abu yahya's definitions
(FINANCE) when somebody buys a corporation using borrowed money ("leverage"), with the expectation that the new owner will able to pay for it from the corporation's own profits.
Kohlberg Kravis and Roberts (KKR) developed the LBO back when Jerome Kohlberg, Jr. and Henry Kravis were still partners at Bear Stearns (1960's). The technique was refined by Michael Milken's methods of underwriting and trading junk bonds. At the same time, corporate raiders and takeover artists like T. Boone Pickens perfected greenmail as a way to make money from failed hostile takeovers.
Kohlberg Kravis and Roberts (KKR) developed the LBO back when Jerome Kohlberg, Jr. and Henry Kravis were still partners at Bear Stearns (1960's). The technique was refined by Michael Milken's methods of underwriting and trading junk bonds. At the same time, corporate raiders and takeover artists like T. Boone Pickens perfected greenmail as a way to make money from failed hostile takeovers.
In constant US dollars, the largest leveraged buyout deal in history was the KKR takeover of RJR Nabisbo for $31.1 billion (1989). In 2006, several deals of even larger size were planned or attempted, but adjusted for inflation, they were not as large.
by Abu Yahya September 4, 2010
Get the leveraged buyout mug.*noun*; from Greek, θεός {god} + δίκαιον (justice). Literally, "the justice of God." Specifically, the attempt to explain God's ways to mortals.
The term was used by Gottfried Leibniz for his book {Théodicée} explaining how an omnipotent and benevolent God could allow suffering in the universe. Leibniz took the approach that this was the "best of all possible worlds," meaning that God could not have made this world better in any one respect, without making it worse in others.
In 1759, Voltaire published the novel *Candide* which was essentially a very long satire of Leibniz' views. The character of Dr. Pangloss is based on Leibniz, although it has been argued that Voltaire misrepresented Leibniz' views.
In common usage, the term *theodicy* refers to any defense of a thing based on the claim that whatever that thing does is the best possible. The obvious example is neoclassical economics, which insists that whatever outcome achieved by "the market," it is the best one that could possibly exist. It's a fallacy because it uses circular reasoning, and it is unfalsifiable.
The term was used by Gottfried Leibniz for his book {Théodicée} explaining how an omnipotent and benevolent God could allow suffering in the universe. Leibniz took the approach that this was the "best of all possible worlds," meaning that God could not have made this world better in any one respect, without making it worse in others.
In 1759, Voltaire published the novel *Candide* which was essentially a very long satire of Leibniz' views. The character of Dr. Pangloss is based on Leibniz, although it has been argued that Voltaire misrepresented Leibniz' views.
In common usage, the term *theodicy* refers to any defense of a thing based on the claim that whatever that thing does is the best possible. The obvious example is neoclassical economics, which insists that whatever outcome achieved by "the market," it is the best one that could possibly exist. It's a fallacy because it uses circular reasoning, and it is unfalsifiable.
Privileged and successful groups need religion for a very different purpose, namely legitimation. Their members are convinced that they deserve their good fortune and that the poor deserve their misfortune. {Max} Weber calls this the "theodicy of good fortune"...
Anthony Waterman in 2002 put forward the suggestion that Smith could be read as offering a kind of Augustinian theodicy of the market. According to him, Smith's idea could be interpreted as thus: just like God put governments in place to restrain sin, the institution of the market also restrains sin.
Nimi Wariboko, *God and Money: A Theology of Money in a Globalizing World* (2008)
Anthony Waterman in 2002 put forward the suggestion that Smith could be read as offering a kind of Augustinian theodicy of the market. According to him, Smith's idea could be interpreted as thus: just like God put governments in place to restrain sin, the institution of the market also restrains sin.
Nimi Wariboko, *God and Money: A Theology of Money in a Globalizing World* (2008)
by Abu Yahya March 23, 2009
Get the theodicy mug.The ability of an economic system to provide what people what, given their incomes. Given the fact that incomes and resources are both finite, efficiency will be of the utmost importance in determining if people's wants are satisfied by the workings of the economic system.
by abu yahya June 23, 2008
Get the economic efficiency mug.(FINANCE) used to refer to an option that has no intrinsic value, given the prevailing spot price. The two obvious examples are the call option and the put option.
*If the strike price of a call option is greater than the current price (or "spot price") of the underlying stock, then there is no point in exercising the option.
*If the strike price of a put option is less than the spot price, then there is no point in exercising the option/
Please note that "having no intrinsic value" IS NOT THE SAME THING as "worthless." An option that is out of the money is not worthless, unless it is about to expire. Assuming there is a lot of time left on the option before it expires, there remains the possibility the spot price of the underlying item could move in a favorable direction, and make the option "in the money."
*If the strike price of a call option is greater than the current price (or "spot price") of the underlying stock, then there is no point in exercising the option.
*If the strike price of a put option is less than the spot price, then there is no point in exercising the option/
Please note that "having no intrinsic value" IS NOT THE SAME THING as "worthless." An option that is out of the money is not worthless, unless it is about to expire. Assuming there is a lot of time left on the option before it expires, there remains the possibility the spot price of the underlying item could move in a favorable direction, and make the option "in the money."
Buying a call option that is out of the money is a long position; buying a put option that is out of the money is a short position.
by Abu Yahya April 15, 2010
Get the out of the money mug.(FINANCE) a bond issued by the US Department of the Treasury. Unlike longer-term bonds, with regular scheduled interest payments, a T-bill is purely discounted. In other words, the lender--the person buying the bond--pays a price lower than the face value of the bond. When the bond matures (after, say, 91 days), then the buyer is paid the face value.
The yield on the T-bill is usually very low; for example, yesterday 13-week T-bill rates were 4.01%. Their price is set at auction.
The yield on the T-bill is usually very low; for example, yesterday 13-week T-bill rates were 4.01%. Their price is set at auction.
People usually suppose that the Federal Reserve System sets interest rates, but this only applies to the federal funds rate. The rates on other treasury securities, like T-bills, are set by auction.
by Abu Yahya May 14, 2010
Get the T-bill mug.(FINANCE) private equity fund; business entity formed to pool money provided by investors in order to buy majority stakes in existing companies. A common practice is to then "take the company private," so that it no longer has shares trading on the stock market. The company is then restructured, so that it has entirely different management practices, or a different business strategy. Afterward, the PE fund will most likely re-sell the company on the stock market in a sponsored IPO.
PE funds are usually limited partnerships (LPs), which gives them special privileges of nondisclosure; most are organized in the State of Delaware. PEF's have sponsors, or "principals," who are responsible for organizing the fund and recruiting other investors. They are never "limited liability partnerships" (LLP's); apologies to Urban Dictionary for erroneously mixing them up in my definition for "private equity fund" and "hedge fund." The difference between the two is explained there.
Among the best-known PE funds are Blackstone Group*, Kohlberg Kravis Roberts (KKR)*, Goldman Sachs Capital Partners*, Carlyle Group, Permira, Apollo Management, Providence Equity, TPG Capital, Warburg Pincus, and Cerberus. Companies marked with an asterisk (*) are publicly listed corporations; most PE funds are privately managed. The selection above includes the largest ones by capital under management.
PE funds are usually limited partnerships (LPs), which gives them special privileges of nondisclosure; most are organized in the State of Delaware. PEF's have sponsors, or "principals," who are responsible for organizing the fund and recruiting other investors. They are never "limited liability partnerships" (LLP's); apologies to Urban Dictionary for erroneously mixing them up in my definition for "private equity fund" and "hedge fund." The difference between the two is explained there.
Among the best-known PE funds are Blackstone Group*, Kohlberg Kravis Roberts (KKR)*, Goldman Sachs Capital Partners*, Carlyle Group, Permira, Apollo Management, Providence Equity, TPG Capital, Warburg Pincus, and Cerberus. Companies marked with an asterisk (*) are publicly listed corporations; most PE funds are privately managed. The selection above includes the largest ones by capital under management.
The PE fund first appeared in the 1970's as a result of changes to ERISA. Institutional investors, usually pension funds, could be legal partners in an LP; they also required a place to park assets with very high rates of return.
In the USA, PE funds have long been sinecures for the most powerful political dynasties: the Rockefellers, the Romneys, the Bushes, and others.
In the USA, PE funds have long been sinecures for the most powerful political dynasties: the Rockefellers, the Romneys, the Bushes, and others.
by Abu Yahya September 2, 2010
Get the PE fund mug.*noun*, term used in economics to refer to the New Classical economics. The fresh water school was lead by Robert E. Lucas, Thomas J. Sargent, and Robert Barro; its position was that fiscal policy and monetary policy are doomed to be ineffective, since they rely on "fooling the public."
Instead, they argued that even tax cuts had no stimulus effect (in contrast to "supply side economics"), and of course they were resolutely opposed to government spending. Instead, the fresh water school maintained that a recession was caused by markets adjusting to a technology shock to create a structurally different economic system. The best thing to do was to allow the markets to restructure industry on their own.
The fresh water school was known for their support of the "rational expectations hypothesis" (REH) and "real business cycle" (RBC) theory.
Instead, they argued that even tax cuts had no stimulus effect (in contrast to "supply side economics"), and of course they were resolutely opposed to government spending. Instead, the fresh water school maintained that a recession was caused by markets adjusting to a technology shock to create a structurally different economic system. The best thing to do was to allow the markets to restructure industry on their own.
The fresh water school was known for their support of the "rational expectations hypothesis" (REH) and "real business cycle" (RBC) theory.
But lately, a ...school of skeptics who think the Government usually just gums things up is gaining attention and influence. The skeptics are known as the "fresh water school," less for the purity of their thought than for their origins at universities along the shores of the Great Lakes.
"'Fresh Water' Economists Gain," *New York Times*, 23 July 1988
"'Fresh Water' Economists Gain," *New York Times*, 23 July 1988
by Abu Yahya March 5, 2009
Get the fresh water school mug.