Recession is defined as the slowdown of economic activity over a period of time. Technically, the recession is identified the GDP declines for two consecutive quarters. The GDP decline is caused by a slowdown in production, falling housing prices and sales and a drop in the investments. The slowdown results in increasing unemployment which in turn causes a slowdown in retail sales. When the market has no demand, the manufacturing faces a setback and the graph declines further.
The current recession is the result of cupidity of people in the US sub-prime mortgage market. The banks lend loan by analyzing the credibility of the borrower. The people who cannot justify their credibility are given loans by the credible borrowers from the bank at a higher interest rate. This is called sub-prime lending. The prime lending refers to the loan borrowed from the bank.
How did the sub-prime lending ignite the recession? The sub-prime loans were converted into financial securities and sold to big investors who paid the loan amount to banks. This amount was used by banks to finance more home loans because the sub-prime loans were sold out at low interest rates which made them vulnerable to buying. Since more and more loans were sold out, the cost of real estate started crashing. Also, since the borrowers did not have a credibility listing, the payments started getting defaulted thus increasing the equated monthly instalment (EMI) interest rates. A vicious cycle of buying n defaulting was created. Since, the EMIs could not be paid the securities started transforming into losses thus, the beginning of the economic meltdown. To cover these losses, the investors started selling their investments in foreign markets. Since the amount of selling in the markets was much higher than the amount of buying, the financial markets in different countries started tumbling. Thus, the world faced the heat of the US sub-prime crisis.
Every problem has a solution. The economies are still fighting with this recession and have been successful to a great extent in suppressing it but the after effects remain in the market. Thus, it is always better to anticipate and plan accordingly. The recession could have been avoided if the covetousness could have been suppressed. Today, mindful people need to save money so that when the economies suffer a breakdown there could still exist a controlled flow of money in the market. The governing bodies need to deploy policies more strictly. The tax cuts also need to be revised. The money in securities is equally unsafe and the risk is even higher for higher values of securities but provides tax exemptions to some extent. In the urge to keep more money in own pockets, people tend to invest in securities. The government must revise its taxing policies to secure money with the citizens and prevent their exposure to risks.
Ignorance is not bliss anymore. Anticipation, planning and undertaking calculated risks are the needs of the hour.
Thursday, May 28, 2009
Recession and role of new technocrats
Recession is defined as the slowdown of economic activity over a period of time. Technically, the recession is identified the GDP declines for two consecutive quarters. The GDP decline is caused by a slowdown in production, falling housing prices and sales and a drop in the investments. The slowdown results in increasing unemployment which in turn causes a slowdown in retail sales. When the market has no demand, the manufacturing faces a setback and the graph declines further.
The current recession is the result of cupidity of people in the US sub-prime mortgage market. The banks lend loan by analysing the credibility of the borrower. The people who cannot justify their credibility are given loans by the credible borrowers from the bank at a higher interest rate. This is called sub-prime lending. The prime lending refers to the loan borrowed from the bank.
How did the sub-prime lending ignite the recession? The sub-prime loans were converted into financial securities and sold to big investors who paid the loan amount to banks. This amount was used by banks to finance more home loans because the sub-prime loans were sold out at low interest rates which made them vulnerable to buying. Since more and more loans were sold out, the cost of real estate started crashing. Also, since the borrowers did not have a credibility listing, the payments started getting defaulted thus increasing the equated monthly instalment (EMI) interest rates. A vicious cycle of buying n defaulting was created. Since, the EMIs could not be paid the securities started transforming into losses thus, the beginning of the economic meltdown. To cover these losses, the investors started selling their investments in foreign markets. Since the amount of selling in the markets was much higher than the amount of buying, the financial markets in different countries started tumbling. Thus, the world faced the heat of the US subprime crisis.
Every problem has a solution. The economies are still fighting with this recession and have been successful to a great extent in suppressing it but the after effects remain in the market. Thus, it is always better to anticipate and plan accordingly. The recession could have been avoided if the covetousness could have been suppressed. Today, mindful people need to save money so that when the economies suffer a breakdown there could still exist a controlled flow of money in the market. The governing bodies need to deploy policies more strictly. The tax cuts also need to be revised. The money in securities is equally unsafe and the risk is even higher for higher values of securities but provides tax exemptions to some extent. In the urge to keep more money in own pockets, people tend to invest in securities. The government must revise its taxing policies to secure money with the citizens and prevent their exposure to risks.
Ignorance is not bliss anymore. Anticipation, planning and undertaking calculated risks are the needs of the hour.
Recession is defined as the slowdown of economic activity over a period of time. Technically, the recession is identified the GDP declines for two consecutive quarters. The GDP decline is caused by a slowdown in production, falling housing prices and sales and a drop in the investments. The slowdown results in increasing unemployment which in turn causes a slowdown in retail sales. When the market has no demand, the manufacturing faces a setback and the graph declines further.
The current recession is the result of cupidity of people in the US sub-prime mortgage market. The banks lend loan by analysing the credibility of the borrower. The people who cannot justify their credibility are given loans by the credible borrowers from the bank at a higher interest rate. This is called sub-prime lending. The prime lending refers to the loan borrowed from the bank.
How did the sub-prime lending ignite the recession? The sub-prime loans were converted into financial securities and sold to big investors who paid the loan amount to banks. This amount was used by banks to finance more home loans because the sub-prime loans were sold out at low interest rates which made them vulnerable to buying. Since more and more loans were sold out, the cost of real estate started crashing. Also, since the borrowers did not have a credibility listing, the payments started getting defaulted thus increasing the equated monthly instalment (EMI) interest rates. A vicious cycle of buying n defaulting was created. Since, the EMIs could not be paid the securities started transforming into losses thus, the beginning of the economic meltdown. To cover these losses, the investors started selling their investments in foreign markets. Since the amount of selling in the markets was much higher than the amount of buying, the financial markets in different countries started tumbling. Thus, the world faced the heat of the US subprime crisis.
Every problem has a solution. The economies are still fighting with this recession and have been successful to a great extent in suppressing it but the after effects remain in the market. Thus, it is always better to anticipate and plan accordingly. The recession could have been avoided if the covetousness could have been suppressed. Today, mindful people need to save money so that when the economies suffer a breakdown there could still exist a controlled flow of money in the market. The governing bodies need to deploy policies more strictly. The tax cuts also need to be revised. The money in securities is equally unsafe and the risk is even higher for higher values of securities but provides tax exemptions to some extent. In the urge to keep more money in own pockets, people tend to invest in securities. The government must revise its taxing policies to secure money with the citizens and prevent their exposure to risks.
Ignorance is not bliss anymore. Anticipation, planning and undertaking calculated risks are the needs of the hour.
Friday, May 22, 2009
Prospects n Challenges for IT Manager
According to Information Technology Association of America (ITAA), IT is defined as “the study, design, development, implementation, support or management of computer-based information systems, particularly software applications and computer hardware.”
Information Technology Management is concerned with exploring and understanding IT as a corporate resource that determines both the strategic and operational capabilities of the firm in designing and developing products and services for maximum customer satisfaction and corporate productivity, profitability and competitiveness.
The role of an IT manager is to develop new ideas into solutions with the optimum use of available resources for the satisfaction of customer. He is responsible for integrating the company’s operational capabilities so as to make the company capable of delivering the services it has promised to the market. Companies appoint IT Managers as IT support to various roles such as financial management, services management, business/IT alignment, corporate governance etc. Thus, IT Manager is required to have knowledge of all the application areas.
The only thing which is constant is change and the rapid change in IT industry has increased the complexity of IT management. There are many factors responsible for the rapid change but few of these factors have been recognised to be contributing majorly:
· Vendor Neglect
· Vendor Oversell
· Acquisition Dilemma
· Support Burden
· Resistance
· Cascading Needs
· New Integration
· Errors
· Training Demands
These barricades are regularly faced by an IT manager in its profession. There are regular neglects on part of the vendors. Sometimes vendors promise to deliver more than they can, for the desire of more earnings. There are regular fluctuations in the market demand. Errors are integral part of any process. There needs to be quality assurance at every step of the process. Sometimes there are internal conflicts which are harmful for the company’s reputation. Also, regular training of the employees to keep them update with the latest trends in technology is necessary.
IT Managers should give careful thought to the fact that problems need to be encountered. Anticipating and planning for them can help avoid project delays and budget overruns.
Thursday, May 21, 2009
Environmental awareness and role of technocrats
“In the end, we conserve only what we love, we will love only what we will understand and we will understand only what we are taught” -- Baba Dioum
Recently, I have read a news item anticipating the establishment of four Hi-Tech cities in the outskirts of the Aligarh city. These establishments will be done with the aims of reducing the size of the crowd in the city and of providing employment to people living in the nearby villages. Though for a noble cause but such projects tend to exploit huge amount of resources. And, the exploitation of resources at such a large scale results in the environmental instability. Definitely a detailed plan needs to be formulated such that the resources can be used optimally, now and again.
There have been instances in the past where mankind has not thought about future impacts of its actions. We face with problems such as the lowering of water table, reduction in the rainfall, increase in the size of ozone-hole, global warming etc. Though these problems are being faced today but their causative actions have been performed in the past viz. deforestation, fast paced technological advancements. Still, we are not learning from our mistakes.
Today, as we move forward with the aim of making world a better and comfortable place to live in, there is a need to put a check at our every action. We need to observe and attend to every factor closely e.g. climate of the place, water table, rainfall, wind etc. There is a need to make people aware of these factors and to develop a general idea, the idea that how to use each resource optimally. Also, there is a need of reducing the amount of usage currently. There is a need of self-realisation. There is a need to think about the impact of an action on the society and environment before committing it.
There are various groups – government and private – which work to make people aware of various minute details that can help in the environmental protection. Also, various research institutes spend a huge sum of money to develop technologies which will help in the cause. E.g. Evolution of hybrid cells and hydrogen cells which help in minimizing pollution through automobiles. The corporate sector has accepted it as its social responsibility to work towards preservation of the environment. In lieu of which, they are awarded quality certificates and rebates on various deals.
Today, most of the people think about the environment before they act. A few change the way they plan to do. Finally, very few do it. It is about time, we all do.
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