Exchange Rate Based On Economic Factors Finance Essay - Free Essay Example

Exchange rate movements can have significant impact on a companys return especially for multinational companies and companies that involved heavily in export and import of goods. A small change in exchange rate would impact directly to the companys performance. Therefore these companies often use derivatives securities such as options, forwards and futures to hedge or mitigate risk arising from exchange rate movements. Investors also use these tools to speculate and hope for profit from fluctuations in exchange rates. If investors predicted accurately on future exchange rate then this would provide a favourable return on their investment portfolio. In this paper, we will examine on how economic factors relate to exchange rate movements and use it to forecast. Firstly, we will look at four different types of exchange rate regime and how the exchange rate is determined. Next, we will examine Purchasing Power Parity (PPP) and we use it to calculate whether a currency is undervalued or overvalued. After that, we look at how Balance of Payment (BOP) could be one of the factors that influences exchange rate movements. Under BOP trade flow model, we use the trade flow and capital market participants to be the factors that determine the exchange rate equilibrium. We then use this model to predict future exchange rate movements when there is a shock in economic activity. Lastly, we will examine the relat ionship between official interest rate and exchange rate and use the interest rate differentials theory to predict future exchange rate. 1.1 TYPES OF EXCHANGE RATE 1.1.1 Free Floating Exchange Rate Regime Under this type of exchange rate, the value of a nations currency is fully determined by the market demand and supply in a freely competitive market. Under no government intervention in the exchange rate determination, the rate fluctuates purely based on the conditions of demand and supply. The benefit of choosing this type of exchange rate over fixed exchange rate regime is that the country will not suffer from balance of payments crisis because the currency will adjust accordingly and no reserves are being used to maintain its pegged value, but on the other hand, it causes lack of confidence to importer or exporter as the currency has the potential to fluctuate widely in a short period during period of turbulence. 1994 economic crisis in Mexico is a good example to explain balance of payment crisis due to its fixed exchange rate regime. Mexican peso had to be devalued immediately when Mexico government run out of its foreign reserves to maintain its fixed exchange rate regime, se e Whitt (1996). However, many nations will prefer managed floating exchange rate instead of free floating exchange rate as they can intervene the market and reduce the fluctuation of its currency. 1.2 Managed Floating Exchange Rate Regime This type of exchange rate is similar to free floating exchange rate, the monetary authorities or central bank will manage and control its fluctuation rather than simply leaving it to be set by the market. The central bank can alter its official interest rates or uses its reserves to influence the value of its currency in the short and long run. We will further discuss interest rates and BOP approach in chapter 2.2 and 2.3. 1.1.3 Fixed and Semi-Fixed Exchange Rate Regime Fixed exchange rate is often called as pegged exchange rate; the exchange rate is set at a declared par value and maintained by the authorities or central bank. The rate will not fluctuate in daily basis as the intervention from the authorities will fix the exchange rate by buying or selling its currency. The central bank must hold large foreign currency reserves to mitigate shocks in supply and demand. Third world countries often use fixed exchange rate to build confidence in investors and avoid bubbles in foreign market. Developing countries can use it to avoid out-of-control-inflation. In term of semi-fixed exchange rate regime, the value of a countrys currency is allowed to float between the permitted bands of fluctuation. Same as fixed exchange rate regime, central bank has to intervene in the foreign exchange market to ensure that the exchange rate stays within the specified bands and it can be done by buying or selling its countrys currency. In other words, central bank a cts as a dominant investor and has the ability to influence market exchange rate. However, the fixed exchange rate regime can backfire, if the foreign exchange market value of the currency is not reflected by the pegged rate. This will lead to investors to trade the currency in the black market; the currency will not be traded at the pegged rate, instead at market value. If the countrys currency were set its rate wrongly, take the case when central bank set its rate above equilibrium (an overvalued currency), in the long period of time, the monetary authorities will suffer from foreign reserves crisis. They must then either devalue their currency or change the regime from fixed to floating type of exchange rate. Please refer to Argentine economic crisis (1999 -2002) and Mexican peso crisis (1994) for a better understanding in the foreign reserves crisis. CHAPTER 2: FACTORS THAT INFLUENCE EXCHANGE RATE In this chapter, we first look at how Purchasing Power Parity (PPP) could be used to analyse the movements in exchange rate and hence predict future spot rate. The reason we start with PPP is that PPP perhaps covers the most fundamental approach to assess long-term value in the foreign exchange market. In order to develop more sophisticated models of exchange rate determination, we must first be able to grip a good understanding about the basic notion of PPP, theories and assumption of this approach. We look at three main types of evaluating a nations currency which are absolute purchasing power parity, real exchange rate and relative purchasing power parity. We then use them to determine whether the currency is overvalued or undervalued. Next, we consider balance of payment (BOP) approach in our study of movements in exchange rate. In this section, we begin with the BOP structure and classification and followed by BOP flow model of exchange rate determination. In this flow m odel, we first look at how trade flow determines the exchange rate equilibrium and later we combine with capital market participants to produce a more complete BOP flow model. We also examine in how exchange rate responds to a shock in economic activity based on the BOP flow model. We look at interest rates as predictor of exchange rate movements in section 2.3. We start with two fundamental interest rate hypotheses which are covered interest rate parity (CIP) and uncovered interest rate parity (UIP) and use them to determine the expected rate of depreciation or appreciation of a currency. Next, we discuss about how interest rate differentials cause movement in capital flow from one country to another and hence affect the exchange rate. 2.1 PURCHASING POWER PARITY (PPP) PPP is one the oldest method to forecast the long-term value of a foreign exchange and the foundation of PPP is based on the assumption of law of one price. Law of one price simply states that in an efficient market, all identical tradable goods must only have one price. This law implies that exchange rates should be adjusted to compensate for price differentials across nations; price of goods and services should cost the same in all nations when prices are measured in a common currency. However, law of one price does not always hold especially in the short time frame. At a point in time, the price for the same item in different market may not be unique if the price measured in a single currency. Antweiler (2009) stated that changes in exchange rate in the short run are news-driven whereas PPP describes the long run behaviour of the exchange rate. The economic forces behind PPP will eventually even out the differences in purchasing power of currencies. As mentioned earlier, we only consider the long-term value of the exchange rate in this paper hence this problem will no longer hold as the price will adjust accordingly. PPP divided into two categories, absolute purchasing power parity and relative purchasing power parity. 2.1.1 Absolute Purchasing Power Parity In order to derive the equation for absolute purchasing power parity, firstly we need to use the assumption of law of one price to equate price of one good expressed in two different currencies. Equation (2.1) holds with respect to all tradable goods and services consumed in two countries. Pi is the price of i good and service in domestic country and with asterisks is the price of goods and services in foreign countries. S is the nominal exchange rate between the domestic country and foreign country, expressed as price of a unit of foreign currency, measured in units of domestic currency. However, we assumed that there are no transaction costs such as transportation and tariffs in equation (2.1). It will be more appropriate to calculate the estimated exchange rate based on PPP if we use a basket of tradable goods and services as our measurement in both countries instead of a single tradable good. P and P* refer to the domestic and foreign countrys price of a basket of tra dable goods and services. Equation (2.2) is often called absolute purchasing power parity. Absolute purchasing power parity follows the proposition that a group of tradable products will have the same cost in every country if the costs are converted in a common currency. If the nominal exchange rate calculated based on equation (2.2) is greater (lower) than the actual exchange rate, it suggests that the domestic currency is undervalued (overvalued) against the foreign currency. 2.1.2 Real Exchange Rate PPP however does not always hold in practice, in this case, many economists wish to measure deviation from PPP and the most popular method used for this measurement is called real exchange rate: Real exchange rate, Q, is defined as the nominal exchange rate that takes inflation differential between two currencies into account. For the simplicity, we use Big Mac, the McDonalds sandwich, as our example to explain how economists use this approach to determine whether one currency is overvalued or undervalued. Let the United Kingdom and the United States be the domestic and foreign country used in our example. We also assume it costs pound;1 to buy a Big Mac in United Kingdom, UK and $1.5 in United States, US. In this case nominal exchange rate is said to be 0.667 (pound;1 = $1.50). If absolute PPP holds, then the value for Q is said to be one; the burger would cost the same in United States and United Kingdom since the burger is identical in both countries. However, if nominal exch ange rate remains constant, i.e. pound;1 = $1.50, and Big Mac costs pound;1.2 in United Kingdom, this implies that it costs 20 percent more in United Kingdom, suggesting that the pound is overvalued by 20 percent relative to US dollar, hence the absolute PPP no longer holds (Q is not equal to one). In this case, there will be an upward pressure on the demand for US dollar; one would buy the burger in US at the price equal to 1 pound (pound;1=$1.50) instead of buying it in UK which costs pound;1.20. Increase in demand for US dollar causes upward pressure on the nominal exchange rate until the price in US and UK is the same, the real exchange rate returns to 1. To further our study on Big Mac, in table 1, page 11, we show the prices of Big Mac in 17 countries expressed in term of US Dollars based on the actual exchange rate as of 4 July 1995. Since the Big Macs are identical, whether purchased in Sydney, San Francisco or Tokyo, they should theoretically cost the same or at least ro ughly the same price according to the law of one price. The Economist magazine found out that the law of one price does not hold when applied to Big Mac, as substantial deviations from PPP exist. Nevertheless, Cumby (1993) study the behaviour of Big Mac prices in 25 countries over seven-year period starting from 1987. The study found that 70-percent of the gap between actual exchange rate and their estimated Purchasing Power McParity values was removed. Purchasing Power McParity works exactly the same as PPP, instead of using a basket of tradable goods and services, it uses Big Mac index which published by The Economist. Table 1 Currency Big Mac Price Implied PPP of the US$ Actual Exchange rate % Over (+)/ In Local Currency In US Dollar Terms as of 4/7/95 Under(-) Valuation Hong Kong Hk$9.50 1.23 4.09 7.73 -47 Indonesia 3900 1.75 1681 2231 -25 Australia A$2.45 1.82 1.06 1.35 -22 Canada C$2.77 1.99 1.19 1.39 -14 Singapore S$2.95 2.10 1.27 1.40 -9 US $2.32 2.32 Italy Lire 4500 2.64 1940 1702 +14 Britain pound; 1.74 2.80 1.33 1.61 +21 Spain Pta 3.55 2.86 153 124 +23 S. Korea Won 2300 2.99 991 769 +29 Holland FI 5.45 3.53 2.35 1.55 +52 Sweden Skr 26.0 3.54 11.2 7.34 +53 Belgium Bfr 109 3.84 47.0 28.4 +66 France FFr 18.5 3.85 7.97 4.80 +66 Germany DM 4.80 3.48 2.07 1.38 +50 Japan  ¥391 4.65 169 84.2 +100 Denmark Dkr 26.75 4.92 11.5 5.43 +112 Source: McDonalds; The Economist, April 15, 1995 2.1.3 Relative Purchasing Power Parity There is another way of measuring real exchange rate which is known as relative purchasing power parity. As before, it measures the relationship between two countries relative inflation rates and the change in the exchange rate, we then use it to predict the future exchange rate. Relative purchasing power parity is defined as the rate of change in price level of a basket of tradable goods and services in one country relative to the price level in another determines the rate of change of the exchange rate between the two countries currencies. Equation (2.4) is obtained by taking logs of Equation (2.2) and the reason of doing so is one could measures the exchange rate in term of rates of growth when we apply derivative on natural logarithm (equation (2.5)). In equation (2.4), s is defined as the log of nominal exchange rate, p and p* represent the log of price in domestic country and foreign country. Next, if we apply derivative on equation (2.4), we arrived at the proportiona l rate of change, which is also known as relative purchasing power parity. The equation as above says that rate of change of currency, ds is equal home countrys inflation rate, dp minus foreign inflation rate, dp*. One way to interpret this relationship is simply saying when prices rise more rapidly in home country than foreign country then it is said that the domestic money losses its value relative to the foreign money or decrease in exchange rate, and vice-versa. Equation (2.5) is also valid for relaxing the assumption of no transaction cost when the transaction cost is proportional to the value of the goods. Take logarithm in Equation (2.6) we have: Since k is a constant, we end up with the same result as equation (2.5) simply because it vanishes when we differentiating a constant, k. In other words, proportional transaction costs have no effects on the relative purchasing power parity. In this section, we discussed how price differentials could be related to nominal exchange rate. Investors could use equations (2.2), (2.3) and (2.5) to predict the future spot rate movements. It is difficult to measure the change in price of a basket of tradable goods and services in both countries, therefore investors often use Consumer Price Index (CPI), Export Price Index (EPI) or Import Price Index in evaluating the estimated exchange rate based on these equations and make appropriate investment decision. In graph 1, we show a strong positive correlation between YEN ¥/USD$ exchange rate and Japan export prices (all commodities) from 2001 to 2010. However, the drawback of using Japan Export Price Index (EPI) is that EPI unable to tell us about the magnitude of the change in exchange rate corresponded to a unit change in export price. We note that the magnitude of the change in YEN ¥/USD$ exchange rates do not correspond well to the Japan export prices in year 2008 and this might be reason of the effect on global financial crisis in year 2007 to 2010. There are number of debates in the international economics on the issue of whether PPP is a valid tool for forecasting exchange rate. PPP could be calculated based on CPI, EPI, wholesale price indexes, wages or other set of price or cost indexes. Unfortunately, each approach may provide different set of answers as to whether a currency is undervalued or overvalued and this might lead to disaster investment decision if an investor chose a wrong set of index. In the effort of calculating relative PPP, we cannot fully rely on the set of price indexes as different countries may have different national preference and tastes, and hence different weight in their price indexes. Therefore, if two nations preference and tastes are not in common, using price indexes may not be the best approach to forecast its exchange rate. Apart from choosing appropriate set of price indexes, there is another problem called the base-year problem. Selecting different base-year could end up the same puzzle as before. However, this problem could be resolved by selecting the base year when both countries current account balance last attained is near zero. 2.2 BALANCE OF PAYMENTS (BOP) The BOP model of exchange rate determination was originally developed in the 1930s and 1940s by Robinson (1937), Machlup (1939), and Haberler (1949). In this section, we explain the meaning of BOP and its accounts, current account and capital and financial accounts. Next, we look at the basic model of BOP which only considers trade flow as the determination of exchange rate then we slowly develop to more complete BOP flow model which able to tell us the future exchange rate movements for a given shock in economy activity. 2.2.1 BOP Structure and Classification BOP is defined as a statistical statement that systematically summarises, for a specific period, the economic transactions of an economy with the rest of the world by IMF (please refer to IMF Balance of Payments Manual, Fifth Edition, Chapter 2 Conceptual Framework, page 6). The transactions refer to receipts and payments of all of the money coming in a country from abroad and going out from the country to abroad for a specific period. Examples of these transactions are payments for the countrys export and imports of goods, services and financial capital. Transactions that lead to a receipt of payment from foreigners (payment to foreigners) are recorded in the BOPs accounts as a credit (debit). BOP accounts are divided into two broad part, current account and capital and financial accounts. Current account deals with payments for import and export goods and services, income from abroad such as interest and dividends, and transfer payments. In order to figure out whether the bala nce of the current account of a country has a deficit or a surplus, one can calculate it using the equation as follow (IMF Balance of Payments Manual, Fifth Edition, Appendices, page 158): In other words, current account balance (CAB) is equal to the sum of net value of exports (X) and imports (IM) goods and services, net income abroad (NY) and net current transfer(NCT). A surplus of CAB indicates that the economy of a country being a net creditor to the rest of the world. This means that the country is providing resources to other economies more than it received, in return, they owes money to the country. This situation is often called as favourable balance and it indicates that there is an upward pressure on demand of the countrys currency, which leads to an increase in the value of the currency. On the other hand, deficit of CAB mirror the economy of a country being a net debtor to the rest of the world. It is said that the country is investing more in its country than saving and it uses resources from other economies to meet its domestic consumption and investment requirements. On the other part of BOP, capital and financial accounts which record the transactions related to international movements of ownership of financial assets. One can easily break capital and financial account into four categories; direct investment, portfolio investment, other investments and reserves account, refer to IMF Balance of Payments Manual, Fifth Edition, Chapter 3 Structure and Classification, page 77. Direct investment records the transactions on long term capital investment, such as purchase of fixed assets in foreign countries or domestic country by any residents or non-residents. Portfolio investment is referred to the transactions of buying or selling shares and bonds in financial markets. Other investments are referred to capital flows into banks or banks provide loans to residents or foreign investors. After the initial investment, any incomes or interest re payments generated by these assets are recorded in the current account. Reserve account is controlled by monetary authorities and these reserves are used for financing or regulating payments imbalances or for other purpose, refer to IMF Balance of Payments Manual, Fifth Edition, Chapter 3 Structure and Classification page 80. Any payment imbalances will usually lead to change in the holding of reserves as monetary authorities will use it for official market intervention to influence the spot rate. If a domestic resident purchased (sold) foreign assets or foreign resident sold his/her (purchased) assets in the domestic economy then it is referred to be capital outflow (capital inflow) and it is recorded as debit (credit) entry in capital and financial accounts. 2.2.2 BOP Flow Model In this section, we will use BOP flow model to determine and affect the value of an exchange rate. We will first be looking at the simple trade flow model of exchange rate determination and how do monetary authorities intervene in the foreign market under fixed and semi fixed exchange rate regime to manage its exchange rate. Next we will include capital market participants into our consideration of modelling exchange rate equilibrium and predict future spot rate movements. We also examine in how exchange rate respond to a shock in economy or large capital movements. The diagram above shows us how the equilibrium MYR/US$ exchange rate is determined under three different exchange rate regimes. On the vertical axis, we plot the MYR/US$ exchange rate and on the horizontal axis we have the quantity of US dollar printed by US government in a specific time frame. In this model, we shall only consider the demand of US dollar (D$) is affected by the Malaysian demand for US goods. To expl ain this, Malaysian residents must first exchange Ringgit Malaysia in the foreign exchange market before they could make payments for the US goods they wish to purchase. In the same vein, the supply of US dollar (S$) is only affected by the demand of Malaysian goods by US residents. In the free floating exchange rate regime, if the demand and supply for dollars is only affected by the trade flows, it should be in the equilibrium point (QE,E2) at all time, which is the intersection between supply (S$) and demand (D$) for dollars. To explain this phenomenon, if we look at the exchange rates above equilibrium, there is an excess of supply of US dollar (S$) and market will push the exchange rate down to equilibrium point, and vice-versa. Let us assume that the exchange rate regime between MYR and US Dollar were semi fixed and the permitted band of fluctuation was E1 and E3. If the equilibrium exchange rate is within the bands therefore no intervention by central bank is required. If the demand shifted above (below) the allowed band of fluctuation,D1$ (D2$), then the central bank must sells (buys) its own currency on the foreign exchange market and restore the equilibrium within the band. In the fixed exchange rate regime, if the MYR/US$ exchange rate were pegged at an artificially high level such as E3, then flow supply for dollars would exceed the flow demand of dollars and the gap between A an B would be the markets excess supply for dollars (QB -QA). In order to maintain at the level E3, the central bank must then buys its own currency on the foreign exchange market in return for the currency to which it is pegged. Graph 2 shows the spot rate between Malaysia and US (MYR/US$) for the period between 1st January 2004 and 31th December 2007. Between 1998 and 2004, the exchange rate between MYR and US Dollar was pegged wrongly at the rate above market equilibrium, 3.80 ($1=MYR 3.80) by Bank Negara Malaysia, Talib (2004). On 21th July 2005, Malaysia and US government agreed to remove this pegged regime and adopted managed float exchange rate regime. Since then, the value depreciated significantly and this indicates that the spot rate was pegged above the market equilibrium. In the BOP model, capital flows are important in analysing the exchange rate movements, especially in the short and intermediate-term horizon, Siourounis (2003). The diagram below shows how capital market participants could influence the value exchange rates. For the purpose of analysing, we divide capital participants into two groups; one seeking for capital gains (currency speculators) and other one is seeking for interest rate differentials (international investor). In the following section, we look at the model on how currency speculators influence the exchange rate whereas the interest rate differentials as a model to predict exchange rate movements will be discussed in section 2.3.3. The diagram above shows the exchange rate correspond to the demand and supply of dollars provided by currency speculators. On the right (left) side of vertical axis, the SP$ represented the supply (demand) of US dollars provided by currency speculators. Let the current spot rate MYR/US$ be the point where SP$ intersects y axis, Ee. If speculators predict the expectation of future spot rate be more than Ee, say E2, then currency speculators will convert Ringgit Malaysia to US dollars at the present and it convert back when the market rose above the current equilibrium point. In other words, currency speculators will be willing to supply more of US dollars in the future if the expected spot rate lies above Ee. The opposite case will be the same if expected spot rate lies below Ee. Complete BOP flow model of exchange rate determination is obtained by combining BOP trade flow model of exchange rate determination, diagram 1, currency speculation and exchange rate determination, diagram 2 and interest rate differentials as a model of exchange rate det ermination, diagram 5. This model allows us to study the interaction of commercial traders and capital market participants set the equilibrium level of spot rate. Diagram 3 (a) is the copy of the trade flow model shown in diagram 1 where exchange rate is determined by only trade demand and supply of US dollars. In order to capture the gaps between trade demand and trade supply we plot excess commercial demand curve for dollars, ED$ in diagram 3 (b), (D$-S$) and relate it to the supply of US dollars curve, SP1$. SP1$ curve is influenced by capital market participants, which consist of international investors and currency speculators. Plot ED$ and SP1$ in a same graph, we obtain the complete BOP flow model of exchange rate determination. In this model, the new equilibrium level of exchange rate is obtained by finding the intersection point between ED$ and SP1$. In other words, it is the intersection point between the net supply of dollars provided by capital market participants and the excess of commercial demand for dollars by commercial traders. However, investors are more interested in how exchange rates respond to shift in domestic and foreign economic activity, change in market expectations of future spot rates and independent shift in trade flows. Using BOP flow model of exchange rate (2), diagram 4 allows us to predict the future exchange rate movements and its direction caused by these shocks. Let us assume the SP2$ and ED1$ be the current supply and demand for US dollars respectively and the corresponding spot rate is at E1. If there is an increase in Malaysian economic activity (case 1), more Malaysian residents are willing to spend, this would imply that a relative increase in Malaysian demand for US goods and services. In turn, it causes an overall rightward shift of excess commercial demand for US dollars from ED1$ to ED2S. The market will respond to the change in Malaysian economic activity and restore its equilibrium at a higher rate, E2. In other words, greater amount of US dollars are injected by Malaysian residents whilst the supply curve remains constant, this caused an increase in the equilibrium spot rate. For the increase in independent trade flows, it will be the same explanation as increase in Malaysian economic activity. In case 2, we assume there is a positive shift in the market expectation of future spot rate and this positive shift would immediately impact the exchange rate. An upward shift in market expectation on the long run equilibrium would shift SP2$ upwards to SP3$, positive shift in capital market participants demand for foreign exchange resulting an immediately appreciation in the spot rate. Siourounis (2003) shows the empirical evidence for a positive shock to net purchase of US equities by UK, Germany and Switzerland have a significant and immediate effect on exchange rate that lasts between 10 and 17 months. In graph 3, we show there is a significant trend between USD$/AUD$ exchange r ate and Australias current account seasonally adjusted. However the exchange rate does not always associate with the Australias current account balance especially in year 2003 to 2004. This could be the reason when Australia became the host for Ruby World Cup (RWC) 2003. URS Finance and Economics (2004) stated that the results of this event contributed to additional economic activity in the short term throughout the Australian economy in terms of industry sales, employment, GDP and Government revenue. However, URS Finance and Economics (2004) also stated that after 2005 any RWC 2003 influence would have diminished on international visitors. We also note that gap between Australias current account seasonally adjusted and its exchange rate was diminished as well. In graph 4 shows the connection between GBP/MYR exchange rate and Malaysias current account balance. Starting from 2003, the exchange rates move along in the same direction with the movements in Malaysias current account b alance; however, this trend is not as significant as in graph 3. Nevertheless, investors could still use this approach to forecast exchange rate. 2.3 INTEREST RATES In this section, we look at the two main forms of interest rate hypothesis, covered interest rate parity and uncovered interest rate parity. Next, we look at the interest rate differentials as a model to predict future exchange rate movements and how it relates to capital movements from one country to another. 2.3.1 Covered interest rate parity (CIP) To explain the meaning of covered interest rate parity, we shall only consider that investors can either invest in UK (domestic country) or US (foreign country) fixed deposit. Let the UK fixed deposit and US fixed deposit rates be r and r* respectively. For simplicity, we assume that the investor can only convert his/her wealth through a 12-months forward exchange rate if he/she decided to invest in US fixed deposit. On the other hand, if the investor has decided to deposit pound;1 for 12 months in a UK bank which guarantee r interest at the end of the period. Then the pound;1 will accumulated to: For the cases when investor decided to invest pound;1 in US fixed deposit then at the end of 12 months period the pound;1 will accumulate to: Let F denote the forward exchange rate and S be the current spot rate, both measured in the unit of sterling price, (GBP per 1 unit of USD). Under no transaction costs and no arbitrage assumptions, equation (2.10) and equation (2.11) should be equal. We can rewrite the ratio F to S in a linear form. Where f is defined as the forward premium (discount), the ratio by which a countrys (UK) forward exchange rate to another (US) exceed (falls below) its spot rate. We can then substitute equation (2.13) to our equilibrium condition in equation (2.12) and express it as follow: Note that we can subtract one from both sides and r*f is the product of interest rate and forward premium (discount). In general cases, we can easily ignore the last term without affect the equilibrium condition as it is the second order of smallness, unless we are dealing we hyperinflation country then this term can not be ignored as it will be significant in measuring the equilibrium condition. Equation (2.15) states that the domestic interest rate must be higher (lower) than the foreign interest rate by the amount equal to the forward discount (premium) on the domestic currency; this is also known as covered interest rate parity hypothesis. However, empirical evidences show that equation (2.13) does not always hold precisely for the given interest rate differentials and forward premium as it contains transaction costs. In fact, for the fixed exchange rate regime, most researchers found out it felt within a specific bound. We define c to be the cost of carrying out the transaction. The absolute value c is too small that one can not justify it as an unexploited profit opportunity and hence the no arbitrage assumption is still valid in this case. Taylor (1989) studied the unexploited profit opportunities in three different types of economics, stable period, period of turbulences and later period of turbulences of an economic. He concluded that there is no unexploited profit opportunity to be found during the stable period in foreign exchange and this indicates that market is in efficient. He also noted that there is potential to exploit profitable arbitrage opportunity during periods of turbulences. In the later period of turbulences, frequency and size of the profit opportunities in the market had decreased significantly and this suggest that efficiency of the market had increased over time. 2.3.2 Uncovered interest rate parity (UIP) In the covered interest rate parity, we restrict investors to invest in foreign country by changing his/her currency through forward contract whereas in uncovered interest rate parity we do not restrict them. Therefore, investors bear the exchange rate risk as they are not guaranteed the value of exchange rate at the end of 12 months period. As equation (2.12), we replace F by Se where Se represents the expected spot rate at the end of 12 months period. Note that the ratio Se/S is not known; unlike in the equation (2.12), all variables are known at the present. The ratio can be greater (lower) than one if the expected spot rate is higher (lower) than the current spot rate. We can rewrite the ratio as follow: We define ?Se to be the expected rate of depreciation or appreciation of the domestic currency over the 12 months period. Substituting equation (2.17) into equation (2.16), we obtain: As before, we ignore the final term, r*Se in equation (2.18) The equation ab ove states the domestic interest rate must be higher (lower) than the foreign interest rate by the amount equal to the expected rate of depreciation (appreciation) of the domestic currency, this is also known as the uncovered interest rate parity hypothesis. 2.3.3 Interest Rate Differentials as Predictors of Exchange Rate Changes Has been mentioned in the previous section, we will look at how international investors react on the interest rate differentials and hence influence the change in exchange rate. Same as before, we assume a two-country world economy consist of United States and Malaysia. We also assume that investors will invest their wealth in Malaysia if the interest rate in Malaysia is higher than in United State, and vice-versa. Diagram 5 shows the relationship between interest rate differentials and the capital movement between two countries. At the point (iUS iMY)2, investors are indifference if they invested their wealth in Malaysia or United State; the interest in both country is the same. However, when the official interest rate set in United State is higher (lower) than in Malaysia, (iUS iMY)3, then investors will inject more capital into US (Malaysia) from Malaysia (US) as they could earn a higher rate of return. In the second part of the diagram shows the relationship between the size of the change in the spot rate and capital flows.   The slop represents the sensitivity of exchange rate towards capital flow; the higher it is the greater the magnitude of the change in spot rate towards capital flows. In reality, equation (2.20) does not always hold as the expected change in exchange rate predicted by investor does not always match with the spot rate at 12-months period. Therefore, we introduce u as the predictor error in equation (2.21). In evaluating the interest rate differentials as predictors of the change in exchange rate, investors have to measure the size and the direction of the predictor error. Mussa (1979) stated that the interest differentials explain little on the changes in exchange rates; therefore one has to include predictor error when evaluating the change in exchange rate. Graph 5, Appendices shows a positive relationship between MYR/GBP spot rate movements and the difference in interest rate between United Kingdom and Malaysia, (IUK- IMYR). Based on these data, if an currency speculator wishes to predict the future spot rate and he is considering interest rate differentials be the only factor that influences spot rate; he will exchange sterling pound for Ringgit Malaysia at the present and convert back to sterling pound in the future to obtain capital gain as the spot rate has the tendency to drift downward. Conclusion This paper found out that the relative change in price in the short run for both countries with respect to the nominal exchange rate does not hold when we use law of one price. Changes in exchange rate in the short run are news-driven and law of one price is valid when we measure the change in the long run. We also showed that prices of Big Mac in 17 countries did not cost the same price when we measured in term of US dollars. In the long run, studies showed that the gap between actual and estimated exchange rate using Purchasing Power McParity was removed. The real exchange rate is said to be equal to one if the absolute purchasing power holds when we measure the prices in both countries with respect to the nominal spot rate. Under the BOP model, if the spot rate were pegged at the rate above its equilibrium then the central bank would have to buy its own currency on the foreign market in return for the currency to which it is pegged. In corporate to this, we look at the case w hen Malaysia and United State removed the fixed exchange rate regime and adopted managed float exchange rate regime, the exchange rate depreciated significantly. We also discussed how capital market participants react and influence the exchange rate when there is a shock in economy activity. In the interest rates section, we discussed the meaning of covered interest rate parity and uncovered interest rate parity; we then use them as predictor of exchange rate changes. In driving these two hypotheses, we use no arbitrage opportunity assumption. However, studies showed that during period of turbulence there is potential to exploit profitable arbitrage opportunity whereas in the stable period there is no unexploited profit opportunity which indicates that market is in efficient. We also discussed how interest rate differentials will influence capital movements and its sensitivity. If interest rate in domestic country is higher than in foreign country then it will cause capital flow into domestic country by international investors. We also concluded that the greater the sensitivity of change in spot rates towards capital flows, the greater the magnitude of the change. We also showed that there is positive trend between YEN ¥/USD$ exchange rate and Japan export prices (All Commodities), USD$/AUD$ exchange rate and Australia current account seasonally adjusted, GBP/MYR exchange rate and UK current account seasonally adjusted, MYR/GBP exchange rate and interest rate differential.

Pros And Cons Of Free Trade Essay - 3046 Words

Pros and Cons of Free Trade I. Introduction Free trade, the ever present driving force behind our national and world economy, is a trade policy embroiled in controversy. It is considered by most economists to be an almost perfect trade policy, barring a few negative effects. Free trade has been shown to increase production, output and income levels in an economy. However, there are many people that view free trade as destroyer of economies and a catalyst of poverty. Critics of free trade have pointed out that in the short-run, free trade causes a loss of jobs which in turn causes a rise in poverty levels. It is interesting to note that the argument for free trade and the argument against free trade are inverses of each other. Proponents of free trade see it as a tool to stimulate an economy while detractors see it as a policy which exacerbates poverty, causes dependency and reduces economic stability. In general, there is no consensus on free trade. Economists see free trade as the devil that we know. While imperfect, it is the best we have to work with. Popular opinion sees free trade as a cause of inequality. Even though it alleviates poverty and causes economic stimulation in the long-run, it can cause the exact opposite in the short run. The pros and the cons of free trade must then be weighed, which will then allow us to determine if free trade is truly a beneficial trade policy. Therefore, this discussion will weigh the benefits and harms of free trade and willShow MoreRelatedPros and Cons of Free Trade1495 Words   |  6 PagesGeography: Pros and Cons of Free Trade Few can contend that the world is more interconnected and interrelated more than ever. This web of interdependency is primarily made possible by trade, and in the twenty-first century, a large and significant portion of trade is conducted on a global scale. Furthermore, while the majority of people agree that free trade can benefit both parties in terms of economic development and an increase in overall production, many critics have voiced their fears of theRead MoreThe Pros And Cons Of Free Trade1286 Words   |  6 Pageswhich is a free trade agreement between the US and 11 other Pacific Rim states reached under the Obama administration. Trump stated that he did a great thing for the American worker. (Bradner) When Trump was on the presidential campaign trail, 54% of Americans answered â€Å"much more likely† or â€Å"somewhat more likely† to the question would you be more likely or less likely to vote for a candidate for President who promises to put a stop to the Tr ans-Pacific Partnership, and enact trade policies thatRead MorePros and Cons of the Free Trade Agreements706 Words   |  3 PagesWhile I was on the internet I was researching for the pros and cons of The Free Trade Agreements, and this is what I found: It seems to be a split between the democrats and the republicans. Pros Some believe that the Free trade will increase sales and profit for the US business. I still think this is up in the air. I don’t feel the economy is up, but is it better? They also said that the Free trade will create us jobs for the middle class over a long term, but I also know that there are still a lotRead MoreThe Pros and Cons of Free Trade Essay1116 Words   |  5 PagesFree Trade is the ability to trade goods and services without barriers, and for prices to rise naturally through supply and demand. In theory, Free Trade was a way to break down the barriers between countries, banishing taxes and allowing prices to be naturally set through supply and demand. According to the World Trade Organization, this gives the poor countries the opportunity to specialize in the production of goods that derive from their environment and natural resources with the capacity toRead More The Pros and Cons of Free Trade Essay941 Words   |  4 PagesThe Pros and Cons of Free Trade Free trade is exchange of goods and commodities between parties without the enforcement of tariffs or duties. The trading of goods between people, communities, and nations is not an innovative economic practice. Nations are however the main element within a free trade agreement. By examining free trade through three different political ideologies: Liberal, Nationalistic, and Marxist approaches, the advantages and disadvantages will become apparent. ThesesRead MoreWhat Is The Pros And Cons Of The North Atlantic Free Trade Agreement?1847 Words   |  8 Pagesnegotiation, the North Atlantic Free Trade Agreement (NAFTA), a trade agreement between the three north American countries: Canada, United States, and Mexico, was put into effect on January 1st 1994. NAFTA was developed to increase trade among the three north American countries while simultaneously promoting each countries’ economy growth. 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They are: the United States of America, Australia, New Zealand, Chile, Malaysia, Singapore, Vietnam, Peru, and Brunei Darussalem. The purpose of the trade agreement is to â€Å"enhance trade and investment among the Trans- Pacific Partnership countries, promote innovation, economic growth and development, and support the creation and retention of jobsRead MoreSolution For Contemporary Economic Issues Essay1371 Words   |  6 PagesSolution for Contemporary Economic Issues The economic globalization is known as the growing scale of cross-border trade of goods and services, communication, and transportation because of Strengthening economies of a group of countries (Shangquan, 2000). Recently, many countries have encountered new types of economic problems, which is related to economic globalization. To master these problems, economists adopted two general types of economic theories. The first theory is protectionism, which isRead MoreInternational Economic Dimensions Of Nutrition Essay1216 Words   |  5 Pages Assignment Question: With a focus on food security, what are the pros and cons of free trade? Food security is defined as when all people at all times have access to safe nutritious food to maintain a healthy and active life (FAO 2003). Therefore, the importance of food security is to the general welfare of the population as a public health and nutrition benefit. Free trade can be defined as a market model in which trade in goods and services between or within countries flow unhindered by

How Internet Affects Our Lives - 877 Words

Internet has become a part of our life. A lot of us depend on internet to do many things for them. As you know, internet makes our life easy and save our time. By internet we make shipping, connect with our family and friends, and even we can be diagnosis through internet applications. Even people every day buy things through internet, people still do not trust internet sites. There are many websites and applications are fake, they sale the air to people. Unfortunately, those layers are not easy to be discovered until many people became victims of them. It is not stopped on steal people money, it is delivered to be murder. The issue was not under control when it starts, then, programmers start to create new solution to limit this issue. People try to give an attention when they use internet site to do not be new victims for internet criminal. In this paper, a few cases of internet crime are going to be presented, in order to discuss how people can deceive it, and how they can protect their selves. In 2014, Oct, Saudi community was transfer a bad news on killing a Saudi student in U.S.A. the story behind killing that guy was the reason to attract people’ attention, not just in Saudi Arabia, but in U.S.A also. Abdullah Alkadi was missed for a while, then in 16th of Sept, his corpse was founded alongside the 10 Freeway near the Cook Street overpass in Palm Desert (Cocca, 2014). The story started when Abdullah Alkadi posted an ad in â€Å"Craigslist† to sale his car Audi (Press,Show MoreRelatedElectronic Devices Affect The Way We Communicate1362 Words   |  6 Pagesthe world are influenced by technologies and use it on a daily basis. It seems like they can’t let go because these electronic devices are so attached to them and it’s an addiction. Electronic devices affect the way we communicate, perceive information, and solve problems. Google changes the way how people find information and solve problems and that they are not using their brain at its fu ll potential. With all the technological advancement, they’re affecting the younger generations the hardest,Read MoreThe Development of Technology Negatively Affect Relationship between People700 Words   |  3 Pages The Development of Technology Negatively Affect Relationship between People â€Æ' The Development of Technology Negatively Affect Relationship between People The development of technology grows rapidly, there are various high tech products that are coming out constantly. Technology plays an essential and indispensable role in our daily lives, and it is the way of interaction with others also. Technology seems to be really convenient to our lives. 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In their eyes, how can such a sweet, innocent tool of exploring specific evidence, paying one’s bill, and social networking become our master when we, as humans, created its very existence? To the skeptics, this question HAS to be answered. To them, it’s essential that we as a collective unit decide if the internet is controllingRead MoreThe Effects Of Social Media On Teenagers And Young Adults1652 Words   |  7 PagesIn the other hand, social media can also have a negative effect on teenagers’ and young adults in their academic lives. One of the main consequences is addiction because students can easily get distracted by simply using their phones or laptop. This issue can harm the student’s concentration and the ability to learn new topics. Social media can easily grab the attention and concentration of students which it can turn into inappropriate actions such as chatting and killing time during class time.Read MoreDoes The Internet Make You Dumber?1002 Words   |  5 Pagesrealize how dumb we are becoming? We live in the age of technolog y, where there is easy access to the Internet. Nicholas Carr, the author of â€Å"Does the Internet Make you Dumber?† stated a good question that is relevant to our generation. Since we have easy access to the Internet, it is making us dumber instead of smarter. I believe individuals have taken advantage of the Internet and it is costing them their thinking skills. Sometimes individual don’t realize the impact that the internet has on our brainRead MoreThe Internet Of Things Will Disrupt Most Industries1456 Words   |  6 Pageshealth care. It s clear that the Internet of Things will disrupt most industries (Fallon, 2014, para. 2). Today, many of us have, at least two or more connected devices like laptops, smart phones, tablets, including other devices such as TVs, cameras, etc. Then there is a rapidly growing range of other smart appliances that can now connect via the internet, such as, a fridge, washing machine, heating control appliances, all the way to a smart h ome. The Internet of Things is, thus, already poisedRead MoreCan Technology Affect Your Mind?1607 Words   |  7 PagesTechnology affect your mind? iPod+ iPhone+ iPad= iBroke†Ã¢â‚¬ ¦and dysfunctional† Has your life begun to revolve around your cell phone? Are you checking your email, texting or tweeting more often than you speak to an actual human? Are you making life and death decisions at the computer. â€Å"Should I buy new iTunes or have gas for the rest of the week?† This is a growing problem. People have begun to let technology control their lives. 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These effects have included medical, emotional problems, and in some cases even death. I also feel that this article really helps other generations to open their eyes as well. Some adults are so involved in work or certain things that they don’t

Satire is Used in the Portraits, Gin Lane, by William...

What is satire? According to oxforddictionaries.com, satire is â€Å"The use of humor, irony, exaggeration, or ridicule to expose and criticize people’s stupidity or vices, particularly in the context of contemporary politics and other topical issues.† This literary device is portrayed heavily in both the illustrations â€Å"Gin Lane† by William Hogarth and in â€Å"Untitled† by Paul Kuczynski. â€Å"Gin Lane† is basically an illustration by William Hogarth that depicts life in the gin shops and shows the negative effects the drink had on the people of London. It shines a light on the horrible circumstances London was under when gin was introduced to its people. â€Å"Unititled† is an illustration by Paul Kuczynski that represents how our current society†¦show more content†¦In the top story of one the buildings fortunate to still be standing, is a man who has hung himself from the rafters. Willaim Hogarth used all these startling sc enes to grab the attention of the viewer and give them an insight on London at its lowest. Through â€Å"Gin Lane,† Hogarth expressed the ravenous effects gin had on the people of London and how it affected the living environment as well. â€Å"Untitled† by Paul Kuczynski also contains satire, however the author of this portrait uses satire to depict the theme of isolation, instead of misery, poverty, ruin and neglect. This simple, yet thought provoking picture, shows a man looking through a periscope that is shaped like the Facebook symbol, to see through a window above an open door. The door is not barricaded in any way, shape or form, so the man is able to walk outside and see what is going on in the world first hand. Instead, he chooses to stay inside by himself and view the world through Facebook. Through â€Å"Untitled,† Kuczynski conveys the message that social media interaction is overtaking physical interaction. People are more likely to go on social media to find out what is happening than to go out and experience it themselves. Kuczynski’s painting greatly showcases that even in its simplicity. Despite the fact that both pieces of art contain various differences, they contain similarities as well. Some of the differences include the message portrayed, themes and the style of drawing. In Hogarth’s

Hamlet As An Anti Hero - 998 Words

How does the play connect with the audience when exploring Hamartia and Peripeteia in its depiction of Hamlet as an anti-hero? Hamlet is a Shakespearian tragedy written and published in approximately 1603; this play depicts the protagonist Hamlet as a gritty anti-hero with human flaws and qualities such as arrogance, apathy and paranoia. He is driven to fuel his revenge against King Claudius without regard to the others consideration because of his selfishness. Hamlet is frustrated with his mothers haste marriage and believes he is responsible to avenge his father’s death mercilessly. Hamlet’s arrogance, carelessness and his indecisiveness are the human flaws that influence his mordant behaviour and the hamartia that eventually led to his own death. Hamlet grieved over the death of his father for the last month while his mother had remarried; isolating himself, presenting himself wearing dark attire inappropriate for his mother. â€Å"A little more than kin and less than kind† says Hamlet as King Claudius attempts to persuade him recuperate from his father’s death. Hamlet is distressed by his father’s death, using it as motive to seek revenge, once confirming Claudius murdered his father. Hamlet was blind sighted by anger and confusion and procrastinated his father’s death because of his self-doubt, his hamartia. The only evidence Hamlet had of his fathers murder was word from the supernatural ghost appearing as a possible demon, or angel, which was his anagnorisis. AlthoughShow MoreRelatedHamlet : A Flawed Anti-Tragic Hero1715 W ords   |  7 PagesAristotle’s poetics have long been considered the go-to guide for determining well written â€Å"poetry†, most notably in comedies and tragedies. Hamlet, like many of Shakespeare’s plays, is considered to be a tragedy although there is room to debate whether or not its protagonist is the quintessential tragic hero or a deeply flawed anti-tragic hero. Evaluating Hamlet using Aristotle’s theories, especially considering the criticism Shakespeare received for seemingly defying these ideals, may be the mostRead MoreAnti-Idealism In Shakespeares Hamlet1563 Words   |  7 Pagesideals worked as a reflection of modern societies shift away from the ideals of the ancient world, however Shakespeare’s works also were very influential in encouraging the anti-ideal sentiment. However, while many of Shakespeare’s plays do portray this anti-idealism, one exception to this is Shakespeare’s play Hamlet. While Hamlet does express ideas such as skepticism and contempt, particularly through Horatio’s character, it also uses religion as a driving force behind character motivations, exemplifiesRead MoreBeowulf And Hamlet Character Analysis1224 Words   |  5 Pages Beowulf and Hamlet side by side many will not see the parallels of these characters instead, only the differences. At a first glance, we see Beowulf, the powerful warrior who died whilst defeating three gruesome monsters, then Hamlet, the problematic and fearful prince who died trying to fulfill a foolish act of hatred. Ultimately, we view them as hero and anti-hero. However, weRead MoreBeowulf And Hamlet Character Analysis1228 Words   |  5 PagesWhen lining the characters Beowulf and Hamlet side by side many will not see the parallels of these characters instead, only the differences. 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Deadpool is a very unique character in Marvel’s franchise as he is not necessarily categorized as a hero or villain, he is mainly seen as an anti-hero as he seeks out good deeds, but uses morally incorrect ways to accomplish them. The play HamletRead MoreLaertes And Fortinbras In Hamlet Essay2081 Words   |  9 PagesThe Tragedy of Hamlet, Prince of Denmark or simply Hamlet is about the titular character wanting to kill his uncle, Claudius, after King Hamlet’s ghost tells Hamlet that he had been poisoned by Claudius. This sets Hamlet on a quest for revenge that shakes the political instability of Elsinore even further than before due to the has murder of King Hamlet. The play is largely about reactions. These reactions were caused by Claudiu s decision to act and take the throne by force which causes the downwardRead MoreWilliam Shakespeare s The Death Of Claudius 1410 Words   |  6 PagesNo surprise, this final Act of Hamlet is as mysterious, ambiguous, and controversial as those that precede it. The play begins rather straightforwardly, if ironically, as a revenge tragedy – Old Hamlet’s ghost spurs his son to revenge – and it would seem that Act Five, like the Act Fives of all major revenge tragedies preceding Hamlet, should fulfill this initial plotline. Indeed, in Act Five Hamlet kills Claudius – finally. But he does so in such a roundabout, half-cocked, off-hand way, we wonderRead MoreIs Hamlet a Hero2672 Words   |  11 PagesHamlet Hero Paper I. My concept of a hero Hamlet, as one of the most eminent plays in history, possesses an intricate conflict between the protagonists and antagonists. 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Why Are Black Boys Failing in School Free Essays

string(112) " she means teachers need to understand that during these times there is a lot of obstacles standing in the way\." It is easy to point the finger but harder to find a solution as to why the black male child is failing in school. There are several crucial factors that contribute to this epidemic including, parents are not communicating with the teachers, the socioeconomic status of the child’s family, and the father’s absence in the child’s life. Each of these topics intertwine with one another and is preventing a race of young men who will not be given the chance to excel in life. We will write a custom essay sample on Why Are Black Boys Failing in School or any similar topic only for you Order Now The worst teachers are the parents. Teaching starts at home from the time the child is old enough to speak, he learns from his parents. We must realize that this is a vicious cycle which must be broken if we are to ever help these young black boys. If a parent is ignorant then they in turn teach their child ignorance. If the parent using profanity and does not speak articulately neither will the child. The main problem is that parents raise their boys until they are able to start school and then they are done. No, learning is a life long process and without involved parents these boys will continue to fail at shocking rates. Perhaps if parents disciplined their children instead of just sending them to school they might actually meet the standard requirements.  (Green 7). In the book titled, Smart Kids, Bad Schools author, Brian Crosby stated, â€Å" If parents did a better job at parenting, schools wouldn’t have so many students who exhibit poor behavior. † (Crosby 253). He feels that poor parenting is a direct cause as to why children misbehave in school therefore, resulting in failing grades. He says that the parents of today are â€Å"weak, out of control, and litigious. † (Crosby 253). He says, â€Å"Disciplining one’s child has become as out of fashion as typewriters, record stores, and unpierced body parts. † (Crosby 252). If children are  not held accountable for their actions at home then how can the school in turn hold them accountable for their actions at school, Crosby asks. Another point Crosby points out is if the child is not in school how does the parent expect the child to learn. â€Å"Education codes do not allow teachers to penalize students for absences. † (Crosby 255). The parent allows the child to miss school then gets angry at the teacher for giving him a failing grade. We are not living in the 1940’s when it was acceptable for a male child to not attend school because he had to work. Richard Wright wrote a book titled Black Boy, where he re-lives his childhood and tells how education was an after thought. During those times the economy was bad especially for blacks in the deep South so in order to survive certain sacrifices had to be made usually education. Wright writes,â€Å" I began school at Howard Institute at a later age than was usual; my mother had not been able to buy me the necessary clothes to male me presentable. † (Wright 28). Once again this type of behavior was acceptable during those times but now it surely frowned upon. Parents of black boys surely do not understand the affect an absence has on a child that is already struggling in their studies. This goes back to my statement that this is a cycle and until we begin to educate parents of black children this problem might continue. Children learn from their parents, mentors, or whatever other figure is in the household. If their parent has a negative attitude about life nine times out of ten that attitude has rubbed off on the child. The child then goes to school with an attitude and it is left up to the teacher of probably thirty other students to try and break through this wall just to reach the child. Andy Kotner, president of the San Diego chapter of the group California Citizens Against Abuse, said, â€Å" We want parents and their kids to accept responsibility for their actions. † (Crosby 257). Simply put parents do not want anyone to tell their children that they have a bad attitude, including the teachers. It is instilled in most parents to defend their young with that being said, parents should listen to both sides of the story before assuming that the teacher was wrong in their actions. Parents + Teachers= A successful student. Another problem with parents not teaming up with teachers is the fear of being called a â€Å"bad parent†. Most parents of black students do not regularly attend teacher/ parent conferences. These conferences are held usually between the sixth and eight week of school and during these meetings parents get a chance to voice any concerns they might have as well as the teachers suggestions. (Cushman 11). One might ask how can a parent send their child to school without ever meeting the teacher? There are several problems associated with black parents and the school system which I discuss in depth later in the paper. Parents just do not place enough emphasis on their child’s education and in turn the child doesn’t either. There is no way that a child could fail if their parents are in continuous communication with his teacher, yes, during these times there is simply not enough hours in the day but if a parent does not care about their child’s future how can expect anyone else to? † Black children are falling farther behind and are victims of an educational system that is failing them.† ( Muhammad 2). If parents do not realize that a teacher alone can not defeat this task alone, that it takes a village to raise a family its sad to say that these little black boys might be lost forever. In the book titled How to Handle Difficult Parents written by Suzanne Tingley, she offers tips for how teachers can try to get pass difficult parents. She says that teachers need learn parent management skills. ( Tingley 8). By that she means teachers need to understand that during these times there is a lot of obstacles standing in the way. You read "Why Are Black Boys Failing in School" in category "Papers" â€Å"When teachers know that a child’s parent stands ready to challenge them at every turn, they can become reluctant to confront inappropriate student behavior or lack of effort. † ( Tingley 8). If the parents are confrontational the teacher becomes intimidated and therefore the issues go unresolved. She feels that parents should communicate with teachers respectfully and civilly without judging the teachers credentials. In today’s society is not always economically possible for the mother to stay at home while the husband works. She says, â€Å"Parents work their jobs, raise their family, and pay their bills. Kids are responsible for attending school, staying out of trouble, and pay attention. † ( Tingley 10). Teachers are not always pointing the finger at the parent but they would like it if the parent was more involved in the child’s schooling. Somewhere along the way we have gotten lost in our forty plus work hour weeks, consumed by emails, and tied down by bills. Parents must take time out of their busy schedules and make a sacrifice for their children. Another problem, Tingley pointed out was that the parents of today make too many excuses for their child’s lack of enthusiasm when it comes to education. Parents feel that if a child becomes bored at school that it is the teachers responsibility to make learning fun. They say that the child is not being challenged enough and that the teacher should devise a plan that works for their child. It is not the teachers job to entertain students; their job is simple- teach. The unwillingness from the parents makes it harder for teachers to do their job. â€Å"The stress of dealing with difficult parents remains one of the top reasons teachers cite for leaving the profession after only five years. † (Tingley 7). There are different parenting styles that contribute to the learning process and should be discussed in order to get a better understanding of why the black child is failing compared to other children. â€Å" In the eighth grade, only nine percent of black males across the country performed at or above the proficient level in reading compared with 33% of white males nationwide†. This statistic comes from the National Assessment of Educational Progress. (Green 2). There is something that other parents from other races are teaching their children that we as black parents are not. â€Å"Everyday our parents tell us: â€Å"Obey your teachers. Do your schoolwork. Stay out of trouble. You’re there to learn, not to fight. Keep trying harder. Keep pushing yourself. Do your homework. After you have done that, you can watch TV. † Sikh immigrant student in a California high school. (Thernstorm 83). I am a black mother raising two black boys and our morning conversation goes a lot differently than the previous one. I tell my boys to mindful of their appearance; they are judged on how they look. I tell them to be on time; typical stereotypes of black people is that we are always late. Don’t let let anyone make you feel bad about yourself; you are just as good as anyone else. If that teacher calls me because you were misbehaving when you get home you are going to be in so much trouble. Parents of black children must remind our little black boys that the world view them differently and that they must always conduct themselves appropriately. Culture plays one of the biggest roles in how parents teach their children. Once culture is defined and I show correlation between the subject, I will discuss our history of learning in America. It is important for one to understand that education was not always an option for blacks in America. Culture is defined as the beliefs,customs, and arts of a particular society. It can be defined by everything from language, religion, cuisine, and social habits. â€Å" Twenty percent of the mothers of black children today never completed high school. † (Gross 124). It is sad to say but within our culture a lot of women have children out of wedlock and usually drop out of school. If we as black parents have no knowledge there is nothing that we can teach our kids except survival. Asian students do better on average than an other students, this has a lot to do with culture. In 2000, a majority (54%) of Asian Americans ages 25-29 had a bachelors degree, as compared to with just a third of (34%) of whites. (Blankstein 34). One reason Asian students are excelling at a compelling rate is that their parents have very high expectations for their children and failure is never an option for them. Another reason, Asian students perform better is because they watch less television then their counterparts. A study from Northwestern University titled, â€Å" Children, Media, and Race†, shows that black kids watch more television than others. Black children watch more than four hours a day and Asians watch less than two. † (Blankstein 27). â€Å"Asian youths are successful, Steinburg writes, â€Å"Not because of their stronger belief in the payoff for their doing well, but because they have greater fear of the consequences of not doing well. †(Rochester 121). The last reason Asian students do better than the average American student is because their parents have a higher income than most.  (Thernstorm 89). Socioeconomic status, plays an important role in child’s education. According to history, it would appear that black children have been set up for failure ever since we arrived in America. â€Å" From colonial times, educational opportunities for African Americans were extremely limited. † (Sharp 8). White Americans often used several cruel techniques to make blacks feel inferior including, segregation, discrimination, and lack of education. The fourteenth amendment guaranteed that all Americans were to have equal protection under the law. At the end of slavery many freed slaves knew that education was vital to their survival and immediately went to register for school. Whites feared this movement, they knew that if blacks received an education and training they would longer depend on the them and their dependency was crucial for the southern economy. ( Sharp 21). During the 1870’s at the end of the Reconstruction era whites quickly leaped into action to stop blacks from receiving an education even though there was a law that stated all Americans should be treated equally. The Jim Crow laws, which were a set of laws that enforced the practice of segregation or discrimination against blacks in public places, employment, and other areas of social life. ( Volkomer 318). In the case of Plessy v. Ferguson, an African American Louisiana man had been jailed in 1896 for refusing to sit in the â€Å"black† section of the train. Just when blacks thought they making some headway the Court ruled that as long as the same facilities that were provided for whites were provided for blacks then the Fourteenth Amendment had not been violated.  (Volkomer 318). This decision grabbed the attention of the National Association for the Advancement of Colored People (NAACP), which was founded by W. E. B Du Bois and other great African American civil rights leaders. The main purpose of the NAACP was â€Å"to achieve, through peaceful and lawful means, equal citizenship rights for all American citizens by eliminating segregation and discrimination in housing,employment, voting, schools, the courts, transportation, and recreation. † (Sharp 18). Founder W. E. B. Du Bois, the first African American to earn a doctorate degree at Harvard University, felt that â€Å"education was the most was the most priceless possession a black person could have. † In his book titled, â€Å" The Educating of Black People. †, he wrote, â€Å" Education must not simply teach work, it must teach life. † (DuBois 37). The rivalry between DuBois and Booker T. Washington was a break through moment in African American history. While DuBois felt that education was the best opportunity for blacks Washington on the other hand felt somewhat differently. Agriculture to Washington was one of his soul ideas of his â€Å"racial uplift† theory. â€Å"Washington offered black acquiescence in disenfranchisement and social segregation if whites would back the idea of black progress in education, agriculture, and economics. † (Rochester 79). This man used his undeniable wit and political savvy to convince white Southners that his educational program would keep black people â€Å"down on the farm† and in return he promised blacks that through work ethics they could achieve the American Dream and become not only business men but land owners as well. This political opinion clashed with what DuBois thought was appropriate for the blacks at that present time. I mean weren’t blacks trying to get off â€Å"the farm† and into classrooms to educate themselves? Even though DuBois viciously disagreed with Washington’s view he did however, acknowledge him for being one of the first black intellects to defend the black race. DuBois writes, â€Å"Negroes must insist continually, in season and out of season, that voting id necessary to modern manhood, that color discrimination is barbarism, and that black boys need education as well as white boys.† (DuBois 63). While blacks had won the war on slavery, the battle on education was still in progress. Black leaders of the Civil Rights movement like Thurgood Marshall and Charles Houston that fought long and hard so that black children would be able to receive equal educational opportunities. Civil Rights, are defined as the right of an individual not to be discriminated against on the basis of their race,sex,or nationality. The education that blacks received in the South during those times foreshadow our culture and the negligent attitudes of black parents. For years blacks have fought for not only their freedom but the right to have an education, it seems that the parents of today have forgotten the many sacrifices their forefathers made for them. Not only were the lessons being taught inferior to those of the white students but the conditions in which the children had to endure almost made it impossible for them to learn. The books that were given to blacks were often used and were filled with racial and derogatory terms. To add insult to injury the curriculum within the the text books focused more so on the inferiority of blacks. It was said to have contained lessons that African Americans were referred to as† ignorant and helpless people who were unable to survive without the help of a benevolent and superior white society. † ( Sharp 15). Most of the schools did not have desks and chairs, a black board for the teacher to write instead, the teachers used cardboard to teach lessons, more times than most there were no bathrooms in the schoolhouse and the children had to go outside to relieve themselves. With these horrendous conditions how did whites think that black children were receiving â€Å"equal† education compared to the white children? The answer to that question is they didn’t, they figured that if they made it hard almost impossible for the blacks that they would just roll over and conform to their way of life. In an article titled â€Å" The Willie Lynch Letters. †, which was written by Willie Lynch, a British slave owner he said, â€Å"Keep the body; Take the mind. † He wrote this letter to help slave owners keep their Negro slaves dependent on them. (Abbott 4). Even when faced with adversity the black community did not falter nor did they give up on their hopes and dreams for their their child’s future. In 1926, African American parents formed a group called the Congress of Colored Parents and Teachers. They worked tirelessly and feverishly to inform the state of Mississippi of the injustice that they allowed to continue. We have come a long way from the Plessy v. Ferguson, Brown v. the Board of Education, and Martin Luther King Jr. infamous â€Å"I Have A Dream† speech, but many will argue that we still have some ways to go. We are not where we used to be yet we are not where we want to be. From slavery to the Jim Crow laws to the No Child Left Behind Act we as parents must continue to fight against the injustices that either we created or society. Civil Rights leaders have fought and died for our little black children to have the same equal rights and it seems like the parents of today have forgotten about our history, this is our culture which has shaped black America into the cultural rich and diverse nation in which we live. Parents of black children must not allow fear to cloud our judgment when it comes to trusting our child’s teachers. One reason these parents do not confide in the teachers is because of fear. We are afraid of failure, failing our children because of our ignorance. Majority of the time there are programs and services that are out there to help families that are struggling in areas of their home life. Until this gap is closed parents will continue to shelter their child from success. â€Å"Black parents and Black communities are ultimately responsible for the education of Black children. Not teachers! Not schools! Not elected officials! We are responsible! If our children are being destroyed in American schools, it is only because we allow it. † (Muhammad 5). â€Å"It is often argued that the low education achievement levels of African- Americans and Hispanics are caused by poverty. † ( Strauss 12). Parents of black children usually earn less than parents of any other race and it is the black children that are failing. Valerie Strauss author of, â€Å" The Way out of the Black Poverty Cycle. †, says that, â€Å" It is often argued that the low education achievement levels of African- Americans and Hispanics are caused by poverty. † (Strauss 38). She feels that poverty plays a vital role in the education of the black child. She continues with, â€Å" if there were more programs to help the black youth improve education this would help alleviate the high rates of incarceration among black males. † (Strauss 14). She feels that the lack of adequate education in the black community is the number one cause in the high rates of black males dropping out of school and ending up in prison. Once they are released from prison most have little or no skills to find employment adequate enough to provide for the family they have left behind thus, the family remains impoverished. Gabriel Trip author of, â€Å" Proficiency of Black Students is Found to Be Far Lower Than Expected. †, says that, â€Å" Only 12% of black 4th grade boys are proficient in reading, compared with 38% of white boys. † (Trip 3). While this is true Trip feels that, â€Å"Poverty alone does not seem to explain the differences: poor white boys do just as well as African- American boys who do not live in poverty. † (Trip 8). This author thinks that if Congress would appropriate more money to the failing black schools and establish more networks for young black males that would be more productive rather than , just closing the failing schools all together. The final topic I will discuss is the absence of the father figure in the young black males life and how it has a major affect on the child’s education. Mike Casserly, director of Council of the Great City Schools asks,† How can we close or narrow the country’s black-white achievement gap when African -American males are not getting the attention and support they need. † (Casserly 3). The reason black males are not the getting the attention they need to succeed is because their fathers are not involved in their lives.â€Å" The father’s guidance to his children and his counsel regarding their anxieties and problems gives them that confidence and a feeling of affection which is necessary to the building of well-rounded personalities. † (Paige 17). Thirty-six percent of the father’s that are currently incarcerated reported that they have one or more school age children. ( Drucker 7). Black children that grow up without a father or a positive male role in their lives have very little direction and often get involved with the wrong crowds. Studies have shown that children who their father is not in their lives stand the risk of becoming alcohol and drug addicts than other children. (Paige 5). Contrary to many beliefs a father’s presence plays an important role in their child’s lives. In the case of the black father and the black male child, the father is either incarcerated or has never been involved in the child’s life. So there leaves a single mother trying to work and provide for her struggling family because the father is now where to be found. As Richard Wright writes, in his novel titled â€Å" Black Boy†, â€Å" As the days slid past the image of my father became associated with my pangs of hunger, and whenever I felt hunger I thought of him with deep biological bitterness. † (Wright 125). This is an example of the negative image and feelings that a young boy will develop for his father when he is not involved. It is impossible for the mother to monitor her children twenty-four hours a day, she cannot be everywhere at once. Like the saying goes, â€Å" While the cat is away the mice will play.† this leaves the child alone usually in the evening when the child should be studying they are more than likely outside or watching television. â€Å" Under constant watch, care, and concern, children are less likely to experiment with extremes of behavior when they know they have two parents who are watching their every move. † (Paige 12). It is understandable that divorce and break-ups do and does happen often, the father should still be involved in their son’s life. When it comes to discipline mothers are just softer and more reluctant than the father, which leaves the boys free to do whatever it is that they want to do. â€Å"Studies have shown that when a father is not present in a home, children are more likely to derail and exhibit bad and dangerous behavior. † (Paige 13). Father’s may be unaware that their presence has such dramatic affects on their child’s life as well as their educational goals. Children emulate their parents behavior and if the father is non existent soon so will the child. Majority of the black males that are failing live in crime ridden urban cities, where gangs and liquor stores out number community centers and churches. Without a father’s love and concern what conclusion can one draw about the future of the young black male? Surely he will wind up in a street gang where he robbing, stealing, and maybe even killing but this stereotype does not have to become a reality of underprivileged black males. There are several tips that can be given for single mothers of black male children whose fathers are either incarcerated or chose not to be involved in the lives of their children. First, mothers must realize that two heads are better than one, meaning even if the father is not involved find an uncle, brother, or even a male friend of the family that would be willing to assist you. Second, ask for help. Black mothers are so afraid of being looked at as a â€Å"bad mother† that we do not ask for help even when we are on the verge of breaking down. There are a lot of services within one’s community that may have several programs like the Big Brother/Big Sister program, that provides positive role models for children. Third, mothers must break the cycle. Education is the key to getting out of that low paying minimum wage job and have an opportunity to have convenient hours and better benefits. Lastly, nothing can replace the presence of a loving, nurturing, and concerned father but there are close substitutes. The failure of black young males is a nationwide epidemic. While I have only visited a few reasons as to why they are failing like, poverty, lack of guidance, and the absence of the father this is just the tip of the iceberg. I fear that unless â€Å"WE†, meaning the parents, teachers, political leaders, community advocates, and neighbors wake up and realize that this is not an easy fix, that this is not something that can be swept under the rug and forgotten about, they will continue to fail. How to cite Why Are Black Boys Failing in School, Papers

Journal of Marital and Family Therapy

Question: Describe about the Journal of Marital and Family Therapy? Answer: Introduction Bereavement could influence any and every aspect of the life and well-being, right from physical as well as mental health till the feelings of the connectedness as well as ability to operate and function at work otherwise school. Death generally means other alterations for those who are left behind, like taking on some novel responsibilities otherwise moving house and sometimes even adjusting to a very different life style and living standards. Impact of bereavement: Physical impact- Things like Exhaustion and muscle tightness otherwise weakness or even body pains as well as fidgety restlessness might have been observed within Georges body as he faced a bereavement. Even lack of energy could have been observed in his physical appearance (Becvar, 2003). As an outcome of bereavement he might face insomnia or even tend to sleep extra, and might even get some disturbing dreams. Also George might face problems with his digestive system. Bereavement also cause the loss of the appetite and sometimes even results in overeating. It might also happen with him and he would tend towards indigestion, disorders in the intestine and problems like diarrhea, extra weight gain otherwise loss.Some symptoms of anxiety can also be seen like headaches and short of the breath, tightness and even heaviness in throat as well as chest pressure. But, fortunately, in case of Mr. George any of the above physical effects were not seen, it means that George was merely emotionally affected with whatever his mothers death has caused to him and he might gradually improve with passing time (Williams and Hall, 2009). Psychological impact- Grief of losing mother affected George emotionally and also mentally plus even affected the way he could relate himself to others. He expected his mother to die as she was suffering cancer yet, he was unable to make himself understand and accept the fact. Emptiness depression- Sense of depression as well as emptiness also could have hit him but no such symptom was seen within George (Blaxter, 2004) Anger- People facing bereavement might at times feel the anger at injustice of the loss, or at lack of proper understanding in some others. But here in this case, people supported George and were very helpful towards him, thus no such scene occurred. Social impact- After sustaining the big loss which George faced as his mother dies, he felt some changes within. He was able to survive the grief, yet life, though he was not seen the same thereafter. This might impact his social life within coming time in some or other way. There are possibilities for him to either lose or gain, few friends. As seen in the case George gained some new friends and was fortunate enough to attain help from others. Social support was abundant for him soon after loss that he suffered. Friends plus many support teams gathered to provide the support (Weiss, 1985). Analyse possible group responses to bereavement. Losing a person or someone otherwise something one loves or cares deeply about actually seems to be very painful. Like George who lost her mother was in grief after the incident and remembered her every time. He experienced some types of difficulties in handling his emotions and also felt like pain plus sadness deep inside. These were just normal reactions towards the significant loss that he faced in his life merely few days back. Yet there is in fact no real right otherwise wrong towards the way to the grief, there are also some healthy ways towards cope with pain that, timely, can renew a person and permit him to move further in his life. After the natural death like what happened with Gary (Georges mother) most bereaved (and same was the case with George) find support as well as course their grief with help of all of their social members in the social network of the family plus friends. Also a majority of the bereaved people even say that they need help and support from the profe ssionals as well as they have lost a very close person within some unnatural/traumatic condition of death, but such a traumatic condition was not the case with George. George like most of the bereaved persons has experienced a painful grief and also a very distressing as well as emotional, physical, plus social reaction for self. Friends, and family as well as other people close people also might have faceddementia feelings of the grief, but teachers in the school did not react in this way and were actually happy about the death as they felt that Garry was suffering from long time. Impact For The Others In The Health Social Care When A Person Is Bereaved Staffs of health care firms and other professionals like nurses, doctors and people who were part of the support groups also experienced majority of the grief related signs. As they worked day and night for such people, they felt the pain of George deep inside and helped him to cope up with the same. Due to their spending of time with Gary they developed a closer as well as longer relationship with her. This hurt them drastically. There were several symptoms like the physical, emotional and also relationships with Gary that effected work and also performances of the professionals for some time. The majorly common reported impacts were feeling sad plus crying as well as thinking about the death and negative affect of death like ruining of the relation and also the affect that the death had on their performance both in the home and also at work. Even the staffs were seen losing capability to provide similar level of help, compassion and support to patients as well as their families lik e they have in the past done to Gary. Psychologists as well as social workers even faced pain as the difficult issue that disturbed the professionals. Their profession and work also were not to much extent but was seen a bit affected and even the staffs did not like to work extra. Nurses plus other healthcare labors also got affected and had some socio-cultural impacts and the personal life facts and experiences also got affected (Brady, 2014). Effectiveness Of The Organisational Policies Plus Procedures Of The Supporting Bereaved Person Like Mrs Garry And Also Her Social Networks- Statutory organizations actually have a task and responsibility towards ensuring that data as well as information and all the practical as well as emotional support gets available to the individuals who are actually bereaved. Voluntary organizations plus the volunteers even offer some vital services to such people. This guidance in fact is to make them feel supported to develop services intended for the important group. The affects of the organizational policies could be as follows: Confidentiality: Such services were there and they respected the confidentiality as well as privacy of George and also all the information which he needed from the school was shared and he was assured that the information will be safeguarded, consent as well as will remain under data protection. Respect: Such services also respected individuality of Georges grief as well as needs, along with him getting treated with proper compassion as well as sensitivity (Davidsen-Nielsen and Leick, 1993). Equality Diversity: These services even were seen to be nondiscriminatory as well as were delivered without any prejudice, recognizing plus responding towards personal beliefs in addition to individual situations comprising of age, culture, sexuality, disability, gender, race and religion otherwise spirituality. Quality: These principles even ensured that all the people delivering support and compassion to the bereaved people, have proper skills, knowledge and training, supervision as well as support pertinent to their job and role, and also assured that all these services work towards improving what they actually offer. Safety: Such principles of the organizations have rousted procedures for recruitment which also included proper phases of clearance along with Disclosure as well as Barring Service plus some ongoing staff and volunteer growth plus development (Stewart, 1983). These standards actually are suggested to be minimum level for the bereavement support that was also provided to Mr. George from the pupils, their parents and also the other staffs of the school where Gary worked as a teacher. How Others Within The Social Networks Might Provide Support To People Experiencing Life Events During the bereavement phase or crisis, bereaved person George was supported by the populace in the social network. It was not the material support like food, money, but was emotional support such as useful information, and advice along with solution to personal issues, some religious help, and making him spend some time with friends as well as making him visit families and friends that and also co-workers plus neighbors etc. Some sorts of support and actions which were undertaken to make him feel better was as follows: Counseling him- Coping with the life events, and finally with some death, presented vast emotional challenge as well as risks toward George and also his families plus friends. He was counseled and was made feel relaxed. While few individuals favor to deal with such challenge all alone, several find it very helpful to discuss to someone. Thus he could have been supported by supplying proper interaction and counseling sessions as well (Devlin-Friend, 2006). Spreading positivity- People tried to inculcate positivity all around George who faced bereavement. This made him feel better in the surrounding. Discussion- Things were discussed and he was never left all alone. Training and experience- well qualified Counselors undertook the task of offering support to George. They were properly trained ones. Evaluate Suitability Of The External Sources While death of people one loves, like death of Mrs. Gary, Georges mother with whom his life was entwined can be linked with a phase of suffering, where every loss was unique as well as he needed immense support. The justification for assessing and evaluating need for bereavement support might be summarized in following points: Palliative care- This encompassed the requirements of family who was Garys son named George. He wanted to fulfill last dream of his mother and for this needed support from the pupils and teachers of school where Gary herself worked as a teacher (Dyregrov and Gjestad, 2012). He being a son has very strong emotional as well as social bond with patient (Mrs. Gary) and thus seeks his active involvement within the decision making was necessary. The palliative care supplier was well placed and they assessed need as well as provided the continuity for care to Garys son after the bereavement that he faced. There was duty of the care towards minimizing risks towards health associated along with bereavement through offering the support proactively for George who was at risk for developing the complicated grief. There even was no evidence that the bereaved person named George would need help, as well as support was needed to be channeled towards George, and this was properly fulfilled. Services also were needed to make best utilization of the limited resources. And this was properly done within the school were all relevant data and information were supplied to the bereaved person. Role of the palliative care and bereavement services, thus, prevented otherwise ameliorated detrimental health results linked with the bereavement. Support plans and strategies also included memorial services and social groups and also therapeutic groups as well as life events. The most general element was the help and support that the organization supplied to George (Eddy, 1994). In the case of Mr. George also, loss of his mother and feeling of guilt spoiled him to vast extent and he was majorly affected with whatever happened. He was deeply upset with whatever happened and even felt worse as he could never bring her mother back. Though later he gained some experience and help from support group that he met in the hospital itself and also he got lot of support from the pupils and their parents and other teachers of the school where his mother was a teacher (Penson, 1990). Organisational Responses To The Need To Support Individuals Experiencing A Significant Life Event All organizations actually are potentially vulnerable towards events that beyond control and that which can produce resulting situations like serious illness of a staff, or seeking support from families of the ill staffs and/ or losing a staff due to his death and many more. An organization's capability to function just after any trauma otherwise tragedy is because of the tangible links and connections as well as networks that it has formed amid people that work there.Some basic reactions are: Development of a Critical Incident Response Team The organization might tend to make and build up a team of experts who would deal with all the losses that have been done by the trauma to the firm. This team will have a proper representative right from Security and Safety, Risk Management as well as Legal Counsel and also Human Resources plus Health Office (Hemmings, 1999). Organization might prepare an incident response manual Organization might have a policy plus procedural manual which would details roles of the organization members towards responding to the incident. Vital concerns for crisis team must include: Staff safety plus emergency operating processes Emergency and medical procedures Tragedy policies procedures for personnel Emergency economic procedures Training supervisors as well as staffs An organization must train its staffs for management of any such incident occurring. Critical Stress Management must also be designed to properly mitigate as well as, if possible, appropriately prevent development of the potentially immobilize post disturbing stress symptoms plus other stress-related mess (Henningfeld, 2009). Bereavement Session Organization might undertake some meetings that will be used while a death generally usually death of an employee that has taken place outside of the workplace and is not witnessed. Such meetings are supportive as well as informational, along with staffs sharing reactions, plus EAP providing some coping skills additional to resources for the management of grief. Counselor might also facilitate proper discussion addressing all the helpful ideas intended for honoring staffs, attending funeral, dealing with work possessions as well as family of staffs, and also workload of the co-workers. Own Contributions To Support The Individuals Experiencing Vital Life Events Many stressful life events could also have a very substantial affect on those that experience such events in life. For few, experience with some shocking life event could also leave them very confused, withdrawn, and depressed, as well as increasingly vulnerable towards next stressful condition that arises. There are several contributions that could help me towards extending support to people who experience significant life events (Hoffman and Coffey, 2008). Counseling- I tried to talk out things with the person facing the life event. It wore his shoes and tried to understand what he was feeling at the moment. Even while talking out things I was extra careful and was worried about not uttering anything that was unacceptable by the person in this condition. Discussion- I discussed the facts with George and asked him what he was feeling with the situation he faced and was he emotionally disturbed with the incident that took place. Extending support- I extended my support and helped George gather information about his mother and her willingness from the school children as well as from the teachers in the school his mother worked as a teacher and also other pupils plus their parents (Leckey, 1991). Recommendations to improve support in health social care firm for individuals: Health promotion programs- The organization can arrange for health promotion program where the staffs could be taught to handle the situations carefully and calmly and also the importance of peoples health must be inculcated within minds of staffs of the firm (Parkes, 2014) Cost saving- Staffs must be taught how to save cost and supply best services to people in less cost. This will help the organization to gain more and more profit with each passing day. Training and development sessions- Some proper session must be organized for the employees and workers of the organization and they should be given all details about how to solve problems and how to understand people and their problems. Promoting the firm- Initiatives must be undertaken to promote the organization to the extent possible. The organization must undertake tasks through which it could get into agreements with hospitals and trauma centers so that they can find more and more customers and can supply good benefit to all those seeking services from the organization (Kadushin and Egan, 2001). Communication Dissemination Activities- Activities related to discussion with the patients and handling them carefully must be enhanced by the organization and the firm must train its staffs in a way that they tend to talk out things and not just supply medicines to people. Rewards and awards- the organization must undertake motivation actions that could promote its staffs and motivate them towards work. Some rewards and awards must be given to the employees working efficiently and effectively for the firm and also for them who have helped people in coping up process of the individuals facing traumas of life. This activity can motivate the employees towards putting extra effort and efficiency towards their task (Mansfield, 2012). Conclusion: In a nutshell, there is actually no right otherwise wrong path in dealing and handling the grief as well as take it as a normal reaction towards loss. Several people cope up with the loss in the best way that they can. But many get abnormal. There are several different ways to handle traumas of life and each way differs from one another depending on the person who is facing the situation. No one at anytime gets over death of the child and few also experience yearning for child 20-30yrs later. Traumas adequately impact both organization as well as its staffs. In several cases critical incidentshave been catastrophic events which have occurred with less or simply no warning, therefore allowing those affected people little otherwise no opportunity towards considering or planning for incident. Thus people facing traumas and those supporting him/her also must be very careful and concerned about the incident and should know proper ways to deal with them. George did not face much problem be cause he got tremendous support from all the social beings around him. Thus the case was seen les complicated. References: Becvar, D. (2003). the impact on the family therapist of a focus on death, dying, and bereavement. Journal of Marital and Family Therapy, 29(4), pp.469-477. Blaxter, M. (2004). Health. Cambridge, UK, Malden, MA: Polity. Boncheva, I. (2012). EXPERIENCE OF SIGNIFICANT LIFE EVENTS IN INDIVIDUALS DIAGNOSED WITH PREHYPERTENSION. JofIMAB, 18, 3(2012), pp.327-329. Bowman, T. (1999). Leading a bereavement group. Bereavement Care, 18(1), pp.3-4. Brady, D. (2014). Bereavement round up. Bereavement Care, 33(2), pp.84-85. Davidsen-Nielsen, M. and Leick, N. (1993). Directive grief treatment in a group setting. Bereavement Care, 12(3), pp.29-32. Devlin-Friend, N. (2006). 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