The the classification of risk affinitive items in

The Republic of
Slovenia believes that The Financial and Economic Crisis finds its origins in
the third financial quarter of 2007 within the United States. The Euro Bank
attributes it to the aggregate recklessness of Wall Street in its lack of
regulation in the classification of risk affinitive items in what was presumed
to be safely bundled CDO’s – especially to those concerning housing, Alt-A and
subprime mortgages. This created fundamentally misleading data with margins of
errors of 30% atleast that was saturated on all financial modelling platforms
– generating myriad fallacies that directed investments in what were perceived
to be ‘potentially profitable’ zones, whilst actually fueling a repercussion in
the form of the subprime mortgage crisis of 2007. Policies of Community
Reinvestment Acts (CRA), Low Interest Rates and Predatory Lending – to increase
loan-extraction-affordability to subprime-income earners were accentuated by
pre-existing credit-default swaps that were intended as insurance for mortgage-backed
securities, spurring the expansion of the housing bubble, until the
‘bubble-burst’ of the entire financial basket in the global financial trading
sectors.

 

The burst
created a chain of events (which still propagates today) where several international
banks that domineer the Global Banking System – declared bankruptcy, and the
surviving banks continue to circulate toxic financial instruments to their
counterparts in the Eurozone and East Asia, who had been purchasing illiquid
and insolvent mortgages from American and British Banks – essentially dumping
worthless and toxic equities – in the values of billions that possessed no
consumer confidence – into their national reserves creating a banking crisis.
This began with the nationalization of Freddie Mac and Fannie May, followed by
the declaration of Bankruptcy of Lehman Brothers.

We Will Write a Custom Essay Specifically
For You For Only $13.90/page!


order now

 

The banking
crisis catalyzed the widespread, abrupt and systematic supply-side collapse in
the global economy (excluding countries that dealt in exports backed by other countries
as third parties, ex. Australia, Canada – which were unscathed by the crisis,
etc.) as investment-based consumer confidence shattered. The imminent crash of
the Global Financial system is exemplified in the systemic banking collapse of
Iceland – causing a record shattering depreciation in the value of the Krona
and bankrupting the three different commercial banks. So far, Policies of
injecting financial capital and purchasing toxic assets from banks (In the
Troubled Asset Relief Program-2008 (TARP) policy) in a currently seemingly
ambiguous effort to liquidize and stimulate national economic activity, has
shown no signs of recovery beyond the absolute absorption of toxic assets from
banks, though more empirical evidence is needed to show that the policy is
successful. The data should indicate an increasing potential correlation with
the variables of consumer confidence and level of injected finance. 

 

All affected
countries are finding themselves lost in a deflationary spiral of
capital-poisoning; the wages decrease with employment rates, creating a
self-reinforcing decline as global consumption drastically decreases. Banks are
using their injected capital to pay off existing debts rather than taking on
new debts, causing new problems. The Global Financial System now stands on the
‘brink of a precipice’ and The Republic of Slovenia believes that an
internationally synchronous and decisive action should be taken.

 

The Republic Of
Slovenia is a new player to the financial world. Having attained its recent
national identity in the balkanization of Yugoslavia, its constitution spent
the latter two years prior to the 2007 (The Year of the Financial and Economic
Crisis) creating legislatures to increase the employment rate and participation
of the labor force, as well as securing itself on a more potent trade point on
the free trade system. Within the intervals of the culmination and peak of the
crisis, Slovenia’s unemployment rate rose from 6.5% to 9%, and its GDP growth
rate decreased by 5%. Considering that it was still in the process of
establishing trading links and had not begun the process of mortgage
acquisition, it still saw witnessed an increase in GDP throughout the Crisis.
However, Slovenia suffered from the export-driven commodities Crude Oil and
Silver depression, which lashed against the economy’s export revenue.
Nevertheless, as the tertiary sector had grown into a larger financial asset,
Slovenia did not face repercussions as economically restrictive as other
nations in the Eurozone.

 

Prior to 2007,
Slovenia’s management of risk relied primarily on monetary policy measures
regulated by the Bank of Slovenia, and on fiscal policy and macroeconomic
policy measures. When Slovenia joined the Eurozone area adopted the Euro, the
Bank of Slovenia lost its independence to pursue a monetary policy, being
forced to conform to policies on regulating the Euro. The Bank of Slovenia
adopted measures to mitigate the effects of the financial crisis in by amending
the Regulation on the assessment of credit risk losses of banks, abolishing the
effects of the prudential filter when creating provisions (which had been
introduced due to the implementation of the IFRS Policy, which was created to
provide more stable data on Global financial sheets).

 

The Republic of
Slovenia is the only country in the pool of affected economies within the
Eurozone that did not require bailouts or experience bankruptcy. However, it
still faces a negative value in its Balance of Payments due to its current
account deficit that is predicted to self-correct within 6 years which
reinforces a macroeconomic balance. Slovenia’s potential growth was stunted by
the imposition of restrictions towards the hedging and approval of financial
derivatives for new businesses and strategic industries which raised
unemployment rates and caused the Aggregate Demand and Supply to drop
noticeably. The breakdown of the Global Financial System affected Slovenia,
primarily since the revenue of exports and expenditure of imports decreased due
to cost-push inflation. Investments further fell as banks and the public were
unwilling to put confidence in loans to create start-ups or invest in equities.
In addition, the fall in the value of commodities had a negative impact on
Slovenia as the primary sector made up 20% of the Gross Domestic Production
within the country during 2007.

 

Slovenia
expresses its interest in engaging in collaborative efforts with countries that
are currently combating the crisis single-handedly. Given its national policies
and interests, and wish to sustain its trading partners and military allies,
The Republic of Slovenia seeks to contribute mainly in the search for solutions
to Retain Confidence in Financial
Institutions, Alleviate the Debt
Crisis and Promote Healthy Trade.

Stable Banking Investments will help in
accentuating supply-side policies to promote deflation, allowing international
trade to stabilize in all countries. The return of consumer confidence is an
important topic as without it, post-recovery growth will be an extremely slow
process due to a lack in economic activity. The unregulated nature of the
Shadow banking system is also topic of concern due to its potential to cause
economic instability. Slovenia believes that it needs to be addressed
effectively.

 

Alleviating the Debt Crisis will serve
well in reducing the aggregate Sovereign Debt and reducing the risk of
defaulting on NDO’s (National Debt Obligations). The financial crisis has often
been metaphorically referred to as a chain reaction. If a country that
monopolizes export value fails to meet its debt obligation, it will cause its trading
partners to declare bankruptcy – spreading and contaminating until the
International Financial System becomes a ticking time bomb that is on the verge
of insolvency. Slovenia worries that it may face its own evitable debt crisis
if countries in the (EECCU) Eurasian Economic Community Customs Union start to
get impacted, creating a vacuum for a potential million dollar worth of
Slovenian Assets to be lost in fragments divided throughout the continent.

 

The Republic of
Slovenia also chooses to recognize the importance of strategic industries and
the competitive nature of countries – desperate for survival – to seek
unconventional and unethical measures. It is never more imperative that
consistency should be followed through the erection of international laws to
follow the MFN laws of Tariff equality, of ethical pricing and respect of the
values of free trade – especially through anti-dumping measures. In addition, rectifying the Trading system should be
amongst key set priorities. Slovenia fears a potential trade war that will
create trade-distortions, reducing the standard of living for the general
population. In addition, there is a palpable tension that a trade war (if
started) will create diplomatic irrational, ceasing mutual collaboration that
would otherwise benefit the global economy.

 

The Republic of
Slovenia believes that the approach to healing the International Financial
System should not be in the implementation of a radical, quick-fix solution. It
is at times like this when the international community needs to step back and
re-examine the consequences of political, financial and economic decisions.
Slovenia recognizes the importance of implementing solutions which will
guarantee a smooth transition away from the crisis in a manner that will not
cause further instability to investors and demolish the embers of what the
global financial system has transformed into. Thus, It is in accordance with
its National Policy,  The Eurozone and
the Transatlantic Economic Council (TEC) that any policy implemented will work
from the very base of the status quo, forcing the set of problems out of their
CDO ‘boxes’ and tackling them independently from there, with an ultimate aim of
eradicating anything potentially potent to the system, whilst simultaneously
creating a set of aims that will create preventative measures to ensure that a
repeat of the crisis for the same ensuing set of reasons will not follow. The
world is in a dire need of a set of risk-preventative regulations.

 

The Republic of
Slovenia stresses on the crucial necessity of every affected country
implementing measures of Austerity by cutting down on government spending and
increasing rates of general taxation, to contribute an increase in the central
budget of the government, which in turns could place a self-correcting pressure
that reduces the current account deficit within a country. Austerity measures
are especially important as they illustrate a government’s fiscal discipline to
creditors and credit rating agencies which will help in recovering The National
Balance Of Payments in countries where the scenario has heightened so much that
it is crucial for governments to bail-out banks or inject capital into the
system (such as in the Toxic Asset Relief Programme).

 

The Republic of
Slovenia would also urge every country to create regulations where banks have a
solemn obligation to secure a sub-illiquid collateral from a party applying for
a mortgage such as personal assets, so that even if mortgages/subprime
mortgages are defaulted, Banks will still receive a true measure of its liquid
assets, which would prevent defaulting from being a consequence, as well as
preventing another rise in the Housing Bubble in the future. This should – in
addition – ideally stop defaulting from being a consequence-free action. As per
the zeitgeist, Slovenia will want to discuss possible strategies that different
governments should raise – with other countries in the European Union, the
Asian Continent, Africa and Americas – in order to synchronize various
regulations and strategies that will create an aggregate positive change to the
system, generating the most economic, optimum, effective and positive change.
Considering that this will involve every country, Slovenia predicts that there
will be a natural predicted potential area of conflict with countries seeking
to prioritize other aspects of their national policy in accordance; which is a
drawback from the governing dynamics of such situations; derived from the Nash
Equilibrium.

 

The Republic of
Slovenia further recommends the creation of a Third party sub-organization
within the WTO (World Trade Organization) that receives annual installments of
financing from Eurozone Countries and stores it in pseudo-private reserves, to
be extracted in the event that a country files bankruptcy and requires a
debt-based bailout. Slovenia believes that such an organization is important
since each country needs mutual credit/debit based transactions, centralized
around global alliances – to help restore the international economy. This
emphasizes the need for trade blocs to remain cooperative. The Republic of
Slovenia proposes that the International Monetary Fund (IMF) will be in charge
of setting up regulations in regards to this resolution, but representatives
from continental blocs will patrol the process, adjust key changes (the rate of
interest of lending/borrowing, etc.) to the process to help satisfy the needs
of the global population. To ensure the viability of the organization, Slovenia
proposes to provide it with additional functionality – so that it generates
enough profitability to maintain itself, whilst maintaining the cash flow of
countries that are near bankrupt.

 

Slovenia is a
nation that looks at the world with two open minded eyes; one looks at what is
happening, and the other looks at what will happen. As a nation, its mindset is
rigid. Politically and economically, everything has a cause and nothing happens
beyond reason. With its political power hinged upon a constitution that is
fundamentally composed of left-wing liberalists even though the country is
democratic looking for the good of the global society, and as per its moral
stance: Slovenia will keep an open mind if needed in the compromise of its
benefits, for the greater good of the global society – insofar to the limit
when it starts to incur negative consequences on the Slovenian people.
President Danilo Turk, the President of Slovenia urges faith in the United
Nations. “My vision for the United
Nations begins with the world’s peoples – and the duty of the Organization to
address their needs fairly and effectively.” Hence, Slovenia will enter
this conference with the candid aim of prospecting solutions to the crisis,
analyzing their reliability and voting for resolutions that it believes will
make a positive change to the Global Society.

x

Hi!
I'm Shane!

Would you like to get a custom essay? How about receiving a customized one?

Check it out