Foreign policy Essay Example | Topics and Well Written Essays - 1500 words

Foreign policy - Essay Example Realism was predominant during the Cold War between U.S and Soviet Union and guided the international affairs at the time. Realists are of the view that â€Å"self-interested states compete constantly for power or security† (Walt, 1998, p. 31). States are often in conflict as they struggle for power and dominance in the world order and as long as the balance of power is not maintained, war between powerful states is inevitable. The U.S and Soviet Union during the Cold War were thus fighting for power; U.S wanted to spread capitalism while the Soviet wanted to spread communism and secure its borders.There are various divisions of realism. Classical realists like Hans Morgenthau believe that states innate desire to dominate others is the cause of war while neorealists like Kenneth Waltz believe the reason for war and conflict is that states are just seeking to survive (Walt, 1998 p. 31). Recently new branches of â€Å"defensive† and â€Å"offensive† realists have e merged. Defensive theorists such as Robert Jervis, Jack Snyder and Van Evera believe in power of military in guaranteeing security and for their survival. These states have much faith in military force and exaggerated perceptions of threat thus use force to defend themselves but have no intrinsic interest in military conquest (Walt, 1998 p. 37). Offensive realists like John Mearsheimer on the other hand, believe the conflict arises from state of anarchy. States are thus encouraged to maximize their strengths in preparation for any emergence of revisionist power. This is because realism is based on Marxism which emphasized the role of capitalism in enhancing conflict among nations and whose solution is a revolution. For example, the U.S feels threatened by the rise of China which a socialist nation is and would do anything to maintain its dominant position in international affairs. International organizations such as NATO and UN are only of value if they serve the U.S interests and n ot when trying to equalize affairs among nations. Defensive realist like Evera think that war is not profitable and that in absence of militant forces such as in the post-cold war Europe, there would be peace. However, offensive realists are of the view that great powers are doomed to compete irrespective of internal characteristics hence security competition is inevitable. The U.S role is to act as Global police hence maintain peace in the world. Liberalism Just like realism, its main focus is the states. This theory advocates for cooperation among nations as the only way to end conflicts. Scholars in this field (Michael Doyle & Robert Keohane) do not believe that power is important in international affairs. Instead, they argue for democracy in believe that â€Å"democratic states are inherently more peaceful than authoritarian states† (Walt, 1998 p. 32). The democratic states aspire to be prosperous and as such, avoid being in conflict with each other but rather cooperate for future gains. This was the rationality used by U.S during Cold War to institute democracies all over Europe.

Summary of Chapter 1_The End of Risk-Free Rate Assignment

Summary of Chapter 1_The End of Risk-Free Rate - Assignment Example This is because the bonds provide funds for healthcare, education, law enforcement as well as other public requirements. The most common theories associated to risk free rate and from which other valuations are derived include modern portfolio theory (MPT) and the capital asset pricing model (CAPM). Additionally, the risk free rate functions in rare occasions since the MPT maintains that there is only one risk-free rate, which is the risk-free rate asset that pays a low rate. The risk free rate is used by MPT to determine the optimum portfolio. At the basic level, risk is said to be the probability of outcomes or events and is divided into three main categories that include absolute, default and relative risk. There have been attempts to use alternatives to the risk-free rate such as the T-bill that remains the best option since it was the closest investment to a short-term riskless security. The main reason why the risk-free rate has changed is the catastrophic events happening in most developed countries’ economies that include credit market collapses, stock market collapses, and wars. The valuation level of the risk-free rate can be determined or judged through the Fisher equation. The idea that treasury bills have yielded zero or negative in certain periods indicates that there is no real risk-free rate. On the other hand, there have been increased debts in major governments and the development of other aspects such as debt mutualization. This is because of realization of too little growth versus intense debts. In some instances, the total debt has exceeded the total GDP. Without growth, fiscal consolidation proves futile. Fiscal measures should be permanent to help in reduction of debt. If austerity is followed, it could take approximately 10 years to realize results. Debt ratio might increase by attempting to reduce it through austerity, which adds risk premium to government bonds over time. The market demand for safe assets has