What caused the demise of Lehman Brothers?

Till date, the biggest bankruptcy ever seen in US history is the crash of Lehman Brothers. The former fourth largest investment bank in the world filed for Chapter 11 Protection with more than $639 billion in assets 7 years ago. Images adorning the hallowed newspaper sheets in the days after its September 15, 2008 collapse were of its dejected employees leaving the company buildings, never to be seen again. However, opinions differ as to what actually caused this gargantuan crash. In truth, it is an amalgamation of many different factors that led to the collapse of the gigantic investment bank. Continue reading “What caused the demise of Lehman Brothers?”

How can Afghanistan be saved? (with an interview with an Afghan woman)

Over the weekend, I’ve had the privilege of getting some questions answered by an Afghan woman, Nooriya Khan, that has lived in Afghanistan both during its heyday and its low point, during the period of 1996-2001. Before I commence my article on how we can perhaps ameliorate the horrific situation in a once great nation, please find below my interview with Mrs. Khan. My thanks to her and her relatives, including Daniel, for helping me gain a unique insight into life in Afghanistan. Continue reading “How can Afghanistan be saved? (with an interview with an Afghan woman)”

Should the Federal Reserve raise interest rates?

Photo by Dan Smith, License: CC by 2.5

Note: If you want to gain a basic grounding into government policy and its effects on currency, please read my previous article on the aforementioned subject.

Within the sphere of economics and economic thought, the discussion which has overwhelmingly prevailed, above others, is that of whether the Federal Reserve, the central bank of the United States, should raise interest rates or not. At the current moment, the tide seems to have shifted towards a tightening of rates, however, the opposition towards an interest rate rise is still unyielding. Economic scholars, who believe that an interest rate hike is the right way to go, assert that the hike will boost job growth through an increase in both opportunity and actual cost of automation, and that it will boost consumer spending, according to the Keynesian model. However, proponents of keeping rates stable argue that a hike would send financial markets into turmoil, perhaps even worse than their late August plunge. Funnily enough, the one minim that both sides agree on is that whatever happens, a Fed rate hike would change the global economic landscape forever. However, in this article, the case for raising interest rates will be argued, as that is precisely what I firmly agree should happen. Continue reading “Should the Federal Reserve raise interest rates?”

Government Policy: What effect does it have on currency?

With the constant drama in the financial markets concerning the extensive deliberation of the US central bank, the Federal Reserve, as to the raising of interest rates, government policy and its effect on currency has been in the limelight recently. Economists and traders alike have been conjunct in debating what a Fed rate hike would do to both the forex markets and the share markets, and whether, indeed, the Fed should even raise rates or not. Some say that there is no reason for the Fed to raise rates, with the US economy keeping a very low inflation rate as of late. However, others ponder whether it is the right time for “lift off”, given that they feel the economy is strong enough to handle an incremental increase of interest rates, which would be the catalyst for the slow but steady process of economic normalisation. Continue reading “Government Policy: What effect does it have on currency?”