Assignment 1 T1 2015
ACC706 – Accounting Theory & Practices
Tutorial Assignment-1 T1, 2015
Due Date 20th Feb., 2015 (5pm.)
Case Study-1
A Depression Scholar Knows What It Takes
By: Robert Samuelson
It would have been insane for US president Barack Obama not to nominate Ben Bernanke to a second term as chairman of the Federal Reserve. The economics dictated, as did the politics.
We will never know whether the world might have suffered a depression if Bernanke’s Fed had not responded so aggressively.
Early this year, the Nobel Prize- winning economist and New York Times columnist Paul Krugman issues depression warnings.
Bernanke admitted similar fears in interviews with David Wessel, economics editor of The Wall Street Journal and author of In Fed We Trust. The fact that the global economy is no longer uncontrollably spiraling downward (for 2010, the Economist Intelligence Unit predicts growth of 2.7 percent for the world and 1.8 percent for the United States) was no foregone conclusion.
Nor was it ordained that the panic gripping financial markets just six months ago would subside. From recent lows in March, the US stock market is now up roughly 50 percent.
It is not that Bernanke’s performance was flawless. Far from it. He made two blunders. First, he didn’t see the crisis coming. Even after the collapse of the investment bank Bear Stearns in March 2008, he didn’t foresee a widespread financial panic or a savage recession.
In the summer of 2008, the economy was weakening but seemed-to Bernanke and most economists-to be suffering from inflationary overheating. Consumer prices were raising at a 5 per cent annual rate, oil was peaking at $147 a barrel.
Second, along with the then- treasury secretary Henry Paulson, Bernanke allowed Lehman Brothers to go bankrupt in September. Both have said they lacked the legal power to rescue Lehman and that no one wanted to buy it.
If Bernanke and Paulson had fully anticipated the consequences of Lehman’s failure, they almost certainly would
Tutorial Assignment-1 T1, 2015
Due Date 20th Feb., 2015 (5pm.)
Case Study-1
A Depression Scholar Knows What It Takes
By: Robert Samuelson
It would have been insane for US president Barack Obama not to nominate Ben Bernanke to a second term as chairman of the Federal Reserve. The economics dictated, as did the politics.
We will never know whether the world might have suffered a depression if Bernanke’s Fed had not responded so aggressively.
Early this year, the Nobel Prize- winning economist and New York Times columnist Paul Krugman issues depression warnings.
Bernanke admitted similar fears in interviews with David Wessel, economics editor of The Wall Street Journal and author of In Fed We Trust. The fact that the global economy is no longer uncontrollably spiraling downward (for 2010, the Economist Intelligence Unit predicts growth of 2.7 percent for the world and 1.8 percent for the United States) was no foregone conclusion.
Nor was it ordained that the panic gripping financial markets just six months ago would subside. From recent lows in March, the US stock market is now up roughly 50 percent.
It is not that Bernanke’s performance was flawless. Far from it. He made two blunders. First, he didn’t see the crisis coming. Even after the collapse of the investment bank Bear Stearns in March 2008, he didn’t foresee a widespread financial panic or a savage recession.
In the summer of 2008, the economy was weakening but seemed-to Bernanke and most economists-to be suffering from inflationary overheating. Consumer prices were raising at a 5 per cent annual rate, oil was peaking at $147 a barrel.
Second, along with the then- treasury secretary Henry Paulson, Bernanke allowed Lehman Brothers to go bankrupt in September. Both have said they lacked the legal power to rescue Lehman and that no one wanted to buy it.
If Bernanke and Paulson had fully anticipated the consequences of Lehman’s failure, they almost certainly would