The law of defamation in england and wales works to protect Essay

The law of defamation in england and wales works to protect corporations and individuals from unfair and unjust statements which unfairly damage their reputatio - Essay Example The law of defamation is the product the attempts of jurists of different historical time frames, attempting to balance two diametrically opposing tendencies, namely, the safeguard of the esteem of individuals while ensuring the freedom of speech in the available channels of expression. This has been a tricky business in United Kingdom and reforms in the past have been only window dressing. After the enactment of the Defamation Act of 1952 it took over four decades for attempting a major change in this direction, with the institution of the Defamation Act of 1996. The drafting of 1996 Act is necessitated by the spurt of the media and their global nature. The huge compensations which individuals are able to get from the press and electronic media for cases involving the reputation of individuals was not conducive to the development of the freedom of the media in the age of free information. Though, it is a subject under the purview of the law, its ramifications are huge on the functioning of the media, discouraging legitimate investigative journalism and open criticism of public policy. Since media today is international in production and dissemination, the British law can become a stumbling block in the international freedom of press. Magazines, newspapers and broadcast though might have originated elsewhere might create unforeseen legal consequences if any of the stories are defamatory in nature when they are circulated in Britain or broadcast through British stations. Globalization has produced a crisis in the tendency of the state to control the media. Broadcasting is the central channel in the formation of opinion in the globalized world. The rapid progress in technology increased the possibility of sending news and view across the globe. The British broadcasting industry is a predominantly a state affair in spite of the much trumpeted independence and autonomy. The defamatory Act if pursued vigorously

Clinton in diplomatic coup on Journalists release Essay Example for Free

Clinton in diplomatic coup on Journalists release Essay Former President Bill Clinton scored a diplomatic coup when he brought back to the United States on Wednesday two convicted women television reporters. The journalists release was a result of what was tagged officially by a member of Obama administration as a humanitarian trip and personal visit to North Korean President Kim Jong-Il. White House hailed the Clinton-led effort and denied it as a bargaining chip in the nuclear standoff between the said two countries. Press Secretary Robert Gibbs told White House reporters that the Clintons trip was purely a humanitarian effort undertaken by the latter and not for and in behalf of the American government. A CNN report said the release of the journalists, Laura Ling and Euna Lee, was made after President Kim granted them pardon for illegally entering North Korea early this year (Quijano, Moore Sosa par. 4). They were meted in June with 12 year jail sentence of hard labor for the alleged crime committed (par.11). Ling and Lee were on assignment from Current TV, a media venture owned by former US Vice President Al Gore. Al Gore himself was reported to have tried to get the release of the two but was rejected by North Korea. They were on assignment to document alleged trafficking of North Korean women to China. After reunited with families at Bob Hope Airport, an emotional Ling said at a media conference that â€Å"We feared at any moment that we could be sent to a hard labor camp† (Quijano, Moore Sosa par. 2) but the two were later informed they will attend a meeting. As they saw President Clinton waiting at them, â€Å"We were shocked, but we knew instantly in our hearts that the nightmare of our lives was finally coming to an end,† added Ling (Quijano, Moore Sosa pars. 5-6). The statement of Gibbs was seen by political observers as a White House attempt to stress it was not making any concession to North Korea which is presently at odds with the United States on the issue of nuclear build-up and atomic research among others. But President Obama himself hailed Clinton and Gore for the successful release and bringing back the two on the former President’s return flight through Los Angeles. Upon learning of the return of Clinton and the two journalists, President Obama said â€Å"We are relieved† (Obama par. 1). The President further told media at the White Houses South Lawn that â€Å"My hope is that the families who have been reunited can enjoy the next several days and weeks, understanding that because of the efforts of (former) president Clinton and (former vice president) Gore, they are able to be with each other once again† (Obama par 4). At Nairobi, Kenya, U. S. Secretary of State Hillary Clinton said she was also relieved after learning the release from her husband. Both Clinton and Gore expressed happiness for the journalists release. A statement from his office quoted Clinton saying â€Å"I am very happy that after this long ordeal, Laura Ling and Euna Lee are now home and reunited with their loved ones. † Gore also showed his gratitude to President Obama and Clinton for joining the â€Å"humanitarian effort† (Quijano, Moore Sosa par. 10) Amidst claims of apology allegedly conveyed by Clinton but which North Korea said it knew nothing about, Press Secretary Gibbs clarified that there was no truth to Clinton conveying Obamas message. The White House spokesman also stressed that Clinton went on a humanitarian and private mission and that the release was definitely not a bargaining issue on nuclear standoff between U. S. and North Korea (Gibbs). The above-reported statements of Obama and Gibbs were posted at the White House website under the Press Briefing Room. For confirmation or verification of the said details stated by the President and Press Secretary, the office may be contacted at the following phone numbers: 202-456-1111 for comments; 202-456-1414 for Switchboard and 202-456-2461 for fax. Works Cited Gibbs, Robert. â€Å"Press Briefing by Press Secretary Robert Gibbs and the Vice Presidents Chief Economist, Jared Bernstein. † The Briefing Room. 8 June 2009 http://www. whitehouse. gov/the_press_office/Briefing-by-Press-Secretary-Robert- Gibbs-with-Jared-Bernstein-the-Vice-Presidents-Chief-Economist-6-8-09/. Obama, Barrack. â€Å"Statement by the President on the Release of Laura Ling and Euna Lee. † The Briefing Room. 5 August 2009 http://www. whitehouse. gov/the_press_office/Statement-by-the- President-on-the-release-of-Laura-Ling-and-Euna-Lee/. Quijano, Elaine; Moore, Charlie Sosa, Ninette. â€Å"Freed journalist: We are so happy to be home. CNN. com International/US. 6 August 2009 http://edition. cnn. com/2009/US/ 08/05/nkorea. journalists/index. html.

Comparative Analysis of Forwards and Futures Contracts

Comparative Analysis of Forwards and Futures Contracts A Mauritian Perspective Abstract This research compares the OTC derivatives market with the exchange-traded derivatives market. Forwards contracts have been used as a representative for OTC markets and Futures for organised exchanges and the costs and benefits of each one have been analysed. This research has been done being with regard to the GBOT setting up in Mauritius. Forwards are frequently used contracts relative to others, in Mauritius. Hence, it is assumed that if the users have to shift to the GBOT, they will use futures contracts as a substitute for forwards since both have similar characteristics except that futures are more sophisticated than forwards. A survey has been done on the top one hundred and twenty companies in Mauritius out of which, only 70 have responded. The questionnaire aimed at determining the current derivatives position in Mauritius and a glance at the perception of the financial officers with respect to GBOT. Even though they believe that GBOT will benefit the country, they are unwilling to enter the market; while most of the respondents are unaware of GBOT and uncertain about the futures market and trade mechanism. Unexpectedly, it was found that some firms use futures for risk management. The results have been used to conclude whether it is viable for Mauritius to introduce an exchange and what measures can be taken to ensure that GBOT is successful. With respect to this research, it seems that the Mauritian market is not ready yet, to conceive this new development in its financial system but there are some measures that can be adopted to combat the inhibitors and there are much lessons to be learned from the record of derivatives mismanagement. List of Abbreviations AML Air Mauritius Company Limited CDS Central Depository and Settlement Company Limited CBOT Chicago Board of Trade CME Chicago Mercantile Exchange CFTC Commodity Futures Trading Commission EFP Exchange of Futures for Physical FSC Financial Services Commission FX Foreign Exchange GBOT Global Board Of Trade HSBC Hongkong and Shanghai Banking Corporation Limited MTM Mark-To-Market OTC Over-The-Counter SEM Stock Exchange of Mauritius STC State Trading Corporation S0 Spot price today ST Spot price at maturity USA United States of America 1.1 Introduction The presence of derivatives market has undoubtedly improved national productivity growth and standards of living. Alan Greenspan (Chairman of the US Federal Reserve System, 2005) Derivatives have gained prominence in the past few decades and are today a vital element in finance. Although they are the latest addition to the financial world, they have been witnessing a high rate of success. They have undergone constant innovation and active trade, notwithstanding the fact that they have led to a more complex form of hedging. Electronic trading and settlement facility has revolutionised the global financial and commodity markets by attracting international investors and increasing liquidity. 1.2 Background Theory 1.2.1 Hedging Hedging is a form of insurance that uses derivatives to absorb financial risk by locking in a price for a particular good. Its essence pertains to the uncertainties associated in prices of goods. Since prices of goods cannot be predicted with certainty, people speculate. Gol (1980) states that when everyone expects a price rise, all opinions seem to converge over a price rise, such that, if speculators enter the futures market, they would also be buyers rather than sellers and their buying activity may further aggravate the price rise. Speculation helps in effective risk management but sometimes backfires; for instance, many airlines speculated a rise in fuel prices and hedged their exposure with derivatives. Unfortunately, the financial crisis 2007-2008 caused fuel prices to decrease considerably in the spot market, but the airlines had the obligation to honour their derivative contracts at relatively higher prices. 1.2.2 Derivatives market Derivatives are financial instruments that derive their value from one or more underlying assets such as stocks, bonds, currencies, interest rates, commodities and market indices; for example, an oil futures contract derives its value from the price of oil- oil being the underlying asset. Derivatives are used extensively in financial and non-financial institutions. Forward contracts are the basic derivatives that stemmed from the goods market, and have thereupon paved the way for other derivatives. Some goods traded through derivatives are base metals, precious metals, agricultural products, energy products, foreign currencies, interest rate, and stock indices among others. Other includes contracts based on carbon, commodity indices, credit, fertilizer, housing, inflation, and weather. Source: Futures Industry Magazine 2009 For this research, commodities, assets, and goods are used interchangeably, irrespective of whether they are used in the financial, commodities or foreign exchange markets. 1.2.3 Types of derivatives There are two distinct groups of derivative instruments: forward-based products and option-based products. Forward-based products are termed linear derivatives as they offer a linear payoff and include futures, forwards, and swaps. Conversely, option-based products are non-linear derivatives since they offer a non-linear payoff and include puts, calls, caps, floors, and collars. Other derivatives, such as options on futures, swaptions, and forward caps, combine the features of both forward and option contracts. Derivatives trade in over-the-counter (OTC) markets or in organised exchanges. OTC trading occurs among a few dealers via phone or electronic messages. OTC contracts are mutual agreements made through private negotiations and transacted outside a trading platform. However, some OTC derivatives are cleared via exchanges (e.g. in the Chicago Mercantile Exchange). Swaps, forwards, and customised options are OTC contracts. Exchange-traded derivatives are standardised in terms of quantity and quality (the amount and quality of the good is fixed) and negotiation is not possible. Organised exchanges employ both open outcry system and electronic order matching systems and share similar purposes to securities exchanges. They design the contract terms and operate a clearinghouse, which acts as a guarantor, settles all contracts, and regulates trading. Large securities firms and commercial banks act as derivatives dealers. Futures and standardised options are traded on exchanges. 1.2.4 Players The three broad categories of traders in the derivatives market are hedgers, speculators, and arbitrageurs. Hedgers use derivatives to reduce the risks that they face from adverse movements in prices of goods while speculators take a position to realise gains with a relatively small initial outlay. Arbitrageurs enter the market to realise gains without risking their own capital. Conclusively, hedgers transfer their risk to speculators and arbitrageurs and thus, boost liquidity on the market. 1.3 Objective of Study A well-regulated organised derivatives market encourages a sustainable financial development and increases savings and investment in the long-run, thereby promoting economic growth. However, the concern is how and when to discern the time for its implementation in small economies. This dissertation aims at analysing the benefits and drawbacks of using forwards and futures contracts. Forwards contracts can be used by minority users, without major procedures and regulation. Contrarily, futures require significant concern and assistance of the government to support and ensure a good operating system. The research is carried out with regard to the commodities market being set up in Mauritius. Forwards laid the groundwork for futures, hence, both are treated simultaneously throughout this study. Futures (exchange-traded) are enhanced forms of forwards (OTC) but differing somewhat in the way they are traded. The costs and benefits of the two instruments are analysed and compared. This will indicate whether it is viable for Mauritius to introduce a derivatives exchange and suggests the measures that can be adopted to ensure that its objectives are attained. Swaps and options are excluded from the study because they operate differently and due to word constraint. Forwards and futures are relatively simpler and typically alike, thus, rendering comparison easier. 1.4 Overview of Remaining Chapters Chapter 2 deals with the literature review while Chapter 3 is an overview of the derivatives market in Mauritius. Chapter 4 covers the research methodology section. Chapter 5 presents the analysis and findings of the research, followed by Chapter 6, which concludes this study and includes some recommendations. chapter two: literature review 2.1 Importance of Derivatives Market Several factors such as size, leverage, asset-liability duration, and taxes amongst others, affect the hedging decision of a firm. The Miller and Modigliani theory posits that hedging is fruitless in perfect financial markets. In reality though, markets are imperfect and hedging alters a firms value by influencing its investment decisions. Bessembinder (1991) distinguishes that hedging corporate risk with forward contracts increases firms value by reducing incentives to under-invest. He also advocates that large institutions are more likely to use derivatives due to informational economies of scale. Likewise, Haushalter (2000) finds a positive correlation between hedging decision and total assets and characterises it as the economies of scale in information and transaction costs of hedging. Hedging also enables a firm to negotiate with its customers, creditors, and managers, which improves contract terms. A research on African countries suggests that volatile international capital flows have the tendency to destabilise shallow markets and precipitate a crisis if there is a change in investors appetite and urges adoption of stronger domestic policies and local derivatives markets for financial risk management purposes (Adelegan, 2009). Hedging is a zero-sum game; one does not gain from trade unless another faces a loss. The gain to the buyer will be exactly equal to the loss to the seller of the forward contract, whilst the gain to the seller will be exactly equal to the loss to the buyer. Hieronymus (1971) defines hedging as taking a position in a futures market that is equal in size and opposite to a predetermined position in the cash market. Hence, a loss in one market is offset by a gain in the other market. This principle works since cash prices and futures prices of a commodity are expected to converge as the contract reaches expiry. Anderson and Danthine ( 1981) define a pure hedge term equal to the risk-minimising futures position corresponding to a predetermined cash position. A hedger, thus, uses the possibilities offered by futures markets to minimise his risk. 2.2 Forwards Market A forward contract is a bilateral binding agreement to buy or sell a specific quantity and quality of an asset, at a pre-determined price and pre-determined future time. Normally, contracts specifying settlement in excess of 30 days after the trade date are forward contracts. Forwards are the first and simplest derivatives that sprouted in the sixteenth century in the agricultural markets, wherein they were used primarily to resist adverse price movements. Dong and Liu (2005) advocate that the equilibrium forward reduces commodity price risk; the buyer and seller will transact at the price specified in the contract, whatever the price of the underlying asset in the spot market at maturity. A forward agreement is somewhat like a legal contract, customised with respect to the needs of the particular buyers and sellers, obligating delivery of the underlying asset under the conditions specified in the contract. The buyers and sellers negotiate over the contract terms. Anderson and Danthine (1981) claim that, in the forwards market, speculators are assumed to be risk-neutral, bidding competitively to exercise arbitrage opportunities. 2.2.1 Benefits of Forward Contracts 2.2.1.1 Risk Management Typically, a forward contract alleviates financial risks, thereby protecting traders. There is no initial investment in the forwards market since cash changes hand only on settlement of the contract at maturity. This causes less volatility in cash transactions, rendering cash flows easy to manage. 2.2.1.2 Settlement Facility Cases wherein the seller defaults for some reason, contracts may be mutually settled in cash. Duffie (1989) finds that in practice, only a small fraction of forward positions are actually delivered while most are closed out before delivery by a cash settlement. Sometimes, initial traders are able to transfer their contracts to someone willing to take their obligation. Per se, it offers a certain degree of flexibility. 2.2.1.3 Trade Linkages and other benefits Forwards allows negotiation on the contracting terms, which benefits traders, builds up trust, and strengthens trade links between parties. Wolak (2007) analyses an electricity company and concludes that forward contracts reduce the cost of production as well as its volatility, and increase pro?t. Likewise, Dong and Liu (2005) show that forward contracts in non-storable goods benefit both producers and suppliers. 2.2.2 Costs of Forward Contracts 2.2.2.1 Counterparty Default Risk Forward contracts mitigate financial risks but give rise to counterparty risk (risk of default), which is one of the prominent risks in OTC derivatives. Counterparty risk can cause huge losses. 2.2.2.2 Transaction Costs In order to ensure guaranteed deals, parties with good credit ratings should be identified, which is a very costly task. Nevertheless, these firms do have a possibility to default for reasons such as insolvency or bankruptcy. An ideal illustration is the collapse of the Lehman Brothers investment bank that has created the biggest turmoil in the worlds history; following which, more concern has shifted to the OTC market. 2.2.2.3 Legal procedures Once the terms and conditions of the contract are accepted, they must be adhered to otherwise legal procedures may entail. Forwards market is an unorganised form of trade with no ability to deal with conflicts other than seeking legal recourse that may be too costly. Influential and wealthy parties only may recourse to such practices. Besides, it causes damage to the dealers reputation. 2.2.2.4 Liquidity and Transparency issues There is no possibility of closing out or reversing a forward contract. Thus, forwards lack flexibility and liquidity and forward delivery is not guaranteed in the absence of a regulator. Additionally, since the contract involves only two entities, there is reduced transparency and possibility of mispricing the goods since not all the forces are at work. 2.2.2.5 Market Power and Bargaining Power Market power and bargaining power affect the capacity for negotiation along with the forward equilibrium price. As such, small investors with lesser power may suffer. Dong and Liu (2005) show that the forward equilibrium moves in favour of the participant with high market power, such that he gains from the contract. However, when negotiation costs are very high, both producers and buyers face a loss regardless of market power and use forward contracts for risk management rather than for gains. 2.2.2.6 Informational Inefficiency A study by Mahenc and Meunier ( 1983) stipulates that there is no proper information dissemination in the forward market but under conditions of imperfect information, forward trading indirectly creates efficiency in the spot market. The necessity to deal with the shortcomings of forward contracts led to the emergence of the futures market. 2.3 Futures Market A futures contract is an agreement between two parties to buy or sell a fixed amount of an asset at a pre-decided price and date. In this respect, futures share the same characteristics as forwards; for instance, they help buyers and sellers with long term planning by locking in a price. However, futures are more sophisticated than forwards. Financial futures were traded on shares of the Dutch East India Company in the seventeenth century, but modern futures markets originated in Japanese rice futures, which were traded in Osaka in the eighteenth century. Futures emerged with the grading system, which purported to ensure that at maturity, the quality of goods delivered was as specified in the contract, which eventually led to standardisation of futures contracts. Futures are standardised contracts in respect of quantity, quality, delivery date, and location. They trade on organised exchanges, which are responsible for setting the quantity, quality of the underlying asset in the contract. Moreover, the exchange sets the terms and conditions of the contract, which are non-negotiable by the traders. All investors are treated equally; small investors are also able to hedge without difficulty. 2.3.1 Structure of the Futures Market Futures exchanges share the same purpose as securities exchanges. They usually have an integrated clearinghouse for clearing and settlement facility. Brokers, who are also members of the exchange, are responsible to match the buy and sell orders without buyers meeting sellers and vice-versa. Only members are allowed to trade on the platform, thus, a non-member wishing to deal in futures, should trade through a broker. The exchange connects buyers and sellers worldwide, communicates and keeps parties joint and ensures compliance with the terms and conditions of the contracts. Exchanges use open outcry in pits or electronic order matching systems or some use both, such as The Chicago Mercantile Exchange. Some authors argue that the open outcry system is more liquid and transparent than the automated system. Traders need to deposit a margin with the exchange prior to trade. The demand for margin (a percentage of the value of the contract) is referred as collateral or as a good faith deposit (Gay, Hunter, and Kolb 1986). All traders are required to have a minimum stated sum of money in their accounts. Contracts are settled on a daily basis: the mark-to-market system (MTM) which affects the contract price. If price of contract increases on a particular day, the holder makes a profit, which he can withdraw from his account, whereas if price decreases, he makes a loss and the amount is deducted from his account. As such, he is required to deposit a margin, referred as a call margin, to replenish his account to the threshold level, known as the variation margining system. Futures contract protect the value of inventories and partly finances the cost of storage since the future price of a commodity is dependent upon its cost of carry (Future price = cash price +cost of carry). This helps to improve marketing policies, financial planning, and long-term forecasting of prices. If ST is expected to be higher than current S0, then the current futures price will be set at a high level relative to the current S0. Likewise, if ST is expected to be lower at maturity, current futures price is set low. 2.3.2 Benefits of Futures Contracts Fundamentally, futures market confers two main purposes: price discovery and price risk management. The market provides protection against default, manipulation, and abuse. 2.3.2.1 Risk Management and Settlement Guarantee Moser (1998) reckons that futures contracts counteract default risk and protect traders through a set of rules. Firstly, standardisation protects traders as it ensures that the quality of the goods delivered is as specified in the contract. Moreover, the exchange can order its members to produce their financial accounts for inspection if their solvency is doubted. In 1873, the CBOT decided to expel any member who refused to abide by this rule (Andreas 1894). The margining and MTM system also contribute to curtail counterparty default risk as traders are called to supplement their account for the losses incurred on their contracts within 24hours; failure to do so causes their positions to be liquidated. There is a settlement guarantee in case of default while a tight regulation ensures that manipulation and abuse is virtually absent. 2.3.2.2 Price Discovery Futures market is transparent; pricing of commodities are fair and manipulations very difficult. Electronic trading on the exchange platform pools together all forces affecting the price of a commodity, leading to price discovery mechanism, which improves efficiency and lowers costs. Technology renders the exchange highly competitive since the market reacts very fast; prices and transactions are monitored constantly while information is captured continuously and incorporated in the intrinsic value of a good. Telser and Higinbotham (1977) concur that, futures market pools trade from diverse area into a central market, thereby increasing the heterogeneity of potential transactions. They proclaim that futures are liquid as transaction occurs readily at mutually acceptable prices and that homogenisation and clarity of the terms and conditions boost liquidity. 2.3.2.3 Liquidity One need not possess the underlying asset to sell futures while one may not be in need of a commodity to buy futures. Speculators and arbitrageurs enter the futures market without possessing or the intention of buying the commodity. Thus, the transfer of risks to different players in the market increases liquidity and maintains the equilibrium in demand and supply. Telser and Higinbotham (1977) statistically demonstrate that as the number of traders in the market increases, the market clearing prices become normal. Futures can be squared-off (reverse a position) without negotiation, thus making delivery non-mandatory. Positions can also be rolled-over. If period for hedge is later than the expiry date of the current futures contract, the hedger can rollover the hedge position by closing the existing position in a futures contract and simultaneously taking a new position in another futures contract with a latter expiry date. 2.3.2.4 Transactional and Informational Efficiency Futures market increases the informational efficiency of cash market and promotes import and export competitiveness. Cox (1976) empirically demonstrates that futures trading increases traders information about forces affecting supply and demand. His analysis rejects the claim that futures trading impose costs on producers, consumers, and others who handle the physical commodity. Additionally, evidences from more fully informed traders suggest that futures trade increases efficiency in spot markets. 2.3.2.5 Increase Export Competitiveness When entering forward contracts, exporters do not, usually, possess the entire stocks for export. Futures market enables them to hedge their projected purchase, until they have to buy in the physical market for exporting. Taking a position in the futures market will help to offset the gain/loss in the physical market; that is, at maturity the net loss/gain in futures market offsets the gain/loss in the physical market. Thus, exporters can accept contracts with longer duration and increase their competitiveness. 2.3.2.6 Offsetting gains and losses in the physical market Futures market also allows a hedger to take a position in the futures market opposite to the position he takes in an over-the-counter market. Such a transaction is termed: exchange of futures for physical (EFP). The OTC and futures positions should be for the same underlying assets or at least similar in terms of value and quantity. This results in the flexibility of customising the physical market with respect to the needs of traders, parallel to the OTC market and at the same time enjoying settlement guarantee in an exchange. Usually, margin requirements for EFP transactions are lower. EFP may seem appealing but is inefficient in fair pricing. Exchange Officials apprehend that EFPs would harm the futures market by reducing volume and liquidity and inhibit fair price discovery. 2.3.2.7 Diversification of portfolios Futures on commodities serve to diversify portfolios, since they are less volatile than financial securities. Bodie and Rosansky (1980) report an average excess return of 9.5% per annum for an equally weighted portfolio of commodity futures between 1950 and 1976. Their analysis reveals that equities are riskier than commodity futures. Furthermore, total return of the equally weighted commodity futures was negatively correlated with the return on long-term bonds, suggesting that commodity futures are effective in diversifying equity and bond portfolios. The benefits of diversification from commodity futures tend to be larger for longer holding. A similar analysis carried out by Gorton and Rouwenhorst (2005) confirms that commodity futures returns have been effective in providing diversification of both stock and bond portfolios. Weiser (2003), on the other hand, contends that commodity futures returns vary with the stage of the business cycle. He finds that commodity futures usually perform well in the early stages of a recession while stock returns are generally disappointing and in later stages of recessions, commodity returns fall while equities perform well. 2.3.3 Costs of Futures Contracts 2.3.3.1 Complexity Despite appealing benefits, futures contracts inherit some costs and the prime one is the complexity of handling them. Futures were generated to deal with the limitations of forwards but, in so doing, they brought a more complex form of hedging. Proper knowledge of the market is crucial; otherwise, hedgers may face unwanted losses. 2.3.3.2 Basis Risk Basis risk (the difference between spot and futures price) is inbuilt in futures market. Hedge positions are usually not perfect due to this difference. Working (1962) emphasises that the existence of basis risk prevents the elimination of all risks. Brorsen (1995) finds that changes in basis can cause forwards to be cheapest in some periods and futures to be cheapest in others. Therefore, the benefits of hedging can be enjoyed when the market is well understood. Advanced futures concepts about hedge positions, hedge ratios, and types of hedges should also be mastered as they benefit hedgers differently in different markets. 2.3.3.3 Mark-to-Market System (MTM)-cash drain out The transaction costs involved, such as, initial margin and variation margin in the MTM system freezes up working capital that could have yielded interest. Furthermore, the margin call should be paid before next opening of the market- a very short delay. These daily settlements make transactions volatile and cash flows cumbersome to maintain. Margin costs and brokerage commission discourage some investors, especially small traders, to enter the market. Williams (1986, 1987) shows that risk-neutral firms will hedge if transaction costs are lower in the futures market than in the cash market. Moreover, instances of dual trading exist, whereby brokers trade on behalf of their clients to earn a commission, without improving the customers position. 2.3.3.4 Large Number of Participants needed Futures contracts fail for lack of interest by market participants, that is, a low trading volume. Telser and Higinbotham (1977) statistically demonstrate that the benefit of an organised market is an increasing function of the number of potential participants and hence, an increasing function of the turnover of the potential participants in that market. They conclude that an organised futures market survive only if it is perfectly competitive, which is achieved when there are many participants. If the open interest (number of contracts outstanding) in the futures market declines, the volume of trade falls relative to the open interest. The commission and the margin are raised consequently. They even assert that there is a cost to the emergence and survival of an organised exchange. 2.3.3.5 Standardisation issues Standardised nature of contracts may cause over-hedging or under-hedging. For example, a contract specifies  £1000 to be sold while a hedger may need only  £800. Therefore, he over-hedges by  £200. Conversely, say a hedger needs  £1100, he under-hedges by  £100. 2.3.3.6 Uninformed Investors Increase Volatility Uninformed investors may increase price volatility in the futures market. If the market is inefficient in information, futures prices become biased predictors of future spot prices and causes cash prices and future prices to diverge rather than converge. Usually, futures contracts with longer maturity are closer to spot prices since time is required to assimilate unanticipated shocks. However, Kaminsky and Manmohan (1990) suggest that it is impractical to make any generalisations about the short-term and long-term horizons in commodity futures market. They find that for longer periods several markets are not fully efficient. In addition, Chernenko et al. (2004) study a wide range of futures and forward rates from financial markets and conclude that forward and futures prices are not generally pure measures of market expectations; per se, they may not be an efficient forecast of the future prices of assets. 2.3.3.7 Losses Faced By Investors Other studies indicate that large scale, professional speculators can profitably forecast commodity prices, but small traders cannot. Stewart (1949) considers futures-trading accounts for small-scale speculators and discovers that they face huge losses. Moreover, Houthakker (1957) and Rockwell (1967) find that large speculators earned profits and small speculators incurred losses for a particular set of data. Similarly, Working (1931) estimated that speculators in wheat futures, incurred losses. Empirical research shows that, for cattle and wheat producers, futures markets have lower transaction costs than forward contracts, while for small firms like farmers, the contracting costs might be higher because of opportunity cost of time in learning about futures, setting up a brokerage account, and managing margin calls. It would be unnecessary for small groups of traders, well acquainted with each other to transact among themselves than use futures. 2.3 Derivatives Mishaps The history of derivatives has witnessed some spectacular losses in the derivatives markets, which includes losses made by both financial (e.g. Amaranth hedge fund, Barings Bank) and non-financial institutions (e.g. Orange country, Shell, Metallgesellschaft). The Metallgesellschaft (MG) is a German oil company, which used futures to hedge its exposure in its early 1990s. MG hedged its position with long positions in short-dated futures contracts that were rolled forward. However, the price of oil fell and then came the margin requirements, which caused short-term cash flow pressures. Members of MG claimed that these were short-term cash outflows and in the long-run, there would be a cash inflow. However, this led to a serious issue as huge cash was drained out of the system. Consequently, MG executives closed out all their hedged positions. Therefore, one lesson to be learned is to be alert at all ti

prince hall :: essays research papers

WHO IS PRINCE HALL ? Prince Hall is recognized as the Father of Black Masonry in the United States. Historically, he made it possible for Negroes to be recognized and enjoy all privileges of free and accepted masonry. Many rumors of the birth of Prince Hall have arisen. A few records and papers have been found of him in Barbados where it was rumored that he was born in 1748, but no record of birth by church or by state, has been found there, and none in Boston. All 11 countries were searched and churches with baptismal records were examined without finding the name of Prince Hall. One widely circulated rumor states that "Prince Hall was free born in British West Indies. His father, Thomas Prince Hall, was an Englishman and his mother a free colored woman of French extraction. In 1765 he worked his passage on a ship to Boston, where he worked as a leather worker, a trade learned from his father. During this time he married Sarah Ritchery. Shortly after their marriage, she died at the age of 24. Eight years later he had acquired real estate and was qualified to vote. Prince Hall also pressed John Hancock to be allowed to join the Continental Army and was one of a few blacks who fought at the battle of Bunker Hill. Religiously inclined, he later became a minister in the African Methodist Episcopal Church with a charge in Cambridge and fought for the abolition of slavery." Some accounts are paraphrased from the generally discredited Grimshaw book of 1903. Free Masonry among Black men began during the War of Independence, when Prince Hall and fourteen other free black men were initiated into Lodge # 441, Irish Constitution, attached to the 38th Regiment of Foot, British Army Garrisoned at Castle Williams (now Fort Independence) Boston Harbor on March 6, 1775. The Master of the Lodge was Sergeant John Batt. Along with Prince Hall, the other newly made masons were Cyrus Johnson, Bueston Slinger, Prince Rees, John Canton, Peter Freeman, Benjamin Tiler, Duff Ruform, Thomas Santerson, Prince Rayden, Cato Spain, Boston Smith, Peter Best, Forten Howard and Richard Titley. When the British Army left Boston, this Lodge, # 441, granted Prince Hall and his brethren authority to meet as a lodge, to go in procession on Saints John Day, and as a Lodge to bury their dead; but they could not confer degrees nor perform any other Masonic "work".

Child Development and Rights Essay

There is little evidence of what it was really like in the past so it is difficult for a lot of people to re-construct the life of a child, however from what I have researched, and in my own opinion I am going to summarise the historical changes in childhood experience and relate these changes to childhood development and rights. In the 19th century I think children missed out on most of their childhood as most of them took on jobs such as chimney sweepers, street sellers and farms for example. These were mainly children from poor families who were seen as extra farm hands and were exploited by receiving low pay for long hours and working in poor conditions. Families did not look at how the children were treated and the possible impact on parts of their development (such as their social skills, health and education). When the government promised all children the same rights in 1989 it helped out a lot of development and gave them a childhood to enjoy. For example; â€Å"The right to be protected from exploitation of labour, drug abuse, sexual exploitation, sale, trafficking and abduction† This meant children now didn’t have to work and had also been given; â€Å"The right to education, training and special needs support where necessary† This improved social skills and social relationships as they where able to mix with other children in school and out of school, instead of having to miss school often or not attend at all because of the long hours and also the parents could not afford to lose their financial contributions. Children’s health was not good and child mortality rate was high, mainly due to overcrowding, poor diet and the poor working conditions which so many workhouse children didn’t live to become adults. These are the children who never recovered from years of chronic malnutrition. â€Å"The right to health and medical services† This gave rights to free healthcare in Britain which originally came out in 1948 (NHS) and a decline in childhood illnesses as children were given vaccines plus child mortality improved. Other parts of the developmental framework such as identity, self-care skills, emotional and behavior is that they never developed them fully as they grew up too fast so they could go to work and look after other siblings. Also from what my grandad has told me, back then they weren’t allowed to express themselves as they would get emotional and physical abuse towards them, so they just carried on with everyday life. They was wealthy families and was a lot easier from them as they had the money to attend a private school or was home-schooled. They were also encouraged to donate money and goods to the poor. Kerry Woolford Even though a legislation was drawn up and improved childhood education, healthcare and welfare, children were and even now in modern society around the world are being taken advantage of for monetary gain. Modern society now especially since 1997 have tried putting children first such as committing to meeting children’s needs. There are still problems such as school truancy, adolescents not in education or training and also child protection as there have been tragic deaths including baby P and Victoria climbie, which her death was largely responsible for the formation of every child matters inactive plus a lot of other changes in different systems, 2. Discuss how family systems are influential in child development processes and include challenges to meeting a child’s needs, such as conflicts and poor parenting practices. Family systems can influence in a child’s development process as the family is on of the main tools for the structure of personality. Parents now days are so inundated with work and/or social relationships that they neglect to spend time with them and fail to communicate with the children and also large number of families consist of any mother and child(ren) because the fathers are absent so it could lead to poor parenting. I’m not saying all single mothers lead to this because I know this from my own experience but according to a study in America in 2006 a broken family structure leads to education difficulty for children, saying; â€Å"when it comes to education achievement, children living with their own married parents do significantly better than other children.† An example of one family that I looked at and found interesting was that both parents were excessive drinkers and argued a lot, the father was also physically abusive and their 2 children could be affected all they way in till they reach adulthood by being angry and never trusting male-female relationships as all they have seen in their parents relationship is a war zone. They have never seen problems resolved constructively, so maybe severely limited in their ability to deal with stressful situations involving the important person in their adult relationships. Challenges in family systems can be hard to meet a child’s needs especially during a divorce. It can be very emotional for children during this time as one parent leaves the house or the child is re-locating, leaving the family home that they have ever known. They can blame themselves, especially if they overhear an argument over something the child has done around the same time of the divorce. The child needs to feel more secure during these changes and it will help to assure them the divorce was by grown up issues, not by anything they have said or done, make sure the child access has to both parents when feeling lonely or need reassuring. Most important take the time to talk with your child, and to spend quality time with them regularly. Kerry Woolford Poor parents practices is the lack of support, monitoring and harsh punishments which are linked with children’s adjustment, development and well-being. When children misbehave some parents use coercive form of discipline (such as spanking) where other parents rely on non-coercive method (such as discussing the consequences of misbehavior). Abusive or neglectful behaviors could cause or have caused serious behavior, cognitive, emotional or mental problems which can lead to substance abuse and crime. Parents that have a great deal in their child’s lives, usually have higher grades, fewer behavior problems, less substance use, better mental health, greater social competence and more positive self-concepts. In conclusion even in the 19th century and in modern society is that children want need is the love from their parents, protection, help and be there for them when there’s a major problem occurs that could disturb the family system.

The eNotes Blog Fantasy Books for a Fantasy Land LA Times Festival of BooksHighlights

Fantasy Books for a Fantasy Land LA Times Festival of BooksHighlights This past weekend thousands- yes, thousands- of literature lovers descended upon the University of Southern California’s campus to celebrate 2012’s LA Times Festival of Books. In its second year at the USC location, the event proves that Los Angeles isn’t the pariah of the book world that many would make it out to be. In fact, the topics of several of its many panels and interviews seemed to reflect back on the unique surreality of Los Angeles itself; after all, what better place to discuss monsters, vampires, horror, fantasy, and all out bizarreness than in a land propagated by pure fiction itself? Besides the talks on California literature, discussions on progressing from page to screen, and the multitude of autobiography-toting celebrities stalking the grounds, a couple of panels delved deeper into the correlation between fiction and Los Angeles. One was Sunday’s â€Å"Whimsical Visions† panel, where surrealist writers Amelia Gray, Etgar Keret, Sara Levine, and Ben Loory converged. They talked about their preference for writing outlandish, fantastical elements in their stories. Keret said, â€Å"If you meet a girl and kiss her, and it feels like you’re floating in air, then why not write about floating in air? It’s a real feeling, and a real experience.† It’s the kind of theory that seems to fit into a city that makes no apologies for not grounding itself in reality. The name Los Angeles is synonymous with movies, of course, so their omnipresence at an LA-based book fair is still felt. Interestingly, one upcoming movie is less an adaptation of a single book than it is a 21st-century take on the collected works and life of Edgar Allen Poe. John Cusack was at the festival to speak about â€Å"The Raven†, which opens in cinemas this Friday. For any who haven’t seen the trailer, the movie follows Poe (Cusack) as he helps detectives try to catch a serial killer bent on torturing his victims in the style of the writer’s own stories. (Think â€Å"The Pit and the Pendulum†- eek.) When asked what he did to prepare for the role, Cusack said that he read all of Poe’s work, which for him was, â€Å"like going into a nightmare, in a way.† Leave it to Hollywood to turn the bookish inventor of the detective novel into an action star. However, Cusack did promise that avid Poe fans would not be disappointed by the film’s inclusion of specific details and fun tidbits from the writer’s life. Lastly, another panel bent on the fantastical included none other than writers Melissa de la Cruz, Seth Grahame-Smith, Deborah Harkness, and Richard Kadrey. The conversation, titled â€Å"Fiction: Bump in the Night,† covered popular culture’s penchant for zombies, vampires, and monsters. And when these authors talk about their monsters of choice, they’re speaking about much more than a spook hiding under the bed. For Grahame-Smith, the vampires in Abraham Lincoln: Vampire Slayer (also being released as a movie) represent slavery; â€Å"They steal your life force to enrich themselves. That’s what slavery is.† De La Cruz, author of the popular occult series â€Å"Witches of East End† reasons why we need fantasy-horror in our lives: â€Å"Ten thousand years ago, we had to kill our food, fight cave dwellers and sabre-tooth tigers. Life was scary. Now we have Wi-Fi everywhere. But we still have that physical need to feel threatened, it’s a reaffirmation of life.† Kadrey said in the same panel, crime and horror is the literature of permission. His thoughts of indulgence bring me back to why the fantasy and surrealist authors present at this years festival seem so pertinent to Los Angeles. The city is pretty overlooked as a literary destination, and yet so much of fiction exists because readers and authors choose to revel in a facade, to escape reality. If LA is the land of the unreal, of the surreal, perhaps it is much more of a literary hub than we give it credit for.