Fed May Cut Rate Below Inflation, Risking Bubbles Essay

Fed May Cut Rate Below Inflation, Risking Bubbles - Essay Example As noted by Mishkin (2006), the interdependence of international monetary systems has created a situation which no economy can be considered an island on its own insulated from developing situations in other economic regions of the world. The interest rate reduction by the Federal Reserve has caused shockwaves across the oceans and financial markets around the world have been forced to reduce their interest rates as well (Torres and Kennedy, 2008). Additionally, as interest rates are reduced, investors can consider it more feasible to invest in securities which carry more risk since the rewards for investing in banks seems less attractive (Mishkin, 2006). This means that stocks become more desirable due to the higher returns on investment provided by them. The interest rate cuts has helped the stock markets as reported by the article where Standard and Poor’s 500 Index rose almost a full percentage point and even the global stock markets showed a positive turn as the MSCI World Index also displayed an increase of 0.8 percent (Torres and Kennedy, 2008). However, there does appear to be some conflict between what is happening in the economy as compared to what the Federal Reserve is doing since the steps being taken by them are usually taken during a recession. While some signs in the economy are recessionary, it is difficult to say that alarm bells should start ringing so quickly in the offices of the Federal Reserve (Torres and Kennedy, 2008). Perhaps a more cautionary approach would be more justifiable since such levels of interest rates could create economic bubbles where many investors could lose billions. Such a warning is given quite clearly in the article itself which warns that credit seekers would get a very good bargain at the moment but this could lead to over lending by the banks in effect leading the country towards another stream of consumer credit problems (Torres and Kennedy, 2008). With rising levels of unemployment and increasing costs

Discuss the following problems in relation to the Scots law of Coursework

Discuss the following problems in relation to the Scots law of contract. You must refer to primary sources such as judicial precedent and legislation in your answer - Coursework Example The plaintiff being a chief inspector of police force alleged that the defendant had violated this section by offering the knife for sale. It was held that the display of knife in the defendant’s shop was not an offer but an invitation to treat. Hence, no liability arose. Advertisements are generally regarded as invitation to treat and are not considered as valid offers. However, advertisements can also amount to a general offer which can be accepted by anyone. It depends on the words used in the advertisement whether it is to be treated as an offer or an invitation to treat. In Carlill v Carbolic Smoke Ball Company2, the defendants made a product called â€Å"smoke ball† which was claimed to be a cure for influenza. The defendants published an advertisement in various newspapers in which they claimed to pay  £100 to anyone who used their product according to the instructions but still contracted influenza. The plaintiff saw this advertisement and bought one of the balls. She used it three times daily for almost two months but contracted the flu. She claimed  £100 from the defendants. The defendants rejected her claim arguing that there was no legally binding contracted between them and the plaintiff. The courts held that the advertisement was not a unilateral offer to the whole world but it was open for acceptance for anyone who fulfilled the condition of using the product according to the instructions. The satisfaction of conditions constituted acceptance of this offer. Further, the purchase and use of the smoke ball constituted good consideration. Therefore, the defendants were held liable to pay  £100 to the plaintiff since there was a legally binding contract. Christina’s advertisement was a unilateral offer to anyone who fulfilled the condition of spending  £50 or more in Elegante. Anyone who fulfilled this condition accepted this offer and was entitled to the voucher. David