192 definitions by Abu Yahya
(FINANCE) the increase in wealth that goes to the owner of a financial asset when it increases in value. If you buy a share of stock, and the share increases in value, then you have capital gains whether you have sold it or not.
If you sell the stock at the higher price, you have made money on the transaction and have "realized capital gains." If you hang onto the asset in the hopes its value will increase even more, you have "unrealized capital gains."
If you sell the stock at the higher price, you have made money on the transaction and have "realized capital gains." If you hang onto the asset in the hopes its value will increase even more, you have "unrealized capital gains."
For owners of stocks, wealth can come in the form of capital gains or dividends. For owners of gold, the only benefit comes from capital gains. This is why gold is usually not a good investment.
by Abu Yahya April 15, 2010
(FINANCE) real estate mortgage backed securities; usually used to refer to the derivatives created by Fannie Mae and Freddie Mac that were used to create collateralized debt obligations CDO's.
Most economists seem to agree that the 2008 crisis was caused by the collapse of the real estate market, which was mainly caused by the toxic relationship between RMBS's and the CDO's created mostly with them.
Most economists seem to agree that the 2008 crisis was caused by the collapse of the real estate market, which was mainly caused by the toxic relationship between RMBS's and the CDO's created mostly with them.
For almost eighty years the RMBS business helped people buy homes, with few serious problems. Then Congress abolished Glass-Steagall, the banks merged and created CDO's, and total disaster followed.
And now our neighborhoods look awful as well.
And now our neighborhoods look awful as well.
by Abu Yahya April 5, 2010
(FINANCE) the amount of bank reserves that a bank must keep in storage to meet unexpected liabilities.
Banks are not allowed to lend out 100% of the money they receive as deposits; if they did, then depositors would be unable to take money out of the bank. On the other hand, the bank has to lend most of the money out, since it needs the income earned from interest on loans. Throughout the history of the Usonian banking system, the US states or the federal government have had rules about interest rates, reserves, and financial accounting used by banks.
Reserve requirements are necessary to mitigate the risk of bank runs; this was thought to have disappeared thanks to deposit insurance, but Washington Mutual experienced a bank run in 2008 that forced it into receivership.
Banks are not allowed to lend out 100% of the money they receive as deposits; if they did, then depositors would be unable to take money out of the bank. On the other hand, the bank has to lend most of the money out, since it needs the income earned from interest on loans. Throughout the history of the Usonian banking system, the US states or the federal government have had rules about interest rates, reserves, and financial accounting used by banks.
Reserve requirements are necessary to mitigate the risk of bank runs; this was thought to have disappeared thanks to deposit insurance, but Washington Mutual experienced a bank run in 2008 that forced it into receivership.
In the USA, reserves have been set by law for centuries; as a percentage of liabilities, this percentage has declined over the centuries to its current level of 3-10% (as of 1992). In the Eurozone, this rate is 2%; in Japan, it is about 1.5%; and in Commonwealth countries like the UK & Canada, it is voluntary--there are no reserve requirements.
by Abu Yahya September 3, 2010
All of the parts of a productive system that contribute to marketable products; the productive elements in a particular economy. This includes the entire network of firms, regulatory bodies (like government), infrastructure (roads, telecommunications), and financial intermediaries (banks, thrifts).
In a global economy, there are many industrial systems. In fact, it's quite possible that a single town could have companies belonging to different industrial systems; e.g., a paper mill near a biotech research facility. Almost none of the productive systems share potential employees or potential markets; a recession for the biotech business could--and probably would--completely spare the paper mill. Moreover, the managers of the two businesses probably want opposite policies: the mill owners want low taxes and small government, while the biotech researchers want big spending on education and infrastructure.
Much confusion is caused by calling the industrial system the "economy." The industrial system is not the economy. The industrial system is an organic entity within a greater economy. Various policies may be beneficial for this or that industrial system, with an ambiguous effect (if any) on the economy.
In a global economy, there are many industrial systems. In fact, it's quite possible that a single town could have companies belonging to different industrial systems; e.g., a paper mill near a biotech research facility. Almost none of the productive systems share potential employees or potential markets; a recession for the biotech business could--and probably would--completely spare the paper mill. Moreover, the managers of the two businesses probably want opposite policies: the mill owners want low taxes and small government, while the biotech researchers want big spending on education and infrastructure.
Much confusion is caused by calling the industrial system the "economy." The industrial system is not the economy. The industrial system is an organic entity within a greater economy. Various policies may be beneficial for this or that industrial system, with an ambiguous effect (if any) on the economy.
The family model was incorporated into the industrial system with the agent (who was the chief manager) filling the father's role. The same model was also expressed in the hierarchical management structure... The overseer was the "father" of his workroom and was expected to treat the workers like his children.
(Tamara K. Hareven, *Family Time and Industrial Time* 1982, p.4)
(Tamara K. Hareven, *Family Time and Industrial Time* 1982, p.4)
by Abu Yahya February 24, 2010
the gap between revenues and expenditures for a government (over a given period of time); often referred to as an internal deficit or fiscal deficit.
The public deficit accumulates over each time period (usually a year) into what is known as the public debt.
by Abu Yahya February 15, 2009
(BUSINESS & MEDIA) 3rd largest media holding company in the world; US holdings include Fox News, Wall Street Journal, New York Post, and Dow Jones; in the UK, News of the World, *The Sun*, *The Sunday Times*, & The Times (London); and a couple dozen papers in Australia, plus Sky Broadcasting. News Corp also owns HarperCollins & 20th Century Fox.
News Corp is fairly aggressive for a holding company in actually imposing a unified strategy and brand identity on its holdings. It was created by Rupert Murdoch from News, LTD. (a firm created by Murdoch's father, Sir Keith) in 1979, a few years after he went on a media buying spree in the USA. Murdoch became a US citizen so he could legally own US TV stations. The Murdoch family owns 29% of News Corp; Saudi Prince Al-Walid bin Talal owns 7%.
News Corp launched Fox News in 1996 to compete with CNN; shortly before this, News Corp also launched the neoconservative magazine *The Weekly Standard* with William Kristol as its editor.
News Corp is fairly aggressive for a holding company in actually imposing a unified strategy and brand identity on its holdings. It was created by Rupert Murdoch from News, LTD. (a firm created by Murdoch's father, Sir Keith) in 1979, a few years after he went on a media buying spree in the USA. Murdoch became a US citizen so he could legally own US TV stations. The Murdoch family owns 29% of News Corp; Saudi Prince Al-Walid bin Talal owns 7%.
News Corp launched Fox News in 1996 to compete with CNN; shortly before this, News Corp also launched the neoconservative magazine *The Weekly Standard* with William Kristol as its editor.
News Corp is not as large as Walt Disney or Time Warner, but it has been far more successful as a business model than its larger competitors. That's mainly because Murdoch focused on finances and political strategy, whereas the other media conglomerates remain unwieldy, random agglomerations. It's like a battle between a remorseless bulldozer and a large heap of sand.
by Abu Yahya September 1, 2010
(ECONOMICS) the difference between the nominal interest rate and the rate of inflation; the actual premium charged by banks for lendable funds.
The real interest rate can be determined by subtracting the annualized rate of inflation from the prime rate offered by banks to borrowers with the best credit.
During the 1970's, the USA experienced relatively high inflation (peaking at 17% in January 1980). In some months this exceeded the prime rate, resulting in negative interest rates for short periods (e.g., April-October, 1978; Feb-July, 1979).
One problem of deflation (i.e., falling absolute prices) is that it always occurs when the economy is in VERY severe recession, and there is no way the central bank can reduce the real interest rate to zero, since 0% nominal rates minus negative inflation = positive real interest rates.
The real interest rate can be determined by subtracting the annualized rate of inflation from the prime rate offered by banks to borrowers with the best credit.
During the 1970's, the USA experienced relatively high inflation (peaking at 17% in January 1980). In some months this exceeded the prime rate, resulting in negative interest rates for short periods (e.g., April-October, 1978; Feb-July, 1979).
One problem of deflation (i.e., falling absolute prices) is that it always occurs when the economy is in VERY severe recession, and there is no way the central bank can reduce the real interest rate to zero, since 0% nominal rates minus negative inflation = positive real interest rates.
During the period 1978 to 1980, there were 14 (out of a total of 36) months during which the real interest rate was negative.
by Abu Yahya September 6, 2010