Three stages of Emerging Markets in a financial crisis Essay

Three stages of Emerging Markets in a financial crisis - Essay Example Mismanagement of financial liberalization and globalization becomes the major culprit as was evident in Mexico in 1994 as well as many East Asian countries in 1997 (Myeconlab, 2011). In the United States, we sow the seeds of a financial crisis in the emerging market countries as those countries liberalize their financial system. This is done by doing away with restrictions on the financial institutions and markets domestically and opening up the economies to flow of capital and financial firms from other nations. A currency which is fixed against the US dollar becomes subject to a speculative attack, where the speculators engage in the massive sales of the currency. Currency crisis sets in as currency sales floods the market and supply outstrips demand which leads to the value of currency collapsing. Interest rates get high, uncertainty increase and asset prices fall. The emerging market economies denominate several debt contracts in foreign currencies leading to a currency mismatch. The domestic currency depreciation increases the value of debts relative to assets which leads to the decline of the net worth of a firm. This decline then increases adverse selection as well as moral hazard problems. Investment also declines as well as economic activity. Therefore to prevent financial crisis in emerging market certain policies are considered including improving prudential regulation and supervision, limiting currency mismatch as well as seq1uencing financial

Financial Literacy Essay Example | Topics and Well Written Essays - 500 words

Financial Literacy - Essay Example This essay will explore several articles on the topics of career and jobs, and saving. After some time on a job, one may get a better offer from another firm or decide it is time to move on. During such a time, it is important for one to know that when changing jobs will have financial implications and that there are factors a person has to take into account. An individual should put in place plans that will ensure that his financial health is stable in the period between transitions of jobs (Farr, 2002). One could, for example, have insurance policies that will ensure he gets certain benefits. Having reserve funds will also be ideal to be able to sustain oneself witin the short-term period (Certified Financial Planners Board of Standards, 2005). One should always prepare for retirement as early as possible. This calls for the need to save enough for the future, to ensure that there are enough resources to sustain one throughout the period after retirement. In addition, job security is never guaranteed, thus, a person should always have a contingency plan in case one loses her or his job. This information will help me to secure my financial future as early as possible and prepare for unplanned circumstances (Claman, 2001). During the beginning and peak of one’s career, an individual may earn more than he will need for immediate consumption; hence, he will need to save for future times when he may not be able to have a constant income or his needs exceeds the current income. Saving can also be a way of creating more wealth and having another extra source of income. Saving can also be viewed from another perspective, which is in terms of the money one spends on a commodity or service. Different services and products have a range of prices depending on the quality, amount and type among other factors. Based on this, one should evaluate the product that he is buying and analyse whether he can get the same at a lower price.