Priesthood Of All Believers Theology Religion Essay

Priesthood Of All Believers Theology Religion Essay Luthers greatest contribution to Protestant ecclesiology was his doctrine of priesthood of all believers. It was a central teaching of Luther in the formation of Christian communities. Eric W. Gritsch has claimed, Luthers doctrine of the priesthood of all believers, developed particularly in his treatises of 1520, is one of the most revolutionary doctrines in the history of Christianity.  [1]  It is the clear biblical idea that we could see from the Genesis to Revelation. The doctrine of the priesthood of all believers opposes the unbiblical doctrine of sacerdotalism  [2]  and the existence of a Brahman-like  [3]  priestly class within the church. When Martin Luther nailed his Ninety-five Theses on the door of Wittenberg Castle Church on October 31, 1517, he was declaring war against the idea that salvation comes through the priesthood via the sacraments. His theses were anti-sacerdotalistic and he spoke against the theology that ex opere operato  [4]  supernatural li fe could be created through baptism, brought to growth by confirmation, nourished by the Mass, and healed of all diseases by penance and extreme unction. Luther vehemently rejected the idea that through sacraments a priest could control an individuals life both here and hereafter. Luther claimed that everyone who does have faith in Jesus Christ is a priest. He wrote that his hope was for a day when we shall recover that joyful liberty in which we shall understand that we are all equal in every right, and shall shake off the yoke of tyranny, and know that he who is a Christian has Christ, and he who has Christ has all things that are Christs, and can do all things.  [5]  The concept that all who believe in Christ are priests came into mind to Luther after he became convinced that Scripture was the only authority for a Christian. Believers are called to be the salt and the light (Matthew 5:13), this is only possible when the believers understands Christs priestly ministry and its own priestly role. This also has serious eschatological implications, as Christ comes to be united with his bride, the Church. Will He find a fragmented body or a united family of believers? Hence this paper mainly examines that where from the concept of priesthood of all believers begins in the Bible and for what purpose; what is the context that steered Luther to raise this idea of priesthood of all believers; the coherence between Luthers idea and the biblical idea of priesthood of all believers; and its implication to the present church of India. I. THE ORIGIN OF THE CONCEPT OF PRIESTHOOD OF ALL BELIEVERS IN THE BIBLE A priest is one who performs the sacrifices, makes the rituals and doing the work of mediator between God and man. He is the one responsible for offering the divinely appointed sacrifices to God, for executing ceremonies relating to the worship of God. In other sense, he is the representative between man and God. Scripture says, For every high priest, being taken from among men, is appointed for men in things pertaining to God, that he may offer both gifts and sacrifices for sins.  [6]  The priestly office came first in time, when our first parents sinned and fell from the high estate into which they had been created. God Himself performed the priestly office when He slew animals and provided a covering for Adam and Eve.  [7]   A. PRIESTHOOD IN THE OLD TESTAMENT There were three orders of men in the Old Testament times such as the kingly, the prophetical and the priestly orders. They were set apart by anointing with holy oil for a particular vocation. A king in the Old Testament was one who ruled men for God. A prophet was one who spoke for God to men. And a priest was one who spoke for men to God. Among all these three orders, even from the very beginning of the human race, the believers have performed priestly works. In the particular period, the head of the family was doing the priestly office. He would build an altar and offer a sacrifice for the help from God. Scripture gives enough evidence for that. 1. Priesthood in the Patriarchal Age In the Bible history, the first period is commonly known as Patriarchal Age. The word patriarch comes from two root words meaning father rule. It encompasses the period between the creation events, and the time when Israel was separated as a special nation at Sinai for the preparation of the coming Messiah. In Genesis 4:3-5 both Cain and Abel functioned in the capacity of priest in that each was responsible for his own offering to God. We could see that when Noah disembarked the ark following the great flood, he offered sacrifices on behalf of his family.  [8]  Abram, after a long march from Ur, came into Canaan and built an altar at Shechem.  [9]  Again and again, Abraham offered sacrifices to God, as did his sons and grandsons. Thus, originally in mans relations with God, every individual functioned as his own priest before God with no particular location established for sacrificing and with no intermediary between him and God.  [10]  When He gave the Law at Mount Sinai , the people of Israel had been given an opportunity to become a kingdom of priests. Now if you obey me fully and keep my covenant, then out of all nations you will be my treasured possession. Although the whole earth is mine, you will be for me a kingdom of priests and a holy nation.  [11]   Here God makes a covenant with all the people of Israel. Based on the above text, the people of Israel become Gods possession and are chosen for the privilege of service. God instituted the priesthood of Israel as a congregated unit for the purpose of service to the world. This is the vocation of the people of God of which each member stands under Gods call, and each is accountable for his or her response to it. 2. A Shift on Priesthood But Israel disobeyed and God removed the opportunity for becoming a kingdom of priests. When Moses went up to the mountain to receive a list of rules and regulations for the newly freed nation, God also gave him instructions to form a professional priesthood. Now each layman would no longer be his own priest, the individual could no longer take his sacrifices directly to God.  [12]  Here God selected Aaron and his family and the tribe of Levi to be His priests. They were set apart that when Israelites entered the Promised Land, the priests and Levites received no inheritance of land as the other eleven tribes. They had been set apart for the service of God and were to be supported by the tithes and offerings of the peoples sacrifices. The sons of Aaron and the tribe of Levi had at least three distinctive as priests. 1. They had direct access to God. At appointed times they went into the Holy Place and even the Holy of Holies to communicate with God. 2. The priests represented God to the people of Israel. They were mediators who communicated the Word of God to the people since they were considered holy. 3. The people represented the people of Israel to God. The people could not approach a holy God directly because of their sin. The priests were mediators for the people as they brought sacrifices before the altar. The high priest entered the Holy of Holies yearly once on the Day of Atonement to offer an atoning substitute of a bull or lamb offering. One of the most important features of the priestly system was to emphasize the absolutely holy nature of Almighty God. This is a concept repeatedly affirmed in the Scriptures.  [13]   B. PRIESTHOOD OF ALL BELIVERS IN THE NEW TESTAMENT This was the situation continued Jesus Christ was crucified. At the same moment of Jesus death, the veil of the Temple was ripped from top to bottom.  [14]  From then on there has been no need for select group of priests. At that point in time and ever since then believers became priests, a part of Gods royal or kingly priesthood. The elimination of the office of priests as a select group of people is based, then, upon the physical sacrifice of Jesus, the ultimate High Priest. Jesus completed and fulfilled the role of priest in His substitutionary death. . . . but He became a priest with an oath when God said to Him: The Lord has sworn and will not change His mind: You are a priest forever. Because of this oath, Jesus has become the guarantee of a better covenant . . . because Jesus lives forever, He has a permanent priesthood. Therefore he is able to savecompletely . . . Such a high priest meets our need-one who is holy, blameless, pure, set apart from sinners, exalted above the heavens. . . . Unlike the other high priests, He does not need to offer sacrifices day after day, first for His own sins, and then for the sins of the people. He sacrificed for their sins once for all when He offered Himself. For the law appoints as high priest men who are weak; but the oath, which came after the law, appointed the Son, who has been made perfect forever.  [15]   The priest, then, is the person who himself has access to God and whose task it is to bring others to Him. While in the ancient world this access to God was the privilege of the professional priests, and in particular of the High Priest who alone could enter into the Holy of Holies. But now through Jesus Christ, the new and living way, access to God becomes the privilege of every Christian. The word priest comes from the Latin presbyter and the Greek presbyteros which simply means elder. This word was later used to describe the leader of a community. In modern usage the term priest seems to be derived more from the actual Greek word for priest hiereus.  [16]  In the New Testament this word is never used to describe a class or caste of people separate from the people of God. Instead, it is used in the sense all Gods people are a chosen race, a royal priesthood  [17]  The New Testament believers constitute the succession to the priesthood in old Israel, having been given the right of direct access to God through Christ. Furthermore, the ministry in the church has replaced the ancient priesthood. Hence, all the believers in Christ are priests in the New Testament. Put into historical perspective, the priesthood concept would look like this: for the first several thousand years mankinds history as recorded in the Bible, each man was responsible for functioning as a priest before God. Then, for approximately 1500 years, the time between Moses and when Christ appeared on earth, the priesthood of the professional existed. From the death of Christ until He returns again, we have reverted to the pre-Sinai days of the priesthood of the believer.  [18]   II. THE HISTORICAL BACKGROUND OF MARTIN LUTHERS REFORMATIVE THOUGHT It is better to look back the history of the church to understand that how the New Testament idea of priesthood of all believers was perverted into the Roman Catholic Idea of Institutionalism. A. PRIESTHOOD OF ALL BELIEVERS IN THE EARLY CHURCH HISTORY The doctrine of the priesthood of all believers is found throughout the Scriptures and was practiced in the early church. As Dr. R. Laird Harris writes, First century Christianity had no priests. The New Testament nowhere uses the word to describe a leader in Christian service.  [19]  But this glorious doctrine was gradually replaced by sacerdotalism beginning in the third century, especially by Cyprian (c. 258) Bishop of Carthage. Cyprian treated all the passages in the Old Testament that refer to the privileges, the sanctions, the duties, and the responsibilities of the Aaronic Priesthood, as applying to the officers of the Christian Church.  [20]  He completely failed to grasp the central thesis of the Epistle to the Hebrews. He was blind to the fact that the only High Priest under the Gospel recognized by the apostolic writings is our Lord Himself  [21]  and not a solitary pope or bishop or priest of the church. So from the third century onwards the priesthood of all believers was not visible in theological thinking. But the Roman Catholic theologians justified sacerdotalism by saying that Jesus gave the keys of the kingdom to Peter, the rock upon whom Jesus would build his church. Further they says that Peter was the first pope of Rome, and so the pope of Rome by succession has the power of the keys of the kingdom to bind and loose, and even to save. Salvation is deposited in the Roman priesthood and dispensed through the sacraments. The sacraments are effectual ex opere operato, meaning the subjective condition of the priest or the recipient does not matter. The Roman Catholic Church teaches that there is no salvation outside of the priesthoods mediatorial function, and no person by grace alone through faith in Jesus Christ may approach the Father with confidence! B. PRIESTHOOD OF ALL BELIEVERS IN THE MEDIVAL PERIOD By the successive centuries, the Roman Catholic hierarchy and other religious groups make a sharp distinction between the laity and the clergy. Such distinction was foreign to the early church where the ultimate authority in ministry traces back to the risen Lord. Along with the structural hierarchy is the sacrament of ordination. The church in Rome imposes the sacrament of ordination that results in the marked separation between the clergy and the laity.  [22]  Christianity had been plagued with it ever since. More and more the church began to structure itself on the basis of the former Levitical order, rather than on the purely New Testament idea of each man is a priest perspective. The change was slow and evolutionary, but pastors gradually came to be called priests and the believers laity. The communion table became an altar and the elements a sacrifice. At the dawn of the Reformation Era, the institutionalized church already would have two major distinguished bodies within the community of believers: the clergy and laity. The status lay people, both in principle and in practice, would not only subordinate to the priests, but also widens the gap between clergy and laity. The gap became synonymous with the sacred and the profane.  [23]   But godly men such as Peter Waldo, John Wyclif and John Hus saw the distinct difference and distance between the clergy and laity. They didnt like it, for it was in opposition to the teachings of the New Testament. Until the dramatic impact of the Protestant Reformation, these smaller movements had little pervasive influence.  [24]   C. PRIESTHOOD OF ALL BELIEVERS IN THE REFORMATION ERA During the Reformation era the concept of the priesthood of all believers became very contentious within the structures of the Institutional church. The Reformation era provides a framework in tracing the concept of the priesthood of all believers. An elucidation on how Martin Luther formulated the doctrine of the priesthood of all believers will be dealt with in the pages to follow. The concept that all who believe in Christ are priests occurred to Luther after he became convinced that Scripture was the only authority for a Christian. As he studied the Bible, especially Pauls Epistle to the Romans, he discovered that in and through Jesus Christ a believer possessed the righteousness of God, and therefore, immediate access to God without the mediation of an arrogant priesthood. Thus, the doctrine of the priesthood of all believers is a sequel to the doctrine of justification by grace alone through faith alone. Those who are clothed in the perfect righteousness of God are welcome in the presence of God. No Christian needs a pontiff, meaning a bridge builder, because Jesus Christ alone is the way to the Father. There were other efforts at reforming the Catholic Church, seeking to bring it back to a more biblical posture, but they all fell short of their goal. It was not until such reforming seeds germinated in a favorable political climate that fruit would be born. The date was October 31, 1517. The place was Wittenberg, Germany. An obscure priest named Martin Luther nailed his grievances to the church door, the Reformation was born. A number of changes were called for by this bold, imaginative priest, but at the very core of the Reformation was the conviction that all believers are priests of the living God. He felt that all believers had the right and responsibility to study Gods Word, involve themselves in the ministry, make confession to God on their own, and even administer the sacraments.  [25]   What had started in 1517 as a protest against indulgences by an unknown monk, developed in 1520 into an irreconcilable conflict dividing the Western Church. The three treatises of To the Christian Nobility of the German Nation, The Babylonian Captivity of the Church, and The Freedom of a Christian are the heart of Luthers protest against the church of his day. The first was written in August, the second in October, and third in November. In great part, Luthers tract is a catalog of the deplorable state of Christendom. The pope exalts himself over secular rulers as well as over the church, and lives in unconscionable luxury. Rome is a moral cesspool where licenses to live in open debauchery can be bought and sold. The Church has become a machine for making money, and the popes henchmen, having bled Italy dry, have now turned their attention to Germany. Because of their inability to live up to the arbitrary rule of celibacy, many pious priests keep wives, yet do so secretly and with a bad conscience. The universities ignore the Bible and lecture on commentaries, and on commentaries on commentaries. The common people are ignorant even of basic Christianity.  [26]  In such a situation, Luther did write his treatises. Primarily, his first treatise of To the Christian Nobility of the German Nation occupied the central theme of the priesthood of all believers. Here it is better to examine the background that led Martin Luther to raise the concept of priesthood of all believers. 1. To the Christian Nobility of the German Nation a) Priesthood of All Believers As Social Implication In his first treatise of To the Christian Nobility of the German Nation the concept of priesthood of all believers has social, ecclesiastical and spiritual implications. At the dawn of the Reformation era, the institutionalized church already would have two major distinguished bodies within the community of believers such as clergy and laity. Socially, he accepted the context of western Christianity, where temporal rulers belong to the body of Christendom. Within the Christian social order, the rulers are ordained of God to punish evildoers and protect those who do good. When pressed by the temporal power the Romanists have made decrees and declared that the temporal power had no jurisdiction over them, but that, on the contrary, the spiritual power is above the temporal.  [27]   Luther argues against the medieval division between the temporal and the church authorities and their separate jurisdictions in all matters. First of all, he attacked the social distinction that emphasized by the Romanists, It is pure invention that pope, bishop, priests, and monks are called the spiritual estate while princes, lords, artisans, and farmers are called the temporal estate. This is indeed a piece of deceit and hypocrisy. Yet no one need be intimidated by it, and for this reason: all Christians are truly of the spiritual estate, and there is no difference among them except that of office.  [28]   He maintains that all Christians are equally Christian so that none is superior to any other as far possessing what is essential to the church, because we all have one baptism, one gospel, one faith, are all Christians alike; for baptism, gospel, and faith alone make us spiritual and a Christian people.  [29]   Relying upon 1Corinthians 12:12-13, which describes the Church as the body of Christ and each member a part of that body, Luther acknowledges differences between Christians, not as questions of status, however, but as occasions for service to others. All are not the same in what God has given them to do, but they are all the same in what God has given them to be in the Church, viz., His very own people. All Christians, therefore, have the same status. By quoting 1Peter 2:9 and Rev. 5:9-10, Luther describes that status as priest and ascribes it to every Christian, As far as that goes, we are all consecrated priests through baptism.  [30]  So what differentiates Christians is simply the work that God has given them to do: There is no true, basic difference between laymen and priests, prices and bishops, between religious and secular, except for the sake of office and work, but not for the same of status. They are all of the spiritual estate, al are truly priests, bishops, and popes  [31]   As part of the divine economy, God has given to each Christian a particular calling in this life whereby he serves others, Everyone must benefit and serve every other by means of his own work or office so that in this way many kinds of work may be done for the bodily and spiritual welfare of the community, just as all the members of the body serve one another (1Cor.12:14-26).  [32]   As examples of such vocations in the body of Christ, Luther mentions cobblers, smiths, peasants, and temporal authorities besides the clergy. But what is noteworthy about the last, those who have as their vocation the administration of the Word of God and Sacraments,  [33]  is that they are exercising an authority that belongs in the first instance to every Christian. For besides designating ones status before God, Luthers concept of the priesthood of believers also includes spiritual power in the church. b) Priesthood of All Believers as Ecclesiastical Implication Luther rejects ecclesiastically, the clergys monopoly on interpreting Scripture. He attacks the second wall of Romanists that only the pope may interpret the Scripture, determining correct doctrine, forgiving sins, and exercising discipline. There is no Scriptural warrant at all for the claim that only the pope may interpret the Bible. Here Luther clarifies the illusion that some of the Romanists claim of the power that was given to St. Peter. Although they allege that this power was given to St. Peter when the keys were given him, it is clear enough that the key were not given to Peter alone but to the whole community. Further, the keys were not ordained for doctrine or government, but only for the binding or loosing of sin.  [34]   As handlers of Scripture the Romanists are manifestly incompetent, and this makes their claim to hold a monopoly on biblical interpretation absurd. The Romanists must admit that there are among us good Christians who have the true faith, spirit, understanding, word, and mind of Christ. Luthers main point is that the Pope isnt the only person able to read the scriptures. He writes, Has not the Pope often erred? Here Luther implies that the Pope isnt God, and that he makes mistakes.  [35]  The Pope, therefore, can misinterpret the Bible. Luther shows that the Pope is like everyone else, so therefore others can interpret the scriptures as well. Luther then uses the Bible as a way to prove the second wall wrong. Luther quotes Christs words, And they shall be all taught of God(St. John vi. 45). Everyone should be able to interpret the scriptures and be taught of God, without the Popes help. Furthermore he questions, Besides, if we are all priests, as was said above, and all have one faith, one gospel, one sacrament, why should we not also have the power to test and judge what is right or wrong in matters of faith? What becomes of Pauls words in 1Corinthians 2:15, A spiritual man judges all things, yet he is judged by no one? And 2Corinthians 4:13, We all have one spirit of faith? Why, then, should not we perceive what is consistent with faith and what is not, just as well as an unbelieving pope does?  [36]   Even more, Luther attacks the third wall of Romanists. He argues that there is no basis either in the nature of a Christian society or in Scripture for the Romanists refusal to call a council. Luther brings up that St. Peter wasnt the only person to call a council: Thus we read in Acts 15 that the council of the Apostles was not called by St. Peter, but by all the Apostles and the elders.  [37]  Also, nowhere in the scriptures does it say that the Pope is allowed to call a council by himself. Therefore their threats can be safely ignored, and a council should be called without delay to deal with a long list of abuses in the Church. Ordinary people and temporal authorities have the right and duty to do this, not only by virtue of their status as kings and priests before God, but because the crisis in the Church demands it. Would it not be unnatural if a fire broke out in a city and everybody were to stand by and let it burn on and on and consume everything that could burn because nobody had the authority of the mayor, or because, perhaps, the fire broke out in the mayors house? à ¢Ã¢â€š ¬Ã‚ ¦How much more should this be done in the spiritual city of Christ if a fire of offense breaks out, whether in the papal government, or anywhere else?  [38]   Therefore, Luther concludes that it is the duty of every Christian in the Church as having the responsibility of priesthood of all believers; he has to espouse the cause of the faith, to understand and defend it, and to denounce every error. c) Priesthood of All Believers as Spiritual Implication Luther declares that since we have one baptism, one gospel one faith, and are all Christians alike; for baptism, gospel, and faith alone make us spiritual and a Christian people. He quotes 1Peter 2:9, But you are a chosen people, a royal priesthood, a holy nation, Gods special possession, that you may declare the praises of him who called you out of darkness into his wonderful light. Yet all are alike consecrated priests, everyone must benefit and serve every other by means of his own work or office so that in this way many kinds of work may be done for the bodily and spiritual welfare of the community, just as all the members of the body serve one another. Mainly all should share the three priestly functions such as prayer intercede with God on behalf of others, proclamation speak the gospel sharing it with the neighbor, and sacrifice living a cross-centered and servant oriented life. Since the Church is in a state of crisis and someone has to act. The temporal authorities and ordinary lay people can and should do so because there are no inherently unspiritual vocations, because all Christians in all vocations are kings and priests, and because the deplorable state of the Church is the concern of every Christian. 2. The Babylonian Captivity of the Church Nevertheless, the second treatise of Luther, The Babylonian Captivity of the Church also has the influence of the idea of priesthood of all believers. In this treatise, he discusses and dismantles the medieval sacramental system. In a measured but powerful way, Luther subjects each of the seven medieval sacraments such as baptism, Eucharist, penance, confirmation, marriage, ordination, and extreme unction to the critique of Gods Word and concludes that there are, strictly speaking, but two sacraments in the church of God baptism and the bread ( Eucharist). For only in these two do we find both the divinely instituted sign and the promise of forgiveness of sins  [39]   Not surprisingly, in his di

Carlos Ghosn Nissan Ceo

Carlos Ghosn as CEO of Nissan and Renault: Can He Rework the ‘Nissan Magic'? â€Å"We knew some people were concerned about the potential for culture clashes, between the French and the Japanese, but it was not an issue. Cultural differences should be used as a catalyst for change, not as a crutch that inhibits change. You can learn a lot from somebody who is not like you. â€Å"1 – Carlos Ghosn, CEO, Nissan. â€Å"Make sure you are focused on your own people. Bring in them motivation and sense of ownership, then you can do your miracle. 2 – Carlos Ghosn, CEO, Nissan. Introduction In 2002, Louis Schweitzer, CEO of Renault announced that Carlos Ghosn, the president and CEO of Nissan would also take over the reigns at Renault in April 2005, while Schweitzer would remain the chairman of the board. With the new position , Carlos Ghosn would lead two companies Nissan and Renault. As of 2004,Renault held 44%stake in Nissan and Nissan owned around 15%of Renault's shar es. ‘Turnaround artist', as Carlos Ghosn was called was behind the industry's most remarkable turnaround at Nissan.After he became the CEO of Nissan in 1999, he had brought in many un-Japanese changes in the Japanese company and had actively persuaded the employees to accept change. Carlos Ghosn was credited for reviving the company from$254million losses and $19billion debt in 1999 into profits within two years. After taking up his position as the CEO of Renault in April 2005,CarlosGhosn is likely to face many challenges. Heading two different automobile companies from two different countries was first of its kind and industry observers expressed doubts whether Ghosn would be able to take up the pressure and rework the ‘Nissanmagic'.Carlos Ghosn: The ‘Nissan Magic'In March 1999,Renault, the then ninth carmaker in the world announced its alliance with Nissan investing $5. 4 billion. Nissan was in losses for many years from 1990-1999 except for profits reported in 1 997(Annexure I) and looked out for partners to recover from the troubles. The brand recognition was very low and it was estimated that Nissan was losing $1000 for every car it sold in US. By the end of 1990s,Nissan exported cars to Europe and Australia and some parts of Asia. The company was in losses to the tune of $5. billion, had debts totaling around $19 billion and was suffering from a poor product portfolio and diminishing brand value. Nissan’s market share had dropped from 6. 6 %in 1991 to 4. 9%by late 1990s. Renault at the same time was expanding internationally through acquisitions. After the unsuccessful merger with Volvo, Renault under Louis Schweitzer entered into an alliance with Nissan acquiring a 36%stake in the company. Triggering the alliance was Nissan’s strength in product designs and sophisticated manufacturing that blended well with the engineering quality at Renault.For Renault, the alliance would help in international expansions in the long-term while for Nissan; it was to get rid of its short-term troubles that had accumulated. Initially industry observers were skeptical about a non-Japanese manager successfully leading a Japanese firm. While Carlos Ghosn was successful in cutting costs and had sometimes imposed hard regimes during his tenure atMichelin3  , many were apprehensive if he would be successful in Japan. | | He was 46 when he joined Nissan and was far younger than the middle-level managers in the company.Carlos Ghosn knew nothing about Japan and had no knowledge of the culture there. He once said that he had a ‘very vague' idea about the country and accepted, â€Å"I did not try to learn too much about Japan before coming, because I didn’t want to have too many preconceived ideas. I wanted to discover Japan by being in Japan with Japanese people. â€Å"4  On the first day, when Carlos Ghosn arrived at Nissan, he took an elevator to reach his office. As he entered the lift, which was already pa cked with workers who were coming up from garage, everyone knew he was the new CEO. To his surprise, at every floor the lift stopped, none got down.Finally, when he got down, the employees bowed as he left and went back to their floors. After such an unexpected incident, which reflected major cultural difference, Carlos Ghosn realized how important it was to understand them. Since the first day, Carlos Ghosn had made the cultural diversity a catalyst rather than a crutch for the company. 5 Next >> 1]Carlos Ghosn's interview, â€Å"Interview: The road to ruin†, www. themanufacturer. com, December 2002 2]Parachkevova, Anna â€Å"CEO outlines Nissan’s resurgence†, www. thedartmouth. com, May 12th 2004 3]Carlos Ghosn joined Michelin in 1974, where he was chairman and CEO ofNorth American operations and had undertook several cost cutting initiatives. 4]†Carlos Ghosn: standing at the global crossing†, http://web-japan. org, April 5th 2002 5]†Th rowing away the culture crutch†, 2000 Automotive News World Congress, January 18th 2000 Carlos Ghosn: The ‘Nissan Magic' Cont†¦ However, since the beginning, Carlos Ghosn was in a Catch-22 situation as Japanese were not used to dictatorship kind of leadership. He knew that if he tried to dictate terms, that could lead to bruising employee morale, and if he remained lenient, it could hinder the required change.Instead of imposing change ,CarlosGhosn brought about the need for urgency in operations by mobilizing   them an agers. Carlos Ghosn identified that the basic flaw with Nissan’s culture when he took over was that employees were reluctant to accept the failures and held other departments or economic conditions responsible for them. This resulted in a lack of urgency among employees as everyone assumed the other would take action. He found that instead of solving the problems, they were trying to live with them.Nissan throughout 1990s, had been concentra ting on short-termmarket share growth rather than long termgrowth and instead of investing its profits towards product portfolio improvement itwas spending themtowards equity purchases of other companies especially its suppliers. Its product profile was comparatively outdated with old designs when customers craved for stylish designs while competitors were steadily focusing on new product designs. By 1999, it had around $4 billion held in the form of shares while its purchasing costs remained very high, around 20-25%more than that of Renault's.The employees openly resisted cross-functional teams, as they strongly believed in territories and sectionalism, which was a major part of their culture. Carlos Ghosn explained, â€Å"Engineers work very well together, financial people work very well together, salespeople work very well together. But when you start to add an engineer, a marketer, a salesperson, and a manufacturer, here all the strengths of Japan in teamwork disappear. â€Å" 6  To overcome the resistance, he had to explain to the employees why the cross-functional teams were important and how they would impact the overall benefits.Carlos Ghosn believed that the general human tendency was to resist anything different. He considered that by accepting change, people tend to become stronger, as they understand the differences and try to analyze the causes for such differences. Cross-functional teams were formed and employees were involved in the revival process. This helped Carlos Ghosn explain his plans and gain acceptance easily. Through these cross-functional teams, employees were made to look beyond their line of responsibilities, understanding the nitty- gritties of the other departments as well.After the cross-functional teams were in place, people owned up responsibility whenever something went wrong. â€Å"The solution to Nissan’s problems was inside the company. The main [idea] we would have for revival of the company would be a rebuilt m otivation of Nissan employees and partners,† he explained. 7| | Immediately after appointing the teams, they were asked to submit plans to achieve the maximum possible output in each area and within a week decisions were made. The outcome was the Nissan Revival Plan (NRP).After the NRPwas announced, every aspect from the timing, the plan schedules and the commitments as well as targets were clearly stated. Shiro Tomii, vice president, Nissan Japan remarked, â€Å"He establishes high yet attainable goals; makes everything clear to all roles and levels of responsibility, works with speed; checks on progress; and appraises results based on fact. â€Å"8 Next >> 6]†Carlos Ghosn: standing at the global crossing†, op. cit 7]Saadi, Dania â€Å"Nissan's miracle man offers clues to solving national economic woes†, www. lebanonwire. com   8]David Magee, Turnaround: how Carlos Ghosn rescued NissanCarlos Ghosn: The ‘Nissan Magic' Cont†¦ Listening to the employees and facilitating their participation in the decision-making process, was key aspect of Carlos Ghosn's leadership. By avoiding impersonal meetings through mails, he stressed the need for face-to-face communication. He believed that the people close to the company could come out with better solutions than an outsider like him. In contrast, the Japanese were polite, reticent and never spoke about the plans to their boss. Carlos Ghosn had to repeatedly explain to the employees that he needed their viewpoints and would not mind if they speak out.This, according to him was the greatest hurdle. While in France at Renault, he emphasized on teamwork, in Japan he believed it was not required and instead individuality was given more prominence. Price Water house Coopers in a report on change management listed Carlos Ghosn's key human resource management techniques calling them very simple and straightforward By maintaining transparency from the stage of planning to action, he ai med at the best possible out comes while also lifting the morale of the employees who were particularly distressed after the crisis at the company.He invited suggestions from every influential individual from suppliers, Nissan’s ex-employees, dealers etc. He explained, â€Å"As you know credibility has two legs, performance, and transparency. Performance, we had none to show at the time, so we were determined to be highly transparent. â€Å"9  He called the NRP, an ‘organization's collective effort' involving thousands of employees at every managerial level. To show his commitment to the plan, he declared that he would resign along with other top executives if the plan fails in bringing in the benefits. Carlos Ghosn wanted immediate results by fixing short-term targets.While he called the passive style of management-by-consensus a killer, an active and constructional version could work miracles, according to him. He believed that an 85%consensus was enough and 100%w as not always essential. While cultural adaptability had been his key, he was also at the same time affirmative about giving more priority to the bottom-line growth rather than just to the cultural aspects. He remarked, â€Å"I do not want to intentionally offend people, but I am more concerned about making Nissan profitable again than being culturally sensitive. â€Å"10| | The first phase of NRP focused on cutting the costs and improving profits.The first major step Carlos Ghosn undertook was divestments from subsidiaries to reduce the debt. Suppliers accounted for major part of costs of production and the age-old Keiretsu system and the obligations that came with it were adding to heavy costs11  . Deviating from the system, Carlos Ghosn opened the purchasing offer to all the suppliers encouraging new suppliers who were ready to supply at low prices. As part of the revival plan, suppliers were forced to offer discounts to the tune of 20-30%and the number of suppliers was broug ht down to 600 from 1145 while the purchasing costs were reduced by 20%.During a meeting with the dealers of Nissan, Carlos Ghosn announced, â€Å"I don't want any excuses. I want to know what you are going to do to make things better. â€Å"12  Cost cutting at each stage began to be regarded as the need of the hour as the employees were encouraged to reduce expenses through all possible ways. The cross functional teams were given one month time to identify areas to cut costs and increase the profits through bottom-line growth. Next >> 9]Ibid. 10]Larimar, Tim â€Å"Japan, Nissan and Ghosn revolution†, www. sb. columbia. edu 11]The Keiretsu system, in which the companies maintained partnership with each of its suppliers, holding shares in those companies, transferring managers characterized the big family of companies and its suppliers were both shared relationships 12]Larimar, Tim â€Å"Japan, Nissan and Ghosn revolution†, op. cit. Carlos Ghosn: The ‘Ni ssan Magic' Cont†¦ The most un-Japanese practices like closing plants and cutting work force, in a country, which believed in lifetime employment, were the biggest of all challenges.When he planned to close five plants which included both assembly plants and power train plants, the board of directors were not informed until the night before, as Carlos Ghosn knew some people within the company wanted his plans to fail. After he announced, he was reported to have threatened, â€Å"If this leaks out, I'll close seven plants, not five. â€Å"13  For Carlos Ghosn, convincing the labor unions over the disadvantages of rigid job definition was a big task. The seniority-based promotion that was entrenched in the Japanese firm was replaced by a performance based and merit-based incentive system.Instead of sacking people, which was against the culture in Japan, 21,000 jobs were cut through retirements, pre-retirements and golden handshakes out of which 16500 were in Japan alone. The plants were closed, while offering alternative jobs to the employees in other plants of the company. The complex manufacturing structure, which involved 24 platforms at seven assembly plants, was brought down to 12 platforms, which were shared by four plants. Around 10%of the retail outlets were closed and 20%of the dealer affiliates was streamlined to further reduce selling and marketing expenses.After the phase one of the revival plan was over, Nissan reported profits of $1. 5 billion for six months between April to September, which was the best results the company had ever seen. At the same time, Carlos Ghosn began to be called an iconoclast, who had brought in some un-Japanese, western style of culture in the company’s operations. He, in contrast to the traditional Japanese business etiquettes, shook hands with his partners and other executives. As a result, there was discontent among the traditionalists and other industry associations in the country.And his bold decision s like closing plants, had invited repugnance among many including the insiders and Ghosn began to take along a bodyguard wherever he went| | The cross-cultural merger between a French and a Japanese firm, raised several other challenges. The alliance aimed at cost savings through sharing of platforms and engineering capabilities. Initially though the employees and the design engineers were convinced over the superiority of the platforms brought in from the Renault plants, they were reluctant to adopt them.To overcome resistance, regular meetings were conducted among the Nissan and Renault employees. While at the same time, Carlos Ghosn began to recruit more designers from Japan to design new models. He maintained that the best way to solve the cultural differences was to avoid forcing the cultural blend. Rather, he believed in appreciating the differences between the cultures and minimizing the cultural clashes by bringing in a performance-driven management. To ensure that the Japa nese staff understands what the French managers spoke, English was made the common language in the company.A dictionary of 100 key words used by them management was prepared to solve the differences in the way each work was interpreted by French as well as Japanese. The words included ‘commitment', ‘transparency', ‘objectives', and ‘targets' etc. Carlos Ghosn: The ‘Nissan Magic' Cont†¦ In Japan, attending all formal parties of suppliers was very important and one was not supposed to miss them unless there was a strong reason. When Carlos Ghosn missed the New Year Party hosted by the suppliers’ association, it was considered as a sign of disrespect to their culture.Carlos Ghosn had attended all such gatherings since then. Carlo sGhosn understood all these subtle aspects, which were an essential part of the culture, as he began adapting to them. In the second phase of the revival plan, which started in 2001, Carlos Ghosn stressed on selling mo re cars, improving the top line growth as well. Dropping non-performing products from its portfolio, the company introduced trendy new models in SUVs and minivans category. An updated Z sports coupe was reintroduced in the market. The phase two increased sales by one million and debt was brought down to zero.With his unconventional leadership style and charisma, he began tow in praises from the employees of the company as well as from the industry and the public. Sometimes, people in streets would stop him and wish him success saying, ‘Gambatte [go for it]'. TIME magazine named him the most influential global business executive and more and more Japanese companies were embarking on the gaijin [Foreigner]-Ghosn’s style for attaining maximum benefits in a short time. His colleagues at Nissan were particularly impressed by his dedication towards achievement of targets and his 24/7 work ethics reinforcing the importance of hard work.His devotion towards the revival of the c ompany from problems, for which he was not in any way responsible, encouraged his peers to work hard and contribute towards a common goal. Toshiyuki Shiga who was made in charge of the Nissan’s expansions in China had once remarked, â€Å"He told me to make a clear strategy for Nissan in China, and he gave me two months to do it. †Ã‚  14  While he ensured that the progress was undertaken without holding any individual responsible for the past crisis, he was also at the same time particular about results. | Dominique Thormann, senior vice president, Nissan Europe, said, â€Å"To people who don't accept that performance is what is at stake, he can be ruthless. â€Å"15 Calling his turnaround at Nissan a ‘near death experience', Carlos Ghosn said he had experienced extensive cultural diversities during his tenure at Renault, Nissan, Nissan’s North American business and Samsung motors, a Korean based company acquired by Renault. His management style is wov en around two attributes- ‘value and motivation'. He believed in motivating employees and demanding performance by empowering them. Your employees must be interested in what is going on in the company. Nothing is more inefficient than a boring company. You have to create an interesting environment where people are interested in the story you are creating and want to hear the happy ending†, he said. He was called ‘Ice Breaker' by Daimler Chrysler's Chairman Jurgen E. Schrempp because of his unconventional thinking and implementing western style of management in Japan breaking the prevalent myth in the industry. Carlos Ghosn: The ‘Nissan Magic' Cont†¦The biweekly comic series, ‘The true life of Carlos Ghosn' featured Nissan's CEO Carlos Ghosn, depicting his popularity in the industry as well as the country. Some others called him ‘an ambassador of change', ‘the troubleshooter' and considered him as a role model for all those business exec utives who were seeking solutions to the poor state of their companies in Japan. After the implementation of the Nissan Revival Plan (NRP), within two years, the company recovered from the losses and reported a 10. 2%increase in its revenues and nearly 84%increase in its operating profits .Though the sales had not considerably improved, the cost cuttings contributed towards improving the bottom line. In May 2001, the company reported its largest net profit of $2. 7 billion. Carlos Ghosn was named the ‘Businessman of the year' by Fortune magazine in 2002 and Auto mobile Magazine called him' man of the year' for his contributions to Nissan. Renault increased its stake in Nissan to 44. 4%while Nissan owned 13. 5%of Renault's share capital. However, by 2003,Nissan started experiencing a downward trend in its sales, as the volume of goods that passed out from dealers was dropping in size.Customers regularly complained of quality defects and Nissan’s rank in overall quality ( as per a survey by J. D. PowerAssociates) dropped to 11th in 2004 from6th in 2003. It looked as the rigorous emphasis on the faster execution of the restructuring had resulted in these quality defects while Ghosn assured he would fix them. To counter the situation, in May 2004, he sent a quality control team of 220 engineers to the Nissan plant in Smyrna (Tennessee) and every part of the assembly line went through a detailed scrutiny.Subtle issues like the workers who wore studded jeans and rings causing scratches to the freshly painted cars, etc came to light. Ghosn was amazed at some very obvious ones, which could be rectified at the plant, like defective doors and reading lights etc. Carlos Ghosn had already achieved two of the three goals that were set for NRP, the debt was cleared and profitability was achieved. | | The Nissan 180, an extension of NRP was launched and aimed at additional sales volume of one million annually from 2005, the third objective of NRP. US market was c onsidered to play a key role in achieving the goal of additional one million sales.A new plant was set up in Canton, the first in North America where Nissan was facing challenges from other Japanese automakers, Toyota and Honda. Mean while, Nissan was planning an alliance with Mitsubishi after Daimler Chrysler gave up its plans of partnership with Mitsubishi. The partnership would help Nissan enter the mini car segment while Mitsubishi would be able to reduce cost burden of new product development. The shortage of steel supplies forced Nissan to reduce its production in 2004, affecting production of 15,000 units amounting to $58. 5million of loss in sales.Nissan closed its plants for five days following the shortage of supplies, as steel prices in creased with demand for steel increasing after the economic boom in China. While halting production was considered a sign of mismanagement many felt that Carlos Ghosn's attempt to bring down the number of suppliers as part of NRP, had resu lted in over-reliance on few suppliers . However, Ghosn defended himself saying that the savings achieved during that phase were far more [$9. 7 billion] than the losses incurred due to loss of sales. Renault – The French Automaker Renault was a state owned government enterprise since 1945.It was started as a motorized vehicle assembler in 1898. Renault built trucks, airplane engines and heavy vehicles during the World War II and after the war and with the economic boom, Renault achieved high volume sales with its low cost cars like 4CV, Renault 4 and Renault 5 through the 1970s and 1980s. During early 1980s, Renault expanded into US by acquiring half the shares of American Motor Corporation. However, the deal was unprofitable and the company had to withdraw from the market in 1987. A similar deal failed in Mexico, and with both the deals financed through debts, Renault was left ith huge debts accumulated by the end of 1980s. It reported losses of $3. 5 billion between 1984 a nd 1986. Further, because it was a state owned business, obligations with labour unions led to more costs for the company. When Louis Schweitzer joined Renault in 1986,Renault had accumulated debts to the tune of $9 billion and was in huge losses. Its proposed merger with Sweden based ABVolvo in 1993 failed due to unfavorable French political climate and with Swedish shareholders expressing reservation. The company continued to be in losses till 1996,when Schweitzer brought in Carlos Ghosn as the executive vice president.Under the duo, product quality was improved, outsourcing secondary activities and overheads were reduced along with reduction in workforce. The same time, French government started setting ground for its IPO when Louis Schweitzer discovered that privatization of the company could only save it. In July 1996, the IPO was completed. By 1998,with the midsize model Scenic, Renault was successful in European market and in 1998 alone it made profits of $1. 4 billion from$4 0 billion sales. 16 While Renault became the No. 1 automaker in Europe, to be a global player, it had to expand its operations further.By the end of 1990s, it had a very small presence in Asia and was totally absent in the North American market. After the merger of Daimler and Chrysler in 1998, for Renault, expansions became a requisite. And, Nissan seemed a lucrative opportunity, as an alliance with Nissan could help in easier market expansion for Renault in developing markets. While others including Ford and DaimlerChrysler had earlier attempted a deal with Nissan, they later withdrew keeping in view the huge debt that Nissan held and its culture that was inflexible. | After the alliance, Renault managed to reduce its launching and warranty costs for new product introductions by recruiting managers from Nissan to undertake the launch. At the same time, it sent its employees to Nissan to oversee manufacturing, to achieve cost efficient production. Later Renault acquired Samsung Mot ors in South Korea and Roman automaker, Dacia as part of its international expansion. With the launch of multi purpose vehicles, Laguna II and A van time in 2001 and Espace IV in 2002 , and after its association with Formula One racing between 1992 and 1997, its brand popularity improved.By 2004,Renault held strong foothold in European market and reported a 6. 5%increase in sales by the first half of 2004 and was the fourth largest auto company in the world. It held nearly 11%market share in Western European market in passenger car and light vehicle cars. At the same time, Renault performance in large cars segment was sluggish and was struggling to achieve operating margin of 4%, when the demand for cars in the European market was low. Some of the new launches like the Vel Satis, a tall saloon luxury model, were not very successful in the market. Are launch in the US market was also underway.Renault was facing other challenges along with Nissan and other automakers. Environmental fr iendly cars, which seemed a likely potential opportunity, were costly to manufacture at the price the customers were ready to pay. Renault was planning for expansions in Chinese market and South Korea and other parts of Asia through alliance with Nissan. Next ;gt;;gt; 16]†For Renault, a new chance to take on the world†, www. businessweek. com, November 15th 1999 Carlos Ghosn as CEO of Renault and Nissan By 2010, Nissan and Renault would build their cars using the common building blocks.Ghosn viewed the alliance as â€Å"managing contradiction between synergy and identity†17  and confirmed that while gaining synergies, the individual identity of each brand would be safeguarded. The other major alliances in the industry, the DaimlerChrysler and the GM/Fiat had not proved to be very successful because of improper management of merged assets, trans-atlantic product development and failed attempt in understanding local market; Ghosn confirmed that Nissan's alliance w ith Renault would creatively achieve it. At the same time the alliance would avoid merger and would maintain ‘a spirit of partnership'18  .The alliance would be the fourth largest automobile group in the world. In October 2004, the first car was built using a common platform of Nissan and Renault. Modus, a subcompact minivan of Renault shared its base with Nissan’s Micra saving $500million for Renault every year. After Carlos Ghosn succeeds Schweitzer at Renault's in April 2005, he would also continue as the CEO of Nissan. Carlos Ghosn was affirmative that he would not leave the company unless he finds the right person who would succeed him at Nissan. He stressed on the need for a Japanese as the CEO of Nissan in such a culture sensitive country.While at Nissan, he had transformed himself into a Japanese, adapting to the culture, analysts feared if he would breach the French business etiquettes as he takes up the rein at Renault. 19  Two of the five vice presidents at Renault would retire soon, and Carlos Ghosn was to take up the reigns at both the companies, during such senior level management changes. At the same time, many feared if the sense of urgency brought through NRP would continue at Nissan or will the company slip back to its old habits, when Carlos Ghosn leaves.The pressure was considered to be very high, as an analyst stated, â€Å"He will be less present at Renault than he was at Nissan, and less present at Nissan that he used to be. I believe this challenge will be more difficult. â€Å"20 The alliance had helped both the companies equally, in terms of cost savings from not requiring to construct new plants where the alliance can use common buildings, common platforms etc. This had also helped them enter new markets faster and gain other synergies . The purchasing power had also increased as they ordered and bought components through Renault-Nissan purchasing organization for both the companies at a time. | The alliance had fr om the beginning ensured that the inter-company cultural clashes do not exist, by maintaining individual cultural identities. While a merger had been avoided since the beginning, Carlos Ghosn confirmed that it would be its agenda in future also. Carlos Ghosn remarked that when he takes up the two positions, he would blend the strengths of the people at the companies, the innovation excellence of the French and the dedication towards manufacturing of the Japanese. 21  He affirmed that his tenure at Nissan had allowed him to learn the real essence of successful leaders, and would drive his success in future also.He called himself, ‘not a theorist of citizenship but an expert in multi nationality’. 22 Carlos Ghosn called the three major attributes, ‘Value, Transparency and Performance' as the ones that would determine the competence of any CEO. He believed that they act as standards for leadership in global business, in the light of growing corporate scandals, when the top executives of the companies were increasingly coming under scrutiny. He explained that the actual results that are delivered along with simultaneous value creation to the customers and the other stakeholders through maintaining transparency, reflect an efficient leadership.By communicating every strategy to every person concerned, he maintained that it would facilitate a faster reaction to dynamics in the fiercely competitive global market place. An analyst once called Carlos Ghosn, ‘amanager without borders, polyglot and cosmopolitan'. Talking about his dual roles and the cultural barriers that he will have to face as he moves to Renault while also heading Nissan, Carlos Ghosn said, â€Å"Global is global. In my opinion, this is going to be the story of the twenty-first century.This is what's going to happen in the twenty-first century – you're going to see the emergence of more ‘global' standards, some kind of global references; you're going to see mor e and more of it. But ‘globality' doesn’t mean ‘uniformity. ‘ It doesn't mean that. You’ll still have different cultures, you’ll still have different tastes, and you’ll still have some adaptations to make to different countries, but you'll have some basic things that will be common globally, especially in the economic area. â€Å"23 17]†Renault's alliance with Nissan†, www. economist. om, August 16th 2001 18]Parachkevova, Anna â€Å"CEO outlines Nissan's resurgence†, http://thedartmouth. com, May 12th 2004 19]†Carlos Ghosn- Nissan motor†, www. businessweek. com, January 8th 2000 20]Tierney, Christine â€Å"Leadership, bold moves help Renault save Nissan†, www. detnews. com, October 24th 2003 21]Smith, Duvergne, Nancy â€Å"Nissan Renault alliance faces down few challenges†, http://web. mit. edu, November 18th 2004 22]Abescat, Bruno â€Å"I am an expert of multi nationality†, http://liv res. lexpress. fr 23]†Carlos Ghosn: standing at the global crossing†, op. cit

The Ring Fencing Proposal Finance Essay - Free Essay Example

Sample details Pages: 3 Words: 1049 Downloads: 6 Date added: 2017/06/26 Category Finance Essay Type Analytical essay Did you like this example? Since the financial crisis in 2008, the economy around the world has been growing slowly, especially in developed countries. And stock markets in many counties experienced downturns. Fox example, the peak point is around 14,000 points for Dow Jones Industrial Average index in 2007, while it declined to 6,600 in 2009. Also the unemployment rate suffered badly, a larger number of youngsters cannot get a job and even some employee has to work less to share workload with other employee. In 2011, this global recession trigger European sovereign debt crisis, especially in Greece, Ireland, Portugal and Spain. In May 2011, one hundred thousand of people protest against the financial retrenchment in Athens. In UK Mervyn King, Bank of England governor, said this financial crisis might be the worst crisis that UK has ever meet. The financial crisis of 2007-2008 is considered to be the worst financial crisis since 1930s. The main reason, I think, is that the regulation of financial markets did not keep pace with the creation of the financial derivative instrument, which lead to cash from taxpayers is used to rescue the irresponsible operation of big banks. On the other hand, when the investment strategies are successful, these major banks get profit. Therefore, the public is becoming so call scapegoat who clean up the mess. In order to deal with this problem, ring-fencing approach was introduced and backed by Chancellor George Osborne. A body of ring-fencing means an organization in UK which performs several core activities. Recently, the only core activity refers to the activity that accepts deposits. In fact, four provisions are included: (1) accepting deposits; (2) making payments; (3) withdrawing money; (4) over drafting. In this way, ring-fencing can be used to separate the excluded activities (risk activities) in the investment banking from the core activity. In practise, the real objective is to handle with the problem of too big to fall . In combination with the resolution method and those banks which has the higher capital measures, it can be resolving the problem of too big to fall economically and operationally. However, many famous economists, like Paul Volcker, the former chairman of the Federal Reserve and the architect of the Volcker Rule argue that if the ring fence approach is put into effect, banks in UK will not safeguard taxpayers in foul weather. They think that total separation is a better choice for bank regulation. In history, total separation approach refers to Glass-Steagall Act, which is the first time to separate the commercial bank from investment bank. At that time, the investment bank stated to access the field of traditional banks, taking deposit. Under such circumstances, the profits of commercial banks were damaged significantly. Therefore, not only retail banks begin to invest their assets but also purchase new shares for reselling to the public. Greedy made baking industry tolerate huge risks in exchange of even larger return. Implementation of Glass-Steagall Act imposed the separation between retail banks and investment bank. From then on, the commercial banks are only allowed to do business with individuals and ordinary firm, and investment banks do riskier business, like mergers and acquisitions In order to promote the development of financial derivative instrument, the Glass-Steagall Act was repealed On November 12, 1999. Without the matched bank regulation, the rapid development of financial derivative instrument became the chief criminal of the financial crisis in 2007 again. In order to avoid the cash of taxpayer was used to clean up the mess again. The ring fence and the total separation approaches were presented by the UK government. While the ring fence approach was seemingly supported by the government. The Chancellor George Osborne announced that the major banks in UK will be totally separated if they cannot obey new rules to ring-fence risky i nvestment business from retail business. Although the relative laws about the ring fence have been legislated, this will leave some problem inevitably: The accurate range of ring fence. This is what kinds of activities and assets can/cannot be included in the ring fencing body: there are still many different kinds of middle activities and assets that are not defined practically. The accurate content of exemption is unknown from ring- fence, for example the de minimis exemption. The specific prohibitive activities of the banks The definition of the derivative does not defined very specifically. Therefore, whether the ring-fence can be implemented or not is still a practical problem. Besides, compared to the total separation approach, the ring fencing method has many weak points. As the ICB acknowledged full separation might provide the strongest firewall to protect retail banking services from contagion effects of external shocks. In means if the domino effect (financi al contagion) happens, the ring fence model cannot provide enough protection to the financial system. Furthermore, whether the ring fence can solve the problem that the major banks are too large and too interrelated to fail or not are unknown, Supposed the ring fencing is implemented, there are still some banks that have assets beyond than UK annually GDP. In addition, there is not a necessary connection between capital levels and riskiness of a bank; we should not pay too much attention on stricter capital requirements. That is to say the taxpayers will still tolerate the huge risks of financial system. In the third place, the cost impact is still unclear. Although the estimation of cost for banking sector recommended by ICB is around  £4bn and  £7bn, the practical costs will be higher. Obviously, these costs would either transfer to the customers or be soaked up by the banks with lowering profits to shareholders. Therefore, it will cause that customers and shareholders change their minds to choose those banks with lower costs and higher return. In order to lower the costs, those banks may move their head quarters to other countries. On that day, the financial centre will become a bubble reputation for London. No matter what kind of approach we use, there is no doubt that the process of transferring a wholesale bank to a retail bank will be a milestone for bank regulation. In order to satisfy the requirement of ring-fence, we have to make a detailed analysis of the some accounting items, like assets and liabilities, which are inside or which are outside the ring fence part. All in all, there are still lots of blanks that need to be completed. Don’t waste time! Our writers will create an original "The Ring Fencing Proposal Finance Essay" essay for you Create order

The Reflection Of Andrew I Died Too Soon - 1459 Words

Reflection of Andrew You Died Too Soon Reading this novel made me a better person. If I were to say that I have thought of suicide often, prior to this novel, I would be lying. For as prevalent and serious of a construct as it is, one would think I would spend more time simply thinking about suicide. But fact is, I haven’t. The idea of suicide is frightening for me. Frightening to the extent that I was scared to think about it. But Andrew You Died Too Soon forced me to connect with my inner self on a deeper and more personal level regarding this topic. I am one of the lucky few to have not experienced suicide ideologies. Sure I have thought of what the world would be like if I were gone, or if I would be missed after my passing, but†¦show more content†¦When looking on find my friends (an app), her location was in a near parking lot. I have never been more frightened than in this moment. I thought she had taken her life and was laying hurt and alone in a campus parkin g lot, and I felt responsible. This idea may be a bit exaggerated, but when suffering from an illness as severe as depression, almost anything is possible. I felt full of guilt that I hadn’t done enough, hadn’t tried enough, and hadn’t been understanding enough. I learned from this experience the severity of depression and the delicacy that is life. Once we had heard from her the next morning, I was instantly relieved. Although I was felt a sense of closure with the situation, I was still curious towards how I could help my friend through this difficult time. We are often quick to judge those who may be experiencing depression or suicidal thoughts, especially when we know little about it and have no personal experiences to relate. I thought the best way for me to contribute to her health was to offer support, rather than offering advice or direction. Corrine suggests in the novel that â€Å"the load is lighter when shared, and such sharing is the essence of fri endship† when describing her experience of loss and the role that her friends played in her experience. This novel suggested to me that listening is often the best form of support to give to those both suffering and grieving,Show MoreRelatedAndrew Jackson s The Trail Of Tears1224 Words   |  5 Pagesfor the ride cause I am about to tell you about the one the only cheese eating, duel fighting, wife loving, cold hearted killer ANDREW JACKSON! Who is this man Andrew Jackson? Well you may have heard of him from his infamous role in the trail of tears. What is the trail of tears you may ask? 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