Mr. Bush sought unbridled power as president of USA to summon reserve forces to face the war like situation. As a result of this act, liberties of American people have been taken away to meet the eventualities and to fight terrorism. By enactment of this act, power of law enforcement agencies / intelligence agencies gave unchecked powers to investigate the suspected terrorist in a brutal manner, which amounts to flagrant violation of human rights (Doyle, 2001). The

Grant Proposal Research Example | Topics and Well Written Essays - 2000 words - 1

Grant - Research Proposal Example In addition, a country that has democracy in its systems will experience stability and there will be less civil conflicts. The research is going to discuss in depth the tools that are important in influencing economic and political development. It will discuss the need of political science in promoting both political and economic development. The research shall rely on John Mill’s principles of inductive inquiry. The scholars wish to apply for a grant for conducting qualitative research within IDDCP’s primary topic areas. It demands the scholars to understand the research is comparative in nature. The researcher understands that in Mill’s method of difference, for good qualitative research, there should be a combination of state building and state failure, with the democratization and democratic consolidation, with economic and political development. There three are essential, because, for instance, there is no economic and political development; there would be no good qualitative research. The other two topics are necessary but not sufficient. In Mill’s method of agreement, a good qualitative research will require a study in state building and state failure, and democratization and democratic consolidation. Additionally, state building and economic and political development is essential for good research. However, democratization and economic and political development would not give a good research. It means state building and state failure is necessary but not sufficient. The study is very important in seeking a grant to conduct qualitative research within IDDCP topic areas. Political science offers extensive knowledge on the topics. In addition, the primordial importance of this study is to provide necessary political knowledge to the researchers in the political field. The information may include the specific roles of researchers in understanding the various topics provided by IDDCP. In the end, it would assist in broadening the political

Operations Strategy Essay Example | Topics and Well Written Essays - 2500 words

Operations Strategy - Essay Example For instance, it is not only enough to focus the whole energy of an organization on production activities, but considering that there are existing processes in the business world as it continuously evolves, other aspects need to be substantially focused and even strategic actions have to be implemented. History The existence of business itself paves way to the formulation of operations strategy. Businesses ended up to the creation of business strategies. These led to the formulation of effective operations strategies (Waters, 1999). Businesses have to function efficiently and this is the reason why strategies are necessary to be integrated with the whole business operation. In fact, this is evident on how the United States’ business evolved over time. The evolution of business policy and management started between 1930 and 1960 as highly influenced by American dominance in the global market (Amatori & Jones, 2003). It is during this period that business was considered as an is olated American subdiscipline. During this time, the United States has become one of the leading countries that introduced business sophistication into the world. This resulted to significant innovation and major changes how the business including its operations was conducted. Throughout history, businesses evolved and primarily this is sped up by the onset of globalization in the modern business world. In globalization, there is increasing interdependence between national systems through different aspects including trade, military alliance, domination and cultural imperialism (Waters, 2001). It is not surprising therefore that the business world has significant changes over time due to the fact that interdependence between nations existed. This includes maximization of resources and operation. This is the very reason why business has become international and has turned into a good opportunity for international organizations to maximize their operations and resources. As the effect, each organization that tries to compete with each other is trying to create competitive strategies for their competitive advantage (Porter, 1990). For instance, marketing strategies existed and companies are after of stimulating needs not just relying purely on production oriented operation approach (Boone & Kurtz, 2006; Kotler et al., 1999). In short, the need for operations strategy is necessary in order to compete. The need for innovation is not just on producing new service or product offerings, but there is substantial consideration on business operation approach in which strategies are become its integral parts in the process. In other words, as business itself evolved, its corresponding operation which has been an integral part in its existence has also become so involved with business strategic formulation. This is in line with the creation of competitive advantage due to spiraling growth of competition everywhere most especially that the world has become so compressed when it comes to interdependence in trade. Thus, every organization is expected to formulate their very own operation strategies in order to sustain their ventures and even maximize their full advantage in their respective industries. Relevance It is important to understand that the relevance of operations strategy at present can be traced back to how business has substantially evolved. Operations element of a business

Traditional Banking Essay Example for Free

Traditional Banking Essay The article â€Å"The decline of traditional banking: implications for financial stability and regulatory policy† by Franklin R. Edwards and Frederic S. Mishkin presents a very detailed and well researched exploration of the current movement of banks away from traditional banking. The authors describe their objectives as including an examination of the reasons behind the decline of traditional banking, and an identification of the effects that these would have on the stability and regulation of banks. The article meets these goals well, as it begins by demonstrating the complexity of the current banking situation and how/why balance sheets reflect information that go far beyond mere lending. The non-traditional methods of banking as well as the financial institutions that have evolved and crowded the banking market are also explored in detail. Finally, the authors expound on the ways that banks might improve their status in the financial market and maintain stable regulatory policies within such a highly competitive and unstable environment. Therefore, while in some areas the explanations were a bit awkward, overall the authors manage to unite the causes, effects, and possible remedies of the current problems being faced by banks, and this is done in a manner that demonstrates a deep understanding of the situation. The introductory pages of the article do give a very detailed picture of why the authors found it necessary to explore the decline of traditional banking. Traditional banking, they explain, dealt mainly with the issuing of long term loans financed by short-term deposits (Edwards Miskhin, 27). They provide evidence in the form of graphs and statistics, showing both the size of the decline in earnings from such traditional (financial) borrowing, as well as the share of non-financial borrowing granted banks and their competitors. The fact that both commercial and thrift banks’ non-financial borrowing declined by an average of 7% over a thirty-five year period demonstrates that significant decline has indeed taken place in their share of that market. The authors also give concrete evidence concerning the decline in these institutions’ returns on such holdings as assets and equity. Finally the authors demonstrate the trend in banks’ share in the market concerned with non-interest income. This increasing trend represents precisely the move away from tradition they have identified. The placement of these facts and charts was effective as a method of vindicating the authors’ decision to explore reasons for the decline in traditional banking. Edwards and Mishkin   go on to explore such areas as the decline in banks’ advantage as far as liabilities are concerned. This is demonstrated in terms of declining cost advantages, which as shown to have become a reality when other institutions found a way to capitalize on the banks’ financial privileges. They explained the fact that ceilings and other restrictions (at one time favorable to the banks) had been placed upon their ability to offer interest on certain types of deposits (such as checkable deposits). These regulations restricted their ability to be competitive at a crucial time in the market and therefore opened the doors for other lending institutions (exempt from such restrictions) to attract customers by offering higher interest. This serves as a cogent explanation of why banks have declined in this traditional area. Yet, the authors represent the complexity of the market by exploring a few other reasons why such decline has taken place. The existence of the new paper market (securities) has also been cited as a reason that adds to the complexity of the problem that banks now face (Edwards Miskhin, 31). The previously mentioned decline in banks’ lending to commercial entities is now explained by the fact that these businesses have been given the option of borrowing directly from the public through the issuance of securities. The authors also cite the rise of mutual funds and junk bonds on the money market as having an indirect effect on the market position of banks. They write, â€Å"The growth of assets in money market mutual funds to more than $500 billion created a ready market for commercial paper because money market mutual funds must hold liquid, high-quality, short-term assets† (31). This serves the explanatory purposes of the authors by demonstrating the sheer size and number of the alternatives to banks that exist on the financial market. The authors, Edwards and Mishkin, also explore some of the reasons why such alternative institutions have become such a threat to banks. Besides their ability to offer attractive alternatives to customers, these financial institutions have also demonstrated an ability to secure their assets. They explain these institutions’ methods of originating loans and then creating more loans from these. They write: â€Å"Advances in information and data processing technology have enabled non-bank competitors to originate loans, transform these into marketable securities, and sell them to obtain more funding with which to make more loans† (Edwards Miskhin, 32). The rise of financially capable technology has made easy these maneuvers by such non-bank facilities, and this has led to the current position of decline in banks’ traditional activities. The authors of the article also demonstrate the route that banks have had to take in order to combat the effects of being forced to share their market. They use graphs and data effectively to demonstrate the sharp climb in what had traditionally been considered risky types of loans. These graphs depict a rise in bank issuance of real estate loans, and further details the authors provide demonstrate that banks have had to stoop to lending to â€Å"less credit-worthy borrowers† in order to increase their financial viability in these tough times (Edwards Mishkin, 27 33). They also depict the methods chosen by banks to increase their activities that take place off the balance sheet. Banks have expanded into the market for financial derivatives, in which they serve as â€Å"off-exchange or over the counter (OTC) derivatives dealers† (34). In order to increase the authority of the article, the writers then provide in several charts concrete evidence of the different kinds of derivative deals in which actual banks have recently participated or mediated. Further evidence concerning the proportion of income banks have derived from these off-balance transactions serve to depict the extent to which they have effaced or replaced traditional banking. Edwards and Mishkin’s exploration of the nature of the risk faced by these banks in involving themselves in OTC activities demonstrates the extent to which these institutions have been forced by a declining traditional market to engage in alternate financial activities. Since their derivative activities have mainly been in the area of swapping interest rates, the risk involved in this can be seen to be high—though tempered by the fact that they â€Å"do not involve payment of principal amounts† (Edwards Miskhin, 38). Furthermore, the authors’ detailed explanation of swaps and the risks they carry aid the overall understanding of the type of risks banks have been forced to take in order to retain their profits. This leads to a better understanding of the extent to which traditional banking has been transformed. Finally, the authors Edwards and Mishkin go on to outline the regulations that have been put in place and the implications that they are likely to have for bank policies. The need for regulation is expressed in the evidence they produce from the GAO (U.S. Government Accounting Office). It explains that the discounts and insurance provided by Federal Reserve Bank accords to banks a level of security that might induce them to take higher risks that they would (or should) otherwise have taken. Regulations have therefore been made that allow only banks with good management and high capital to engage in some of the riskier types of non-traditional banking activities. Such activities include securities underwriting and trading, and dealing in the derivatives market. The inclusion of these explanations in the article demonstrates the thoroughness of the authors in identifying other reasons (beyond mere competition) why some banks have been or may be forced out of the financial business. The details of policy implications for banks given by the authors are shown to include regulations that strengthen banks’ ability to compete. These measures have also been shown to include the seeking of methods that prevent the fall of capital below certain levels (Edwards Mishkin, 40). In presenting the pros and cons of these ideas, the authors demonstrate and impart a thorough understanding of the intricacies of banking and further communicate the complexities of the business. The writers, through their efforts, also demonstrate the gravity of the situation that banks now face in their need to write policy giving them the ability to expand beyond their traditional financial market. Despite the overall clarity and detail of the ideas presented in support of the authors’ claims, a level of awkwardness does enter into a few paragraphs of this article. The awkwardness within this article mainly exists in the introductory pages, where Edwards and Mishkin enumerate (rather than explore) the reasons for and the extent of the decline in traditional banking. The confusing nature of the financial situation being faced by banks is translated to the work, as the writers continually meet their given reasons with qualifications to the effect that demonstrate the inadequacy of each explanation. They, for example, identify their measure of banks’ profitability over a period of time as â€Å"crude† and explain that other measures do not â€Å"adjust for the expenses associated with generating noninterest income† (Edwards Miskhin, 29-30). One gets the feeling that the writers might have taken the trouble to do the extra calculations in order to provide a more comprehensive view of the situation. However, they do provide much more detailed explorations in the ensuing paragraphs. This article by Edwards and Mushkin presents a very interesting and informative view of the current situation facing banks in today’s financial market. The traditional role usually occupied by banks as lenders has been undermined by the influx of non-traditional lending institutions. These institutions have taken the opportunity to provide lower-interest loans and higher-interest deposits to customers, thereby forcing banks to flee to riskier methods of gaining revenue. Policies that regulate banks’ behavior have become necessary as a result of this trend toward riskier business, and this has sparked ideas concerning policy making and the risks and benefits they would impart to all stakeholders. Work Cited Edwards, Franklin R and Frederic S. Mishkin. â€Å"The decline of traditional banking: implications   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   for financial stability and regulatory policy.† FRBNY Economic Policy Review. July (1995): 27-45.

Effects of the Recession on the Housing Market

Effects of the Recession on the Housing Market Introduction This part of the dissertation seeks to understand and investigate the cause of the current global recession and how it has affected the housing market in the UK. Housing Market Trends After the housing markets spectacular collapse in the 1990s, the UK housing market staged a significant revival. According to the HBOS index, the average house price stood at about  £163,000 in 2005, approximately double the  £82,000 it would have been worth in 2000. Cameron (2005) suggests that house prices surpassed their 1989 peak, relative to average household incomes. The other traditional measure of affordability, the ratio of interest payments to income, is not so overstretched, but only if capital repayments and unsecured debt are ignored. In addition, the strength of the housing market reflects the exceptional economic performance of the economy in 2005, which in turn is partially due to the sensible independent monetary policies pursued by the Bank of England Cameron (2005). As a result, it is suggested that Britain dealt with the world economic slowdown of 2001-2003 a great deal better than the majority of chief economies, producing six per cent growth. This vigorous expansion cannot completely describe the strength of the house price boom. Consequently, numerous economists have argued that there is a bubble in the British housing market, in common with a number of other countries, such as Spain, Australia, Canada, Sweden, and parts of the USA. FIGURE 1 Figure 1 shows the ratio of average house prices to average earnings, a key measure of affordability, for Great Britain and three major regions up to 2004 which is before the economic recession struck. As is visible, there is a positive contrast of cyclical behaviour in each series, with a surprising rise since 1999. According to the HBOS index, prices rose by only 1.3% over the nine months from July 2004 to April 2005. One of the main causes of this poor rise was due to the fact that many households were affected by the increases of the Bank of England base rate. Moreover, the increasing lack of demand within first time buyers, together with decreased numbers of house sales and low request rates for mortgages, implies that house prices have become separated from their underpinnings. The Nature of the Housing Market Housing markets are unusual for a number of reasons Housing markets are peculiar for a number of reasons. First, houses take time to build, so when demand rises, supply can only respond with a considerable lag. Indeed, to all intents, the short-run supply of housing is fixed. Second, houses are an asset that pays an implicit income (that is, the amount of rent that the owner saves by owning a house), so the value of the house should reflect expectations about future rents. But more importantly, since house-ownership in the UK is so widespread, a house is most householdsà ¢Ã¢â€š ¬Ã¢â€ž ¢ most important asset and since prices can go down as well as up, households are thereby exposed to a considerable amount of risk (almost half a million households had their homes repossessed in the 1990s). Unfortunately, it is not really possible to offset this risk since nobody offers insurance against a fall in prices. The Global economic recession It seems to have been agreed that the financial crisis which formed the birth of the current global economic recession was formed in the millennia of 2000 as a result of several factors which influenced increased housing sales and increased mortgage lending. [Sakbani (2009), Turalay (2009), Sel (2009)] One of the main factors which influenced the financial crisis was the boom in the housing market which was the result of increased supply of housing which persuaded financial institutions to increase and extend mortgages at attractive rates which mortgages borrowers could not afford to pay back. At the time of increased mortgage lending, the mortgage lenders had liquid assets that where at a level never seen before and this encouraged them to invest their assets into higher earning assets. This boom gave mortgage lenders an opportunity to double their portfolio of mortgage lending in respect of the past 10 years and mortgages reached some 50 per cent of their total lending assets after 2001 (Sakbani, 2009). The second factor which influenced housing sales was the record low-interest rates which were put in place by major banks to attract would be house buyers into purchasing mortgages at very low interest rates and other influences was the deregulation of financial institutions, there was a attitude throughout the major central banks of self regulation and with the increased financial innovations, major banks tended to regulate themselves. The final major factor was the disappearance of inflation fear as banks began to grow and increase portfolios, their self confidence began also to grow and any fears which were previously held started to disappear and this therefore relaxed their customer vigilance (Sakbani, 2008). As the demand for housing rose in the last decade and a half, this reached a record high in all major countries including the UK and USA. In the USA in particular, housing units sold in 2005 reached a peak of 1,283,000 as compared to an average of 609,000 in 1995-2000. More than 6 million units were sold in the five years up to 2006 (US Economic Forecast, 2009). The affects of this, increased the wealth and amount of disposable income available to households which in turn, increased the growth of the US economy up to 2007. It is recognised however, that this increase in economies and housing sales would not have taken place if there was a reduction in the availability of cheap mortgages being made available in the USA and UK up to 2005 and the substantial increase of low interest rates (IMF, 2008). The major banks began to operate under reduced regulation and with the global financial markets know in full swing, this increased the housing boom in the UK as some mortgages contained grace periods of up to three years and minimal down payments where required and with the introduction of low-interest rates, only fuelled the housing boom. Furthermore, these mortgages that where being taken out by borrowers would have originally been considered as non-credit worthy or, at very least, borrowers who incurred debts beyond their capacity to pay back (Ronald, 2008). As the banks began to run these debts, they ensured that the higher the risk, the higher should be the lending rate which therefore gave rise to the subprime mortgage market; this is a market whose borrowers may have difficulty maintaining the repayment schedule. Proponents of subprime lending maintain that the practice extends credit to people who would otherwise not have access to the credit market. As Professor Rosen of Princeton University explained, The main thing that innovations in the mortgage market have done over the past 30 years is to let in the excluded: the young, the discriminated against, the people without a lot of money in the bank to use for a down payment.à ¢Ã¢â€š ¬? It has now been agreed that this would have only ended in one way, this being collapse of the housing market and financial institutions. As borrowers started to run out of finances to repay their mortgages and defaults began to increase, the rate of increase in housing prices started to fall and could not compete with the rate of debt which therefore meant that borrowers could not refinance their loans or sell their houses at large profits [(The) Economist (2008), Sakbani (2008), Elise (2008)]. One way this could have been prevented is that if banks had extended their mortgage loans under the old conditions of mortgage lending, they would have had to hold them on their books and eventually would have run out of funds. But starting in the late 1980s, financial innovations made it possible for mortgage lenders to unload their loans to pools, which can transform these personalised, non-negotiable obligations into derivative securities guaranteed by the mortgages (Sakbani, 2008). After the crisis erupted, the International Monetary Fund (IMF, 2008) estimated the size of these securities at more than $945 billion, while Goldman Sachs put them at more than $1.0 trillion. In September 2008, the IMF revised its estimate to $1.4 trillion ((The) Economist, 2008). On January 28, 2009 the IMF once more revised its estimate to $2.2 trillion. All these estimates therefore prove that, nobody had any idea of the amount of the non-performing assets. Sakbani (2008) tends to suggest that there were many culprits that where directly related to the financial crisis of 2008 which include: the greedy banks and other financial institutions with their irresponsible and uninformed behaviour, the equally greedy borrowers, the absence of regulations covering all the financial institutions involved and not just banks, the lacunae of vigilant supervision at both the states and federal levels, the non-regulated and non-transparent character of the financial innovations, the failure of the rating agencies to do their job and finally the loose monetary policy of the Greenspan era in the years 2001-2004. Mr Greenspan, testifying on October 23, 2008 before a Congressional Committee, admitted his error in believing that investment managers would exercise prudence in their operations and accepted that the regulatory system was loose and fundamentally obsolete. Since the beginning of the economic recession, there has been a high reduction in new housing starts after a reduced number of sales. Berkeley Homes for example, reported sales down by 50% in the summer of 2008, also with housebuildersà ¢Ã¢â€š ¬Ã¢â€ž ¢ shares falling to low levels, there is major financing problems which continue to suffer. Housing Developments Policy Turalay (2008) appears to suggest that at the beginning of the downturn, the position of the UK housing market did not appear to be that bad as it was expected that there would be a gradual slow down in housing sales and then a fairly rapid recovery process which would not adversely affect the economy, however, this did not prove to be the case and no-one could have predicted what actually happened. Although UK economist Andrew Oswald, famously declared in November 2002; à ¢Ã¢â€š ¬Ã…“I think we are about to go through the great housing crash of 2003 to 2005. . . . I advise you to sell your house, and move into rented accommodation Panic will then set inà ¢Ã¢â€š ¬?(Pickard, 2005, p. 9). When comparing the period of July-October 2007 with July-October 2008, evidence suggests that a fall in average sale prices of around 14 per cent (Land Registry, 2008). It has been noted by Pryce Sprigings (2008) that measuring price change is hampered by the fact that selling times have risen substantially and indices are therefore not comparing like with like à ¢Ã¢â€š ¬Ã¢â‚¬Å" ideally one would like to compare, for example, the acerage price of houses that sold within a month on the market in 2007 with average prices of houses that sold within a month on the market in 2008. Evidence also suggests that transaction volumes have fallen dramatically from around 111,000 sales per month in England and Wales between July and October 2007 to 45,000 sales per month between July and October 2008, which is a fall of 60 per cent (Land Registry, 2008). Other data sources also reported this fall including Halifax, Nationwide, Land Registry and Council of Mortgage Lenders (CML). Some locations are showing even greater falls, with city centre flat and apartment markets appearing to be particularly vulnerable. During Oswaldà ¢Ã¢â€š ¬Ã¢â€ž ¢s prediction, real average house prices rose at one of the steepest rates recorded in modern times, by nearly a quarter in real terms, from  £140,593 in 2003 quarter 1, to  £173,412 in 2006 quarter 1, based on nationwide real mix adjusted house prices see Figure 1 below, and continued to rise for a further two years until quarter 4 of 2007. Figure 1 Real House Prices There appears to have been significant early interventions from the government and the Bank of England to keep both the housing market and the wider economy on course. Consecutive cuts to base rates, addition of  £50bn of liquidity into the finance markets by the Bank of England to alleviate the credit crunch, and  £2.7bn fiscal improvement to balance low-income households for the withdrawal of the 10p tax rate. It was expected that these would all combine to form an apparently positive reinforcement, however this would prove not to be the case as in March 2008, initial indications emerged of a somewhat more speedy slowdown in the housing sector was about to develop. The RICS housing market survey of that month specified that surveyor attitude with regard to house prices had weakened to the lowest point since the survey began in 1978 and the ratio of completed sales in the previous three months to the stock of unsold property on the market fell to 0.224, the lowest since September 1996 (RICS UK Economic Brief, 2008). With mortgage approvals falling by 44 per cent in the same year (2008), this resulted in a significant fall in housing demand which led to banks being unwilling to offer new loans on houses. Although there is no surprise that the housing market has took a downturn and because this has happened before, there are no unexpected events occurring, Pryce and Sprigings tend to suggest that the speed and severity of the decline has been unusual. They go on to express that this leads us to naturally question whether our policies, our regulatory frameworks, our collective approach to housing and cultural obsession with house prices, have in some way exacerbated this particular manifestation of that cycle by sustaining the upswing well beyond mean trend and perhaps resulting an unnecessarily sever and rapid downturn (Pryce and Sprigings, 2008). These questions however are not wholly of interest to housing professionals as links between residential property and the broader market as well recognised. An example of this is stated by Goodhart and Hofmann (2008, p.180), where they find; à ¢Ã¢â€š ¬Ã…“a significant multidirectional link between house prices, monetary variables, and the macroeconomy with the effects of money and credit amplified when house prices are boomingà ¢Ã¢â€š ¬?. It is agreed by Maclennan and Pryce that housing impacts on the real economy via the construction, financial, estate agency and legal sector and through housing equity financed consumption, all of which are sensitive to housing market fluctuations, and all have become increasingly inter-linked across nations as a result of the globalisation of capital and labour (Maclennan and Pryce, 1996). It is also in agreement with numerous authors, Malpass in particular, that housing also impacts on welfare; not only through homelessness caused by repossessions (i.e. owner occupiers and renters affected by landlord default) at a time of crisis, but increasingly through equity release funding of education support (including accommodation) at the start of life and elderly care at the end. (Malpass, 2005). Another article which backs Malpassà ¢Ã¢â€š ¬Ã¢â€ž ¢ suggestion is the announcement of the Homes and Communities Agency (HCA) which has confirmed the closing of Local Authority New Build (LANB) as a national programme. This is a result of the Treasury announcing that it was cutting  £220 million from HCAà ¢Ã¢â€š ¬Ã¢â€ž ¢s budget, this follows on from the cut to the May budget of  £230 million. The new builds where seen as a solution to ease the housing crisis of the UK since the recession and to add to Malpassà ¢Ã¢â€š ¬Ã¢â€ž ¢ argument, Baroness Hanham stated in the House of Lords; à ¢Ã¢â€š ¬Ã…“There will be casualties; I donà ¢Ã¢â€š ¬Ã¢â€ž ¢t have any doubt that there will be casualtiesà ¢Ã¢â€š ¬? Furthermore to this statement, Labours Lord McKenzie warned à ¢Ã¢â€š ¬Ã…“It will force many to move or end up homeless and create ghettos of the poorà ¢Ã¢â€š ¬?. Unfortunately, the literature and policy debates on the nature and consequences of housing markets have evolved rather dichotomously. As Maclennan (2008, p. 424) observed; à ¢Ã¢â€š ¬Ã…“Many nations are now involved in two housing discussions, namely à ¢Ã¢â€š ¬Ã…“homelessness and affordabilityà ¢Ã¢â€š ¬? and à ¢Ã¢â€š ¬Ã‹Å"à ¢Ã¢â€š ¬Ã‹Å"house price booms, bubbles and bustsà ¢Ã¢â€š ¬Ã¢â€ž ¢Ãƒ ¢Ã¢â€š ¬Ã¢â€ž ¢. The first theme has largely been the domain of social policy ministries, lobbies and researchers (Carter and Polevychok, 2004).The second has absorbed the macroeconomic policy community, including central banks, finance ministries, financial institutions and some academic economists, who are concerned about à ¢Ã¢â€š ¬Ã…“stabilityà ¢Ã¢â€š ¬?. Affordability and stability are often discussed as if they are unrelated, not just in the press, but also within policymaking circles.à ¢Ã¢â€š ¬? Researchers can now endeavour to bridge this gap in housing discussions. By using the analogy of sowing and reaping, à ¢Ã¢â€š ¬Ã‹Å"whatsoever a man soweth, that shall he also reapà ¢Ã¢â€š ¬Ã¢â€ž ¢ (Galations 6:7, King James Version). It can be highlighted how scrupulous aspects of the existing recession should require policy makers and researchers to reflect on the failures of policy that have arisen as a result of the à ¢Ã¢â€š ¬Ã…“fragmented nature of housing thinking within modern governmentsà ¢Ã¢â€š ¬? (Maclennan, 2008). Pryce and Sprigings propose that the great correction that is currently underway is a consequence, not only of transcendent global forces, but also significantly of UK policy decisions on financial liberalisation and housing. And if we are reaping what we have sown in domestic policy, who are the winners and losers, and what are the implications for how we evaluate UK post-war policy? It has been made clear that such issues are underpinned by major policy, theoretical, and empirical questions that will most probably be debated at length in the future. What Pryce and Sprigings have done, is highlighted the issues and hope that highlighting these issues will offer some key pointers as to how the future debate should be structured and what might be done to ensure a more integrated approach to modernising UK housing policies. It is argued that successive governments i.e. Conservative Party and Labour Party have promoted homeownership since the end of the Second World War and its benefits it brings financially to the lease holder if they are the occupier as one of the White Papers show from 1953, which states; à ¢Ã¢â€š ¬Ã…“One object of future housing policy will be to continue to promote, by all possible means, the building of new houses for owner occupation. Of all forms of saving this is one of the best. Of all forms of ownership this is one of the most satisfying to the individual and the most beneficial to the nationà ¢Ã¢â€š ¬? (1953White Paper, Houses: The Next Step). Gradually homeownership became deeply embedded in the UK psyche as the tenure of aspiration (Ronald, 2008). However, people then become aware that homeownership may not be best suited for everyone and this is a point that is raised by Sprigings (2008) where he identified that by encouraging low-income households into homeownership, we are subjecting them to the worst of its costs and risks while the market may restrict for them the potential of its benefits. This idea was also backed up by Pickard (2005) where he stated that housing is believed to be a great long-term investment on average, but for the deprived areas, and for the poorest households, homeownership may simply not produce the promised benefits. Housing developments and the global recession can be seen as interlinked with certain groups of society and those in less secure jobs as people on low income will bear the biggest brunt of the recession as low income workers and people in less secure jobs are more than likely to face financial difficulties when it comes to mortgage repayments as they are likely to lose their jobs or see rising inflation and rising interest rates and therefore low income households are likely to leave homeownership at the worst point because they are facing the biggest impact of the recession and also when the market begins to resume to normality again, low-income households may find it harder to re-enter the housing market when house prices are low because there is a proven correlation between credit being made available and housing prices and low-income households may not be able to obtain credit when house prices are still low therefore not enabling them to enter the housing market when it seems mo st beneficial. The CML also back up this idea as figures for October 2008 show that, the value of loans has decreased to 83 per cent of the value of the property therefore, as it has been established that long term dividends on housing can be superior, low-income households will find it difficult to witness these dividends as they will be exiting the housing market when it begins to deteriorate and trying to enter the housing market when it is difficult to obtain credit. Pryce (2008) seems to perceive that the promotion of homeownership by successive UK governments and therefore the rapid increase of owner occupation may have inadvertently produced a money pump working in the opposite direction. Another theory which Pryce (2008) identifies is the fact that low-income and particularly ethnic groups are less likely to enjoy the benefits of inter-generational housing welfare transfer. Keister (2003) also backs up the second theory of Pryce (2008) by identifying that children from larger families accumulate less wealth than do those from smaller families and that siblings dilute parentsà ¢Ã¢â€š ¬Ã¢â€ž ¢ finite financial resources and non material resources. Sibship size also reduced that likelihood of receiving a trust account or an inheritance and decreases home and stock ownership. Buy-to-Let Mortgages Buy-to-Let mortgages where developed in 1995 and where designed as a new financial product in the UK which enabled individuals to purchase a mortgage on a property for the purpose of letting the property out to future tenants. The benefits from these mortgages can include a stable income from rental receipts, as well as an accumulation of wealth if house prices go up. However one of the main factors of risk with taking out a buy-to-let mortgage is leverage speculation where the landlord purchases a property expecting to sell the house at a later date for a higher price or that rental income will exceed the repayment amounts of the initial loan. Buy-to-Let mortgages have became extremely popular with apprentice investors as this type of mortgage attracts middle income people to start to develop into small-scale landlords as a means of investing for their retirement. The volume of these loans grew rapidly in value as shown in Figure 2. Figure 2 BTL loan Pryce (2008) expresses concern at the fact that 90 per cent of total BTL advances since 1999 have been taken out during periods of above-trend house prices, and  £74 billion of BTL mortgages, which is more than half of the total BTL advances since 1999, were issues at the very peak of the housing boom. This can be seen in Figure 3. Fig 3 It is therefore in agreement that, a significant proportion of BTL loans are at risk because there is consensus that the value of securities will fall below the outstanding mortgage debts. This consensus is backed-up by the fact that repossessions on BTL properties as a per cent of all BTL mortgages almost doubled in the space of 18 months from the second half of 2005 to the first half of 2007 before the first round of gloomy house price results were released in late 2007. Latest CML data also reinforces this claim as they show a large increase in BTL accounts over three months in arrears at the third quarter of 2008 having trebled in number in 12 months to around 18,000. (Pryce and Sprigings 2008). If home owners begin to default on their loans then the impact could be significant not only for lenders, but for particular sectors of the housing market as 80 per cent of BTL properties are terraced of flats and these account for almost a third of the entire UK private rented stock (Sprigings, 2008). One of the key features of the BTL which there is much agreement on is the impact it seems to have had on new housing supply with flats coming to dominate supply, particularly in city markets. (Taylor 2008, Sprigings 2008). Fig 4 Effects of the Recession on the Housing Market Effects of the Recession on the Housing Market Introduction This part of the dissertation seeks to understand and investigate the cause of the current global recession and how it has affected the housing market in the UK. Housing Market Trends After the housing markets spectacular collapse in the 1990s, the UK housing market staged a significant revival. According to the HBOS index, the average house price stood at about  £163,000 in 2005, approximately double the  £82,000 it would have been worth in 2000. Cameron (2005) suggests that house prices surpassed their 1989 peak, relative to average household incomes. The other traditional measure of affordability, the ratio of interest payments to income, is not so overstretched, but only if capital repayments and unsecured debt are ignored. In addition, the strength of the housing market reflects the exceptional economic performance of the economy in 2005, which in turn is partially due to the sensible independent monetary policies pursued by the Bank of England Cameron (2005). As a result, it is suggested that Britain dealt with the world economic slowdown of 2001-2003 a great deal better than the majority of chief economies, producing six per cent growth. This vigorous expansion cannot completely describe the strength of the house price boom. Consequently, numerous economists have argued that there is a bubble in the British housing market, in common with a number of other countries, such as Spain, Australia, Canada, Sweden, and parts of the USA. FIGURE 1 Figure 1 shows the ratio of average house prices to average earnings, a key measure of affordability, for Great Britain and three major regions up to 2004 which is before the economic recession struck. As is visible, there is a positive contrast of cyclical behaviour in each series, with a surprising rise since 1999. According to the HBOS index, prices rose by only 1.3% over the nine months from July 2004 to April 2005. One of the main causes of this poor rise was due to the fact that many households were affected by the increases of the Bank of England base rate. Moreover, the increasing lack of demand within first time buyers, together with decreased numbers of house sales and low request rates for mortgages, implies that house prices have become separated from their underpinnings. The Nature of the Housing Market Housing markets are unusual for a number of reasons Housing markets are peculiar for a number of reasons. First, houses take time to build, so when demand rises, supply can only respond with a considerable lag. Indeed, to all intents, the short-run supply of housing is fixed. Second, houses are an asset that pays an implicit income (that is, the amount of rent that the owner saves by owning a house), so the value of the house should reflect expectations about future rents. But more importantly, since house-ownership in the UK is so widespread, a house is most householdsà ¢Ã¢â€š ¬Ã¢â€ž ¢ most important asset and since prices can go down as well as up, households are thereby exposed to a considerable amount of risk (almost half a million households had their homes repossessed in the 1990s). Unfortunately, it is not really possible to offset this risk since nobody offers insurance against a fall in prices. The Global economic recession It seems to have been agreed that the financial crisis which formed the birth of the current global economic recession was formed in the millennia of 2000 as a result of several factors which influenced increased housing sales and increased mortgage lending. [Sakbani (2009), Turalay (2009), Sel (2009)] One of the main factors which influenced the financial crisis was the boom in the housing market which was the result of increased supply of housing which persuaded financial institutions to increase and extend mortgages at attractive rates which mortgages borrowers could not afford to pay back. At the time of increased mortgage lending, the mortgage lenders had liquid assets that where at a level never seen before and this encouraged them to invest their assets into higher earning assets. This boom gave mortgage lenders an opportunity to double their portfolio of mortgage lending in respect of the past 10 years and mortgages reached some 50 per cent of their total lending assets after 2001 (Sakbani, 2009). The second factor which influenced housing sales was the record low-interest rates which were put in place by major banks to attract would be house buyers into purchasing mortgages at very low interest rates and other influences was the deregulation of financial institutions, there was a attitude throughout the major central banks of self regulation and with the increased financial innovations, major banks tended to regulate themselves. The final major factor was the disappearance of inflation fear as banks began to grow and increase portfolios, their self confidence began also to grow and any fears which were previously held started to disappear and this therefore relaxed their customer vigilance (Sakbani, 2008). As the demand for housing rose in the last decade and a half, this reached a record high in all major countries including the UK and USA. In the USA in particular, housing units sold in 2005 reached a peak of 1,283,000 as compared to an average of 609,000 in 1995-2000. More than 6 million units were sold in the five years up to 2006 (US Economic Forecast, 2009). The affects of this, increased the wealth and amount of disposable income available to households which in turn, increased the growth of the US economy up to 2007. It is recognised however, that this increase in economies and housing sales would not have taken place if there was a reduction in the availability of cheap mortgages being made available in the USA and UK up to 2005 and the substantial increase of low interest rates (IMF, 2008). The major banks began to operate under reduced regulation and with the global financial markets know in full swing, this increased the housing boom in the UK as some mortgages contained grace periods of up to three years and minimal down payments where required and with the introduction of low-interest rates, only fuelled the housing boom. Furthermore, these mortgages that where being taken out by borrowers would have originally been considered as non-credit worthy or, at very least, borrowers who incurred debts beyond their capacity to pay back (Ronald, 2008). As the banks began to run these debts, they ensured that the higher the risk, the higher should be the lending rate which therefore gave rise to the subprime mortgage market; this is a market whose borrowers may have difficulty maintaining the repayment schedule. Proponents of subprime lending maintain that the practice extends credit to people who would otherwise not have access to the credit market. As Professor Rosen of Princeton University explained, The main thing that innovations in the mortgage market have done over the past 30 years is to let in the excluded: the young, the discriminated against, the people without a lot of money in the bank to use for a down payment.à ¢Ã¢â€š ¬? It has now been agreed that this would have only ended in one way, this being collapse of the housing market and financial institutions. As borrowers started to run out of finances to repay their mortgages and defaults began to increase, the rate of increase in housing prices started to fall and could not compete with the rate of debt which therefore meant that borrowers could not refinance their loans or sell their houses at large profits [(The) Economist (2008), Sakbani (2008), Elise (2008)]. One way this could have been prevented is that if banks had extended their mortgage loans under the old conditions of mortgage lending, they would have had to hold them on their books and eventually would have run out of funds. But starting in the late 1980s, financial innovations made it possible for mortgage lenders to unload their loans to pools, which can transform these personalised, non-negotiable obligations into derivative securities guaranteed by the mortgages (Sakbani, 2008). After the crisis erupted, the International Monetary Fund (IMF, 2008) estimated the size of these securities at more than $945 billion, while Goldman Sachs put them at more than $1.0 trillion. In September 2008, the IMF revised its estimate to $1.4 trillion ((The) Economist, 2008). On January 28, 2009 the IMF once more revised its estimate to $2.2 trillion. All these estimates therefore prove that, nobody had any idea of the amount of the non-performing assets. Sakbani (2008) tends to suggest that there were many culprits that where directly related to the financial crisis of 2008 which include: the greedy banks and other financial institutions with their irresponsible and uninformed behaviour, the equally greedy borrowers, the absence of regulations covering all the financial institutions involved and not just banks, the lacunae of vigilant supervision at both the states and federal levels, the non-regulated and non-transparent character of the financial innovations, the failure of the rating agencies to do their job and finally the loose monetary policy of the Greenspan era in the years 2001-2004. Mr Greenspan, testifying on October 23, 2008 before a Congressional Committee, admitted his error in believing that investment managers would exercise prudence in their operations and accepted that the regulatory system was loose and fundamentally obsolete. Since the beginning of the economic recession, there has been a high reduction in new housing starts after a reduced number of sales. Berkeley Homes for example, reported sales down by 50% in the summer of 2008, also with housebuildersà ¢Ã¢â€š ¬Ã¢â€ž ¢ shares falling to low levels, there is major financing problems which continue to suffer. Housing Developments Policy Turalay (2008) appears to suggest that at the beginning of the downturn, the position of the UK housing market did not appear to be that bad as it was expected that there would be a gradual slow down in housing sales and then a fairly rapid recovery process which would not adversely affect the economy, however, this did not prove to be the case and no-one could have predicted what actually happened. Although UK economist Andrew Oswald, famously declared in November 2002; à ¢Ã¢â€š ¬Ã…“I think we are about to go through the great housing crash of 2003 to 2005. . . . I advise you to sell your house, and move into rented accommodation Panic will then set inà ¢Ã¢â€š ¬?(Pickard, 2005, p. 9). When comparing the period of July-October 2007 with July-October 2008, evidence suggests that a fall in average sale prices of around 14 per cent (Land Registry, 2008). It has been noted by Pryce Sprigings (2008) that measuring price change is hampered by the fact that selling times have risen substantially and indices are therefore not comparing like with like à ¢Ã¢â€š ¬Ã¢â‚¬Å" ideally one would like to compare, for example, the acerage price of houses that sold within a month on the market in 2007 with average prices of houses that sold within a month on the market in 2008. Evidence also suggests that transaction volumes have fallen dramatically from around 111,000 sales per month in England and Wales between July and October 2007 to 45,000 sales per month between July and October 2008, which is a fall of 60 per cent (Land Registry, 2008). Other data sources also reported this fall including Halifax, Nationwide, Land Registry and Council of Mortgage Lenders (CML). Some locations are showing even greater falls, with city centre flat and apartment markets appearing to be particularly vulnerable. During Oswaldà ¢Ã¢â€š ¬Ã¢â€ž ¢s prediction, real average house prices rose at one of the steepest rates recorded in modern times, by nearly a quarter in real terms, from  £140,593 in 2003 quarter 1, to  £173,412 in 2006 quarter 1, based on nationwide real mix adjusted house prices see Figure 1 below, and continued to rise for a further two years until quarter 4 of 2007. Figure 1 Real House Prices There appears to have been significant early interventions from the government and the Bank of England to keep both the housing market and the wider economy on course. Consecutive cuts to base rates, addition of  £50bn of liquidity into the finance markets by the Bank of England to alleviate the credit crunch, and  £2.7bn fiscal improvement to balance low-income households for the withdrawal of the 10p tax rate. It was expected that these would all combine to form an apparently positive reinforcement, however this would prove not to be the case as in March 2008, initial indications emerged of a somewhat more speedy slowdown in the housing sector was about to develop. The RICS housing market survey of that month specified that surveyor attitude with regard to house prices had weakened to the lowest point since the survey began in 1978 and the ratio of completed sales in the previous three months to the stock of unsold property on the market fell to 0.224, the lowest since September 1996 (RICS UK Economic Brief, 2008). With mortgage approvals falling by 44 per cent in the same year (2008), this resulted in a significant fall in housing demand which led to banks being unwilling to offer new loans on houses. Although there is no surprise that the housing market has took a downturn and because this has happened before, there are no unexpected events occurring, Pryce and Sprigings tend to suggest that the speed and severity of the decline has been unusual. They go on to express that this leads us to naturally question whether our policies, our regulatory frameworks, our collective approach to housing and cultural obsession with house prices, have in some way exacerbated this particular manifestation of that cycle by sustaining the upswing well beyond mean trend and perhaps resulting an unnecessarily sever and rapid downturn (Pryce and Sprigings, 2008). These questions however are not wholly of interest to housing professionals as links between residential property and the broader market as well recognised. An example of this is stated by Goodhart and Hofmann (2008, p.180), where they find; à ¢Ã¢â€š ¬Ã…“a significant multidirectional link between house prices, monetary variables, and the macroeconomy with the effects of money and credit amplified when house prices are boomingà ¢Ã¢â€š ¬?. It is agreed by Maclennan and Pryce that housing impacts on the real economy via the construction, financial, estate agency and legal sector and through housing equity financed consumption, all of which are sensitive to housing market fluctuations, and all have become increasingly inter-linked across nations as a result of the globalisation of capital and labour (Maclennan and Pryce, 1996). It is also in agreement with numerous authors, Malpass in particular, that housing also impacts on welfare; not only through homelessness caused by repossessions (i.e. owner occupiers and renters affected by landlord default) at a time of crisis, but increasingly through equity release funding of education support (including accommodation) at the start of life and elderly care at the end. (Malpass, 2005). Another article which backs Malpassà ¢Ã¢â€š ¬Ã¢â€ž ¢ suggestion is the announcement of the Homes and Communities Agency (HCA) which has confirmed the closing of Local Authority New Build (LANB) as a national programme. This is a result of the Treasury announcing that it was cutting  £220 million from HCAà ¢Ã¢â€š ¬Ã¢â€ž ¢s budget, this follows on from the cut to the May budget of  £230 million. The new builds where seen as a solution to ease the housing crisis of the UK since the recession and to add to Malpassà ¢Ã¢â€š ¬Ã¢â€ž ¢ argument, Baroness Hanham stated in the House of Lords; à ¢Ã¢â€š ¬Ã…“There will be casualties; I donà ¢Ã¢â€š ¬Ã¢â€ž ¢t have any doubt that there will be casualtiesà ¢Ã¢â€š ¬? Furthermore to this statement, Labours Lord McKenzie warned à ¢Ã¢â€š ¬Ã…“It will force many to move or end up homeless and create ghettos of the poorà ¢Ã¢â€š ¬?. Unfortunately, the literature and policy debates on the nature and consequences of housing markets have evolved rather dichotomously. As Maclennan (2008, p. 424) observed; à ¢Ã¢â€š ¬Ã…“Many nations are now involved in two housing discussions, namely à ¢Ã¢â€š ¬Ã…“homelessness and affordabilityà ¢Ã¢â€š ¬? and à ¢Ã¢â€š ¬Ã‹Å"à ¢Ã¢â€š ¬Ã‹Å"house price booms, bubbles and bustsà ¢Ã¢â€š ¬Ã¢â€ž ¢Ãƒ ¢Ã¢â€š ¬Ã¢â€ž ¢. The first theme has largely been the domain of social policy ministries, lobbies and researchers (Carter and Polevychok, 2004).The second has absorbed the macroeconomic policy community, including central banks, finance ministries, financial institutions and some academic economists, who are concerned about à ¢Ã¢â€š ¬Ã…“stabilityà ¢Ã¢â€š ¬?. Affordability and stability are often discussed as if they are unrelated, not just in the press, but also within policymaking circles.à ¢Ã¢â€š ¬? Researchers can now endeavour to bridge this gap in housing discussions. By using the analogy of sowing and reaping, à ¢Ã¢â€š ¬Ã‹Å"whatsoever a man soweth, that shall he also reapà ¢Ã¢â€š ¬Ã¢â€ž ¢ (Galations 6:7, King James Version). It can be highlighted how scrupulous aspects of the existing recession should require policy makers and researchers to reflect on the failures of policy that have arisen as a result of the à ¢Ã¢â€š ¬Ã…“fragmented nature of housing thinking within modern governmentsà ¢Ã¢â€š ¬? (Maclennan, 2008). Pryce and Sprigings propose that the great correction that is currently underway is a consequence, not only of transcendent global forces, but also significantly of UK policy decisions on financial liberalisation and housing. And if we are reaping what we have sown in domestic policy, who are the winners and losers, and what are the implications for how we evaluate UK post-war policy? It has been made clear that such issues are underpinned by major policy, theoretical, and empirical questions that will most probably be debated at length in the future. What Pryce and Sprigings have done, is highlighted the issues and hope that highlighting these issues will offer some key pointers as to how the future debate should be structured and what might be done to ensure a more integrated approach to modernising UK housing policies. It is argued that successive governments i.e. Conservative Party and Labour Party have promoted homeownership since the end of the Second World War and its benefits it brings financially to the lease holder if they are the occupier as one of the White Papers show from 1953, which states; à ¢Ã¢â€š ¬Ã…“One object of future housing policy will be to continue to promote, by all possible means, the building of new houses for owner occupation. Of all forms of saving this is one of the best. Of all forms of ownership this is one of the most satisfying to the individual and the most beneficial to the nationà ¢Ã¢â€š ¬? (1953White Paper, Houses: The Next Step). Gradually homeownership became deeply embedded in the UK psyche as the tenure of aspiration (Ronald, 2008). However, people then become aware that homeownership may not be best suited for everyone and this is a point that is raised by Sprigings (2008) where he identified that by encouraging low-income households into homeownership, we are subjecting them to the worst of its costs and risks while the market may restrict for them the potential of its benefits. This idea was also backed up by Pickard (2005) where he stated that housing is believed to be a great long-term investment on average, but for the deprived areas, and for the poorest households, homeownership may simply not produce the promised benefits. Housing developments and the global recession can be seen as interlinked with certain groups of society and those in less secure jobs as people on low income will bear the biggest brunt of the recession as low income workers and people in less secure jobs are more than likely to face financial difficulties when it comes to mortgage repayments as they are likely to lose their jobs or see rising inflation and rising interest rates and therefore low income households are likely to leave homeownership at the worst point because they are facing the biggest impact of the recession and also when the market begins to resume to normality again, low-income households may find it harder to re-enter the housing market when house prices are low because there is a proven correlation between credit being made available and housing prices and low-income households may not be able to obtain credit when house prices are still low therefore not enabling them to enter the housing market when it seems mo st beneficial. The CML also back up this idea as figures for October 2008 show that, the value of loans has decreased to 83 per cent of the value of the property therefore, as it has been established that long term dividends on housing can be superior, low-income households will find it difficult to witness these dividends as they will be exiting the housing market when it begins to deteriorate and trying to enter the housing market when it is difficult to obtain credit. Pryce (2008) seems to perceive that the promotion of homeownership by successive UK governments and therefore the rapid increase of owner occupation may have inadvertently produced a money pump working in the opposite direction. Another theory which Pryce (2008) identifies is the fact that low-income and particularly ethnic groups are less likely to enjoy the benefits of inter-generational housing welfare transfer. Keister (2003) also backs up the second theory of Pryce (2008) by identifying that children from larger families accumulate less wealth than do those from smaller families and that siblings dilute parentsà ¢Ã¢â€š ¬Ã¢â€ž ¢ finite financial resources and non material resources. Sibship size also reduced that likelihood of receiving a trust account or an inheritance and decreases home and stock ownership. Buy-to-Let Mortgages Buy-to-Let mortgages where developed in 1995 and where designed as a new financial product in the UK which enabled individuals to purchase a mortgage on a property for the purpose of letting the property out to future tenants. The benefits from these mortgages can include a stable income from rental receipts, as well as an accumulation of wealth if house prices go up. However one of the main factors of risk with taking out a buy-to-let mortgage is leverage speculation where the landlord purchases a property expecting to sell the house at a later date for a higher price or that rental income will exceed the repayment amounts of the initial loan. Buy-to-Let mortgages have became extremely popular with apprentice investors as this type of mortgage attracts middle income people to start to develop into small-scale landlords as a means of investing for their retirement. The volume of these loans grew rapidly in value as shown in Figure 2. Figure 2 BTL loan Pryce (2008) expresses concern at the fact that 90 per cent of total BTL advances since 1999 have been taken out during periods of above-trend house prices, and  £74 billion of BTL mortgages, which is more than half of the total BTL advances since 1999, were issues at the very peak of the housing boom. This can be seen in Figure 3. Fig 3 It is therefore in agreement that, a significant proportion of BTL loans are at risk because there is consensus that the value of securities will fall below the outstanding mortgage debts. This consensus is backed-up by the fact that repossessions on BTL properties as a per cent of all BTL mortgages almost doubled in the space of 18 months from the second half of 2005 to the first half of 2007 before the first round of gloomy house price results were released in late 2007. Latest CML data also reinforces this claim as they show a large increase in BTL accounts over three months in arrears at the third quarter of 2008 having trebled in number in 12 months to around 18,000. (Pryce and Sprigings 2008). If home owners begin to default on their loans then the impact could be significant not only for lenders, but for particular sectors of the housing market as 80 per cent of BTL properties are terraced of flats and these account for almost a third of the entire UK private rented stock (Sprigings, 2008). One of the key features of the BTL which there is much agreement on is the impact it seems to have had on new housing supply with flats coming to dominate supply, particularly in city markets. (Taylor 2008, Sprigings 2008). Fig 4