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Credit analysis [Jan. 7th, 2015|11:23 am]
Economics Discussion Forum

Alex Kuznetsov
Credit analysis is a complex process that includes the following main stages:
Analysis of justification in need of a loan provided by the potential borrower.
Analysis of financial statements.
Analysis of the preliminary financial statements of the company.
Consideration of the plan cash flow planning purposes receipts payments and determine the probability of their deferral, the assessment on the basis of the ability of the borrower to timely repay the loan. Scenario analysis and assessment of the sustainability of the borrower to extreme changes in the economic environment.
Analysis of the situation of the company in the market against other competitors in the industry.
Evaluation of senior management of the company, its strategies, management techniques and performance-based results.
Preparation of necessary documentation for the loan, reflecting conditions such as: ensuring repayment of loans; limitation on debt; assessment of the financial condition and obligations of the borrower; guarantees from parent company or a third party; the conditions of occurrence of default, etc.
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A tad off topic [Feb. 26th, 2014|01:04 pm]
Economics Discussion Forum


Does anyone know if Albert O. Hirschman (Exit, Voice, and Loyalty) did any work on the concept of polycentric law?  It would seem to be the natural extension of the concepts laid forth in the aforementioned work.


The reason I decided to post this here is because Hirschman was an economist and the concept of polycentric law relies upon the application of economic principles to the provision of law as a market good.

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Perfect Competition, preferences, and Asymmetrical Information [Feb. 18th, 2014|05:16 pm]
Economics Discussion Forum


So a thought occurred to me recently about the model of perfect competition (PC) as it relates to personal preferences (PP) and Symmetrical Information (SI).  Namely my question centers around whether or not PC models necessitate the existence of Symmetrical Preferences (SP) as it seems to me that in order for PC to operate in regards to SI then SP would also have to obtain.


These are general thoughts thus far and I have not yet developed what relation, if any, may exist between SI and SP.  Broadly, however, it seems that in order for SI to have any measurable impact on PC then market actors would have to have SP.  That is, market actors would have to have similar time/cost preferences in order for SI to have any discernable effect.


Not sure if what I'm getting at is clear, but if you have any thoughts then feel free to share them because it as an idea that I'd like to develop further.

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Those dead children look delightful on your breasts [Nov. 11th, 2013|12:53 pm]
Economics Discussion Forum


It's always good to think of opportunity costs. That bra is at least worth 12,500 dead children.

(Nota bene: The ODT decided not to publish my comment as above. You can guess why)
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Social system [Jul. 11th, 2013|09:31 pm]
Economics Discussion Forum

Social system - a term that refers to human society, formed in a structure. An example of a social system is a village, city or state, in rare cases, a few states. Speaking of human society as a system, we must give a description of the structure that makes up this system. Property and types of relations to it are the key elements to understand  social system elements and how it is governed.

There are three  property types which provide an individual with all necessary for life: labor,  authority and capital. In society there are always present all three of these, differently  distributed among people. One dominating property is the basis for a specific group of people - an element of the social system. Uneven distribution creates the need for exchange. The capital is exchanged for labor. Executive powers to capital and labor. The owner of the company hires an worker and  exchanges his labor to the part of the profits derived from investment in the business. At the same time the company owner buys resources from the government. The government, in turn, collects taxes and spends them on social needs. Once humans came out of the primitive state (if, in general this primitive state ever existed in pure form), they immediately self organized into the social system. Humans can survive only in the community. Ownership divides society into groups. The need to exchange contributes to the development of the social system and develops its ability to survive as an entity.

If we recall Daniel Defoe's Robinson Crusoe book, we will notice that as soon as Robinson found Friday, they immediately formed a social system. Robinson had power and property (weapons, and, in fact the capital), while Friday possessed  only labor.

The primary source of human existence is labor, it is the property of the first major social system group -Labor. Labor creates private property and generates the second group of the social system - the assets owners- Capital. Each community of people is producing food, clothing, shelter, etc. And as soon as there is production, there also appear the owners of this production. In addition there is public ownership of land, and everything on it and in it. This sort of property need governance as well. People who control public property, call it public resources, form the third group of the social system - Government. The power is based on the available resources. The social system can not operate without its elements. The government decides the issues of social life in the community, protects citizens and manages shared resources. The owners of production (Capital) manage investments and organize its production facilities. The owners of labor are directly employed in production. Without labor there is no production. Without Capital the production is inefficient. Lack of government makes the social system unmanageable.

Groups in a social system constantly interact with each other, exchanging property. And this exchange is caused by desire for material well-being and the only way to increase it is productivity growth. Productivity growth contributes to profits of owners of assets, growth in labor costs and more efficient use of resources. The ability of the social system in self-preservation is totally dependent on the exchange between the groups. The division of labor facilitates productivity growth. The same division of labor allows deeper separation between groups strengthening exchange between  the social groups. The ownership types are divided between the groups, so that every group has one predominant property type. The owners of labor have only labor and do not control investments.  The government is not engaged in investment. Higher productivity and growth of investment in production equipment and training of employees. The whole social system tends to increase its resistance much of which depends on the productivity level. The productivity level reflects social system development level and how it differs from other social systems.

The most striking example of different social systems is the existence two types of states, east and west. In the eastern state the power and capital are combined in one social group. This makes the resources trade more profitable than investments in manufacturing and productivity. In other words low productivity is compensated  through the natural resources trade increase. In the western state, which is on a higher stage of development, all three social system  groups are quite apart promoting higher productivity level.

If you do not pay attention to orthodox economics, but come from the proposed social system theory, the main economic targets should reflect all three social groups. The formula to determine the gross national product (GNP) will be as follows: GDP = consumption + investment + costs of public spending. All three groups consume the entire national product. Asset owners provide investment in the economy.  The population provide consumer spending. Government expenditures consist of three parts, one part goes to the government maintenance, the second on public investment in resources, and the third is spent on forever state needs, such as defense, police, etc. National product output will be higher if the exchange between the groups will be most intense.

Now a few words about how to manage the social system. In the management of the social system one must maintain an effective exchange between social groups. The satisfaction level of all social groups reflects exchange efficiency. The exchange between asset owners and the government (investment in resources) between the government and the public (tax on security), between asset owners and the public (standard of living.)

The government affects the entire social system and its individual elements, changing the exchange of property between groups. If the exchange is satisfactory, then the owners of the assets are expected return on investments, the population met the standard of living and the government remains in power. We can say that when the exchange between the groups is in balance then the social system is in a stable equilibrium. If the government unable to provide policy meeting different social groups expectations then there are conflicts within the social system and the social system is out of balance. The criterion for a balanced social system is the increase in productivity.

In most cases, management of the state is reduced to avoid economic crisis. The reason for the economic crisis lies in the imbalance between the groups. If the government is unable to provide asset owners with the necessary resources, then their investment activity is reduced, increasing the unemployment rate. Resource requirements depend on the investment cycle, where orthodox economics ignores alternation of investment in productivity with the investments in production capacity. During the period of economic growth, which is characterized by employment, gross national product and the government expenditure growth, the exchange balance shifts towards the state, especially in terms of sunk costs. The social system loses a major resource - aggregate demand. Asset owners are losing the return on investment, and seek to invest in productivity growth, which in turn reduces employment and aggregate demand further. The further growth of production (investment in production) becomes impossible and the system is in crisis. But the government, as the most inert system element is not able to respond to such changes. John Maynard Keynes proposed his theory of partial state intervention in the economy, which helps prevent depression, but ignoring the state as the largest economic entity, does not resolve the crises.

The site describes the social systems and states relationship, based on available resources. Trade, political relations and wars between the states can be explained solely by government recourses, available or desirable. And, therefore, the war is an exclusive product of government disputes over resources.
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As Russia sees the USA [Apr. 7th, 2013|04:47 pm]
Economics Discussion Forum


I want to talk about the United States from the point of view of Russia.
I want to tell you about Russia as it really is.
I'm not going to lie about Russia. Any Russian will tell as I am.
U.S. looks as aggressive and as a fascist state.
The Americans and the British brought to power in the Soviet Union Mikhail Gorbachev.
Today Russian know that Mikhail Gorbachev a traitor Russia. For what he destroyed the Soviet Union, he was awarded the Nobel Peace Prize.
After the collapse of the Soviet Union Americans hired Yeltsin.
Russian President Boris Yeltsin continued destruction of Russia.
Russian people demanded a national leader and a miracle happened.
President Putin is a wonderful gift from President Yeltsin.
Putin is not dependent on the U.S. and leads the Russian policy in the interests of the Russian people.
In Russia, the president is not a puppet, but a real head.
Putin's bloody regime is a myth. This myth invented Western forces.
This is cheap propaganda. In the West, people believe in this myth. Our neighbors to the east in this myth do not believe.
Terrorist attack September 11, 2001 was coined by the U.S. Congress. He was made with remote controlled airliners.
Due to the terrorist attacks of September 11, the U.S. came up with the myth of global terrorism. Under the guise of global terrorism the U.S. expand their influence in the East.
Indeed, Europe, Russia and the East, are aware of these crimes the U.S.. Such methods are supported monopoly dollar.
Central banks in most countries are totally dependent on the U.S. Federal Reserve.
Most of the world can not trade in their money. Foreign trade only through the dollar.
But still want to trade through its currency.
If someone decides to do so, the country is attacked by the U.S. Army.
Any country that is independent of the U.S. and Britain, Americans consider totalitarian.
Today, Russia is a strong country. We got stronger after the devastation of the nineties.
Russian government wants to restore the Soviet Union, but in another form.
Russia will have many allies in Europe and the East.
Russia is included in alliances BRICS, SCO and the Eurasian Union. Eurasian Union is an analogue of the Soviet Union.
These alliances have one goal. The purpose of this is to destroy the U.S. dollar as the monopoly.
This fall BRICS began to make external transactions through their own money. BRICS today refused dollars.
For the U.S., this means the beginning of the end.
World domination is based on the U.S. dollar. Printing dollars instead of real work. Very soon, this will not do.
When the dollar collapses, the U.S. could start a civil war.
Individual U.S. states will divide the property. Special services of Russia, Germany, China and other countries, will warm the U.S. population.
So we try to divide the United States. Our share is Alaska. Easy way to get just as easily and take away.
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While in a foreign country, visit a cemetery first and then go to their market... [Nov. 25th, 2012|10:17 pm]
Economics Discussion Forum

Originally posted byjasurbekrat While in a foreign country, visit a cemetery first and then go to their market...
A lot of factors reflect the economic development. Many refer to economic factors such as GDP and CPI to measure a country's economic standing. However, those factors are not always true indicators. It is documented that so-called shadow economy blocks the real picture behind those indicators. Black market is a case in point. The unemployment rate in a particular state might be 25%, for example, but in reality out of those quarter 15% might be engaged in black market activities such as trading and arbitraging without official state registration and paying income tax thus making the real unemployment rate way lower than the real figure. Coming from such environment, I normally use basic informal factors to measure the economic and social development of a country as well as  official economic data.
Back in my childhood I loved helping my mother with shopping. Whenever we visited the main bazaar in my city, I was always surprised and curious about the words at the entrance "Musofir bo'lib davlat ko'rmoqni istasang avval mozorga bor keyin bozorga". The rough translation of those words from Uzbek would be "While in a foreign country, visit a cemetery first and then go their market". Indeed those two places are the summary of social and economic picture. Cemetery is the respect to the history and Market is present life as well as the future prospects. Well, such informal factors could be anything; road conditions, the internet access or even skyscrapers.Yet no matter how banal it may sound, Markets and Cemeteries are two important places where one can the social and economic life from a different angle. The United States of America has no bazaars but it has something similar to bazaar in more organized way - Walmart. Of course there are plenty of such stores in the US but Walmart is the most adjacent form in comparison to bazaars. Cemeteries in the United States resemble Walmart in the way of organization. It may not be a good comparison but while visiting those two places in Louisiana, I came to a conclusion that the Americans have huge patriotism and respect towards their history. It can be seen in the presence of the "Stars and Stripes", neatness and organization in the cemeteries.Which country in the world has flags in their cemeteries and markets?! Likewise, it is the place with a profound future that is reflected by organization and efficiency in Walmart bazaars. The more well-organized and efficient those focal areas, the higher the socio-economic development is.
 So *my personal conclusion* of the saying above is that there is positive correlation between those two areas (Market and Cemetery) and the socio-economic development and living standards of a country. 

A Walmart super-store in the USEfficient organization is reflected in two remote social points.
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Black Friday - A Gift for Thanksgiving or an Economic Strategy? [Nov. 25th, 2012|10:14 pm]
Economics Discussion Forum

Originally posted byjasurbekrat Black Friday - A Gift for Thanksgiving or an Economic Strategy?
November 22 is a special day for many Americans. They widely celebrate Thanksgiving - the holiday of gratitude for everything God blessed with. It has roots in religious traditions, but today it is mainly celebrated mainly in secular way, typically with family. Many people feel excited about this holiday because they visit each other and prepare different meals to celebrate it. However, there is another reason main reason why millions of people across the nation look forward to that day; Black Friday, in other words, A Big Discounts Day. Practically all mega-markets on that day, usually after 8 pm, open their stores offering discounts up to 90%. Many people stay up all night and wait for the discount
Black Friday in pictures
 stores to open because it is a good opportunity to buy a product at almost twice as cheap as in any other time of the year. But is it really out of the goodness of the heart of corporate people or there is a strategic plan behind that?
I experienced Black Friday wandering around stores to find a good deal for my needs. Every store, almost every store had a long line of 500 meters waiting for them. From a business student perspective, I can say that this is the most creative way of heating up the economy with cash inflow into money circulation. Billions of dollars will be injected within the economy over a night by individual savings which in the same way makes more money available at Federal and State Banks for corporate America.
Consequently, many corporations then borrow this money back from financial institutions and
IMG_1526[1]invest in strategic projects that will ultimately create more jobs for people. In fact, the reason why it is called Black Friday is normally before 1980 many corporations used to make low revenue during the year (January through November) but after Thanksgiving the sales used to climb dramatically. Therefore, accountants used to highlight their loss or low revenue till November with a red color in their accounting books and thereafter with black color to show sales boost.  Amazing, isn't it? There is mutual benefit for both customers and businesses. Good deals for consumers and immediate inventory turnover and thus large profit for businesses.
After all I experienced on November 22, I came to a conclusion that Black Friday is not just about discounts. It is about catalyzing the economic growth and ameliorating the living standards in the nation and the phonemenal event that many developing and developed nations should implement.

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Free Money! [May. 26th, 2012|10:12 am]
Economics Discussion Forum

Disturbing the tumble weeds and in this community, I'm at askance at whether anyone here fancies themselves a bit of an expert on Free Money, as a means to reduce the negative effects of Liquidity Preference?

It intrigues me as a concept and even more so because of its apparent (limited testing) success.
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Economic Collapse Crumb Cake [Aug. 1st, 2011|11:07 am]
Economics Discussion Forum

Thought you might enjoy my Economic Collapse Crumb Cake.

From Apocalypse Cakes.
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