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Business valuation The WACC must be applied to the subject company's net cash flow to total invested capital. One of the problems with this method is that the valuator may elect to calculate WACC according to the subject company's existing capital structure, the average industry capital structure, or the optimal capita... | https://en.wikipedia.org/wiki?curid=1885799 |
Business valuation The rationale behind this choice is that this earnings basis corresponds to the equity discount rate derived from the Build-Up or CAPM models: the returns obtained from investments in publicly traded companies can easily be represented in terms of net cash flows. At the same time, the discount rates ... | https://en.wikipedia.org/wiki?curid=1885799 |
Business valuation In addition to systematic risks, the discount rate must include "unsystematic risk" representing that portion of total investment risk that can be avoided through diversification. Public capital markets do not provide evidence of unsystematic risk since investors that fail to diversify cannot expect ... | https://en.wikipedia.org/wiki?curid=1885799 |
Business valuation Total beta can help appraisers develop a cost of capital who were content to use their intuition alone when previously adding a purely subjective company-specific risk premium in the build-up approach. It is important to understand why this capitalization rate for small, privately held companies is s... | https://en.wikipedia.org/wiki?curid=1885799 |
Business valuation ) In asset-based analysis the value of a business is equal to the sum of its parts. That is the theory underlying the asset-based approaches to business valuation. The asset approach to business valuation reported on the books of the subject company at their acquisition value, net of depreciation whe... | https://en.wikipedia.org/wiki?curid=1885799 |
Business valuation The asset based approach is the entry barrier value and should preferably to be used in businesses having mature or declining growth cycle and is more suitable for capital intensive industry. Adjusted net book value may be the most relevant standard of value where liquidation is imminent or ongoing; ... | https://en.wikipedia.org/wiki?curid=1885799 |
Business valuation The difficulty lies in identifying public companies that are sufficiently comparable to the subject company for this purpose. Also, as for a private company, the equity is less liquid (in other words its stocks are less easy to buy or sell) than for a public company, its value is considered to be sli... | https://en.wikipedia.org/wiki?curid=1885799 |
Business valuation " If the guideline public companies are sufficiently similar to each other and the subject company to permit a meaningful comparison, then their multiples should be similar. The public companies identified for comparison purposes should be similar to the subject company in terms of industry, product ... | https://en.wikipedia.org/wiki?curid=1885799 |
Business valuation In general, equity may be viewed as a call option on the firm, and this allows for the valuation of troubled firms which may otherwise be difficult to analyse. The classic application of this approach is to the valuation of distressed securities, already discussed in the original Black-Scholes paper.... | https://en.wikipedia.org/wiki?curid=1885799 |
Business valuation Just as a financial option gives its owner the right, but not the obligation, to buy or sell a security at a given price, companies that make strategic investments have the right, but not the obligation, to exploit opportunities in the future; management will of course only exercise where this makes ... | https://en.wikipedia.org/wiki?curid=1885799 |
Business valuation Product patents may also be valued as options, and the value of firms holding these patents—typically firms in the , , and sectors—can (should) similarly be viewed as the sum of the value of products in place and the portfolio of patents yet to be deployed. As regards the option analysis, since the p... | https://en.wikipedia.org/wiki?curid=1885799 |
Business valuation There are three common levels of value: controlling interest, marketable minority, and non-marketable minority. The intermediate level, marketable minority interest, is less than the controlling interest level and higher than the non-marketable minority interest level. The marketable minority interes... | https://en.wikipedia.org/wiki?curid=1885799 |
Business valuation Non-marketable, minority level is the lowest level on the chart, representing the level at which non-controlling equity interests in private companies are generally valued or traded. This level of value is discounted because no ready market exists in which to purchase or sell interests. Private compa... | https://en.wikipedia.org/wiki?curid=1885799 |
Business valuation Minority interest discounts are the inverse of control premiums, to which the following mathematical relationship exists: MID = 1 – [1 / (1 + CP)] The most common source of data regarding control premiums is the Control Premium Study, published annually by Mergerstat since 1972. Mergerstat compiles d... | https://en.wikipedia.org/wiki?curid=1885799 |
Business valuation There is usually a cost and a time lag associated with locating interested and capable buyers of interests in privately held companies, because there is no established market of readily available buyers and sellers. All other factors being equal, an interest in a publicly traded company is worth more... | https://en.wikipedia.org/wiki?curid=1885799 |
Business valuation Some experts believe the Lack of Control and Marketability discounts can aggregate discounts for as much as ninety percent of a Company's fair market value, specifically with family-owned companies. Restricted stocks are equity securities of public companies that are similar in all respects to the fr... | https://en.wikipedia.org/wiki?curid=1885799 |
Business valuation In addition to the restricted stock studies, U.S. publicly traded companies are able to sell stock to offshore investors (SEC Regulation S, enacted in 1990) without registering the shares with the Securities and Exchange Commission. The offshore buyers may resell these shares in the United States, st... | https://en.wikipedia.org/wiki?curid=1885799 |
Business valuation Another approach to measure the marketability discount is to compare the prices of stock offered in initial public offerings (IPOs) to transactions in the same company's stocks prior to the IPO. Companies that are going public are required to disclose all transactions in their stocks for a period of ... | https://en.wikipedia.org/wiki?curid=1885799 |
Business valuation The evidence on the market value of specific businesses varies widely, largely depending on reported market transactions in the equity of the firm. A fraction of businesses are "publicly traded," meaning that their equity can be purchased and sold by investors in stock markets available to the genera... | https://en.wikipedia.org/wiki?curid=1885799 |
Business valuation The 2004 and 2007 SCF indicate a growing trend in stock ownership, with 51% of households indicating a direct or indirect ownership of stocks, with the majority of those respondents indicating indirect ownership through mutual funds. Few indications are available on the value of privately held firms.... | https://en.wikipedia.org/wiki?curid=1885799 |
Exponential smoothing is a rule of thumb technique for smoothing time series data using the exponential window function. Whereas in the simple moving average the past observations are weighted equally, exponential functions are used to assign exponentially decreasing weights over time. It is an easily learned and easil... | https://en.wikipedia.org/wiki?curid=1890727 |
Exponential smoothing Here, exponential smoothing is the application of the exponential, or Poisson, window function. was first suggested in the statistical literature without citation to previous work by Robert Goodell Brown in 1956, and then expanded by Charles C. Holt in 1957. The formulation below, which is the one... | https://en.wikipedia.org/wiki?curid=1890727 |
Exponential smoothing Sometimes the statistician's judgment is used to choose an appropriate factor. Alternatively, a statistical technique may be used to "optimize" the value of "α". For example, the method of least squares might be used to determine the value of "α" for which the sum of the quantities formula_10 is m... | https://en.wikipedia.org/wiki?curid=1890727 |
Exponential smoothing The time constant of an exponential moving average is the amount of time for the smoothed response of a unit set function to reach formula_11 of the original signal. The relationship between this time constant, formula_12, and the smoothing factor, formula_13, is given by the formula: Where formul... | https://en.wikipedia.org/wiki?curid=1890727 |
Exponential smoothing For simple exponential smoothing, there is only one smoothing parameter ("α"), but for the methods that follow there is usually more than one smoothing parameter. There are cases where the smoothing parameters may be chosen in a subjective manner — the forecaster specifies the value of the smoothi... | https://en.wikipedia.org/wiki?curid=1890727 |
Exponential smoothing By direct substitution of the defining equation for simple exponential smoothing back into itself we find that In other words, as time passes the smoothed statistic "s" becomes the weighted average of a greater and greater number of the past observations "x", and the weights assigned to previous o... | https://en.wikipedia.org/wiki?curid=1890727 |
Exponential smoothing In the signal processing literature, the use of non-causal (symmetric) filters is commonplace, and the exponential window function is broadly used in this fashion, but a different terminology is used: exponential smoothing is equivalent to a first-order Infinite Impulse Response or IIR filter and ... | https://en.wikipedia.org/wiki?curid=1890727 |
Exponential smoothing Double exponential smoothing is given by the formulas And for t > 1 by where α is the "data smoothing factor", 0 < α < 1, and β is the "trend smoothing factor", 0 < β < 1. To forecast beyond "x" Setting the initial value "b" is a matter of preference. An option other than the one listed above is (... | https://en.wikipedia.org/wiki?curid=1890727 |
Exponential smoothing Triple exponential smoothing was first suggested by Holt's student, Peter Winters, in 1960 after reading a signal processing book from the 1940s on exponential smoothing. Holt's novel idea was to repeat filtering an odd number of times greater than 1 and less than 5, which was popular with scholar... | https://en.wikipedia.org/wiki?curid=1890727 |
Exponential smoothing ..,L is a bit more involved. If "N" is the number of complete cycles present in your data, then: where Note that "A" is the average value of "x" in the "j"th cycle of your data. Triple exponential smoothing with additive seasonality is given by: formula_30 | https://en.wikipedia.org/wiki?curid=1890727 |
NOPLAT Net operating profit less adjusted taxes (NOPLAT) refers to after-tax EBIT adjusted for deferred taxes, or NOPAT + net increase in deferred taxes. It represents the profits generated from a company's core operations after subtracting the income taxes related to the core operations and adding back in taxes that t... | https://en.wikipedia.org/wiki?curid=1894325 |
Béla Balassa Béla Alexander Balassa (6 April 1928 – 10 May 1991) was a Hungarian economist and professor at Johns Hopkins University and a consultant for the World Bank. Balassa is best known for his work on the relationship between purchasing power parity and cross-country productivity differences (the Balassa–Samuels... | https://en.wikipedia.org/wiki?curid=1894340 |
External sector The external sector is the portion of a country's economy that interacts with the economies of other countries. In the goods market, the external sector involves exports and imports. In the financial market it involves capital flows. Economic features related to the external sector include: | https://en.wikipedia.org/wiki?curid=1894631 |
FDI stock is the value of the share of capital and reserves (including retained profits) attributable to the parent enterprise, plus the net indebtedness of affiliates to the parent enterprise. Inward stock is the value of the capital and reserves in the economy attributable to a parent enterprise resident in a differe... | https://en.wikipedia.org/wiki?curid=1895031 |
SELIC The Sistema Especial de Liquidação e Custodia (SELIC) "(Special Clearance and Escrow System)" is the Brazilian Central Bank's system for performing open market operations in execution of monetary policy. The rate is the Bank's overnight rate. | https://en.wikipedia.org/wiki?curid=1896449 |
Bid price A bid price is the highest price that a buyer (i.e., bidder) is willing to pay for a goods. It is usually referred to simply as the "bid". In bid and ask, the bid price stands in contrast to the ask price or "offer", and the difference between the two is called the bid–ask spread. An unsolicited bid or purcha... | https://en.wikipedia.org/wiki?curid=1904366 |
New Public Management (NPM) is an approach to running public service organizations that is used in government and public service institutions and agencies, at both sub-national and national levels. The term was first introduced by academics in the UK and Australia to describe approaches that were developed during the 1... | https://en.wikipedia.org/wiki?curid=1906130 |
New Public Management NPM advocates in some countries worked to remove "collective agreements [in favour of] ... individual rewards packages at senior levels combined with short term contracts" and introduce private sector-style corporate governance, including using a Board of Directors approach to strategic guidance f... | https://en.wikipedia.org/wiki?curid=1906130 |
New Public Management This NPM approach is contrasted with the traditional public administration model, in which institutional decision-making, policy-making and public service delivery is guided by regulations, legislation and administrative procedures. NPM reforms use approaches such as disaggregation, customer satis... | https://en.wikipedia.org/wiki?curid=1906130 |
New Public Management A term was coined in the late 1980s to denote a new (or renewed) focus on the importance of management and ‘production engineering’ in public service delivery, which often linked to doctrines of economic rationalism (Hood 1989, Pollitt 1993). During this timeframe public management became an activ... | https://en.wikipedia.org/wiki?curid=1906130 |
New Public Management For instance, regional innovation agency were created under NPM principles to support the innovation process. A benign interpretation is that these decisions have been a defensible, if imperfect, response to policy problems. Those problems as well as their solutions were formulated within the poli... | https://en.wikipedia.org/wiki?curid=1906130 |
New Public Management The idea for using this method for government reform was that if the government guided private-sector principles were used rather than rigid hierarchical bureaucracy, it would work more efficiently. NPM promotes a shift from bureaucratic administration to business-like professional management. NPM... | https://en.wikipedia.org/wiki?curid=1906130 |
New Public Management NPM advocates frequently moved from a bound together administration framework to a decentralized framework in which directors pick up adaptability and are not constrained to organization restrictions. This characteristic centers on how NPM can advance competition within the public sector which may... | https://en.wikipedia.org/wiki?curid=1906130 |
New Public Management "Doing more with less" moreover cost reduction stimulates efficiency and is one way which makes it different from the traditional of management approach draws practices from the private sector and uses them in the public sector of management. NPM reforms use market forces to hold the public sector... | https://en.wikipedia.org/wiki?curid=1906130 |
New Public Management NPM brings to question integrity and compliance when dealing with incentives for public managers - the interests of customers and owners do not always align. Questions such as managers being more or less faithful arise. The public interest is at risk and could undermine the trust in government. "G... | https://en.wikipedia.org/wiki?curid=1906130 |
New Public Management Digital Era Governance provides a unique opportunity for self- sustainability however, there are various factors that will determine whether or not DEG can be implemented successfully. When countries have proper technology, NPM simply can't compete very well with DEG. DEG does an excellent job of ... | https://en.wikipedia.org/wiki?curid=1906130 |
New Public Management By contrast, the emphasis of the movement a decade or so later was firmly managerial normative in that it stressed the difference that management could and should make in the quality and efficiency of public services. It focuses on public service production functions and operational issues contras... | https://en.wikipedia.org/wiki?curid=1906130 |
The McDonaldization of Society is a 1993 book by sociologist George Ritzer. Ritzer suggests that in the later part of the 20th century the socially-structured form of the fast-food restaurant has become the organizational force representing and extending the process of rationalization into the realm of everyday interac... | https://en.wikipedia.org/wiki?curid=1907580 |
The McDonaldization of Society The process affects all aspects of everyday life. | https://en.wikipedia.org/wiki?curid=1907580 |
Endogeneity (econometrics) In econometrics, endogeneity broadly refers to situations in which an explanatory variable is correlated with the error term. The distinction between endogenous and exogenous variables originated in simultaneous equations models, where one separates variables whose values are determined by th... | https://en.wikipedia.org/wiki?curid=1908618 |
Endogeneity (econometrics) If the independent variable is correlated with the error term in a regression model then the estimate of the regression coefficient in an ordinary least squares (OLS) regression is biased; however if the correlation is not contemporaneous, then the coefficient estimate may still be consistent... | https://en.wikipedia.org/wiki?curid=1908618 |
Endogeneity (econometrics) That is, instead of observing formula_25, what is actually observed is formula_26 where formula_27 is the measurement error or "noise". In this case, a model given by can be written in terms of observables and error terms as Since both formula_30 and formula_31 depend on formula_27, they are ... | https://en.wikipedia.org/wiki?curid=1908618 |
Endogeneity (econometrics) In this instance it would be correct to say that infestation is exogenous within the period, but endogenous over time. Let the model be "y" = "f"("x", "z") + "u". If the variable "x" is sequential exogenous for parameter formula_1, and "y" does not cause "x" in the Granger sense, then the var... | https://en.wikipedia.org/wiki?curid=1908618 |
Ellsberg paradox The is a paradox in decision theory in which people's choices violate the postulates of subjective expected utility. It is generally taken to be evidence for ambiguity aversion. The paradox was popularized by Daniel Ellsberg, although a version of it was noted considerably earlier by John Maynard Keyne... | https://en.wikipedia.org/wiki?curid=1912480 |
Ellsberg paradox The balls are well mixed so that each individual ball is as likely to be drawn as any other. Given a choice between two gambles: Also you are given the choice between these two gambles (about a different draw from the same urn): This situation poses both "Knightian uncertainty" – how many of the non-re... | https://en.wikipedia.org/wiki?curid=1912480 |
Ellsberg paradox And, supposing instead that you "prefer" Gamble B to Gamble A, it follows that you will also "prefer" Gamble D to Gamble C. When surveyed, however, most people "strictly prefer" Gamble A to Gamble B and Gamble D to Gamble C. Therefore, some assumptions of the expected utility theory are violated. Mathe... | https://en.wikipedia.org/wiki?curid=1912480 |
Ellsberg paradox Therefore, it is sufficient to assume that the preference is to receive some money to nothing (and, this assumption is not necessary: in the mathematical treatment above, it was assumed "U"($100) > "U"($0), but a contradiction can still be obtained for "U"($100) < "U"($0) and for "U"($100) = "U"($0)). ... | https://en.wikipedia.org/wiki?curid=1912480 |
Ellsberg paradox That is, these alternative approaches sometimes suppose that the agent formulates a subjective (though not necessarily Bayesian) probability for possible outcomes. One such attempt is based on info-gap decision theory. The agent is told precise probabilities of some outcomes, though the practical meani... | https://en.wikipedia.org/wiki?curid=1912480 |
Ellsberg paradox Many humans naturally assume in real-world situations that if they are not told the probability of a certain event, it is to deceive them. People make the same decisions in the experiment that they would about related but not identical real-life problems where the experimenter would be likely to be a d... | https://en.wikipedia.org/wiki?curid=1912480 |
Ellsberg paradox These theories attribute the source of the ambiguity aversion to the participant's pre-existing knowledge. | https://en.wikipedia.org/wiki?curid=1912480 |
Solow–Swan model The is an economic model of long-run economic growth set within the framework of neoclassical economics. It attempts to explain long-run economic growth by looking at capital accumulation, labor or population growth, and increases in productivity, commonly referred to as technological progress. At its ... | https://en.wikipedia.org/wiki?curid=1913978 |
Solow–Swan model Today, economists use Solow's sources-of-growth accounting to estimate the separate effects on economic growth of technological change, capital, and labor. Solow extended the Harrod–Domar model by adding labor as a factor of production and capital-output ratios that are not fixed as they are in the Har... | https://en.wikipedia.org/wiki?curid=1913978 |
Solow–Swan model An interesting implication of Solow's model is that poor countries should grow faster and eventually catch-up to richer countries. This convergence could be explained by: Baumol attempted to verify this empirically and found a very strong correlation between a countries' output growth over a long perio... | https://en.wikipedia.org/wiki?curid=1913978 |
Solow–Swan model Paradoxically, even though TFP growth is exogenous in the model, it cannot be observed, so it can only be estimated in conjunction with the simultaneous estimate of the effect of capital accumulation on growth during a particular time period. The model can be reformulated in slightly different ways usi... | https://en.wikipedia.org/wiki?curid=1913978 |
Solow–Swan model labor, as well as the level of technology grow exogenously at rates formula_12 and formula_13, respectively: The number of effective units of labor, formula_16, therefore grows at rate formula_17. Meanwhile, the stock of capital depreciates over time at a constant rate formula_18. However, only a fract... | https://en.wikipedia.org/wiki?curid=1913978 |
Solow–Swan model The equation implies that formula_34 converges to a steady-state value of formula_35, defined by formula_36, at which there is neither an increase nor a decrease of capital intensity: at which the stock of capital formula_2 and effective labour formula_8 are growing at rate formula_40. By assumption of... | https://en.wikipedia.org/wiki?curid=1913978 |
Solow–Swan model Since the marginal product of physical capital is not higher in poor countries than in rich countries, the implication is that productivity is lower in poor countries. The basic Solow model cannot explain why productivity is lower in these countries. Lucas suggested that lower levels of human capital i... | https://en.wikipedia.org/wiki?curid=1913978 |
Solow–Swan model Therefore, there are two fundamental dynamic equations in this model: The balanced (or steady-state) equilibrium growth path is determined by formula_64, which means formula_65 and formula_66. Solving for the steady-state level of formula_27 and formula_68 yields: In the steady state, formula_71. Kleno... | https://en.wikipedia.org/wiki?curid=1913978 |
Solow–Swan model The external effect of human capital on the productivity of physical capital is evident in the marginal product of physical capital: He showed that the large estimates of the effect of human capital in cross-country estimates of the model are consistent with the smaller effect typically found on worker... | https://en.wikipedia.org/wiki?curid=1913978 |
Solow–Swan model However, savings rates vary widely across countries. In particular, since considerable financing constraints exist for investment in schooling, savings rates for human capital are likely to vary as a function of cultural and ideological characteristics in each country. Since the 1950s, output/worker in... | https://en.wikipedia.org/wiki?curid=1913978 |
Solow–Swan model Econometric analysis on Singapore and the other "East Asian Tigers" has produced the surprising result that although output per worker has been rising, almost none of their rapid growth had been due to rising per-capita productivity (they have a low "Solow residual"). | https://en.wikipedia.org/wiki?curid=1913978 |
Diversified financial Diversified financials is a specific category of the Global Industry Classification Standard (GICS) that is used by the financial community. It includes a range of consumer and commercially oriented companies offering a wide variety of financial products and services, including various lending pro... | https://en.wikipedia.org/wiki?curid=1914859 |
Philip Mirowski (born 21 August 1951 in Jackson, Michigan) is a historian and philosopher of economic thought at the University of Notre Dame. He received a PhD in Economics from the University of Michigan in 1979. In his book "More Heat than Light", Mirowski reveals a history of how physics has drawn inspiration from ... | https://en.wikipedia.org/wiki?curid=1916846 |
Philip Mirowski In his book "Never Let a Serious Crisis Go to Waste", Mirowski concludes that neoliberal thought has become so pervasive that any countervailing evidence serves only to further convince disciples of its ultimate truth. Once neoliberalism became a Theory of Everything, providing a revolutionary account o... | https://en.wikipedia.org/wiki?curid=1916846 |
Michel Onfray (; born 1 January 1959) is a French writer and philosopher. Having a hedonistic, epicurean and atheist world view, he is a highly prolific author on philosophy, having written more than 100 books. His philosophy is mainly influenced by such thinkers as Nietzsche, Epicurus, the Cynic and Cyrenaic schools, ... | https://en.wikipedia.org/wiki?curid=1917730 |
Michel Onfray At that time, he and his supporters established the "Université populaire de Caen", proclaiming its foundation on a free-of-charge basis and on the manifesto written by Onfray in 2004 ("La communauté philosophique"). Onfray is an atheist and author of "Traité d'Athéologie" (""), which "became the number o... | https://en.wikipedia.org/wiki?curid=1917730 |
Michel Onfray Onfray writes that there is no philosophy without self-psychoanalysis. He describes himself as an atheist and considers theist religion to be indefensible. Onfray has published 9 books under a project of history of philosophy called "Counter-history of Philosophy". In each of these books Onfray deals with... | https://en.wikipedia.org/wiki?curid=1917730 |
Michel Onfray From that point on, anything that crosses this partial – in both senses of the word – view of things finds itself dismissed. This applies to nearly all non-Western philosophies, Oriental wisdom in particular, but also sensualist, empirical, materialist, nominalist, hedonistic currents and everything that ... | https://en.wikipedia.org/wiki?curid=1917730 |
Michel Onfray " Onfray's works "have explored the philosophical resonances and components of (and challenges to) science, painting, gastronomy, sex and sensuality, bioethics, wine, and writing. His most ambitious project is his projected six-volume "Counter-history of Philosophy"", of which three have been published. F... | https://en.wikipedia.org/wiki?curid=1917730 |
Michel Onfray Recently he has been involved in promoting the work of Jean Meslier, an 18th-century French Catholic priest who was discovered, upon his death, to have written a book-length philosophical essay promoting atheism. In the atheist manifesto, Onfray has said that among the "incalculable number of contradictio... | https://en.wikipedia.org/wiki?curid=1917730 |
Michel Onfray "The Université Populaire, which is open to all who cannot access the state university system, and on principle does not accept any money from the State -- Onfray uses the profits from his books to help finance it -- has had enormous success. Based on Onfray's book "La Communauté Philosophique: Manifeste ... | https://en.wikipedia.org/wiki?curid=1917730 |
Paradox of thrift The paradox of thrift (or paradox of saving) is a paradox of economics. The paradox states that an increase in autonomous saving leads to a decrease in aggregate demand and thus a decrease in gross output which will in turn lower "total" saving. The paradox is, narrowly speaking, that total saving may... | https://en.wikipedia.org/wiki?curid=1918286 |
Paradox of thrift Assuming that income has a direct effect on saving, an increase in the autonomous component of saving, other things being equal, will move the equilibrium point at which income equals output to a lower value, thereby inducing a decline in saving that may more than offset the original increase. In this... | https://en.wikipedia.org/wiki?curid=1918286 |
Paradox of thrift While the paradox of thrift was popularized by Keynes, and is often attributed to him, it was stated by a number of others prior to Keynes, and the proposition that spending may help and saving may hurt an economy dates to antiquity; similar sentiments occur in the Bible verse: which has found occasio... | https://en.wikipedia.org/wiki?curid=1918286 |
Paradox of thrift The paradox of thrift formally can be well described as a circuit paradox using the terms of "Balances Mechanics" developed by the German economist Wolfgang Stützel (German: "Saldenmechanik"): It is about saving by cut of expenses, which always leads to a revenue surplus of the individual, so to savin... | https://en.wikipedia.org/wiki?curid=1918286 |
Paradox of thrift Businesses are cancelling planned investments and laying off workers to preserve cash. And, financial institutions are shrinking assets to bolster capital and improve their chances of weathering the current storm. Once again, Minsky understood this dynamic. He spoke of the paradox of deleveraging, in ... | https://en.wikipedia.org/wiki?curid=1918286 |
Paradox of thrift So a decline in consumer spending is offset by an increase in lending, and subsequent investment and spending. Two caveats are added to this criticism. Firstly, if savings are held as cash, rather than being loaned out (directly by savers, or indirectly, as via bank deposits), then loanable funds do n... | https://en.wikipedia.org/wiki?curid=1918286 |
Paradox of thrift They further note that this frequently occurs in concert with currency devaluation (hence increasing exports and decreasing imports), and cannot work as a solution to a global problem, because the global economy is a closed system – not "every" nation can increase net exports. The Austrian School econ... | https://en.wikipedia.org/wiki?curid=1918286 |
United States housing bubble The was a real estate bubble affecting over half of the U.S. states. Housing prices peaked in early 2006, started to decline in 2006 and 2007, and reached new lows in 2012. On December 30, 2008, the Case–Shiller home price index reported its largest price drop in its history. The credit cri... | https://en.wikipedia.org/wiki?curid=1920610 |
United States housing bubble This was shared between the public sector and the private sector. Because of the large market share of Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) (both of which are government-sponsored enterprises) as well as the Federal ... | https://en.wikipedia.org/wiki?curid=1920610 |
United States housing bubble Factors include tax policy (exemption of housing from capital gains), historically low interest rates, tax lending standards, failure of regulators to intervene, and speculative fever. This bubble may be related to the stock market or dot-com bubble of the 1990s. This bubble roughly coincid... | https://en.wikipedia.org/wiki?curid=1920610 |
United States housing bubble Greenspan warned of "large double digit declines" in home values "larger than most people expect". Problems for home owners with good credit surfaced in mid-2007, causing the United States' largest mortgage lender, Countrywide Financial, to warn that a recovery in the housing sector was not... | https://en.wikipedia.org/wiki?curid=1920610 |
United States housing bubble Hunn wrote: Many contested any suggestion that there could be a housing bubble, particularly at its peak from 2004 to 2006, with some rejecting the "house bubble" label in 2008. Claims that there was no warning of the crisis were further repudiated in an August 2008 article in "The New York... | https://en.wikipedia.org/wiki?curid=1920610 |
United States housing bubble " Reuters reported in October 2007 that a Merrill Lynch analyst too had warned in 2006 that companies could suffer from their subprime investments. The "Economist" magazine stated, "The worldwide rise in house prices is the biggest bubble in history", so any explanation needs to consider it... | https://en.wikipedia.org/wiki?curid=1920610 |
United States housing bubble " The chief economist of Freddie Mac and the director of Joint Center for Housing Studies (JCHS) denied the existence of a national housing bubble and expressed doubt that any significant decline in home prices was possible, citing consistently rising prices since the Great Depression, an a... | https://en.wikipedia.org/wiki?curid=1920610 |
United States housing bubble " National home sales and prices both fell dramatically in March 2007 — the steepest plunge since the 1989 Savings and Loan crisis. According to NAR data, sales were down 13% to 482,000 from the peak of 554,000 in March 2006, and the national median price fell nearly 6% to $217,000 from a p... | https://en.wikipedia.org/wiki?curid=1920610 |
United States housing bubble In addition, Democratic senators such as Senator Charles Schumer of New York were already proposing a federal government bailout of subprime borrowers in order to save homeowners from losing their residences. Home price appreciation has been non-uniform to such an extent that some economist... | https://en.wikipedia.org/wiki?curid=1920610 |
United States housing bubble It was in the East Coast, the more populated part of the country where the economic real estate turmoil was the worst. Somewhat paradoxically, as the housing bubble deflates some metropolitan areas (such as Denver and Atlanta) have been experiencing high foreclosure rates, even though they ... | https://en.wikipedia.org/wiki?curid=1920610 |
United States housing bubble Some of the cities and regions that had experienced the fastest growth during 2000–2005 began to experience high foreclosure rates. It was suggested that the weakness of the housing industry and the loss of the consumption that had been driven by the withdrawal of mortgage equity could lead... | https://en.wikipedia.org/wiki?curid=1920610 |
United States housing bubble In a paper he presented to a Federal Reserve Board economic symposium in August 2007, Yale University economist Robert Shiller warned, "The examples we have of past cycles indicate that major declines in real home prices—even 50 percent declines in some places—are entirely possible going fo... | https://en.wikipedia.org/wiki?curid=1920610 |
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