Reflection On “Margin Call” Combining With China Actual Condition

Margin Call is a film which is based upon the financial companies’ management division and financial analysis. The financial downfall and the economic crisis faced affected the business and the position of the investors. The word margin call also means additional margin which is not only related to the film drama but also the financial crisis that was faced leading to the economic downturn. Margin call occurs when the investors account funds are less than the margin of maintenance. Considering the aspect of economic and financial crisis it is noted that business faces downturn and is unable to offer value. During the crisis neither the business nor the economy is able to offer value and continuous development. The crisis is due to various factors and thus it can be divided into passive and active crisis. The contradiction of the economies due to various activities along with fraudulent acts does not only hamper the national economy but also the international economy. The negative economic growth rate and the crisis created are due to overproduction and lack of control over the economic cycle. The world economy faced a huge downfall in the year 1825 affecting the entire capitalist system. The impact of the crisis is huge upon the business and normal consumers. The film offers a critical view to this issue and the aspect of financial analysis. The film states that downsizing of company creates risks and issues. The senior management of the business determines the reasons for loss of the company which is linked to various factors.

There are several reasons that leads to margin call which includes holding on to trades with no potential for long time might affect the margin. Another reason as per the financial analyst is about overleveraging account and potential. The main reason for the margin call that impacts the business and economy is excessive leveraging without having adequate funds. These impacts the trades and leads to liquidation affecting the overall business. Thus to avoid such situations it is vital to leverage properly so that the trades and margins are maintained. The main aspect is that securities of the company have lesser value thus impacting the account and business.

Considering the aspects of China the focus is upon the virtual economy and the deviation from the real economy. It is important to note that the cost of labour is high in the US thus affecting the manufacturing industry. The high cost of labour and the financial derivatives impacts the business leverage and credit. The investors are attracted towards company with better operating rules and profitability. The leveraging, increasing number of financial derivatives affects the virtual economy and the currency. These aspects increased the transactions and value of the virtual economy as compared to that of the real economy. The virtual growth deviated from that of the real economy thus affecting the business.

Contextually, I am of the opinion that China is taking measures to offer better value to the real economy. It is maintaining the value by offering jobs and taking vital measures that positively influences the economy. International currency status is another aspect that affects the economy and the government. For the effectiveness of the business and the economy it is vital to introduce social funds so that value is added to the economy. The value impacts the large scale infrastructure along with the investments so that currency is positively influenced. Considering the aspects of China with the real condition is different in several ways as the power and responsibility of capital is huge. The Wall Street has the knowledge about the capital structure thus impacting the economy. The bull market and trading of stocks has a strong impact over the global capital market. The bull market with cheap credit along with liquidity has helped in developing a model that impacts income. However, it is difficult for people to understand thus affecting the business and financial derivatives. For the development of the economy of China and capital market it is vital that strong open and transparent information system is created so that the frameworks are effective to ensure rights and responsibilities. The responsibilities will be to ensure development so that the economy can maintain a better position so that the financial downfall can be minimised.

Today China is one of the dominant global leaders as it has the power to create value by maintaining openness and material wealth. China is not in a position to stop the crisis but is in a better position to support the finance through ensuring flexibility. The US economic crisis was based upon various reasons but the lack of competent financial institutions and lack of flexibility impacted the economy the most. The idea is to enhance the flexibility of the China economy by improving the credit evaluation system so that the management is effective to formulate operational efficiency. I firmly state that the growth of the economy is based upon several factors such as cultivation of jobs and financial capital. The diversified financial institutions improve the competence of the China and help to make effective credit evaluation. The role of management and high experience affects the platform and contributes to the development. Today the Chinese market has become an important part of the global economy because of its dramatic run up and leverage induced sales. The regulations are effective to ensure margin trading in future affecting the economy and business.