The Debate over Global Warming - 1406 Words

The last time our planet sustained temperatures as high as the present, was millions of years ago when dinosaurs roamed Earth. Civilization has greatly progressed since then in areas such as technology and the arts, but with this development comes an increased standard of living for humans. In order to keep up with the industry and production of this age, our population releases environmentally harmful substances like greenhouse gases into the air every day. In recent decades’ findings, these substances have been found to trap heat in the atmosphere over time, contributing to global warming. To cut these emissions completely would bankrupt the world’s struggling, industry-dependent economy. Knowing that this isn’t a threat that will peak in our life time or even the next generation’s causes political progression to move slowly. If we misinterpret the climate change now when it’s shifting more noticeably, the time available to effectively respond to the issue could end. In order to react appropriately to the world’s changing climate, we must educate members of society in the distinct knowledge that humans have direct influence on the warming of the planet. The fundamental disagreement when arguing about global warming is whether or not humans have an impact on the process, and if so, to what extent. Essentially people have different answers to this question because there is no universally established frame of reference to view the data. In the article â€Å"The Nature of ScienceShow MoreRelatedThe Debate Over Global Warming1499 Words   |  6 PagesThe global warming debate has been at the top of the list for environmentalists increasingly over the last twenty years. The controversy of global warming is either considered due to human activity or natural causes. Although the earth’s climate and temperatures have changed, that does not mean it is humanly caused. Despite the pretense linking the association between man and global warming, which is heavily supported by consensus of scientists, eco-sensitive politicians, and the effort to restrictRead MoreThe Debate Over Global Warming1063 Words   |  5 Pagesclimate change debate has been ongoing for nearly thirty years now, the debate is over the causation(s) of global warming. Temperatures on earth have increased approximately 2.0 °F since the early 20th century. Levels of greenhouse gases such as carbon dioxide and methane have drastically increased within the atmosphere. Both sides within the debate surrounding global climate change can agree on these points. However; disagree on a number of other possible causations of global warming. Even though thereRead MoreThe Debate Over Global Warming Essay1249 Words   |  5 PagesAs the threat posed by global warming continues to mount, there has been much debate over how to stem the rise in global temperatures. Nearly all experts agree that the primary driver of global warming has been human activity. Over the last century and a half, human activity has released immense amounts of carbon dioxide and other greenhouse gases into the atmosphere, altering the Earth’s climate. Yet, although there is a pressing need to reduce our dependence on fossil fuels, it is impossible toRead MoreThe Debate Over Global Warming2192 Words   |  9 Pagesown thoughts about global warming, it’s not real or it’s too late for humans to fix the issue, the list goes on. The global warming debate would not be so heated if it didn t involve politics and it just reverted back to simple science. With many people looking to blame someone or something it’s hard for politics and science not to collide. Below i will focus on how politics are lacking in effort to stop global warming between the huge oil companies having more influence over the government, toRead MoreThe Debate Over Global Warming1159 Words   |  5 Pages The date is 450 years into the future. The calendar reads March 1st, 2465. The world is much different than how it was 400, 500 years ago. Your know those warnings scientists have been crying out for years about global warming? Well, they were true, and their effects were much more severe than anticipated†¦ Johanna is 15 years old. She lives in Kansas City, but this Kansas isn’t the one that our readers from the past may know. This Kansas is more like an island, surrounded by water on all sidesRead MoreGlobal Warming: Fallacy or Truth Essays1142 Words   |  5 PagesOver 35 years ago, climatologist Wally Broecker coined the term global warming in a paper outlining the trends that he was noticing with temperature and C02 levels (Stefan). Ever since then, the debate has heated up on the controversy of global warming. Politicians have even used the issue to boost their campaigns. Some question whether the earth’s temperature is rising at an unusual rate. Scientists perform experiments from glacial ice to observe the correlation between carbon dioxide levels andRead MoreGlobal Warming And Its Effects On The World1074 Words   |  5 PagesIt would be a rare week indeed without hearing about global warming on the television or radio, or reading about it in the newspaper or a n online blog. There have been many opinions from an abundance of points of view on the subject. Scientists, politicians, and environmentalists have all weighed in on the debate, and each of them is passionate about their beliefs. Some issues brought about due to global warming are polar ice caps melting, glaciers receding more and more each year, and risingRead MoreGlobal Warming Has Become A National Distraction1071 Words   |  5 PagesIt would be a rare week indeed without hearing about global warming on the television or radio, or reading about it in a magazine or an online blog. There have been many opinions from an abundance of points of view on the subject. Scientists, politicians, and environmentalists have all weighed in on the debate, and each of them is passionate about their beliefs. Some issues brought about due to global warming are polar ice caps melting, glaciers receding more and more each year, and rising oceanRead MoreGlobal Warming: Fact or Fiction1089 Wo rds   |  5 PagesGlobal Warming: Fact or Fiction Lower Capstone – Unit 3 Independent Project Rozlynn Mundy American InterContinental University Online July 4, 2010 Title: Global Warming: Fact or Fiction Abstract Introduction I. Overview of Global Warming A. Signs of global warming a. Support b. Skepticism II. Effects of Global Warming A. Contributors to global a. Manmade b. Natural Summary Abstract The information found in this paper is designed to raiseRead MoreHuman Activity Is Responsible For Our Current Warming Trend1598 Words   |  7 PagesHumans Are To Blame The biggest problem with climate change today is the debate on whether or not human activity is responsible for our current warming trend. According to Jonathon Schuldt (2014:219), around 99.7% of climatologists agree that man-made climate change is a reality, while only 40% of Americans believe that humans are the main driver. This is because we live in societies in which, thanks largely to the internet, everyone is free to express an opinion. On the issue of climate change

Essay On Colonialism In The Tempest - 1624 Words

As Shakespeare’s final play, The Tempest, holds phenomenal value. In his writing, Shakespeare often included contemporary issues of his time. In Hamlet, for example, the idea of a King dying was an important notion. This was drawn from the belief that a King got his authority from God, so if he died nature would become unbalanced and disturbed. In The Tempest, he included his supportive views of colonialism into his writing. Centuries later, Aimà © Cà ©saire made an adaptation of Shakespeare’s The Tempest, to create a direct critique of colonialism’s effects. Although both writers present viewpoints in regards to colonialism, Cà ©saire’s adaptation, â€Å"A Tempest†, possesses a better argument supportive of the author’s views. Cà ©saire’s, â€Å"A†¦show more content†¦In an acting of mocking, Prospero tells Caliban; â€Å"Cannibal would suit you† (page 20 Cà ©saire). A more contemporary audience, like that of wh ich Cà ©saire is aiming towards, would be much more likely to recognize the relationship between the words Caliban and cannibal being so casually used in the play. Thus, the usage of overemphasizing this irony helps critique the absurdity behinds its origins, and then to critique the treatment of indigenous colored people as a whole. This attack on racism and derogative representations towards indigenous people, help exacerbate Cà ©saire’s critique. One of the biggest ways Cà ©saire attempts to make Caliban sympathetic is in the beginning of Act 3. In act 3 of A Tempest, Caliban breaks an important literary element and tradition of plays during Shakespearian time, Caliban breaks the fourth wall. This is something Shakespeare never would have attempted. Caliban speaks directly to the audience, which helps establish a connection between the character and the audience. This technique is a brilliant was to support her claims, since Shakespeare would have considered this act a taboo. This is, therefore, another example of dramatic irony that the audience would have picked up on. Additionally, Cà ©saire strays away from Shakespeare through having the cast wear masks. As a result, this would help the audience be disassociated and alienated to the characters, to an extent. Consequently, as aShow MoreRelated The Theme of Colonialism in Shakespeares Tempest Essay example2636 Words   |  11 Pages The Tempest, by Shakespeare, offers t he reader a variety of themes. The one theme that stands out the most is that of colonialism. During the time of Shakespeare, many European countries such as Spain, France, and England, were expanding their borders by taking over less developed countries, referred to as colonies. During this time of exploitation, there was skepticism concerning the possible success of the colonies. While some scholars believe that the play is about the Americas, I argue thatRead MoreEssay on Imperialism and Colonialism in Shakespeare ´s The Tempest943 Words   |  4 PagesThe Tempest was Shakespeare’s last play that was written shortly after England colonized Virginia in 1609. Throughout the play, there are many different references to imperialism and colonialism within the characters. The Tempest analyzes the imperialistic relationships between England and America but applies it to personal human interaction between the central characters. The island gives newcomers a sense of endless po ssibilities like claiming the land for themselves because of the belief in theRead More tempcolon Confronting Colonialism and Imperialism in Aime Cesaires A Tempest1403 Words   |  6 PagesConfronting Colonialism in A Tempest   Ã‚  Ã‚   A Tempest by Aime Cesaire is an attempt to confront and rewrite the idea of colonialism as presented in Shakespeare’s The Tempest.   He is successful at this attempt by changing the point of view of the story.   Cesaire transforms the characters and transposes the scenes to reveal Shakespeare’s Prospero as the exploitative European power and Caliban and Ariel as the exploited natives.   Cesaire’s A Tempest is an effective response to Shakespeare’s The TempestRead More tempcolon Comparing Language in Shakespeares Tempest and Aime Cesaires A Tempest892 Words   |  4 PagesColonial Language in Shakespeares The Tempest and Aime Cesaires A Tempest      Ã‚  Ã‚   Language and literature are the most subtle and seductive tools of domination. They gradually shape thoughts and attitudes on an almost subconscious level. Perhaps Gayatri Chakravorty Spivak states this condition most succinctly in her essay The Burden of English when she writes, Literature buys your assent in an almost clandestine way...for good or ill, as medicine or poison, perhaps always a bit of both(137)Read MoreThe Tempest Critical Analysis1029 Words   |  5 Pagesone’s ability to defy and transcend contextual limitations. The prescribed text, William Shakespeare’s dramatic tragicomedy â€Å"The Tempest† (1619) exhibits the physical discovery of a new world, fostering renewed intellectual and emotional understandings in relation to the construct of power in a microcosmic manner. This is further demonstrated through George Orwell’s essay â€Å"Marrakech† (1939), which recounts the poverty in corrupt Colonialist Morocco amidst th e Second World War and presents the intellectualRead MoreThings Fall Apart By Chinua Achebe And William Shakespeare s The Tempest1417 Words   |  6 PagesRoughly based on personal encounters Joseph Conrad uses Heart of Darkness to comment on the negative aspects of colonialism. Colonialism by definition is, â€Å"the policy and practice of a power in extending control over weaker peoples or areas.† In the novel Things Fall Apart by Chinua Achebe and William Shakespeare’s play The Tempest, colonialism plays a significant role in the break down of humans. The conquerors in both stories disregard the natives believing that they are working towards the greaterRead More European Colonization in Shakespeares The Tempest Essay1279 Words   |  6 PagesNo Critique of European Colonization in The Tempest      Since the 1960s, several critics have found a critique of colonialism in their respective readings of Shakespeares The Tempest. The most radical of these analyses takes Prospero to be a European invader of the magical but primitive land that he comes to rule, using his superior knowledge to enslave its original inhabitants, most notably Caliban, and forcing them to do his bidding. While the textual clues concerning the geographic locationRead MoreEssay on Post Colonial Interpretations of Shakespeare’s The Tempest1908 Words   |  8 PagesPost Colonial Interpretations of Shakespeare’s The Tempest â€Å"†¦do we really expect, amidst this ruin and undoing of our life, that any is yet left a free and uncorrupted judge of great things and things which reads to eternity; and that we are not downright bribed by our desire to better ourselves?† – Longinus Since the seventeenth century many interpretations and criticisms of William Shakespeare’s The Tempest have been recorded. Yet, since the play is widely symbolical and allegorical Shakespeare’sRead MoreWilliam Shakespeare s The Tempest1267 Words   |  6 Pagesand whimsy, incorporating both fiction and nonfiction elements. One trademark of Shakespeare s plays were the subtle allusions to the concurrent events in the English government. This is evident in his well known and final play, The Tempest. The story of The Tempest tells the tale of Prospero, a fallen duke forced to live on a desolate island in exile. He intends to regain his dukedom and seek revenge upon those who wronged him. During his time on the island, Prospero masters the power of illusionRead MoreThe Selfish Act Of Colonialism : A Nascent Of English Colonialism1741 Words   |  7 PagesOn answering the question, â€Å"To what extent is The Tempest â€Å"about† nascent English colonial?† I would say that this Shakespearean play is completely a nascent of English colonialism, because it’s plot is based around colonialism. The story describes white men inhabiting an island and proceed to fight for control, without any input by the natives. What makes this a story specifically about nascent English colonialism is the alluding fact that humans are power hungry, which will prove to be true within

Case Study Barings Free Essays

string(169) " in Japan caused a steep drop in the Nikkei 225 equity index , however, Leeson’s unauthorised trading positions suffered huge losses and his operation unravelled\." Summary: One of the most infamous tales of financial demise is that of Barings Bank. Trader Nick Leeson was supposed to be exploiting low-risk arbitrage opportunities that would leverage price low rage differences in similar equity derivatives on the Singapore Money Exchange (Simex) and the Osaka exchange. In fact, he was taking much riskier positions by buying and selling different amounts of the contracts on the two exchanges or buying and selling contracts of different types. We will write a custom essay sample on Case Study Barings or any similar topic only for you Order Now Thanks to the lax attitude of senior management, Leeson was given control over both the trading and back office functions. As Leeson’s losses mounted, he increased his bets. However, after an earthquake in Japan after caused the Nikkei Index to drop sharply, the losses increased rapidly, with Leeson’s positions going more than $1 billion into the red. This was too much for the bank to sustain; in March of 1995, it was purchased by the Dutch b bank ING for just one pound sterling. Overview: Barings Bank had a long history of success and was much respected as the UK’s oldest d merchant bank. But in February of 1995, this highly regarded bank, with $900 million in capital, was bankrupted by $1 billion of unauthorised trading losses. In 1993, Nick Leeson was appointed general manager of the bank’s Barings Futures subsidiary appointed in Singapore. In this capacity, he was able to conceal his unauthorised trading activities for over a year because he managed both the trading and back office functions. The senior managers at a Barings came primarily from a merchant banking background and knew very little about trading. Even in the face of large profits, which should have tipped management off to the fact that substantial risks were being taken, they continued to believe that Leeson held matched Leeson positions on the Singapore International Monetary Exchange (Simex) and the Osaka exchange, and hence was making a low-risk profit. low In fact, Leeson was trading derivatives contracts on the two exchanges that were, in some cases, of different types and, in some cases, in mismatched amounts. For example, Leeson rent executed a trading strategy known as a â€Å"straddle,† with the objective of making a profit by selling put and call options on the same underlying financial instrument, in this case, the Nikkei th 225 Index. A straddle will generally produce positive earnings when markets are stable but can result in large losses if markets are volatile. Leeson created an error account numbered 88888 as a holding area for any premiums or losses that he made. Leeson claims that he initially opened the account to conceal a single loss of e. 0,000 pounds sterling that had resulted from an accounting error until he could make up the difference through trading. However, he continued booking various losses into the account and also continued to increase his volume of trading and level of risk taking. Leeson took unauthorized speculative positions primarily in futures linked to the Nikkei 225 and Japanese government bonds (JGB) as well as options on the Nikkei. He hid his t rading in an unused BSS error account, number 88888. Exactly why Leeson was speculating is unclear. He claims that he originally used the 88888 account to hide some embarrassing losses resulting from mistakes made by his traders. However, Leeson started actively trading in the 88888 account almost as soon as he arrived in Singapore. The sheer volume of his trading suggests a simple desire to speculate. He lost money from the beginning. Increasing his bets only made him lose more money. By the end of 1992, the 88888 account was under water by about GBP 2 million. A year later, this had mushroomed to GBP 23 million. By the end of 1994, Leeson’s 88888 account had lost a total of GBP 208 million. Barings management remained blithely unaware. On February 23, 1995, Nick Leeson hopped on a plane to Kuala Lumpur leaving behind a GBP 827 million hole in the Barings balance sheet. As a trader, Leeson had extremely bad luck. By mid February 1995, he had accumulated an enormous position—half the open interest in the Nikkei future and 85% of the open interest in the JGB future. The market was aware of this and probably traded against him. Prior to 1995, however, he just made consistently bad bets. The fact that he was so unlucky shouldn’t be too much of a surprise. If he hadn’t been so misfortunate, we probably wouldn’t have ever heard of him. Traders sometimes speculate without authorization. Presumably, a few are able to cover their tracks. Others are caught. When they are caught, they are fired, and their employer eats the loss. Usually, neither the trader nor his employer has any interest in publicizing the incident. Leeson made headlines precisely because he was so unlucky. By the time he was discovered, he had bankrupted his employer. Publicity was unavoidable. What is amazing about Leeson’s activities is the fact that he was able to accumulate such staggering losses without Barings’ management noticing. As Leeson lost money, he had to pay those losses to SIMEX in the form of margin. Leeson needed cash. By falsifying accounts and making various misrepresentations, he was able to secure funding from various companies within the Barings organization and from client accounts. His misrepresentations were flimsy at best. For example, he claimed that he needed funds to make margin payments on behalf of BSS clients, and he gave a technical argument related to how the SIMEX collected margin as justification. This claim was false. It was actually against SIMEX rules for a broker to post its own money as margin for a client. Even if the claim were true, the funds would have been needed only temporarily—until the client could make payment. Instead, Leeson continued to ask for ever more funding. Leeson increased the size of his open positions even as his losses increased due to volatility in the markets. When an earthquake in Japan caused a steep drop in the Nikkei 225 equity index , however, Leeson’s unauthorised trading positions suffered huge losses and his operation unravelled. You read "Case Study Barings" in category "Free Case study samples" On March 3, 1995, the Dutch bank ING purchased Barings for 1 pound sterling, providing the final chapter in the story of the 223-year-old bank that had once helped the United States to finance the Louisiana purchase. The beginning of the end occurred on January 16, 1995, when Leeson placed a short straddle (an options trading strategy) in the Singapore and Tokyo stock exchanges, essentially betting that the Japanese stock market would not move significantly overnight. However, the Kobe earthquake hit early in the morning on January 17, sending Asian markets, and Leeson’s investments, into a tailspin. Leeson attempted to recoup his losses by making a series of increasingly risky new investments, this time betting that the Nikkei Stock Average would make a rapid recovery. But the recovery failed to materialize, and he succeeded only in digging a deeper hole. Realizing the gravity of the situation, Leeson left a note reading â€Å"I’m Sorry† and fled. Losses eventually reached ?827 million ($1. 4 billion at then-prevailing exchange rates), then prevailing twice the bank’s available trading capital. This led to the bank’s collapse. After fleeing to Malaysia, Brunei and finally Germany, Leeson was arrested and extradited back to Singapore on March 2, 1995. While he had authorization for the January 16 short straddle, he was charged with raud for deceiving his superiors about the riskiness of his activities and the scale of his losses, although some observers (and Leeson himself) have place much of the placed blame on the bank’s own deficient internal auditing and risk management practices. Sentenced to six and a half years in jail in Singapore, he was released from prison in 1999, having been diagnosed with colon cancer , which he has survived despite grim forecasts at the time. While in despite prison, in 1996, Leeson published an autobiography, Rogue Trader, detailing his acts. There may be a temptation to view this debacle as being caused by just one individual – the â€Å"rogue trader† – but in reality the fiasco should be attributed to the underlying structure of the firm, and particularly to the lack of internal checks and balances. Events: 1993: Nick Leeson becomes general manager of Barings Futures (Singapore), running the bank’s Simex (Singapore International Monetary Exchange) activities. January 1994: By this date (at the latest), Leeson started selling put and call options on the Nikkei 225 equity index, placing the premiums earned into an error account number 88888. This strategy, known as a straddle, is essentially a bet on the stability of market prices. 24 February 1994: A memorandum from the Barings’ asset and liability committee values the 4 options portfolio at 2. 8 billion yen. July 1994 – August 1994: James Baker, an internal auditor, spends two weeks in Singapore investigating the immense profits being made there. Baker identifies the weakness of internal controls and recommends that the general manager should no longer be responsible for the back office. In response, a separate financial manager in Hong Kong is given part part-time responsibility for watching over the back office. ng August 1994: In an attempt to better evaluate its overall risk, Barings sets up an integrated Group Treasury and Risk function, reporting to a new asset and liability committee (Alco). December 1994: A later Barings investigation reveals that, for unknown reasons, Leeson has run up an accrued loss amounting to Y7. 7 billion on the account by the end of 1994. 23 January 1995: The Nikkei 225 drops by 1000 points after an earthquake hits Japan’s industrial heartland. 6 January 1995: The London futures team gives Barings’ Alco Committee a presentation on the Baring Futures (Singapore) operation, which states that Leeson is operating a perfectly perfectl matched book – long in Osaka, but short to the same amount on Simex. 8 February 1995: Coopers Lybrand decides to hold off signing off on Barings’ accounts until it becomes possibl e to clear up a few points with Leeson. 23 February 1995: At close of trading, the error account contains 55,399 Nikkei contracts trading, expiring in March and 5640 expiring in June. As of February 25, this totalled a loss of 59 billion yen on Simex. 24 February 1995: The Barings Board meets to discuss a hastily prepared analysis of the hastily-prepared transactions in Account 88888. March 1995: The Dutch Bank ING agrees to purchase Barings for 1 pound and assume all of its liabilities (Bull, 1995). Lessons to be Learned: Lack of internal checks and balances Even when segregation of duties was suggested by internal audit, the concentration of power in the Leeson’s hands was scarcely diluted. Lack of understanding of the business. If Barings’ auditors and top management had understood the trading business, they would have realised that it was not possible for Leeson to be making the profits that he was reporting without taking on undue risk, and they might have questioned where the money was coming from. Arbitrage is supposed to be a low risk, and hence low profit, business, so Leeson’s large m. profits should have inspired alarm rather than praise. Given that arbitrage should be cash cashneutral or cash-rich, additional alarms should have gone off as the Bank wired hundreds of rich, millions of dollars to Singapore. Poor supervision of employees Although Leeson had never held a trading license prior to his arrival in Singapore, there was little oversight of his activities and no individual was directly responsible for monitoring his trading strategies. Lack of a clear reporting line Leeson’s fraud may have been facilitated by the confusion caused by two reporting lines: one to London, for proprietary trading, and another to Tokyo for trading on behalf of customers. customer Allikas: http://www. erisk. com/Learning/CaseStudies/ref_case_barings. asp Kusimused: 1. Millist kauplemisstrateegiat Nick Leeson oma ulemustele teadaolevalt kasutas? Kuidas selle strateegiaga teoreetiliselt raha on voimalik teenida? 2. Millist kauplemisstrateegiat Nick Leeson tegelikult kasutas? Kuidas selle strateegiaga teoreetiliselt raha on voimalik teenida? 3. Mis on back-office funktsioonid? 4. Mis sundmus sai Barings pangale saatuslikuks? Mis selle tulemusel juhtus Leesoni positsioonidega? 5. Mis olid pohjused (mida tehti valesti), et kaesolev Baringsi case sai uldse juhtuda (5 pohjust)? 6. Milliseid eetilisi noudeid Nick Leeson oma tegutsemisega rikkus ning kuidas oleks tulnud korrektselt kaituda? How to cite Case Study Barings, Free Case study samples

Case Study Barings Free Essays

string(169) " in Japan caused a steep drop in the Nikkei 225 equity index , however, Leeson’s unauthorised trading positions suffered huge losses and his operation unravelled\." Summary: One of the most infamous tales of financial demise is that of Barings Bank. Trader Nick Leeson was supposed to be exploiting low-risk arbitrage opportunities that would leverage price low rage differences in similar equity derivatives on the Singapore Money Exchange (Simex) and the Osaka exchange. In fact, he was taking much riskier positions by buying and selling different amounts of the contracts on the two exchanges or buying and selling contracts of different types. We will write a custom essay sample on Case Study Barings or any similar topic only for you Order Now Thanks to the lax attitude of senior management, Leeson was given control over both the trading and back office functions. As Leeson’s losses mounted, he increased his bets. However, after an earthquake in Japan after caused the Nikkei Index to drop sharply, the losses increased rapidly, with Leeson’s positions going more than $1 billion into the red. This was too much for the bank to sustain; in March of 1995, it was purchased by the Dutch b bank ING for just one pound sterling. Overview: Barings Bank had a long history of success and was much respected as the UK’s oldest d merchant bank. But in February of 1995, this highly regarded bank, with $900 million in capital, was bankrupted by $1 billion of unauthorised trading losses. In 1993, Nick Leeson was appointed general manager of the bank’s Barings Futures subsidiary appointed in Singapore. In this capacity, he was able to conceal his unauthorised trading activities for over a year because he managed both the trading and back office functions. The senior managers at a Barings came primarily from a merchant banking background and knew very little about trading. Even in the face of large profits, which should have tipped management off to the fact that substantial risks were being taken, they continued to believe that Leeson held matched Leeson positions on the Singapore International Monetary Exchange (Simex) and the Osaka exchange, and hence was making a low-risk profit. low In fact, Leeson was trading derivatives contracts on the two exchanges that were, in some cases, of different types and, in some cases, in mismatched amounts. For example, Leeson rent executed a trading strategy known as a â€Å"straddle,† with the objective of making a profit by selling put and call options on the same underlying financial instrument, in this case, the Nikkei th 225 Index. A straddle will generally produce positive earnings when markets are stable but can result in large losses if markets are volatile. Leeson created an error account numbered 88888 as a holding area for any premiums or losses that he made. Leeson claims that he initially opened the account to conceal a single loss of e. 0,000 pounds sterling that had resulted from an accounting error until he could make up the difference through trading. However, he continued booking various losses into the account and also continued to increase his volume of trading and level of risk taking. Leeson took unauthorized speculative positions primarily in futures linked to the Nikkei 225 and Japanese government bonds (JGB) as well as options on the Nikkei. He hid his t rading in an unused BSS error account, number 88888. Exactly why Leeson was speculating is unclear. He claims that he originally used the 88888 account to hide some embarrassing losses resulting from mistakes made by his traders. However, Leeson started actively trading in the 88888 account almost as soon as he arrived in Singapore. The sheer volume of his trading suggests a simple desire to speculate. He lost money from the beginning. Increasing his bets only made him lose more money. By the end of 1992, the 88888 account was under water by about GBP 2 million. A year later, this had mushroomed to GBP 23 million. By the end of 1994, Leeson’s 88888 account had lost a total of GBP 208 million. Barings management remained blithely unaware. On February 23, 1995, Nick Leeson hopped on a plane to Kuala Lumpur leaving behind a GBP 827 million hole in the Barings balance sheet. As a trader, Leeson had extremely bad luck. By mid February 1995, he had accumulated an enormous position—half the open interest in the Nikkei future and 85% of the open interest in the JGB future. The market was aware of this and probably traded against him. Prior to 1995, however, he just made consistently bad bets. The fact that he was so unlucky shouldn’t be too much of a surprise. If he hadn’t been so misfortunate, we probably wouldn’t have ever heard of him. Traders sometimes speculate without authorization. Presumably, a few are able to cover their tracks. Others are caught. When they are caught, they are fired, and their employer eats the loss. Usually, neither the trader nor his employer has any interest in publicizing the incident. Leeson made headlines precisely because he was so unlucky. By the time he was discovered, he had bankrupted his employer. Publicity was unavoidable. What is amazing about Leeson’s activities is the fact that he was able to accumulate such staggering losses without Barings’ management noticing. As Leeson lost money, he had to pay those losses to SIMEX in the form of margin. Leeson needed cash. By falsifying accounts and making various misrepresentations, he was able to secure funding from various companies within the Barings organization and from client accounts. His misrepresentations were flimsy at best. For example, he claimed that he needed funds to make margin payments on behalf of BSS clients, and he gave a technical argument related to how the SIMEX collected margin as justification. This claim was false. It was actually against SIMEX rules for a broker to post its own money as margin for a client. Even if the claim were true, the funds would have been needed only temporarily—until the client could make payment. Instead, Leeson continued to ask for ever more funding. Leeson increased the size of his open positions even as his losses increased due to volatility in the markets. When an earthquake in Japan caused a steep drop in the Nikkei 225 equity index , however, Leeson’s unauthorised trading positions suffered huge losses and his operation unravelled. You read "Case Study Barings" in category "Free Case study samples" On March 3, 1995, the Dutch bank ING purchased Barings for 1 pound sterling, providing the final chapter in the story of the 223-year-old bank that had once helped the United States to finance the Louisiana purchase. The beginning of the end occurred on January 16, 1995, when Leeson placed a short straddle (an options trading strategy) in the Singapore and Tokyo stock exchanges, essentially betting that the Japanese stock market would not move significantly overnight. However, the Kobe earthquake hit early in the morning on January 17, sending Asian markets, and Leeson’s investments, into a tailspin. Leeson attempted to recoup his losses by making a series of increasingly risky new investments, this time betting that the Nikkei Stock Average would make a rapid recovery. But the recovery failed to materialize, and he succeeded only in digging a deeper hole. Realizing the gravity of the situation, Leeson left a note reading â€Å"I’m Sorry† and fled. Losses eventually reached ?827 million ($1. 4 billion at then-prevailing exchange rates), then prevailing twice the bank’s available trading capital. This led to the bank’s collapse. After fleeing to Malaysia, Brunei and finally Germany, Leeson was arrested and extradited back to Singapore on March 2, 1995. While he had authorization for the January 16 short straddle, he was charged with raud for deceiving his superiors about the riskiness of his activities and the scale of his losses, although some observers (and Leeson himself) have place much of the placed blame on the bank’s own deficient internal auditing and risk management practices. Sentenced to six and a half years in jail in Singapore, he was released from prison in 1999, having been diagnosed with colon cancer , which he has survived despite grim forecasts at the time. While in despite prison, in 1996, Leeson published an autobiography, Rogue Trader, detailing his acts. There may be a temptation to view this debacle as being caused by just one individual – the â€Å"rogue trader† – but in reality the fiasco should be attributed to the underlying structure of the firm, and particularly to the lack of internal checks and balances. Events: 1993: Nick Leeson becomes general manager of Barings Futures (Singapore), running the bank’s Simex (Singapore International Monetary Exchange) activities. January 1994: By this date (at the latest), Leeson started selling put and call options on the Nikkei 225 equity index, placing the premiums earned into an error account number 88888. This strategy, known as a straddle, is essentially a bet on the stability of market prices. 24 February 1994: A memorandum from the Barings’ asset and liability committee values the 4 options portfolio at 2. 8 billion yen. July 1994 – August 1994: James Baker, an internal auditor, spends two weeks in Singapore investigating the immense profits being made there. Baker identifies the weakness of internal controls and recommends that the general manager should no longer be responsible for the back office. In response, a separate financial manager in Hong Kong is given part part-time responsibility for watching over the back office. ng August 1994: In an attempt to better evaluate its overall risk, Barings sets up an integrated Group Treasury and Risk function, reporting to a new asset and liability committee (Alco). December 1994: A later Barings investigation reveals that, for unknown reasons, Leeson has run up an accrued loss amounting to Y7. 7 billion on the account by the end of 1994. 23 January 1995: The Nikkei 225 drops by 1000 points after an earthquake hits Japan’s industrial heartland. 6 January 1995: The London futures team gives Barings’ Alco Committee a presentation on the Baring Futures (Singapore) operation, which states that Leeson is operating a perfectly perfectl matched book – long in Osaka, but short to the same amount on Simex. 8 February 1995: Coopers Lybrand decides to hold off signing off on Barings’ accounts until it becomes possibl e to clear up a few points with Leeson. 23 February 1995: At close of trading, the error account contains 55,399 Nikkei contracts trading, expiring in March and 5640 expiring in June. As of February 25, this totalled a loss of 59 billion yen on Simex. 24 February 1995: The Barings Board meets to discuss a hastily prepared analysis of the hastily-prepared transactions in Account 88888. March 1995: The Dutch Bank ING agrees to purchase Barings for 1 pound and assume all of its liabilities (Bull, 1995). Lessons to be Learned: Lack of internal checks and balances Even when segregation of duties was suggested by internal audit, the concentration of power in the Leeson’s hands was scarcely diluted. Lack of understanding of the business. If Barings’ auditors and top management had understood the trading business, they would have realised that it was not possible for Leeson to be making the profits that he was reporting without taking on undue risk, and they might have questioned where the money was coming from. Arbitrage is supposed to be a low risk, and hence low profit, business, so Leeson’s large m. profits should have inspired alarm rather than praise. Given that arbitrage should be cash cashneutral or cash-rich, additional alarms should have gone off as the Bank wired hundreds of rich, millions of dollars to Singapore. Poor supervision of employees Although Leeson had never held a trading license prior to his arrival in Singapore, there was little oversight of his activities and no individual was directly responsible for monitoring his trading strategies. Lack of a clear reporting line Leeson’s fraud may have been facilitated by the confusion caused by two reporting lines: one to London, for proprietary trading, and another to Tokyo for trading on behalf of customers. customer Allikas: http://www. erisk. com/Learning/CaseStudies/ref_case_barings. asp Kusimused: 1. Millist kauplemisstrateegiat Nick Leeson oma ulemustele teadaolevalt kasutas? Kuidas selle strateegiaga teoreetiliselt raha on voimalik teenida? 2. Millist kauplemisstrateegiat Nick Leeson tegelikult kasutas? Kuidas selle strateegiaga teoreetiliselt raha on voimalik teenida? 3. Mis on back-office funktsioonid? 4. Mis sundmus sai Barings pangale saatuslikuks? Mis selle tulemusel juhtus Leesoni positsioonidega? 5. Mis olid pohjused (mida tehti valesti), et kaesolev Baringsi case sai uldse juhtuda (5 pohjust)? 6. Milliseid eetilisi noudeid Nick Leeson oma tegutsemisega rikkus ning kuidas oleks tulnud korrektselt kaituda? How to cite Case Study Barings, Free Case study samples