192 definitions by abu yahya

AEI
(acronym) American Enterprise Institute; an extremely powerful thinktank associated with the Conservative Movement.
The AEI is extremely well-connected, and much favored by business interests.
by Abu Yahya May 29, 2009

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FDI
foreign direct investment; includes direct capital investment in companies that have not yet issued stock. As opposed to portfolio investment (purchases of traded securities in a firm). Both FDI and portfolio investment refer to capital transfers from country to country.
A major component of any country's capital accounts is FDI.
by abu yahya August 03, 2008

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Breathless and/or mendacious "Globalization" pieces from neoliberal commentators. A lot of pop economics insists that increased trade in services, intellectual property, and equities will solve every significant problem.
The American Enterprise Institute (AEI) is always good for a large steaming helping of globollocks.
by Abu Yahya August 03, 2008

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(1) The strategy by the world's economic elites of imposing an extremely neoliberal economic regime on communities they control, using some form of shock: a natural disaster, a coup d'etat, a war, a financial crisis, etc. Once the community has been crippled by this first shock, the economic "reforms" are imposed suddenly, creating a secondary blow. Then, as the community begins to recover and fight back, the authorities use torture and police brutality to (literally) shock the community a third time.

(2) title of a book by Naomi Klein describing def. 1

(Please see disaster capitalism.)
Ms. Klein's 2007 book described the rise of disaster capitalism in mostly poor countries: Chile (after 1973), Argentina (after 1989), Poland (after 1993), and Sri Lanka (after 2004). But in 2009, the super rich were able to inflict the shock doctrine on the richest countries of the world, including Germany, France, and Italy.

The 2008 financial crisis was entirely a product of the richest 1% of the human race; but soon after, national governments scrambled to punish the remaining 99% for the crisis instead, by slashing public services and imposing austerity programs.
by Abu Yahya July 10, 2010

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(FINANCE) a type of financial derivative which two parties "swap," or exchange, the streams of income (or payments) from two different sources. The actual instrument is created by a third party, such as an investment bank.

The most familiar version of the swap is the interest rate swap, in which the holder of a fixed rate loan and the holder of an adjustable rate loan agree to exchange revenue streams.

The variety of swaps available is massively greater than with options or futures; essentially, swaps exist for every arbitrage opportunity that any combination of markets provides; the market for swaps is huge.
BILL: Why do firms buy swaps? Why don't they just sell the loans they have to other banks, or whatever?

ANNA: One is that swaps are a method of hedging risk; you hold the bond in case the price goes up, but you buy interest rate swaps to protect against having average rates in your portfolio that are two high or two low.
by Abu Yahya April 05, 2010

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(FINANCE) a financial instrument whose value is tied to something else; for example,

* a futures contract (future)

* an option

* a swap

In each of these examples, the value of the derivative is related in some way to the price of something else. When the market price of (say) an ounce of gold goes from $1000/oz to $1050/oz, the return to the owner of 1 oz. of actual gold is 5%. But for the owner of a call option or a future, the return is much, much greater than that.

A derivative can be used to multiply risk AND potential profits to speculators; but it can be used for the counterparty to minimize risk by locking in prices, or by hedging against risk.
The economic crisis of 2008 has really focused attention on the financial derivative market.
by Abu Yahya April 05, 2010

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a graph correlating inflation against unemployment rates. Using a horizontal axis to represent unemployment, and a vertical axis to represent inflation, A.W. Phillips found the rate of inflation and unemployment in Great Britain for every year between 1861 and 1957. When he had plotted the 97 dots on the chart, he had a rather neat hyperbola convex to the origin of the graph.

In other words, if the rate of unemployment was low, the rate of inflation was high, and vice versa. At the time, economists concluded that this was a logical outcome of both being influenced by the rate of interest: if interest rates were low, then unemployment would be low and prices would rise, but if interest rates were high then there would be lots of unemployment and workers would not have much money to spend... so prices would go down.

Unfortunately, when economists tried to design policy around this concept they disrupted the smooth relationship. In the years since the 1960's, there has not been a straightforward relationship, and Keynesian economics has had to be drastically revised to a post-Phillips Curve regime.

There is some correlation between inflation and unemployment, but the correlation is much more complicated than originally thought. It is quite possible to have high unemployment and high inflation (i.e., a high "misery index").
The Phillips Curve implies a trade-off between unemployment and inflation. Unfortunately, this trade-off may sometimes represent more of a Faustian bargain.
by Abu Yahya February 14, 2009

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