Growth theory
The part of economic theory that seeks to explain (and hopes to predict) the rate at which a country's economy will grow over time. Economic growth is usually measured as the annualpercentage rate of growth in one or another of the country's major national income accounting aggregates,such as Gross National Product or Gross Domestic Product (almost always with appropriate statistical adjustments to discountthe potentially misleading effects of price inflation). Just about any country's economy will show sizable year-to-year and quarter-to-quarter fluctuations in its economic growth rate, but economic growth theorists tend to concentrate their efforts on analyzing and explaining the smaller variations in thelonger-term trend or average rate of economic growth over periods of a decade or more. They leave explanation of the shorter-term fluctuations around thelonger-term trend to specialists in business cycle theory because investigation has shownthat the predominant influences on short-term growth rates seemto differ in important ways from the determinants of an economy's long term average growth performance. It might also be added that the political effects of variations in long rangeeconomic growth ratestend to be substantiallydifferent from the political effects of the booms and busts of thebusiness cycle.
The short term ups anddowns of the business cycle have dramatic effects on popular perceptions of the country's economic well-being. In a recession, hundreds of thousands or even millions of people maybecome unemployed and suffer dramatic declines in their incomes for the duration of the crisis -- usually for a period of somewhere between sixmonths and one-and-a-half years before more normal economic conditions return again. Yet over the long haul, even rather small increases or decreases in the trend rate of economicgrowth will have muchmore profound and enduring effects on economic production and hence on the material living standards of the population.
Saturday, 20 October 2012
Capitalism
Capitalism ..
A form of economic order characterized by private ownership of the means of production and the freedom of private owners to use, buy andsell their property or services on the market at voluntarily agreed prices and terms, with only minimal interference with such transactions by the state or other authoritative third parties.
A form of economic order characterized by private ownership of the means of production and the freedom of private owners to use, buy andsell their property or services on the market at voluntarily agreed prices and terms, with only minimal interference with such transactions by the state or other authoritative third parties.
Budget deficit
The amount by which total government spending is more than government income during a specified period; the amount of money which the government has to raise by borrowing or currency emission in order to make up for the shortfall in tax revenues.
(ATM) Automated Teller Machine .
A machine, activated by a magnetically encoded card or othermedium, that can process a variety of banking transactions. These include accepting deposits and loan payments, providing withdrawals,and transferring funds between accounts.
Bank Statement:
Bank Statement:
Periodically the bank provides a statement of a customer's deposit account. It shows all deposits made, all checks paid, and other debits posted during the period (usually one month), as well as the current balance.
Periodically the bank provides a statement of a customer's deposit account. It shows all deposits made, all checks paid, and other debits posted during the period (usually one month), as well as the current balance.
Bankruptcy:
Bankruptcy:
The legal proceedingsby which the affairs ofa bankrupt person are turned over to a trustee or receiver for administration under the bankruptcy laws. There are two types ofbankruptcy:
*. Involuntary bankruptcy-one or more creditors of an insolvent debtor file a petition having thedebtor declared bankrupt.
*. Voluntary bankruptcy-the debtor files a petitionclaiming inability to meet financial obligations and willingness to be declared bankrupt.
The legal proceedingsby which the affairs ofa bankrupt person are turned over to a trustee or receiver for administration under the bankruptcy laws. There are two types ofbankruptcy:
*. Involuntary bankruptcy-one or more creditors of an insolvent debtor file a petition having thedebtor declared bankrupt.
*. Voluntary bankruptcy-the debtor files a petitionclaiming inability to meet financial obligations and willingness to be declared bankrupt.
return on capital employed (ROCE)
A fundamental financial performance measure. A percentage figure representing profit before interest against the money thatis invested in the business. (profit before interest and tax, divided by capital employed, x 100 to produce percentage figure.)
return on investment
Another fundamental financial and business performance measure. This term means different things to different people (often depending on perspective and what isactually being judged) so it's important to clarify understanding ifinterpretation has serious implications. Many business managers and owners use the term in a general sense as a means of assessing the merit of an investment or business decision. 'Return' generally means profit before tax,but clarify this with theperson using the term -profit depends on various circumstances, not least the accounting conventions used in the business. In this sense most CEO's and business owners regard ROI as the ultimate measure of any business or any businessproposition, after all it'swhat most business is aimed at producing - maximum return on investment, otherise you might as well put your money in a bank savings account. Strictly speaking ReturnOn Investment is defined as:
Profits derived as a proportion of and directly attributable to cost or 'book value' of an asset, liability or activity, net of depreciation.
Profits derived as a proportion of and directly attributable to cost or 'book value' of an asset, liability or activity, net of depreciation.
German Banking Sector not out of danger moodys says
The debt ratings agency Moody's Investors Service provided a reminder Friday that the vaunted German economy has a major weakness: its banking system.
In a report, Moody's warned that German banks suffer from meager profits, rising risk and insufficient reserves to absorb losses. The rating agency reaffirmed the negative outlook it has assigned to German banks since 2008.
The poor state of German banks seems surprising considering that the country's economy has heldup fairly well to the euro zone crisis. In addition, German banks benefit from the country's status as a haven from the turmoil and are able to borrow money atmuch lower rates than counterparts in other European countries. There isno real estate bubble and households are not over-indebted.
German banks did, however, invest heavily in countries like Spain and Italy before the crisis, because they could earn more profits there than at home. Four years after the financial crisis began, they remain exposed to problemsin those countries, Moody's said.
In addition, Moody's said, Germany still has too many banks in relation to the size of the country. The oversupply pushes down lending rates and profits.
"Intense competition and low interest rates are causing margin pressure that will likely further erodealready-weak bank revenues and profits," Moody's said in a statement early Friday.
The combination of low profits and high leverage"will make it difficult for many German banks to copewith major (unforeseen) losses," Moody's said.
In a report, Moody's warned that German banks suffer from meager profits, rising risk and insufficient reserves to absorb losses. The rating agency reaffirmed the negative outlook it has assigned to German banks since 2008.
The poor state of German banks seems surprising considering that the country's economy has heldup fairly well to the euro zone crisis. In addition, German banks benefit from the country's status as a haven from the turmoil and are able to borrow money atmuch lower rates than counterparts in other European countries. There isno real estate bubble and households are not over-indebted.
German banks did, however, invest heavily in countries like Spain and Italy before the crisis, because they could earn more profits there than at home. Four years after the financial crisis began, they remain exposed to problemsin those countries, Moody's said.
In addition, Moody's said, Germany still has too many banks in relation to the size of the country. The oversupply pushes down lending rates and profits.
"Intense competition and low interest rates are causing margin pressure that will likely further erodealready-weak bank revenues and profits," Moody's said in a statement early Friday.
The combination of low profits and high leverage"will make it difficult for many German banks to copewith major (unforeseen) losses," Moody's said.
Thursday, 18 October 2012
EU leaders agree on bank oversight
Leaders of the European Union in Brussels have agreed Thursday to a dealfor a eurozone-wide banking supervisor in 2013 that is designed to help prevent future catastrophic bank failures that could threaten the monetary union.
The agreement sets the stage for development of a legal framework to allowthe European Central Bank to give emergency funds to ailing banks directly without going through national governments -- bailouts which, in turn, have required bailouts for the nations themselves, as was seen in Greece and Ireland.
The move is necessary to"break the vicious circle between banks and sovereigns," said European Council President Herman Van Rompuy in a press conference early Friday."Next hurdle to set up a single supervisory mechanism to prevent banking risks and cross-border contagion from emerging ... built with the integrity of the single market in mind."
The leaders set a goal of approving the legislative framework by January 1, with the new supervisory mechanism "operational inthe course of 2013," Van Rompuy said.
The group also released a statement on the progress of Greece toward meeting budget cuts required to qualify for the next roundof bailout payments, applauding "the determination of the Greek government to deliver on its commitments" and"remarkable efforts by theGreek people" while underlining the need for continued fiscal reform.
"This is necessary in order to bring about a more competitive private sector, private investment and an effective public sector," read a statement from the European leaders. "These conditions will allow Greece to achieve renewed growth and will ensure its future in the euro area."
Greece is one of 17 nations united under the single euro currency. Its debt woes sparked an existential crisis for the eurozone, underlining thegulf between monetary unity and fiscal unity among its members. The Brussels summit aims to help bridge that gap with banking sector reforms and more integrated budget policies.
"Without a stable monetary union there cannot be a stable European Union therefore the goal is to make the euro fully stable economically, financially and also politically," Van Rompuy said.
Athens must cut $17 billion from its budget in order to receive the next$41 billon tranche of bailout money it needs to keep from defaulting. Thetroika of the European Central Bank, International Monetary Fund and the European Commission overseeing the bailout left Athens for the Brussels summit without an agreement in place.
The summit started Thursday as tens of thousands of people rallied across Greece to protest further tough austerity measures, [and] as a general strike shut down much of the country's transportation network. Clashes broke out in Athens after protesters threw stones and bottles at police. Greece is in its fifth year ofrecession and has seen its unemployment rate soar to more than 25%.
The agreement sets the stage for development of a legal framework to allowthe European Central Bank to give emergency funds to ailing banks directly without going through national governments -- bailouts which, in turn, have required bailouts for the nations themselves, as was seen in Greece and Ireland.
The move is necessary to"break the vicious circle between banks and sovereigns," said European Council President Herman Van Rompuy in a press conference early Friday."Next hurdle to set up a single supervisory mechanism to prevent banking risks and cross-border contagion from emerging ... built with the integrity of the single market in mind."
The leaders set a goal of approving the legislative framework by January 1, with the new supervisory mechanism "operational inthe course of 2013," Van Rompuy said.
The group also released a statement on the progress of Greece toward meeting budget cuts required to qualify for the next roundof bailout payments, applauding "the determination of the Greek government to deliver on its commitments" and"remarkable efforts by theGreek people" while underlining the need for continued fiscal reform.
"This is necessary in order to bring about a more competitive private sector, private investment and an effective public sector," read a statement from the European leaders. "These conditions will allow Greece to achieve renewed growth and will ensure its future in the euro area."
Greece is one of 17 nations united under the single euro currency. Its debt woes sparked an existential crisis for the eurozone, underlining thegulf between monetary unity and fiscal unity among its members. The Brussels summit aims to help bridge that gap with banking sector reforms and more integrated budget policies.
"Without a stable monetary union there cannot be a stable European Union therefore the goal is to make the euro fully stable economically, financially and also politically," Van Rompuy said.
Athens must cut $17 billion from its budget in order to receive the next$41 billon tranche of bailout money it needs to keep from defaulting. Thetroika of the European Central Bank, International Monetary Fund and the European Commission overseeing the bailout left Athens for the Brussels summit without an agreement in place.
The summit started Thursday as tens of thousands of people rallied across Greece to protest further tough austerity measures, [and] as a general strike shut down much of the country's transportation network. Clashes broke out in Athens after protesters threw stones and bottles at police. Greece is in its fifth year ofrecession and has seen its unemployment rate soar to more than 25%.
Subscribe to:
Posts (Atom)