192 definitions by Abu Yahya
(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
(FINANCE) create a call option that allows the future owner to buy a set number of shares of an underlying stock at a fixed strike price. May also be for traded items other than stock. The writer of a call option is both the counterparty and the originator of the derivative.
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A call option is a product that allows an investor to take a long position on a stock without actually owning it; if the underlying stock rises in value, the call option rises a lot more. The increased potential windfall is offset by the much greater likelihood that the investor will lose the entire initial investment.
The writer of the option is presumed to own the thing offered for sale; if the price of the underlying stock rises above the strike price, then the owner of the option will presumably exercise it and pocket the profit. Thus, there is a risk to the writer of the option that all of the profits from owning the stock will go to the buyer of the option. This risk is offset by the fees the writer charges for the option.
In some cases, a speculator may write an option for shares of stock that she does not own. This is particularly risky, since the price of the underlying stock could rise above the strike price, forcing the writer to buy the shares at a high price in order to sell them at a low price.
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A call option is a product that allows an investor to take a long position on a stock without actually owning it; if the underlying stock rises in value, the call option rises a lot more. The increased potential windfall is offset by the much greater likelihood that the investor will lose the entire initial investment.
The writer of the option is presumed to own the thing offered for sale; if the price of the underlying stock rises above the strike price, then the owner of the option will presumably exercise it and pocket the profit. Thus, there is a risk to the writer of the option that all of the profits from owning the stock will go to the buyer of the option. This risk is offset by the fees the writer charges for the option.
In some cases, a speculator may write an option for shares of stock that she does not own. This is particularly risky, since the price of the underlying stock could rise above the strike price, forcing the writer to buy the shares at a high price in order to sell them at a low price.
ANNA: See, here we can see management has totally screwed up. The share price is going to fall, so we should write a call.
BILL: But we don't own any shares of their stock!
ANNA: Yes, I pity the fool who buys our options!
BILL: But we don't own any shares of their stock!
ANNA: Yes, I pity the fool who buys our options!
by Abu Yahya April 5, 2010
the amount of goods and services that a country imports, minus the goods and services that it exports *in a calendar year*. In 1999 Japan exported much more than it imported, so it had a trade surplus. The same year, the United States imported more than it exported, and therefore had a large trade deficit.
While Japan had a trade surplus and the USA had a trade deficit, both had something called a trade balance, which was negative for the USA and positive for Japan.
While Japan had a trade surplus and the USA had a trade deficit, both had something called a trade balance, which was negative for the USA and positive for Japan.
During economic downturns, political leaders become very concerned if their country is running a trade deficit, because it means that jobs are being lost to business overseas.
by Abu Yahya February 14, 2009