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is michael milken an author | after being diagnosed with prostate cancer michael milken wrote a series of books including the taste for living cookbook mike milken s favorite recipes for fighting cancer with beth ginsberg | |
has michael milken donated to education | education is a key focus of the milken family foundation among other things the foundation awards prizes to hardworking k 12 teachers and principals and offers financial support to college bound students in need of assistance 11the bottom linemichael milken is a billionaire and philanthropist mainly known for pioneering the junk bond craze of the 1980s nicknamed the junk bond king milken while working as an executive at the investment bank drexel burnham lambert became famous for getting companies with lower credit ratings access to capital milken s work turned him into one of wall street s highest earners and a symbol of the greed and growth of financial markets in the 1980s by 1990 he was behind bars for securities fraud | |
what is the michigan consumer sentiment index mcsi | the michigan consumer sentiment index mcsi is a monthly survey of consumer confidence levels in the united states conducted by the university of michigan the survey is based on telephone interviews that gather information on consumer expectations for the economy consumer sentiment is a statistical measurement of the overall health of the economy as determined by consumer opinion it takes into account people s feelings toward their current financial health the health of the economy in the short term and the prospects for longer term economic growth and is widely considered to be a useful economic indicator understanding the michigan consumer sentiment index mcsi the michigan consumer sentiment index was created in the 1940s by professor george katona at the university of michigan s institute for social research his efforts ultimately led to a national telephone survey conducted and published monthly by the university the survey queries consumers on their views of their own personal finances as well as the short term and long term state of the u s economy the preliminary report is generally released during the middle of the month and covers survey responses collected in the first two weeks of the month the final report is released at the end of the month and covers the full month 23 it is designed to capture the mood of american consumers whether the sentiment is optimistic pessimistic or neutral the survey signals information about near term consumer spending plans 4because consumer spending accounts for about 68 1 of gross domestic product gdp in the u s the mcsi is regarded as one of many important economic indicators followed by businesses policymakers and participants in the investment community 1mcsi basic designeach month the university conducts a minimum of 500 phone interviews across the continental u s the survey asks 50 core questions and covers three areas personal finances business conditions and buying conditions 4 the answers to these questions form the basis of the index consumers are asked questions such as about 60 of each monthly survey consists of new responses and the remaining 40 is drawn from repeat surveys the repeat surveys help reveal the changes in consumer sentiment over time and provide a more accurate measure of consumer confidence 6special considerationsaccording to the university of michigan the surveys have proven to be an accurate indicator of the future course of the national economy 4 surveys have demonstrated their ability to accurately anticipate changes in interest rates unemployment rates inflation rates gdp growth housing car demand and other key economic measures the index of consumer expectations ice was created as a subsidiary survey of the mcsi it has come to be included in the larger index of leading composite indicators published by the bureau of economic analysis bea through the department of commerce | |
what is a micro cap | a micro cap is a publicly traded company in the u s that has a market capitalization between approximately 50 million and 300 million micro cap companies have greater market capitalization than nano caps and less than small mid large and mega cap corporations companies with larger market capitalization do not automatically have stock prices that are higher than those companies with smaller market capitalizations 1 | |
how a micro cap works | companies with less than 50 million in market capitalization are frequently referred to as nano caps both nano caps and micro caps are known for their volatility and as such tend to be considered riskier than companies with larger market capitalization market capitalization measures the market value of a company s outstanding shares calculated by multiplying the stock s price by the total number of shares outstanding microcaps also have a reputation for high risk because many have unproven products no solid history assets sales or operations lack of liquidity and a small shareholder base also expose them to massive price shocks being that micro cap stocks have a market cap between 50 million and 300 million investors must be ready for greater volatility and risk compared to the large cap stocks in the s p 500 1 however during periods of bullish strength micro caps tend to outperform their larger counterparts for instance the 10 year returns from 2011 2022 for the dow jones select micro cap index were an annualized 9 99 while the s p 500 index returned an annualized 11 13 23special considerationswhile there may be some u s micro cap companies that rely on a heavy portion of their revenue coming from sources outside the u s the vast majority conducts all or most of their business within the u s this is important because domestic companies that do not have operations overseas do not need to worry about currency fluctuations and the potential impact of conversion risks on earnings micro cap vs larger capanother consideration is the fact that there are vastly more micro cap stocks on the market than there are large and giant cap stocks overall investors may not see the same level of readily available information as with larger stocks such as apple aapl as a result the limited information and vast quantity of micro cap stocks on the market make research extremely important to avoid fraudulent stocks and other potential pitfalls because many micro cap stocks do not have to file regular financial reports with the securities and exchange commission sec research becomes even more difficult criticism of micro capsmany micro cap stocks can be found on the over the counter otc markets such as the otc bulletin board otcbb and the otc link llc otc link rather than national exchanges such as the new york stock exchange nyse unlike stocks on national exchanges companies on these exchanges do not have to meet minimum standards such as for net assets and numbers of shareholders microcaps also have another drawback in that investors need to pay attention to liquidity when researching smaller companies lack of regular analyst coverage and institutional buying are additional reasons why there is less liquidity in the micro cap markets than in larger cap stocks overall micro cap stocks represent a high risk high reward opportunity for investors who are willing to do more research on the company involved to determine whether it is worth the investment this could include contacting the company directly to get the answers to any questions | |
what is a micromanager | a micromanager is a boss or manager who gives excessive supervision to employees a micromanager rather than telling an employee what task needs to be accomplished and by when will watch the employee s actions closely and provide frequent criticism of the employee s work and processes understanding micromanagersmicromanagement is a form of leadership that may produce results in the short term but it hurts employee and company morale over time usually micromanaging has a negative connotation because an employee may feel that a micromanager is being condescending towards them due to a perceived lack of faith in the employee s competency also a manager who implements this management style creates an environment where their team develops insecurity and a lack of confidence in its work in the absence of the manager the team may find it difficult to function a micromanager will usually use up most of their time supervising the work of their direct reports and exaggerating the importance of minor details to subordinates time that could have been used to get other important things done although micromanagement is easily recognized by others in the firm the micromanager may not view themselves as such in contrast to a micromanager a macro manager is more effective in their management approach macro managing defines broad tasks for direct reports to accomplish and then leaves them alone to do their work macro managers have confidence that the team can complete the same task without being continually reminded of the process signs of micromanagementsigns of micromanagers include but are not limited to from the list provided above it is easy to understand that a micromanager struggles with meeting deadlines since work has to be redone repeatedly and valuable time is spent poring over inconsequential details team members eventually become frustrated and resentful as their work is undermined at every stage and they have no autonomy over how to run an assigned project because team members skills and development on the job are stunted the micromanaging style of leadership is ineffective ways to reform a micromanagera micromanager who has identified themselves as such can take a number of steps to break this habit | |
what is a micro investing platform | a micro investing platform is an application that allows users to regularly save small sums of money micro investing platforms aim to remove traditional barriers to investing such as brokerage account minimums and encourage people to invest even if they have limited incomes and assets understanding micro investing platformsmicro investing platforms are the digital age equivalent of saving in a jar all the spare change from your purchases and then taking the full jar of change to the bank for example you could sign up for an account with a platform and register your debit card each time you make a purchase the platform rounds up your purchase to the nearest dollar and deposits the difference into an investment account robo advisors such as acorns helped pioneer this concept you are unlikely to notice the extra 0 50 missing from your account when you pay 3 50 for a cappuccino but over time you will notice the growing sum in your brokerage account if you buy that same coffee 20 times a month basically every workday you will have effortlessly invested 10 by the end of the month or 120 by the end of the year of course a better solution would be for you to make your own cappuccinos at home for 0 50 and invest the 3 00 savings per cup and end up with an extra 60 a month and 720 a year to invest but for individuals who don t want to change their behavior micro investing offers a superior alternative to investing nothing at all micro investing makes investing sums as low as a few pennies possible by eliminating per transaction fees and investment minimums consumers don t need to save up 100 for one share of a stock or mutual fund and they don t need to pay a brokerage fee to purchase that share instead they pay the micro investing platform a nominal fee perhaps 1 per month and it invests their money in fractional shares because those fractional shares are in exchange traded funds etf the consumer s investment is diversified across many different stocks and or bonds helping to protect against market swings in a way that investing in a single stock does not even for people who save regularly micro investing platforms can improve their situation saving 50 a month for 10 years in a savings account with 0 interest rate results in 6 000 which actually has less intrinsic value after 10 years since savings accounts usually pay interest at a lower rate than inflation investing 49 a month after the 1 platform fee for 10 years with an average annual return of 7 however results in 8 580 before taxes and inflation special considerationsautomatic investment is not a required feature of a micro investing platform the ability to invest very small amounts of money is to that end some micro investing platforms aim to help users to not only get in the habit of saving and investing but also to learn about investing the platform might teach them how to choose an etf based on their goals risk tolerance interests and beliefs for example a notable micro investing platform is acorns inc which automatically invests a user s spare change through a smartphone app 1 micro investing platforms must register with the securities and exchange commission sec as a registered investment advisor ria and as a broker dealer 2 3 | |
what is microcredit | microcredit is a common form of microfinance that involves an extremely small loan given to an individual to help them become self employed or grow a small business these borrowers tend to be low income individuals especially from less developed countries ldcs microcredit is also known as microlending or microloan | |
how microcredit works | the concept of microcredit was built on the idea that skilled people in underdeveloped countries who live outside of traditional banking and monetary systems could gain entry into an economy through the assistance of a small loan the people to whom such microcredit is offered may live in barter systems where no actual currency is exchanged modern microcredit is typically attributed to the grameen bank model developed by economist muhammad yunus this system started in bangladesh in 1976 with a group of women borrowing 27 to finance the group s own small businesses the women repaid the loan and were able to sustain the business the women in bangladesh who received microcredit did not have money to purchase the materials they needed to make the bamboo stools that they would in turn sell and at the same time each individual borrower would be too risky to lend to on their own by borrowing as a group the initial financing gave them the resources to begin production with an understanding that the loan would be paid over time as they brought in revenue microloans can range from as small as 10 to 100 and rarely exceed 2 000 the structure of microcredit arrangements frequently differs from traditional banking wherein collateral may be required or other terms established to guarantee repayment there might not be a written agreement at all in some instances the microcredit was guaranteed by an agreement with the members of the borrower s community who would be expected to compel the borrower to work toward repaying the debt as borrowers successfully pay off their microcredits they may become eligible for loans of larger and larger amounts micro loan termslike conventional lenders micro financiers must charge interest on loans and they institute specific repayment plans with payments due at regular intervals some lenders require loan recipients to set aside a part of their income in a savings account which can be used as insurance if the customer defaults if the borrower repays the loan successfully then they have just accrued extra savings because many applicants cannot offer collateral microlenders often pool borrowers together as a buffer after receiving loans recipients repay their debts together because the success of the program depends on everyone s contributions this creates a form of peer pressure that can help to ensure repayment for example if an individual is having trouble using his or her money to start a business that person can seek help from other group members or from the loan officer through repayment loan recipients start to develop a good credit history which allows them to obtain larger loans in the future interestingly although these borrowers often qualify as very poor repayment amounts on microloans are often actually higher than the average repayment rate on more conventional forms of financing for example the microfinancing institution opportunity international reported repayment rates of approximately 98 9 in 2016 critiques of microcreditthere have been criticisms of microcredit and the way it can be misused for example in south africa microcredit was introduced in some of the poorest communities to encourage people to pursue self employment however the way it was introduced in some instances led to the funds being expended through consumption spending rather than the establishment or furthering of any form of business or employment activity also the borrowers may find themselves with a magnitude of debt they cannot repay even with the small scale loans offered through microcredit the problem is that the borrowers may not have a steady income source or they plan to use the microcredit to create an income source for themselves that would allow them to pay back the financing as a result some borrowers have resorted to selling off personal property and seeking new financing to cover their previous microcredit | |
what is microeconomics | microeconomics is the social science that studies the implications of incentives and decisions and how they affect the utilization and distribution of resources on an individual level microeconomics shows how and why different goods have different values it addresses how individuals and businesses conduct and benefit from efficient production and exchange and how individuals can best coordinate and cooperate with each other microeconomics provides a more detailed understanding of individuals firms and markets macroeconomics provides a more aggregate view of economies investopedia tara anandunderstanding microeconomicsmicroeconomics is the study of what s likely to happen when individuals make choices in response to changes in incentives prices resources or methods of production these scenarios are also known as tendencies individuals are often grouped into microeconomic subgroups such as buyers sellers and business owners these groups create the supply and demand for resources using money and interest rates as pricing mechanisms for coordination 1the uses of microeconomicsmicroeconomics can be applied in a positive or normative sense positive microeconomics describes economic behavior and explains what to expect if certain conditions change it theorizes that consumers will tend to buy fewer cars than before if a manufacturer raises the prices of cars the price of copper will tend to increase if a major copper mine collapses in south america because supply is restricted positive microeconomics could help an investor see why apple inc aapl stock prices might fall if consumers buy fewer iphones it could also explain why a higher minimum wage might force the wendy s company wen to hire fewer workers these explanations conclusions and predictions of positive microeconomics can then be applied normatively to prescribe what people businesses and governments should do to attain the most valuable or beneficial patterns of production exchange and consumption among market participants this extension of the implications of microeconomics from what is to what ought to be or what people ought to do also requires at least the implicit application of some sort of ethical or moral theory or principles and some form of utilitarianism method of microeconomicsmicroeconomic study has historically been performed according to general equilibrium theory developed by l on walras in elements of pure economics and partial equilibrium theory introduced by alfred marshall in principles of economics 2the marshallian and walrasian methods fall under the larger umbrella of neoclassical microeconomics neoclassical economics focuses on how consumers and producers make rational choices to maximize their economic well being subject to the constraints of how much income and resources they have available neoclassical economists make simplifying assumptions about markets such as perfect knowledge infinite numbers of buyers and sellers homogeneous goods or static variable relationships to construct mathematical models of economic behavior these methods attempt to represent human behavior in functional mathematical language this allows economists to develop mathematically testable models of individual markets neoclassicals believe in constructing measurable hypotheses about economic events and then using empirical evidence to determine which hypotheses work best they follow the logical positivism or logical empiricism branch of philosophy in this way microeconomics applies a range of research methods depending on the question being studied and the behaviors involved basic concepts of microeconomicsthe study of microeconomics involves several key concepts including but not limited to | |
where is microeconomics used | microeconomics has a wide variety of uses policymakers may use microeconomics to understand the effect of setting a minimum wage or subsidizing the production of certain commodities businesses may use microeconomics to analyze pricing or production choices individuals may use it to assess purchasing and spending decisions | |
what is utility in microeconomics | utility refers to the degree of satisfaction that an individual receives when making an economic decision the concept is important because decision makers are often assumed to seek maximum utility when making choices within a market 3 | |
how important is microeconomics in our daily life | microeconomics is critical to daily life even in ways that may not be evident to those engaging in it take the case of someone who s looking to buy a car microeconomic principles play a central role in individual decision making they ll likely consider various incentives such as rebates or low interest rates when assessing whether to purchase a vehicle they ll probably select a make and model based on maximizing utility while also staying within their income constraints a car company will have made similar microeconomic considerations in the production and supply of cars into the market the bottom linemicroeconomics is a field of study focused on the decision making of individuals and firms within economies it s in contrast with macroeconomics a field that examines economies on a broader level microeconomics may look at the incentives that influence individuals to make certain purchases how they seek to maximize utility and how they react to restraints microeconomics for firms may look at how producers decide what to produce in what quantities and what inputs to use based on minimizing costs and maximizing profits microeconomists formulate various types of models based on logic and observed human behavior they test the models against real world observations | |
what is microfinance | microfinance also called microcredit is a type of banking service provided to low income individuals or groups who otherwise wouldn t have access to financial services while institutions participating in microfinance most often provide lending microloans can range from as small as 50 to under 50 000 but many banks offer additional services such as checking and savings accounts as well as micro insurance products and some even offer financial and business education 12 the goal of microfinance is to ultimately give impoverished people an opportunity to become self sufficient investopedia laura porterunderstanding microfinancemicrofinance services are provided to unemployed or low income individuals because most people trapped in poverty or who have limited financial resources don t have enough income to do business with traditional financial institutions despite being excluded from banking services however people who live on as little as 2 a day do attempt to save borrow or acquire credit or insurance and they do make payments on their debt thus many poor people typically look to family friends and even loan sharks who often charge exorbitant interest rates for help microfinance allows people to take on reasonable small business loans safely and in a manner that is consistent with ethical lending practices although they exist all around the world the majority of microfinancing operations occur in developing nations such as bangladesh cambodia india afghanistan democratic republic of congo indonesia and ecuador 3 many microfinance institutions sometimes referred to as mfis focus on helping women in particular 56microfinancing organizations support a large number of activities ranging from providing the basics like bank checking and savings accounts to startup capital for small business entrepreneurs and educational programs that teach the principles of investing these programs can focus on such skills as bookkeeping cash flow management and technical or professional skills like accounting unlike typical financing situations in which the lender is primarily concerned with the borrower having enough collateral to cover the loan many microfinance organizations focus on helping entrepreneurs succeed in many instances people seeking help from microfinance organizations are first required to take a basic money management class lessons cover understanding interest rates the concept of cash flow how financing agreements and savings accounts work how to budget and how to manage debt once educated customers may apply for loans just as one would find at a traditional bank a loan officer helps borrowers with applications oversees the lending process and approves loans the typical loan sometimes as little as 100 may not seem like much to some people in the developed world but for many impoverished people this figure often is enough to start or sustain a business or engage in other profitable activities microfinance loan termslike conventional lenders microfinanciers must charge interest on loans and they institute specific repayment plans with payments due at regular intervals some lenders require loan recipients to set aside a part of their income in a savings account which can be used as insurance if the customer defaults if the borrower repays the loan successfully then they have just accrued extra savings empowering women in particular as many microfinance organizations do may lead to more stability and prosperity for families 7because many applicants can t offer collateral microlenders often pool borrowers together as a buffer after receiving loans recipients repay their debts together because the success of the program depends on everyone s contributions this creates a form of peer pressure that can help to ensure repayment for example if an individual is having trouble using their money to start a business that person can seek help from other group members or from the loan officer through repayment loan recipients start to develop a good credit history which allows them to get larger loans in the future although these borrowers often qualify as very poor repayment rates on microloans are often higher than the average repayment rate on more conventional forms of financing for example the grameen bank in bangladesh one of the original microlenders reports an average repayment rate of 98 85history of microfinancemicrofinance isn t a new concept small operations of this type have existed since the 18th century the first occurrence of microlending is attributed to the irish loan fund system introduced by jonathan swift which sought to improve conditions for impoverished irish citizens 9 in its modern form microfinancing became popular on a large scale in the 1970s the first organization to receive attention was the grameen bank started in 1983 by muhammad yunus in bangladesh 10 in addition to providing loans to its clients the grameen bank also suggests that its customers subscribe to its 16 decisions a basic list of ways that the poor can improve their lives 11 the 16 decisions touch upon a wide variety of subjects ranging from a request to stop the practice of issuing dowries upon a couple s marriage to keeping drinking water sanitary in 2006 the nobel peace prize was awarded to both yunus and the grameen bank for their efforts in developing the microfinance system 5there are other microfinance operations around the world some larger organizations work closely with the world bank while other smaller groups operate in different nations some organizations enable lenders to choose exactly who they want to support categorizing borrowers with criteria such as level of poverty geographic region and type of small business benefits of microfinancemillions of people have directly or indirectly benefited from microfinance related operations 12 the consultative group to assist the poor a washington based global nonprofit organization estimates that as of 2021 more than 120 million people had directly benefited from microfinance related operations 13 however these operations are only available to some of the world s poor while an estimated 1 7 billion people lack access to establishing basic financial accounts 14the benefits of microfinance extend beyond the direct effects of giving people a source for capital entrepreneurs who create successful businesses in turn create jobs trade and overall economic improvement within a community the for profit controversyalthough there are countless heartwarming success stories microfinance has sometimes been the target of criticism as microfinance interest rates are generally higher than conventional banks critics have charged that these operations are making money off the poor 15in fact some non profit microlenders have converted to being for profit as they ve grown one of the largest and most controversial is mexico s banco compartamos the bank was started in 1990 as a nonprofit however 10 years later management decided to transform the enterprise into a traditional for profit company in 2007 it went public on the mexican stock exchange and its initial public offering ipo raised more than 400 million 1617like most other microfinance companies compartamos banco makes relatively small loans serves a largely female clientele and pools borrowers into groups 18 the main difference lies in how it uses the funds it nets in interest and repayments like any public company it distributes them to shareholders 19 in contrast nonprofit institutions take a more philanthropic stance toward profits using them to expand the number of people they help or to create more programs in addition to compartamos banco many major financial institutions and other large corporations have launched for profit microfinance departments including citigroup and barclays for example 202122 other companies have created mutual funds that invest primarily in microfinance firms compartamos banco and its for profit peers have been criticized by many including the grandfather of modern microfinance himself yunus the immediate pragmatic fear is that out of a desire to make money large microfinance bankers will charge higher interest rates that may create a debt trap for low income borrowers 20but yunus and others also have a more fundamental concern that the incentive for microcredit should be poverty alleviation not profit by their very nature and their obligation to stockholders these publicly traded firms work against the original mission of microfinance helping the poor above all else in response compartamos and other for profit microfinanciers counter that commercialization allows them to operate more efficiently and to attract more capital by appealing to profit seeking investors by becoming a profitable business their argument goes a microfinance bank is able to extend its reach providing more money and more loans to low income applicants for now though charitable and commercialized microfinanciers do co exist in addition to the divide between the nonprofit and for profit microfinance enterprises other criticisms exist some say that individual microloans of 100 aren t enough money to provide independence rather they keep recipients working in subsistence level trades or just cover basic needs like food and shelter a better approach these critics maintain is to create jobs by constructing new factories and producing new goods they cite the examples of china and india where the development of large industries has led to stable employment and higher wages which in turn has helped millions to emerge from the lowest levels of poverty other critics have said that the presence of interest payments is a burden despite the healthy repayment rates there still are borrowers who can t or don t repay loans because of the failure of their ventures personal catastrophe or other reasons so this added debt can make recipients of microcredit even poorer than when they started | |
what are the general terms of a microfinance loan | like conventional lenders microfinanciers must charge interest on loans and they institute specific repayment plans with payments due at regular intervals some lenders require loan recipients to set aside a part of their income in a savings account which can be used as insurance if the customer defaults if the borrower repays the loan successfully then they have gained accrued extra savings | |
what are the benefits of microfinance | the benefits of microfinance extend beyond the direct effects of giving people a source for capital entrepreneurs who create successful businesses can then offer jobs and trade to help improve their community additionally the international finance corp ifc has helped establish or improve credit reporting bureaus in 30 developing nations it also has advocated for adding relevant laws that govern financial activities in developing countries | |
what are some criticisms of microfinance | while some microfinance interest rates are lower than conventional banks rates critics have charged that these operations are making money off the poor 15 also many major financial institutions and other large corporations have launched for profit microfinance departments raising concerns that out of a desire to make money these larger bankers will charge higher interest rates that may create a debt trap for low income borrowers 20 and some have argued that individual microloans aren t enough money to provide a realistic path to independence the bottom linemicrofinance is a form of banking service provided to low income individuals or groups who otherwise wouldn t have access to financial services institutions most often lend amounts of 50 to under 50 000 but they may also offer checking and savings accounts and some deliver financial and business education the goal of microfinance is to ultimately give impoverished people an opportunity to become self sufficient some criticisms of the microlending industry as it s grown include excessively high interest rates charged on the small loans extended profit motives at odds with the original intent of helping the poor and loans so limited they can t really make their impoverished borrowers self sufficient | |
what is micromarketing | micromarketing is an approach to advertising that tends to target a specific group of people in a niche market with micromarketing products or services are marketed directly to a targeted group of customers to make use of micromarketing techniques a company has to narrowly define an audience by a particular characteristic such as gender job title age or geography and then create campaigns geared toward that specific group it can be a more expensive technique than other approaches to marketing due to customization and lack of an economy of scale understanding micromarketingmarketing is crucial for businesses operating in a competitive environment as a strategy marketing is used by companies to increase their sales customer base brand awareness and ultimately profits the long term strength of any business depends upon how successful its marketing campaign is whether a company offers one or 101 products it must identify its target market in order to run an effective marketing campaign in the past companies ran mass marketing campaigns through tv or radio ads in the hopes of catching the attention of consumers in target markets today businesses are able to offer more personalized marketing schemes to each individual in their target pool as opposed to hitting a mass audience at once micromarketing became more common in the 1990s as the personal computer boom meant easier segmentation and dissemination of information to customers with technology constantly advancing the delivery of highly customized products to individual segments of a population has become easier to deliver micromarketing strategy is useful for firms of any size large firms can create specific segments within their customer base while small businesses with smaller advertising budgets prefer to match consumers with targeted products and promotions by personalizing their marketing process | |
how micromarketing works | there are different approaches to micromarketing for example a business may decide to run a micromarketing program by offering promotions specifically to its loyal customer base matching special offers to unhappy or lost consumers tailoring products to consumers with unique needs marketing goods and services to residents in a particular town or region or offering products to targeted consumers with specific job titles or career designations the challenge with micromarketing is its high cost of implementation and lack of an economy of scale companies using this marketing strategy typically spend more per target consumer and customizing many advertisements to appeal to many small groups of consumers is more expensive than creating a few marketing ads targeted at a mass audience also micromarketing can be expensive to run due to the inability to scale up in size micromarketing is different from macromarketing a strategy that looks to target the biggest possible consumer base of a company product or service with macromarketing a business attempts to measure how wide a scale its target market for a good or service is and proceeds to work on how its products can be made available to this group of consumers example of micromarketingexamples of companies that have run successful micromarketing campaigns include procter gamble pg and uber | |
when p g was introducing its pantene relaxed natural shampoo and conditioner product line it created and ran a unique marketing campaign to target african american women 1 when uber was trying to expand its geographic reach it used big data from social media platforms to learn more about the specific transportation problems in each city it was looking to move into the resulting effect was the growth of the company s client base through tailored promotions and referral benefits 2 | special considerationsthe expansion in emergent innovation including big data is used by micromarketers to capture data from mobile devices and e commerce platforms the captured data is sorted according to various distinctions including demographics geographies ip address favored sites brand preferences or spending habits to track the type of products that a consumer is viewing or purchases this process allows a website to match related products to digital consumers by running a tailored marketing program to a well defined segment of consumers micromarketing looks to entice the target audience to take an action such as making a purchase of goods or services the ultimate goal of micromarketing is to match products to a consumer s tracked preferences in order to generate profit for a company from customer satisfaction | |
what is mid cap | mid cap or mid capitalization is the term that is used to designate companies with a market cap capitalization or market value between 2 and 10 billion as the name implies a mid cap company falls in the middle between large cap or big cap and small cap companies classifications such as large cap mid cap and small cap are approximations of a company s current value as such they may change over time understanding mid capthere are two main ways a company can raise capital when it s needed through debt or equity debt must be paid back but can generally be borrowed at a lower rate than equity due to tax advantages equity may cost more but it does not need to be paid back in times of crisis as a result companies strive to strike a balance between debt and equity this balance is referred to as a firm s capital structure capital structure especially equity capital structure can tell investors a lot about the growth prospects for a company one way to gain insight about a company s capital structure and market depth is by calculating its market capitalization companies with low market capitalization also referred to as small caps have 2 billion or less in market capitalization large capitalization firms have over 10 billion in market capitalization and mid cap firms fall somewhere in between these two categories ranging from 2 billion to 10 billion in market capitalization additional categories such as mega cap over 200 billion micro cap 50 million to 500 million and nano cap less than 50 million have been added to the spectrum of market capitalization for the sake of clarity for investors a mid cap company may be appealing because they are expected to grow and increase in profits market share and productivity they are in the middle of their growth curve since they are still considered to be in a growth stage they are deemed to be less risky than small caps but more risky than large caps successful mid cap companies run the risk of seeing their market capitalization rise mainly due to an increase in their share prices to the point where they fall out of the mid cap category while a company s market cap depends on market price a company with a stock priced above 10 is not necessarily a mid cap stock to calculate market capitalization analysts multiply the current market price by the current number of shares outstanding for example if company a has 10 billion shares outstanding at a price of 1 it has a market capitalization of 10 billion if company b has one billion shares outstanding at a price of 5 company b has a market capitalization of 5 billion even though company a has a lower stock price it has a higher market capitalization than company b company b may have the higher stock price but it has one tenth of the shares outstanding advantages of mid capsmost financial advisors suggest that the key to minimizing risk is a well diversified portfolio investors should have a mix of small mid and large cap stocks however some investors see mid cap stocks as a way to diversify risk as well small cap stocks offer the most growth potential but that growth comes with the most risk large cap stocks offer the most stability but they offer lower growth prospects mid cap stocks represent a hybrid of the two providing a balance of growth and stability no one can accurately predict when the market will favor a specific kind of company whether it s a large mid or small cap so it s important to diversify your portfolio as we mentioned above but the percentage of mid caps that you ll want to invest in depends on your specific goals and risk tolerance however there are many advantages to mid cap companies that investors may want to consider when interest rates are low and capital is cheap corporate growth is generally stable mid cap companies typically can get the credit they need in order to grow and they do well during the expansion part of the business cycle mid caps are not as risky as small cap companies which means they tend to do relatively well financially during times of economic turbulence in addition many mid caps are well known are often focused on one specific business and have been around long enough to make a niche in their target market and finally because they are riskier than large caps they may have a higher return which could be more appealing to a less risk averse investor s bottom line investor s can either buy a mid cap company s stock directly or buy a mid cap mutual fund an investment vehicle that focuses on mid cap companies | |
what is mid cap | mid cap or mid capitalization is the term that is used to designate companies with a market cap capitalization or market value between 2 and 10 billion as the name implies a mid cap company falls in the middle between large cap or big cap and small cap companies classifications such as large cap mid cap and small cap are approximations of a company s current value as such they may change over time understanding mid capthere are two main ways a company can raise capital when it s needed through debt or equity debt must be paid back but can generally be borrowed at a lower rate than equity due to tax advantages equity may cost more but it does not need to be paid back in times of crisis as a result companies strive to strike a balance between debt and equity this balance is referred to as a firm s capital structure capital structure especially equity capital structure can tell investors a lot about the growth prospects for a company one way to gain insight about a company s capital structure and market depth is by calculating its market capitalization companies with low market capitalization also referred to as small caps have 2 billion or less in market capitalization large capitalization firms have over 10 billion in market capitalization and mid cap firms fall somewhere in between these two categories ranging from 2 billion to 10 billion in market capitalization additional categories such as mega cap over 200 billion micro cap 50 million to 500 million and nano cap less than 50 million have been added to the spectrum of market capitalization for the sake of clarity for investors a mid cap company may be appealing because they are expected to grow and increase in profits market share and productivity they are in the middle of their growth curve since they are still considered to be in a growth stage they are deemed to be less risky than small caps but more risky than large caps successful mid cap companies run the risk of seeing their market capitalization rise mainly due to an increase in their share prices to the point where they fall out of the mid cap category while a company s market cap depends on market price a company with a stock priced above 10 is not necessarily a mid cap stock to calculate market capitalization analysts multiply the current market price by the current number of shares outstanding for example if company a has 10 billion shares outstanding at a price of 1 it has a market capitalization of 10 billion if company b has one billion shares outstanding at a price of 5 company b has a market capitalization of 5 billion even though company a has a lower stock price it has a higher market capitalization than company b company b may have the higher stock price but it has one tenth of the shares outstanding advantages of mid capsmost financial advisors suggest that the key to minimizing risk is a well diversified portfolio investors should have a mix of small mid and large cap stocks however some investors see mid cap stocks as a way to diversify risk as well small cap stocks offer the most growth potential but that growth comes with the most risk large cap stocks offer the most stability but they offer lower growth prospects mid cap stocks represent a hybrid of the two providing a balance of growth and stability no one can accurately predict when the market will favor a specific kind of company whether it s a large mid or small cap so it s important to diversify your portfolio as we mentioned above but the percentage of mid caps that you ll want to invest in depends on your specific goals and risk tolerance however there are many advantages to mid cap companies that investors may want to consider when interest rates are low and capital is cheap corporate growth is generally stable mid cap companies typically can get the credit they need in order to grow and they do well during the expansion part of the business cycle mid caps are not as risky as small cap companies which means they tend to do relatively well financially during times of economic turbulence in addition many mid caps are well known are often focused on one specific business and have been around long enough to make a niche in their target market and finally because they are riskier than large caps they may have a higher return which could be more appealing to a less risk averse investor s bottom line investor s can either buy a mid cap company s stock directly or buy a mid cap mutual fund an investment vehicle that focuses on mid cap companies | |
what is mena | mena is an acronym for the middle east and north africa mena region the region is typically considered to include around 19 countries but the definition can be stretched to include up to 27 1 the world bank includes 21 countries as part of mena and based on their 2020 population reports the region accounts for approximately 6 of the world s population 2according to opec data the mena region holds more than half of the world s oil reserves and two fifths of the world s natural gas reserves 3 due to the region s substantial petroleum and natural gas production mena is an important source of global economic and energy resources understanding menamany of the 13 opec nations are within the mena region while there is no standardized list of countries included in the mena region the term typically includes the area from morocco in northwest africa to iran in southwest asia and down to sudan in africa 14the following countries are often included in the mena region not an exhaustive list algeria bahrain djibouti egypt iran iraq israel jordan kuwait lebanon libya malta morocco oman qatar saudi arabia syria tunisia united arab emirates palestine and yemen 21facing a tough recovery due to covid 19 economic growth in the mena region fell by 3 8 in 2020 according to the world bank 5some key mena economiesby far the largest economy in the mena region the kingdom of saudi arabia reported a gross domestic product of 833 billion in 2021 6 the country is highly dependent on petroleum and natural gas which provide some 90 of the country s export earnings although it controls the world s second largest proven oil reserves saudi arabia has announced efforts to reduce its dependence on petroleum exports through investments in the technology and tourism sectors 7iran is the fifth largest economy in the mena region like saudi arabia petroleum exports play a major role in the country s economy though it is more diversified than many other oil exporters in the middle east 68however iran is also subject to strict international economic sanctions as a state sponsor of terrorism a growing nuclear threat and perpetrator of cyber intrusions against foreign countries 9 as a result it is difficult for iran s economy to boom iran s currency has greatly weakened and sanctions greatly restrict international trade with a gdp of 488 billion in 2021 israel is the second largest economy in the mena region behind the geographically much larger saudi arabia 6 unlike many of its neighbors israel is not an energy exporter instead the economy is largely centered around industrial manufacturing diamond cutting and high technology in fact israel is ranked among the top 10 of global high tech ecosystems israel has become world renowned as being the start up nation and is the world leader for number of start ups per capita 10although it is a comparatively advanced industrial country with high average incomes and a strong currency israel s position has often been complicated by geopolitical conflicts with its neighbors 11with a 2020 gdp of 365 billion egypt represents the largest economy in north africa as well as the third largest economy in the mena region 6 following the overthrow of president hosni mubarak during the 2011 arab spring protests the egyptian economy began to undergo significant market reforms which helped attract outside investors and address domestic unemployment in addition to hydrocarbons egypt is a major exporter of textiles and agricultural products 12investing in the mena regionwith more than half of the world s proven oil reserves most investment opportunities in the mena region are focused on the energy industries there are many financial products allowing both retail and institutional investors to gain exposure to specific countries oil and natural gas markets as well as etfs that target north africa the middle east or the mena region as a whole several mena economies are deliberately re orienting their economies to reduce their dependence on fossil fuel exports for example the united arab emirates has a burgeoning tech sector and qatar is expanding into financial services 1314there are currently no mena specific etfs in the u s that encompass the entire region instead there are several sub regional or country specific etfs that american investors can access these include note that investors in other countries may have access to more and different mena specific funds there is no specific boundary for the middle east north africa or the mena region as a whole borderline cases like turkey afghanistan and sudan may or may not be included in the mena region conflict in the mena regiondue to the strategic importance of their oil reserves countries in the mena region have been affected by major local conflicts as well as interference by foreign powers notably the u s invasions of iraq and afghanistan caused major disruptions in regional economic activity while the 2011 arab spring protests caused a number of revolutions and civil wars most notably in libya and syria as well as what the world bank described as the biggest refugee crisis since world war ii 1516 other conflicts in the area include israeli clashes with palestinian terrorists ongoing wars in syria yemen iraq and afghanistan political instability in lebanon and a growing rivalry between iran and saudi arabia as regional power 171819 | |
what does mena stand for | mena stands for the middle east and northern africa referring to the countries between iran in the east and tunisia and morocco in the west | |
what countries are in the mena region | there is no clear definition of which countries are included in the mena region but it is typically considered to include at least algeria bahrain djibouti egypt iran iraq israel jordan kuwait lebanon libya malta morocco oman qatar saudi arabia syria tunisia the united arab emirates palestine and yemen also sometimes included are mauritania somalia sudan turkey and western sahara to name a few 21 | |
what are the countries in the middle east | the middle east is generally considered to include the countries on or near the arabian peninsula according to the cia world factbook the middle east includes armenia azerbaijan bahrain gaza strip westbank georgia iran iraq israel jordan kuwait lebanon oman qatar saudi arabia syria turkey united arab emirates and yemen 20 afghanistan and pakistan are often grouped together with the middle east but they are not typically included in considerations of the mena region | |
which countries make up north africa | the countries of northern africa typically include algeria egypt libya morocco sudan tunisia and western sahara this term may also be extended to include certain east african countries such as djibouti and somalia 21the bottom linethe middles east and north african region better known by the acronym mena is an important energy resource rich region of the world centrally located between the west and asia mena countries are home to much of the world s oil and natural gas reserves as emerging markets investors look to these countries as growth opportunities however the risk of regional conflict remains high | |
what is a middle income country mic | according to the world bank middle income countries mics are defined as economies with a gross national income gni per capita between 1 136 and 13 845 as of 2024 mics consist of lower middle income countries and upper middle income countries both of which are part of the income categories that the world bank uses to classify economies for operational and analytical purposes 1understanding middle income countries mics the world bank has historically classified every economy as low middle or high income it now further specifies countries as having low lower middle upper middle or high income economies the world bank uses gni per capita in current u s dollars converted by the atlas method of a three year moving average of exchange rates as the basis for this classification 2it views gni as a broad measure and the single best indicator of economic capacity and progress the world bank used to refer to low income and middle income economies as developing economies in 2016 it chose to drop the term from its vocabulary citing a lack of specificity instead the world bank now refers to countries by their region income and lending status 3mic characteristicsmics are broken up into lower middle income and upper middle income economies lower middle income economies have per capita gnis between 1 136 and 4 465 while upper middle economies have per capita gnis between 4 466 and 13 845 1mics are a very diverse group by region size population and income level ranging from tiny nations with small populations such as belize and the marshall islands to all five of the brics countries brazil russia india china and south africa china and india together account for approximately one third of the world s population and are increasingly influential players in the global economy 4the diverse nature of mics means that the challenges facing many of them are quite different for nations in the lower middle income category the biggest issue might be providing their citizens with essential services such as water and electricity for the economies in the upper middle income category the greatest challenges could be curbing corruption and improving governance the significance of micsmics are essential for continued global economic growth and stability according to the world bank sustainable growth and development in mics have positive spillovers to the rest of the world examples are poverty reduction international financial stability and global cross border issues including climate change sustainable energy development food and water security and international trade 5mics have a combined population of five billion or over 75 of the world s seven billion people hosting 62 of the world s economically disadvantaged representing about one third of global gdp mics are a major engine of global economic growth 6graduating from lower to upper middle incomecountries graduate from one level to another depending on their gni per capita according to a june 2023 report by the world bank india continued to be a lower middle income country and is expected to continue to be so in 2024 countries that will move from low income to lower middle income country categories are guinea and zambia countries moving from lower middle income to upper middle income are indonesia el salvador west bank and gaza and jordan countries moving from upper middle income to high income are guyana and american samoa 7 | |
what are the income levels of countries | the world bank breaks down countries as a classification based on their gross national income gni per capita its four main categories are low income low middle income upper middle income and high income | |
what countries are middle income countries | countries that are middle income countries include turkey iraq russia brazil argentina peru nigeria angola india and pakistan 8 | |
is china a middle income country | yes china is considered a middle income country it is specifically an upper middle income country according to the world bank 7the bottom linethe world bank classifies countries based on gross national income gni per capita to better analyze these nations middle income countries are those with a gni per capita between 1 136 and 13 845 middle income countries can be further categorized as lower middle income and upper middle income 1 | |
what is a middle market firm | the middle market is the segment of american businesses with annual revenues roughly in the range of 10 million to 1 billion depending on the industry they operate in there are about 200 000 middle market firms in the u s most of them privately owned or closely held and their annual revenues combined total more than 10 trillion 1understanding middle market firmsmiddle market companies are responsible for about 48 million jobs with combined annual revenues of 10 trillion which accounts for about one third of annual u s private sector gross receipts 1 that makes the middle market a powerhouse of the u s economy though many of these companies are little known to the general public the middle market is a critical sector of the american economy and an important engine of job creation with middle market employment growing more than twice as quickly as the national average companies in this sector are heavily concentrated in service oriented activities including business services health services and educational services significant numbers are engaged in retail or wholesale trade construction activity or manufacturing 2middle market firm characteristicsthere is no universally accepted definition of the middle market traditionally annual revenues were the key differentiator the harvard business review defines the middle market as those businesses that earn between 10 million and 1 billion in annual revenue 3 other sources may place the lower threshold as low as 5 million or as high as 50 million some analysts prefer to define middle market firms by the value of their total assets others characterize the middle market as companies with between 500 and 1 000 1 500 employees by this reckoning small businesses have 500 or fewer employees the lack of a clear delineation can result in some gray areas when attempts are made to group businesses by the classic three level approach that includes small business middle market business and big business some cut the categories down to two and label all but the biggest businesses as small and medium sized enterprises smes the u s middle market generated about 10 trillion in combined revenues in 2021 if the u s middle market were a country it would have the third highest gdp in the world 42challenges for middle market firmsthe interests of middle market businesses may be relatively under represented in policy and economic debates from the local level to internationally most big businesses are publicly traded companies they report financial information quarterly and employ lobbyists to represent their interests small businesses have associations that represent their interests the middle market by comparison is more amorphous and less transparent they are low profile and their products and services may be generally recognized only by their customers the covid 19 pandemic also hit smes especially hard in fact 43 of middle market executives believe the pandemic will have some adverse effects on revenues in 2021 5 even discounting the effects of the pandemic significant challenges remain according to a 2021 report maintaining customer relationships continues to be difficult with a majority of middle market executives citing this as one of their top challenges right now managing workforce disruption and keeping employees engaged and productive also continues to be an ongoing problem for middle market leaders 5relative to big public companies middle market businesses can have a tough time raising capital to expand or invest and their costs of debt are typically higher although middle market lenders particularly boutique investment and commercial banks aggressively compete for the business of the middle market larger businesses enjoy the advantage of economies of scale many theories explain why this is the case but it often boils down to the added transaction costs banks undertake for due diligence and marketing activities when they cater to the middle market middle market companies often look to business development companies bdcs for funding these are similar to closed end investment funds many bdcs are public companies whose shares trade on major stock exchanges as investments they can be somewhat high risk but also offer high dividend yields to qualify as a bdc a company must be registered in compliance with section 54 of the investment company act of 1940 it must be a domestic company whose class of securities is registered with the securities and exchange commission sec 6by regulation a bdc must invest at least 70 of its assets in private or public u s firms with market values of less than 250 million the companies they invest in are often young businesses in need of financing or companies that are struggling to emerge from financial difficulties the bdc is required to provide managerial assistance to the companies in its portfolio 7investing in middle market firmsmost middle market firms are not publicly traded but they can be found among small cap or micro cap companies middle market companies are not usually considered big enough to be mid cap stocks which are defined as having a market capitalization between 2 billion and 10 billion there are several a number of exchange traded funds etfs and mutual funds that focus on small cap indexes including the russell 2000 and the russell microcap index investors may also be able to invest directly in the shares of business development companies that provide financing to middle market firms because bdcs are regulated investment companies rics they must distribute over 90 of their profits to shareholders 7 that ric status though means they don t pay corporate income tax on profits before they distribute them to shareholders the result is above average dividend yields according to bdc investor com as of june 2021 the ten highest yielding bdcs were posting yields from 9 19 to 21 99 8middle market vs main streetmain street is an informal term for small businesses with a relatively small number of employees that take in a modest amount of revenue the middle market is a step up from this with larger operations more employees and revenues in the tens to hundreds of millions of dollars per year the middle market consists of companies that would make up small cap and micro cap stocks if they were listed on a stock exchange these can be riskier than holding shares of larger more mature companies which tend to be more stable at the same time the growth opportunities and ability to be nimble can often be greater for the middle markets providing higher potential returns | |
what is middle market banking | middle market banking refers to an area of commercial banking that provides services to local governments nonprofits and companies with around 50 million to 1 billion of total revenue in order to serve these clients middle market investment banks may need to specialize in specific areas of expertise 9 | |
what is middle market private equity | middle market private equity refers to the sector of private equity businesses that invest in companies worth between 50 million and 500 million companies in this range tend to be well established without the risks of investing in a small startup 10 | |
what is the lower middle market | the lower middle market is a smaller subset of middle market firms with a total valuation between about 10 and 100 million dollars because of their small size these firms tend to be more attractive for mergers and acquisitions that the rest of the middle market 11the bottom linemiddle market firms are companies that occupy the range between small mom pop businesses and major enterprises these companies tend to be service oriented and are rarely publicly traded in the united states middle market firms account for a large share of employment and overall business activity | |
what is the middle office | the middle office is the department in a financial services company investment bank or hedge fund that sits in between the front and back office it typically manages risk and calculates profits and losses it is generally in charge of information technology it as well | |
how a middle office works | a financial services company is logically broken up into three parts the front office includes sales personnel and corporate finance the middle office manages risk and it resources and the back office provides administrative support and payment services the middle office draws on the resources of both the front and the back offices middle office and back office jobs generally do not directly produce revenue but are essential to managing risk and ensuring that transactions are correctly executed they are considered an essential part of the company s infrastructure in the early days of foreign exchange and investment banking responsibilities were generally split between the front office and the back office front office personnel included the salespeople traders and deal makers most had college degrees and many had mbas back office personnel performed the clerical work and were only required to have high school diplomas as transactions and technology grew more complex other functions developed and split off from the back office creating the middle office these employees usually have at least a bachelor s degree and increasing numbers of them have either an mba or a master s degree in technology on job sites financial services companies generally identify these positions as middle office opportunities requirements of the middle officemiddle office personnel are responsible for ensuring that the deal negotiated by the front office is accurately booked processed and paid for this can include managing a wide range of international swap dealers association isda agreements tracking deals profits and losses and ensuring that all required compliance documents have been completed some firms have specialized legal support teams as part of the middle office information technology functions of the office run the gamut from ensuring that paying and receiving functions are operational to designing software to implement trading strategies it middle office personnel also manage contracted software systems that are used for trading such as bloomberg and reuters 3000 they support both the front and back office and are often on call 24 hours to ensure that essential market data is constantly captured and monitored other considerationsfor some years financial services companies have been moving back office functions overseas in order to cut costs since the financial crisis of 2008 some middle office functions also have moved off shore the countries getting those jobs generally have a strong population of highly educated workers and strong english language skills but a substantially lower pay scale popular target countries include ireland and india | |
what is middleman | the term middleman is an informal word for an intermediary in a transaction or process chain understanding middlemana middleman or intermediary will facilitate interaction between parties typically for a commission or fee some critics say that businesses and customers should try to cut out the middleman by dealing directly with each other avoiding any increased costs or commissions intermediaries also make money by selling the product for more than its purchase price this difference is called the markup or cost the buyer ends up paying intermediaries can be small companies or large corporations with an international presence in the supply chain an intermediary may represent a distributor who purchases goods from the manufacturer and sells them to a retailer often at an increased price salespeople are often considered middle people such as real estate agents who match homebuyers with sellers certain industries either by policy infrastructure or mandate include an intermediate layer of business for example automobile makers typically do not sell vehicles directly to consumers instead their products are sold through auto dealers which may include various accessories options and upgrades to upsell cars at a higher premium auto dealerships try to sell pricier versions of cars in order to turn a greater profit for themselves as a large portion of the sales revenue goes back to the manufacturer the same is true for electronics appliances and other retail products sellers of electronics and appliances may attempt to steer customers to higher end products in order to secure a greater profit margin than low priced items such intermediaries may be constrained by the manufacturer in the ways they can sell a product including how it is marketed or if the product can be packaged with other items to create special offers the rise of e commerce has changed the dynamics of where an intermediary fits in some types of industries and legislation continues to evolve in response middleman examplein certain states the sale of alcoholic beverages may be structured to require retailers bars and restaurants to purchase products through a liquor distributor under such policies a winery cannot sell its products directly to retailers thus making a middleman essential this can limit the availability of their products as they are beholden to the intermediate distributors who control the channels they can pass their wine through such constraints may also extend to the sale and shipment of their products from one state to another some states allow the sale and shipment of products such as wine directly to the consumer through online purchases thus eliminating the layers of middlemen while other states prohibit this practice this has proven to be a contentious challenge to the distribution segment of the industry which relied on wine and spirits makers being required to ship their wares through them | |
what is midstream | midstream is a term used to describe one of the three major stages of oil and gas industry operations midstream activities include the processing storing transporting and marketing of oil natural gas and natural gas liquids the two other major stages are upstream which refers to raw crude oil and natural gas production and downstream which refers to the refining of crude oil into gasoline diesel jet and other fuels today many large oil companies undertake all streams of the process and are known as integrated oil companies understanding midstream activitiesmidstream activities are commonly included as part of other operations for much of the global oil and gas industry the midstream and downstream activities take place after the initial production phase known as upstream and through to the endpoint of sale many oil and gas companies are considered integrated because of their ability to combine upstream midstream and downstream activities as part of their overall operations the midstream industry designation is much more prevalent in the oil industry in the united states and canada than in the rest of the world because of the large privately owned oil pipelines and storage facilities in these countries for example the keystone pipeline system is an oil pipeline system in canada and the united states commissioned in 2010 and is now owned solely by transcanada corporation other pure midstream operating companies include names like oasis midstream partners sanchez midstream partners hess midstream magellan midstream partners and eqt midstream partners the designation in the u s of crude oil transportation and storage as a separate part of the production chain is what allows the midstream industry to exist midstream examplemagellan midstream partners states on their website that they own and operate five marine storage terminals located along coastal waterways with approximately 26 million barrels of aggregate storage capacity and approximately one million barrels of storage jointly owned through their texas frontera llc joint venture the marine terminals provide distribution storage blending inventory management and additive injection services for refiners marketers traders and other end users of petroleum products these key services offered between raw upstream production and the refiners are an important part of the midstream business designation in europe the transportation and storage of crude tends to be integrated with the upstream production business major european oil companies such as shell or bp tend to report production and transportation costs together in their annual financial results additionally many european oil pipelines are controlled by governments of the countries whose territory they cross or by state owned oil transportation companies in those countries this state ownership tends to result in the absence of midstream as a separately designated part of the oil production value chain | |
what is mifid ii | mifid ii is one of the most important pieces of legislation enacted in finance and investing this century rolled out in 2018 by the european union eu to regulate financial markets while increasing protections for investors it aimed to standardize financial practices across the eu and restore confidence in the industry especially after the 2008 financial crisis it focuses on three key areas service model product development and product placement 12understanding mifid iimifid ii amends the original markets in financial instruments directive mifid from a decade before it rolled out on jan 3 2018 six years after the european commission the eu s executive branch adopted the legislative proposal mifid ii set out goals for greater transparency in the member states and the markets in financial instruments regulation put into force at the same time enacts rules for financial institutions within the eu colloquially mifid ii is used for both and we ll use the term to cover both eu enactments in what follows 32the original mifid went into effect in november 2007 the global financial crisis exposed its weaknesses soon after critics said it focused too narrowly on stocks ignoring fixed income vehicles derivatives currencies and other assets mifid also did not address dealings with firms and investment products from outside the eu leaving rules about those to the discretion of eu member nations 2mifid ii standardizes oversight of the financial industry among member nations and greatly broadens the scope of the eu s regulation of securities markets in particular it imposes more reporting requirements and tests to increase transparency and reduce the use of dark pools private financial exchanges that allow investors to trade without revealing their identities and over the counter otc trading 4the regulations extend mifid s earlier requirements to more financial instruments equities commodities debt instruments futures options exchange traded funds and currencies all fall under its purview if a financial product is available in the eu it is covered by mifid ii even if say the trader wishing to buy it is located outside the eu that s the cost eu companies spent preparing for mifid ii according to the boston consulting group the wall street journal reported 3mifid ii covers virtually all aspects of financial investment and trading and all financial professionals working in the eu bankers traders fund managers exchange officials and brokers and their firms all have to abide by its regulations as do institutional and retail investors applied largely to equities markets73 articlesdrafted in 2004 and became law from 2007 to 2018did not address dealings with firms or products outside the euapplies to all types of securities and derivatives97 articlesproposed in 2012 and in force since 2018applies to any firms wanting to access and trade in eu products regardless of where they are basedkey regulations of mifid iimifid ii brought sweeping changes to trading and investing here are some of the most important a major goal of mifid ii was to move trading out of the shadows from over the counter otc trading and dark pools to regulated trading platforms mifid ii created a new trading venue the organized trading facility to capture previously unregulated trades in addition investment firms that want to execute client orders must be a multilateral trading facility mtf mifid ii limited the trading volume of a stock in a dark pool to 8 of the total trading volume of that stock anywhere over 12 months such pools are private financial exchanges for trading securities that allow institutional investors to trade large blocks of securities without any details being made public until later 2while the stated purpose of dark pools is to enable large trades without impacting the market with news of them this also made them all but immune to oversight mifid ii aims to balance the need for privacy in large transactions that could be contravened by publicity and the market and the public s need for transparency and information on trading activities 2transparency was another major goal of the financial legislation for starters regulated markets and mtfs are required to publish the bid and offer prices of securities continuously but the legislation goes much further 2banks and brokerages can no longer charge for research and transactions in a single bundle making it clearer to clients what each costs individually and hopefully improving the quality of research available to institutional and retail investors alike 54this sounds quite technical but the effects wouldn t be if the legislation s aims were met mifid ii restricts the inducements paid to investment firms or financial advisors by third parties for indirect access to their customers this is meant to reduce major conflicts of interest when banks and investor services offer advice and services these must now be offered in the client s best interest not unknown third parties for example firms paying brokerages commissions on clients they sign up for their funds without such regulations there s a risk that financial advisors might recommend products or services not because they are the best options for their clients but because they offer the most lucrative commissions or other benefits to the advisors more broadly investment firms are now required to take all sufficient steps to obtain the best possible results for their clients and to act in their best interest that includes being upfront about commissions and fees 6investment firms must give regulators reports containing the details of each transaction they execute by the following day they also must keep records of all communications including phone conversations this enables regulators to monitor potential market abuses better 2transaction reporting is not just required for sell side firms such as brokers the counterparties who initiate the trade also must do so 2mifid ii places far greater scrutiny on algorithmic trading and high frequency trading hft to improve transparency in the market prevent manipulation or abuse and ensure fair trading practices given the regulation firms had to adjust their trading strategies invest far more in compliance and infrastructure and maintain detailed records of their trading activities and algorithms let s break this down further | |
what s next for financial regulations after mifid ii | the law mandated a review that began in 2020 of its effects on the eu s financial markets in october 2023 the eu finalized changes highlighted in the review to put to a parliamentary vote the changes to mifid ii aim to increase transparency and ban conflicts of interest here are some of the changes in store for mifid ii the eu would establish centralized data feeds known as consolidated tapes to aggregate crucial market data from multiple trading platforms including stock exchanges and investment banks this aggregation aims to give institutional and retail investors easier access to the latest data on the volume and prices of trading in securities this change would ban brokers from being compensated for directing client orders to specific trading platforms some eu member states where the practice is prevalent have been granted an extension until 2026 to enforce this ban the change also aligns the eu with markets in the u k which already banned pfof the eu s regulated markets will be required to have plans to temporarily pause or limit trading during emergencies or when there s a significant price fluctuation in a financial instrument over a short period in extraordinary circumstances the markets should be able to cancel change or correct any transaction | |
what is a dark pool | dark pools are private asset exchanges designed to supply additional liquidity and anonymity for trading large blocks of securities away from the public eye they offer price and cost advantages to buy side institutions such as mutual funds and pension funds which claim that these benefits ultimately accrue to the retail investors who invest in these funds however dark pools lack of transparency makes them susceptible to conflicts of interest by their owners and predatory trading practices by hft firms | |
what is the u s equivalent of mifid | according to the world bank the federal rules most comparable to mifid are the following 7 | |
how did brexit change mifid ii in the u k | post brexit the u k no longer needed to align with eu regulations including mifid ii initially the u k incorporated much of mifid ii into its law providing needed continuity and stability in its financial markets at a turbulent moment 89since amsterdam s stock market took over from london post brexit as the top trading market in the eu and u k the u k has been looking for ways to put its markets front and center in the region 10the u k s push has been toward sustainable deregulation including the so called edinburgh reforms announced in december 2022 and further proposals in december 2023 which some hoped would surgically remove all vestiges of eu rules left in its financial system 119thus far the u k s room for maneuver has not been as capacious as brexit promised given the need to prevent post 2008 backsliding and to remain aligned with global standards to engage in the global market 1012the bottom linemifid ii marked a major change in how investors in the eu buy sell and trade financial securities key policies of mifid ii include increased transparency in transactions and costs diminishing otc and dark pool trading and ending legalized conflicts of interest that potentially put clients in the hands of investment managers using them for commissions with third parties mifid ii also advanced into the newest areas of finance supplying greater scrutiny for the algorithms behind hft and bringing them in line with its requirements for transparency and fairness | |
what is a mill levy | the mill levy is a property tax it is applied to a property based on its assessed value the rate of the tax is expressed in mills and is equal to one dollar per 1 000 dollars of assessed value the mill levy is calculated by determining how much revenue each tax jurisdiction will need for the upcoming year to fund its budget for public services for example funding public schools and maintaining parks and recreation areas that revenue is then divided by the total value of all property within the area finally the rate from each jurisdiction is added to obtain the mill levy for the entire area 1 | |
how mill levies work | there can be several taxing authorities in one region which could include school county and city districts when it comes to the mill levy the rate of taxation is expressed in mills this mill levy determines how much the taxable value of your property will be charged in real estate taxes most jurisdictions use a percentage formula which is known as an assessment ratio to determine the property value for the mill levy each year the official assessed value of a property is usually set by a tax assessor and may be used to set the mill levy in some cases a percentage of the market value of the property can be used to set the mill levy instead to determine what the mill levy will be most jurisdictions use a percentage formula which is known as an assessment ratio to determine the property value for the mill levy a tax assessor usually sets the assessed value of a property for mill levy purposes in some cases a percentage of the market value of the property can be used to set the mill levy example of a mill levyas an example if the entire property value in the area is 1 billion and the school district needs 100 million in revenue the county needs 10 million and the city needs 50 million the tax levy for the school district would be 100 million divided by 1 billion or 0 10 the tax levy for the county would be 0 01 10 million 1 billion and the tax levy for the city would be 0 05 50 million 1 billion add all the tax levies up and you get a mill levy of 0 16 or 160 mills one mill 0 001 in general mill levies are applied to real estate land buildings and significant personal property such as cars and boats | |
what is the mill rate | the mill rate is the amount of tax payable per dollar of the assessed value of a property it is a figure that represents the amount per 1 000 of the assessed value of the property which is used to calculate the amount of property tax understanding the mill ratemill rate is also known as the millage rate the term millage is derived from a latin word millesimum meaning thousandth with 1 mill being equal to 1 1000th of a currency unit as used in relation to property tax 1 mill is equal to 1 in property tax which is levied per 1 000 of a property s determined taxable value 12you can find the millage rate for an individual property on the property deed itself or by calling your municipal tax office | |
where does the mill rate come from | the mill rate for your property is determined by who or what is taxing you that means that different mill rates are charged by different agencies which can include the township or city county school boards and emergency services districts all these individual rates are combined to calculate your final property tax bill for example once a budget is passed by your local government known revenues are subtracted which leaves the deficit to be raised through property taxes this amount is divided by the value of all property in the town which is then multiplied by 1 000 this figure represents the tax rate or the mill rate calculating property taxes using the mill rateproperty taxes are calculated by multiplying the assessed taxable property value by the mill rate and then dividing that sum by 1 000 the property tax levied on a property can be calculated as follows for example if the local mill rate is 7 this means that for every 1 000 of assessed value 7 is owed in property taxes if a taxpayer s personal residence has a taxable value of 150 000 then the property tax bill for their residence is | |
how property taxes are determined | property taxes are critical to funding the operations of municipal and other local government entities not all states levy income taxes but all states do levy property taxes property taxes are often assessed by more than one government entity for example a single property may be assessed for both municipal and county taxes government entities set mill rates based on the total value of property within the entity s jurisdiction to provide the necessary tax revenue to cover projected expenses in their annual budgets this includes things such as infrastructure police and emergency services parks and public schools for this reason and also because of fluctuating real estate values a tax assessor typically updates the taxable value of the property annually mill rates will usually vary for different types of property such as residential commercial or industrial properties property tax is an ad valorem tax which means it is based on value the assessed tax value of the property is calculated using local real estate data and is usually a percentage of a property s fair market value determined by multiplying the property s market value or appraisal value by an assessment ratio established by the local taxing authority some states have a homestead provision that exempts a specified dollar amount of a property s market value from assessment for property taxes for example in a state with a 50 000 homestead provision only 150 000 of a 200 000 home would be subject to property taxes 3the assessed tax value may be either higher or lower than a property s actual market value if you believe that your property has been assessed at an unreasonably high value you can request a reassessment | |
how do you calculate property taxes based on the mill rate | the mill rate represents the amount of property tax that you pay on real estate it is measured in mills equivalent to a 10th of a percent for example a mill rate of 12 means that your property tax is equal to 1 2 of your property s assessed value to calculate your property tax multiply your property s mill rate by the assessed property value and divide it by 1 000 | |
how do you find your mill rate | mill rates or millage rates are calculated by local and municipal governments based on their financial needs you can usually find the millage rates for your area by calling or checking the website for your local government or assessor s office | |
how do you calculate percentage from mill rate | property taxes are often measured in mills representing a 10th of a percent to determine the tax rate as a percentage multiply the mill rate by 10 the bottom linethe mill rate is simply a tax rate that is used to assess the property tax within a jurisdiction it utilizes a specific calculation 1 mill is equal to 1 in property tax levied per 1 000 of a property s assessed value so a mill rate of 7 means that you pay 7 for every 1 000 of your property s assessed value the assessed property taxes are then used to pay for government expenses within the area where the property is situated | |
what is the mill rate | the mill rate is the amount of tax payable per dollar of the assessed value of a property it is a figure that represents the amount per 1 000 of the assessed value of the property which is used to calculate the amount of property tax understanding the mill ratemill rate is also known as the millage rate the term millage is derived from a latin word millesimum meaning thousandth with 1 mill being equal to 1 1000th of a currency unit as used in relation to property tax 1 mill is equal to 1 in property tax which is levied per 1 000 of a property s determined taxable value 12you can find the millage rate for an individual property on the property deed itself or by calling your municipal tax office | |
where does the mill rate come from | the mill rate for your property is determined by who or what is taxing you that means that different mill rates are charged by different agencies which can include the township or city county school boards and emergency services districts all these individual rates are combined to calculate your final property tax bill for example once a budget is passed by your local government known revenues are subtracted which leaves the deficit to be raised through property taxes this amount is divided by the value of all property in the town which is then multiplied by 1 000 this figure represents the tax rate or the mill rate calculating property taxes using the mill rateproperty taxes are calculated by multiplying the assessed taxable property value by the mill rate and then dividing that sum by 1 000 the property tax levied on a property can be calculated as follows for example if the local mill rate is 7 this means that for every 1 000 of assessed value 7 is owed in property taxes if a taxpayer s personal residence has a taxable value of 150 000 then the property tax bill for their residence is | |
how property taxes are determined | property taxes are critical to funding the operations of municipal and other local government entities not all states levy income taxes but all states do levy property taxes property taxes are often assessed by more than one government entity for example a single property may be assessed for both municipal and county taxes government entities set mill rates based on the total value of property within the entity s jurisdiction to provide the necessary tax revenue to cover projected expenses in their annual budgets this includes things such as infrastructure police and emergency services parks and public schools for this reason and also because of fluctuating real estate values a tax assessor typically updates the taxable value of the property annually mill rates will usually vary for different types of property such as residential commercial or industrial properties property tax is an ad valorem tax which means it is based on value the assessed tax value of the property is calculated using local real estate data and is usually a percentage of a property s fair market value determined by multiplying the property s market value or appraisal value by an assessment ratio established by the local taxing authority some states have a homestead provision that exempts a specified dollar amount of a property s market value from assessment for property taxes for example in a state with a 50 000 homestead provision only 150 000 of a 200 000 home would be subject to property taxes 3the assessed tax value may be either higher or lower than a property s actual market value if you believe that your property has been assessed at an unreasonably high value you can request a reassessment | |
how do you calculate property taxes based on the mill rate | the mill rate represents the amount of property tax that you pay on real estate it is measured in mills equivalent to a 10th of a percent for example a mill rate of 12 means that your property tax is equal to 1 2 of your property s assessed value to calculate your property tax multiply your property s mill rate by the assessed property value and divide it by 1 000 | |
how do you find your mill rate | mill rates or millage rates are calculated by local and municipal governments based on their financial needs you can usually find the millage rates for your area by calling or checking the website for your local government or assessor s office | |
how do you calculate percentage from mill rate | property taxes are often measured in mills representing a 10th of a percent to determine the tax rate as a percentage multiply the mill rate by 10 the bottom linethe mill rate is simply a tax rate that is used to assess the property tax within a jurisdiction it utilizes a specific calculation 1 mill is equal to 1 in property tax levied per 1 000 of a property s assessed value so a mill rate of 7 means that you pay 7 for every 1 000 of your property s assessed value the assessed property taxes are then used to pay for government expenses within the area where the property is situated | |
millennial is the name given to the generation born from 1981 to 1996 dates now clarified by the pew research center although some have seen them as starting in 1980 and being born as late as 2004 1 also known as generation y gen y the millennial generation follows generation x gen x in terms of numbers it has edged out the baby boomers as the most significant generation in american history | millennials are so named because they were born near or came of age during the dawn of the 21st century the new millennium as the first to be born into a digital world members of this group are considered digital natives technology has always been a part of their everyday lives it s been estimated that they check their phones as many as 150 times daily and serving them has been a major contributing factor to the growth of silicon valley and other technology hubs 2research has shown the millennial generation to be the most ethnically and racially diverse in u s history gen y tends to be progressive in their political views and voting habits and less religiously observant than their predecessors gen x 3 | |
milton friedman was a u s economist and nobel laureate known as the most influential advocate of free market capitalism and monetarism in the 20th century | at the beginning of his career in the 1950s and 1960s friedman s strong advocacy of monetary policy over fiscal policy and free markets over government intervention was considered radical by the established macroeconomics community at the time the field was dominated by the keynesian position that fiscal policy government spending and tax policies to influence the economy was more important than monetary policy control of the overall supply of money available to banks consumers and businesses and that an interventionist government could moderate recessions by using fiscal policy to prop up aggregate demand spur consumption and reduce unemployment in a direct challenge to the keynesian establishment friedman and his fellow monetarists held that governments could foster economic stability by controlling the supply of money that flows into the economy and allowing the rest of the market to fix itself he argued for a return to the free market including smaller government and deregulation in most areas of the economy by the time friedman died in 2006 at the age of 94 his theories had been so influential that the wall street journal said that he had reshaped modern capitalism and provided the intellectual foundations for the anti inflation tax cutting and antigovernment policies of president ronald reagan and british prime minister margaret thatcher education and early careermilton friedman 1912 to 2006 was born to immigrant parents in brooklyn n y and grew up in a small town in in new jersey 20 miles from new york city in his nobel biography friedman described his family as warm and supportive but the family income as small and highly uncertain his father died during his senior year in high school and he took various jobs to supplement a scholarship to rutgers university where he earned an undergraduate degree in mathematics and economics in 1932 on the recommendation of a rutgers professor friedman was awarded a scholarship to an economics graduate program at the university of chicago in 1932 over the next 14 years in addition to academic roles at the university of chicago and columbia university friedman held a series of government roles that deepened his expertise in mathematical statistics and economic theory and contributed to publications on consumption and income analysis that launched his career for example friedman s consumer budget study at the national resources committee contributed to his famous theory of the consumption function his professional income study incomes from independent professional practice at the national bureau of economic research nber introduced the groundbreaking concepts of permanent and transitory income into economic science prior to earning a ph d in economics from columbia university in 1946 friedman spent world war ii on a select team of statistical analysts working on wartime tax policy for the u s treasury department 1941 to 1943 and serving as mathematical statisticians on weapon design military tactics and metallurgical experiments at columbia university 1943 to 1945 of note during these early years at the u s treasury the famous anti taxation crusader recommended increasing taxes to suppress wartime inflation and devised the first system of income tax withholding the university of chicago and hoover lnstitution 1946 to 2006 in 1946 friedman accepted an offer to teach economic theory at the university of chicago and spent the next 30 years conducting groundbreaking analysis and developing free market theories that challenged keynesian economics the school of thought that had dominated macroeconomics since the new deal workshop on money and banking a key institutional accomplishment during this period at the university of chicago was friedman s establishment of a money and banking workshop that allowed his monetary studies to evolve from individual scholarship into a cumulative body of work that drove the revival of both empirical and theoretical research in the fields of monetary history and statistics the chicago school of economics friedman also became the most famous alumnus of the chicago school of economics a neoclassical school founded in the 1930s by his professor frank knight to promote free markets and the concept of rational expectations a macroeconomic theory that holds that individuals base decisions on three factors human rationality available information and past experiences which means both that current expectations directly influence the future economy and that economists can accurately model future inflation and interest rates with no need for government intervention nobel prize in economic sciences 1976 in 1976 shortly before he retired from the university of chicago friedman was awarded the nobel prize in economic sciences for his achievements in the fields of consumption analysis monetary history and theory and for his demonstration of the complexity of stabilization policy hoover lnstitution of stanford university from 1977 when he retired from active teaching at the university of chicago until his death in 2006 friedman served as a senior research fellow at the hoover lnstitution of stanford university a public policy think tank promoting the principles of individual economic and political freedom friedman the theoretical economistcertain of friedman s accomplishments as a theoretical economist have been so significant that even vocal neo keynesian critics admire the brilliance of his logic including his assertion that economic models should be judged by the accuracy of their predictions about behavior rather than their psychological realism for example in friedman s rational behavior model on consumption behavior consumer preferences can be expressed mathematically in terms of utility and consumer choices are driven by rational calculations to maximize utility until then keynesian economists had explained consumer decisions more loosely in psychological terms such as the tendency to spend some but not all of any increase in income notable praise from ideological opponents includes paul krugman s statement that friedman s two greatest triumphs as an economic theorist came from applying the hypothesis of rational behavior to questions other economists had thought beyond its reach friedman s first universally applauded application of the hypothesis of rational behavior to economic patterns was a theory of the consumption function his 1957 book that made the case for his permanent income hypothesis this was a consumer spending theory positing that saving and spending decisions are based on perceptions of permanent rather than temporary changes to income people spend at a level consistent with their expected long term income and save only if current income is higher than expected permanent income by effectively resolving previous inaccuracies in the analysis of the relationship between income and spending friedman laid the foundation for all subsequent economic analysis of spending and saving patterns another indisputable friedman victory praised by critics as well as admirers was that his rational behavior explanation of inflation accurately predicted a phenomenon that establishment keynesians thought was impossible stagflation a period of stagnant economic growth with simultaneous high inflation and high unemployment in 1967 when friedman presented his prediction of stagflation in a presidential address to the american economic association he was challenging prevailing economic theories based on the phillips curve an economic model that demonstrated an historical correlation between unemployment and inflation that keynesian economists had always assumed was stable at the time keynesian economists had been using the phillips curve to argue that the stable tradeoff between unemployment and inflation justified expansionary fiscal policies and deficit spending that drove higher inflation because it would keep unemployment low friedman s counterargument to the keynesians in 1967 was that even though the data did show a correlation between inflation and unemployment it was only a temporary trade off not a stable correlation and both inflation and unemployment would eventually be high at the same time friedman s rational behavior argument was that consumers dealing with long term inflation eventually build expectations of future inflation into saving and spending decisions which eventually cancels the power of high inflation to keep employment high | |
when the stagflation of the late 1970s proved the accuracy of friedman s prediction that the historical correlation between inflation and unemployment would eventually break down it was hailed as one of the great triumphs of postwar economics | monetarism and the great depression | |
when friedman won the nobel prize in 1976 the committee cited a book on monetarism that he and his colleague anna schwartz had published in 1963 a monetary history of the united states 1867 1960 in this book friedman used highly detailed theoretical and empirical analysis of the role of money in the u s economy since the civil war to make the anti keynesian case that control of the money supply was a primary tool of economic management as it had been throughout pre keynesian economics | the argument against monetary policy had been dominant since the great depression in the 1930s when the massive economic crisis made interest rates so low that there was no incentive to invest and keynesians believed that any additional cash pumped into the economy would have just been held by individuals and banks without jumpstarting the economy in that context keynesians successfully advocated fiscal policy over monetary policy to pull the economy out of the great depression the most controversial position in friedman s 1967 book targeted this keynesian approach to the great depression and became quite influential with economists and the general public in it he argued that the government namely the federal reserve made the great depression worse by not enacting monetary policies in the book friedman claimed that if the federal reserve had prevented the dramatic drop in money supply by bailing out banks in the early 1930s it could have prevented the wave of bank failures that made people decide to hold cash rather than make deposits and made banks hold deposits rather than make loans to revive the economy one of the reasons that an anti government economist like friedman would advocate any government action at all is that monetary policy is the least interventionalist and ideally apolitical action that the government can take in the economy for example the federal reserve is a central bank so it controls the monetary base the total currency in circulation and in bank vaults as well as bank deposits at the federal reserve per friedman all the federal reserve had to do to increase the money supply was to create more monetary base and then let market forces play out with no further government involvement in contrast keynesian fiscal policies required much more government involvement in the economy for example a government funded public works project to increase employment would not only be administered by government officials but it could also be used to serve political ends neo keynesian critics of the book include paul krugman who despite calling a monetary history a vast work of extraordinary scholarship took exception to friedman s argument that the federal reserve made the great depression worse by not enacting monetary policies in fact the fed did increase the monetary aggregate under its control also known as the monetary base so krugman considers it highly debatable to say that the fed could have prevented the crash of the money supply that in turn triggered the collapse of spending that deepened the depression money supply is a different monetary aggregate that includes currency plus bank deposits that can be used as cash krugman also cautioned that what friedman claimed in the book that the federal reserve had turned a cyclical recession into a major depression by failing to bail out the banks was widely misinterpreted by some economists and the public as friedman believing that the federal reserve had caused the great depression which made the depression a failure of big government rather than a failure of unrestricted free markets real world application of monetarismfriedman first introduced monetarism in his 1959 book a program for monetary stability and for the next three decades monetarism was a major topic of economic debate in subsequent publications and public appearances over the next 25 years he made the case for controlling the money supply so effectively that his reputation as an economist was defined to a large extent by the monetarism doctrine he created however by the 1980s in the wake of notable failures of major monetary policy initiatives in the real world some of his staunchest proponents began to reverse their support of monetarism when an avowed monetarist in the u k prime minister margaret thatcher enacted monetary policy to control inflation in the early 1980s the inflation rate jumped to 23 monetarism was abandoned by 1982 in the u s when the federal reserve attempted monetarism by steadily growing the money supply to control inflation in the late 1970s the painful recession of 1981 1982 resulted by 1982 the u s had abandoned monetarism in practice and in 1986 the new york times reported that beryl sprinkel president reagan s chief economist and one of the most tenacious partisans of monetarism had publicly disavowed the theory of note when asked about the failed u s attempt friedman said that what happened wasn t a failure of monetarism but an execution failure by the federal reserve which he said had focused on interest rates instead of money monetarism would work if the fed plugged the policy into a computer and relied mostly on the computer to steer the economy in this context critics have attributed friedman s strong advocacy of monetarism to a primarily partisan motivation monetarism served his unilateral anti government agenda because he believed that the federal reserve should grow the money supply at a steady low fixed rate without even small deviations in response to economic conditions monetary policy could be on autopilot and government officials would have no control at all the public face of free marketsin 1976 when friedman was awarded the nobel prize in economic sciences for his work on consumption analysis monetary history and theory and the complexity of stabilization policy it marked the turning of the tide away from three decades of keynesian economics and toward the chicago school of economics he had co founded with this international validation of his theories and the major intellectual victory of his prediction of stagflation in the late 1970s friedman became the new public face of free markets after three decades of keynesian dominance friedman reshaped academic thought in economics around a laissez faire free market emphasis on prices inflation and human incentives a direct counter to keynes focus on employment interest and public policy over the next three decades friedman and his colleagues at the chicago school of economics argued against deficit spending and expansionary fiscal policy and for monetarism deregulation in most areas of the economy and a return to the free market small government principles of classic economists such as adam smith friedman the public intellectualone of friedman s most significant accomplishments was the extent to which his theories influenced government policy and public opinion as well as economic research as the nobel committee noted in 1976 it is very rare for an economist to wield such influence directly and indirectly not only on the direction of scientific research but also on actual policies at his death in 2006 federal reserve chairman ben bernanke said among economic scholars milton friedman had no peer the direct and indirect influences of his thinking on contemporary monetary economics would be difficult to overstate friedman s range as a spokesperson was equally impressive in addition to having the ear of powerful politicians and writing academic papers he reached the public through popular books columns and television appearances from debating highly technical economic principles at the academic level to communicating the economic benefits of free markets and small government to television audiences in direct plain language few public intellectuals in any field have been as effective during friedman s landmark interviews on phil donahue s show in 1979 and 1980 the host said his guest was a man who will never be accused of making economics confusing and told friedman the nice thing about you is that when you speak i almost always understand you in addition to lectures on college campuses friedman had a 10 series television program entitled free to choose based on his best selling book with the same name economist walter block sometimes a friendly agitator of friedman memorialized his contemporary s 2006 death by writing milton s valiant witty wise eloquent and yes i ll say it inspirational analysis must stand out as an example to us all communicating economics to the massesone measure of the extent to which friedman has shifted the center of debate about the proper role of government in the economy is the fact that certain of his core ideas have become popular wisdom in many ways friedman was an idealist and libertarian activist but his economic analysis was always grounded in practical reality he famously told richard heffner host of the open mind in an interview one of the great mistakes is to judge policies and programs by their intentions rather than their results many of friedman s most controversial positions were based on this principle he opposed raising the minimum wage because he felt it unintentionally harmed young and low skilled workers particularly minorities he also opposed tariffs and subsidies because they unintentionally harmed domestic consumers his famous 1989 open letter to then drug czar bill bennett called for the decriminalization of all drugs mostly because of the devastating unintended effects of the drug war this letter lost friedman a swath of conservative supporters who he said failed to recognize that the very measures you favor are a major source of the evils you deplore the most famous excerpt from friedman s writings and speeches is inflation is always and everywhere a monetary phenomenon he defied the intellectual climate of his era and reasserted the quantity theory of money as a viable economic tenet in a 1956 paper titled studies in the quantity theory of money friedman found that in the long run increased monetary growth increases prices but does not really affect output friedman s work busted the classic keynesian dichotomy on inflation which asserted that prices rose from either cost push or demand pull sources it also put monetary policy on the same level as fiscal policy in a 1980 newsweek column milton friedman said if you put the federal government in charge of the sahara desert in five years there d be a shortage of sand though perhaps poetic this famous quote illustrates friedman s often doctrinaire opposition to government intervention into the economy the sahara desert has in fact long been largely owned by various african national governments and has never experienced a shortage of sand friedman was a vocal critic of government power and was convinced free markets operated better on grounds of morality and efficiency in terms of the actual economics friedman rested on a few truisms and basic incentive based analyses he offered that no bureaucrat would or could spend money as wisely or as carefully as the taxpayers from whom it was taken he spoke often of regulatory capture the phenomenon where powerful special interests co opt the very agencies designed to control them to friedman government policy is created and carried out through force and that force creates unintended consequences that do not come from voluntary trade the political power of government creates an incentive for the wealthy and devious to misuse it helping to generate what friedman dubbed government failure friedman loved pointing out government failures in a way that proved his arguments about unintended consequences and the bad incentives of government policy he exposed how president richard nixon s wage and price controls led to gasoline shortages and higher unemployment he railed against the interstate commerce commission icc and federal communications commission fcc for creating de facto monopolies in transportation and media famously he contended that the combination of public schooling minimum wage laws drug prohibition and welfare programs had unintentionally forced many inner city families into cycles of crime and poverty did friedman say that greed is good friedman did not say that greed is good that is a line from the 1987 movie wall street but he did write a famous article in the new york times in 1970 titled the social responsibility of business is to increase profits that article has been called the inspiration for the greed is good excesses of activist investors who push companies to create shareholder value at all costs and to the exclusion of all other considerations including investing in employees and delivering value to customers was friedman a libertarian walter block said that friedman called himself a small l libertarian and he was clearly aligned with the libertarian principles of small less intrusive government and deregulation throughout his career | |
what inspired friedman to become an economist | friedman who was born in 1912 said that the great depression was of one of the most important factors influencing his decision to become an economist he wanted to investigate the causes and consequences of such widespread economic misery the bottom linemilton friedman is widely considered the most influential economic and public policy thinker of the second half of the 20th century just as keynes is considered the most influential of the first half one of friedman s most significant accomplishments was the extent to which his theories influenced government policy and public opinion as well as economic research friedman s public policy theories are based on two core principles that voluntary interactions between consumers and businesses often produce results superior to those crafted by government decree and that policies have unintended consequences so economists should focus on results not intentions friedman s use of monetarism to contradict keynesian theories based on the phillips curve is considered a major intellectual triumph by both critics and admirers when the stagflation of the late 1970s proved the accuracy of his prediction that the historical correlation between inflation and unemployment would eventually break down it was hailed as one of the great triumphs of postwar economics | |
what is minimum efficient scale mes | the minimum efficient scale mes is the lowest point on a cost curve at which a company can produce its product at a competitive price at the mes point the company can achieve the economies of scale necessary for it to compete effectively in its industry understanding minimum efficient scalefor companies that produce goods it is critical to find an optimal balance between consumer demand production volume and the costs associated with manufacturing and delivering goods a range of production costs go into establishing a minimum efficient scale but its relationship to the size of its market that is the demand for the product determines how many competitors can effectively operate in the market in other words mes seeks to identify the point at which a firm can produce its goods cheaply enough to offer them at a competitive price in the marketplace in economics the mes is the lowest production point that will minimize the long run average total cost lratc lratc represents the average cost per unit of output over the long run but remember all inputs are variable mes allows a company to achieve the lowest cost per unit until constant returns to scale begin minimum efficient scale and economies of scalethe minimum efficient scale mes is when the unit cost is at its lowest possible point while the company is producing its goods effectively mes allows a company to compete more effectively since it can produce its goods efficiently at the minimum cost per unit mes can be achieved through economies to scale economies of scale are when a company lowers the per unit cost of production while increasing production volume as production volumes rise the total costs are spread out over the increased number of units produced economies of scale can increase a companies efficiency and profit however the lower costs can also allow a company to pass those savings onto their customers through lower prices enhancing its competitive advantage companies can achieve internal economies of scale by making improvements internally for example henry ford improved ford s production capability by implementing a moving assembly line the stages of the assembly process were divided up so that each worker would have a specific task before the assembly line one worker might complete all of the tasks which was inefficient since it involved more skilled labor increasing labor costs ford increased its production at a lower per unit cost since it could hire unskilled labor to perform specific tasks 1a company s minimum efficient scale is the productivity level where its internal economies of scale create output that s as efficient and inexpensive as possible the mes is the point on a company s long run average cost curve where internal economies of scale have been exhausted and constant returns have begun companies can also experience external economies of scale which is when an outside force improves the scale for the entire industry such as an industry tax break for example the government might pass a tax break for companies that purchase new equipment benefitting all companies within the industry during constant returns the u shaped curve remains flat see earlier graph until diseconomies of scale begin and costs rise without input as companies get larger and grow more complex they can experience higher costs and diseconomies of scale this can occur when managing a larger company becomes challenging leading to poor communication between employees and management which increases the long run average cost per unit example of minimum efficient scalexyz company is a producer and manufacturer of mobile devices and was looking to improve its production capacity to increase revenue while lowering its production costs the company decided to purchase new equipment to replace the outdated technology and machinery the newer technology improved the production volumes and speed at producing goods reducing the long run average cost per unit since the new equipment was more efficient it used fewer input goods and raw materials in the production process although the new technology required an outlay of cash xyz company achieved higher profits through internal economies to scale the company could increase its sales since the new machinery could handle higher production volumes and the lower input costs reduced the variable costs in producing the mobile devices due to the increase in sales and production volumes xyz was able to buy the needed raw materials in bulk or greater quantities at a volume discount buying in bulk also reduced the long run average cost per unit eventually minimum efficient scale kicked in and the new technology didn t lower costs any further even when production continued to rise as a result xyz company achieved constant returns to scale meaning the savings from internal economies to scale had been exhausted special considerations | |
when minimum efficient scale can be achieved with a small amount of production many companies can operate efficiently and compete in an industry such as restaurants however if it takes a high level of production output to achieve minimum efficient scale fewer companies can operate in the industry such as in the case of the telecommunications industry | a healthy mes consists of numerous factors but those factors are continually shifting they have to be recalculated frequently to reflect the changes a business also has to keep adjusting its production levels to keep hitting the mark | |
what are minimum lease payments | the minimum lease payment is the lowest amount that a lessor can expect to make and a lessee can expect to pay over the lifetime of the lease accountants calculate minimum lease payments in order to assign a present value to a lease in order to record the lease properly in the company s books the method of calculating minimum lease payments is laid out in the statement of financial accounting standards no 13 fas 13 accounting for leases which was published by the financial accounting standards board fasb in 1980 the formula for minimum lease payments and lease valuationthe present value formula encompasses the minimum lease payments and the value of the total lease leased equipment often has a residual value at the end of the lease term which is an estimate of the amount of value remaining in the leased asset p v i 0 n p m t i 1 r r e s 1 r n where p v present value of the minimum lease payments p m t i lease payment for period i r interest rate n number of payment periods r e s residual amount begin aligned pv sum i 0 n left frac pmt i left 1 r right right frac res left 1 r right n textbf where pv text present value of the minimum lease payments pmt i text lease payment for period i r text interest rate n text number of payment periods res text residual amount end aligned pv i 0 n 1 r pmti 1 r nres where pv present value of the minimum lease paymentspmti lease payment for period ir interest raten number of payment periodsres residual amount | |
what does calculating minimum lease payments tell you | the minimum lease payment calculation is an important part of an accounting analysis called the recovery of investment test 90 test this test is used to decide whether a lease should be recorded in the company s books as an operating or capital lease the accounting treatment for minimum lease payments differs depending on whether you re the lessee or the lessor | |
when a company cannot afford to fully purchase equipment or expects it to have a short useful life it may opt to lease the equipment the lessor owns the equipment and rents it out the lessee makes regularly scheduled payments to the lessor for the use of the equipment the lessee is expected to make a minimum payment during the contractual period that the equipment is leased out the minimum payment is known as the minimum lease payment | minimum lease payments are rental payments over the lease term including the amount of any bargain purchase option premium and any guaranteed residual value and excluding any rental relating to costs to be met by the lessor and any contingent rentals special considerationsalthough common sense suggests that the minimum lease payments on a 12 month lease at 1 000 a month should be 12 000 this number can be complicated by contractual clauses executory costs like maintenance and insurance are usually excluded because they are the responsibility of the lessor but other factors can be added to the cost of a lease these include any guarantees made by the lessee to the lessor about the residual value of the leased property at the end of the lease as well as any payments for non renewal of the lease once these are factored in a reasonable present value can be assigned to the lease for accounting purposes example of minimum lease payments and present valuethe value of a lease is estimated by discounting the minimum lease payments let s use an example to determine how much a lease will cost in today s dollars a company takes out a 3 year lease on a number of heavy duty trucks the minimum lease payment per month is 3 000 per month or 36 000 per year lessors also charge interest as compensation for leasing their equipment in this case the interest rate is 5 per year or 5 divided by12 months 0 417 per month to calculate the present value pv of the leased trucks the residual value must be factored in the residual value is the value of the trucks after the lease period is over let s assume in this case that the residual value is 45 000 the annual interest rate on the lease is used as the discount rate in calculating the pv the pv on the trucks lease can be calculated using the pv formula and including the residual in the calculation as follows p v 36 000 1 0 5 1 36 000 1 0 5 2 36 000 1 0 5 3 45 000 1 0 5 3 34 285 71 32 653 06 31 098 83 38 873 53 136 911 13 begin aligned pv frac text 36 000 1 05 1 frac text 36 000 1 05 2 frac text 36 000 1 05 3 frac text 45 000 1 05 3 text 34 285 71 text 32 653 06 text 31 098 83 text 38 873 53 text 136 911 13 end aligned pv 1 051 36 000 1 052 36 000 1 053 36 000 1 053 45 000 34 285 71 32 653 06 31 098 83 38 873 53 136 911 13 in today s value the lease will be estimated to cost 136 911 13 | |
what is a minimum monthly payment | the minimum monthly payment is the lowest amount a customer can pay on their revolving credit account per month to remain in good standing with the credit card company making the monthly minimum payment on time is the least a consumer needs to do to avoid late fees and to have a good repayment history on their credit report the amount of the minimum monthly payment is calculated as a small percentage of the consumer s total credit balance understanding minimum monthly paymenta minimum monthly payment is provided to customers monthly on revolving credit accounts revolving credit accounts differ from non revolving credit accounts revolving credit accounts offer customers a low minimum monthly payment compared to a standardized payment schedule calculated for non revolving credit all else being equal consumers who only make the minimum monthly payment on their credit cards will incur higher interest expenses and take longer to pay off their balances than consumers who pay more than the minimum each month the best option is always to pay credit card balances in full and on time because this strategy prevents the consumer from having to pay any interest or late fees paying off revolving credit balances monthly also allows customers to take greater advantage of cash back offers and rewards points earned on purchases depending on your interest rate you ll save an average of 10 to 29 per year in interest by increasing your credit card payments above the minimum monthly payment revolving credit monthly statementsrevolving credit accounts are credit accounts that approve a borrower for a maximum level of borrowing at a specified interest rate which may be fixed or variable different from non revolving credit revolving credit accounts are open accounts that allow borrowers to keep variable credit balances without taking the full maximum principal customers can keep revolving credit accounts open for life as long as they remain in good standing with the credit issuer since revolving credit accounts will have varying outstanding balances each month credit companies provide borrowers with a monthly statement that details the activity on their account and a monthly minimum payment they must make to keep their account in good standing with no delinquencies monthly revolving credit statements provide a variety of details for the account holder each month basic details include the month s itemized transactions the interest charged fees charged the previous month s balance the balance at the end of the statement period and the minimum monthly payment that must be paid to keep the account current you should always try to pay your full balance each month but you won t be able to use another credit card to do that the average minimum monthly payment on credit cards held by americans in 2020 was approximately 124 this is based on average monthly balances at the time of 6 200 and a 2 minimum payment rate 1revolving vs non revolving creditrevolving credit borrowers have the advantage of maintaining rolling balances over the life of the account this allows them to take money from the account for purchases up to a maximum level at any time by making monthly payments a borrower pays down some of the outstanding balance with interest and therefore can continuously use the account for borrowing non revolving credit accounts differ from revolving credit accounts in that they pay out a principal amount to a borrower at the time of approval borrowers often use non revolving credit for targeted purchases such as academic tuition cars and real estate non revolving credit accounts set a payment schedule for the borrower at the time of loan approval the payment schedule is static and usually does not change over the life of the loan with non revolving credit the borrower receives a one time lump sum payout with a specified repayment period the borrower must make monthly payments for the duration of the loan with the account being closed after full repayment has been made | |
what is minimum wage | a minimum wage is the lowest wage that a worker may be paid per hour it s a price floor on hourly wages mandated by federal law nonexempt workers can t be offered a job or agree to work for less than this amount understanding minimum wageminimum wage laws were first introduced in australia and new zealand in an attempt to raise the income of unskilled workers most modern developed economies as well as many developing economies enforce a national minimum wage the first minimum wage law in the united states went into effect in 1912 when massachusetts set a minimum hourly rate for women and children under age 18 2the federal government established a minimum wage of 0 25 under the fair labor standards act flsa in 1938 3 that wage was worth 5 48 as of the fourth quarter of 2023 if you adjust it for inflation 4the federal minimum wage rate in the united states is 7 25 per hour as of 2024 unless the worker falls into a category that s specifically exempted from flsa 56the government periodically assesses the federal minimum wage level with changes in inflation or the cost of living and the rate has not increased since july 2009 the fair minimum wage act of 2007 ordered the minimum wage to be raised from 5 15 in three increments it rose to 5 85 6 55 and then finally to 7 25 7president joe biden campaigned on a promise to raise the federal minimum wage for government workers to 15 an hour the executive order was signed on april 27 2021 and was implemented on jan 30 2022 8history of the minimum wagethe first minimum wage laws came into effect in the late 1800s when sweatshop labor was common in newly industrialized countries minimum wages were a central demand for the new union movement along with shorter hours and better working conditions the first national minimum wage was enacted by new zealand in 1894 followed by the united kingdom in 1909 minimum wages were advocated by both labor organizers and consumer groups in the united states but they faced challenges from business interests several states attempted to pass minimum wage laws but they were rebuffed by a 1923 supreme court decision that declared minimum wage laws to be unconstitutional 9it wasn t until the new deal that congress finally enacted a federal minimum wage law the fair labor standards act that was passed in 1938 set the minimum wage at 0 25 per hour it may seem low but that wage provided a reasonably comfortable living for depression era families 10federal minimum wage vs state minimum wagesthe united states enforces a federal minimum wage but individual states cities and localities can enact different minimum wage requirements provided that the stipulated hourly wage is not lower than the federal minimum wage an employer who is subject to the federal and state minimum wage requirements must pay the higher of the two 5states usually set a minimum wage that is reflective of the cost of living in the region the state of massachusetts has a minimum wage of 15 as of jan 1 2024 and montana has a minimum wage rate of 10 30 as of that date 11minimum wage rates exceed the federal rate in 30 states and the district of columbia as of january 2024 the district of columbia has the highest minimum wage at 17 per hour the second highest is washington state at 16 28 new york and california are tied for third place at 16 11only five states have not adopted a state minimum wage as of jan 1 2024 alabama louisiana mississippi south carolina and tennessee 11this map shows the minimum wage set at each state level seven states have no state minimum and two georgia and wyoming have a minimum wage less than that provided for at the federal level in all cases the federal minimum wage of 7 25 applies 11some states have special exceptions to their minimum wage rules state minimum wages vs municipal minimum wagescities and municipalities within a state may set a higher minimum wage for residents who live in areas with higher costs of living the city of chicago has had a minimum wage of 15 or 15 80 depending on employer size as of july 2023 the illinois state minimum wage is 14 as of jan 1 2024 1415minimum wage exceptionscertain categories of workers are exempt from being covered by minimum wage laws low wage laborers in the united states can be exempt from the minimum wage if a sizable portion of their income is derived from tips a lower minimum wage of 2 13 per hour as of january 2024 may apply to tipped employees who regularly receive more than 30 in tips per month or if the total tips retained in addition to the hourly wage rate are equal to or greater than the federal minimum wage the employer is expected to compensate the employee for the shortfall if the employee s total tips and hourly rate fall below the minimum wage 16a full time student working for a university retail store or service establishment cannot be paid less than 85 of the minimum wage students can work up to eight hours per day but they can t work more than 20 hours per week when school is in session students in technical or vocational programs can t be paid less than 75 of the minimum wage throughout their active enrollment in the program 1718workers under the age of 20 may be paid 4 25 per hour by federal law until they pass a three month probationary period the employer must convert their pay structure to the federal minimum wage rate after that 19workers with physical or mental disabilities can be paid less than the federal minimum wage according to the terms of the flsa disabilities that can affect production capacity include blindness cerebral palsy alcohol and drug addiction mental illness and developmental disabilities 20the 15 minimum wageminimum wage laws were designed to end the exploitation of workforces and ensure that a country s working population doesn t fall below the poverty line the fair labor standards act flsa establishes the minimum wage affecting full time and part time workers in the private sector and federal state and local governments 21debate surrounds the establishment of a 15 federal minimum wage president joe biden s american rescue plan attempted to raise the minimum but the biden administration has so far only succeeded in raising the minimum hourly wage of government employees to 15 8proponents argue that an increase in the minimum wage helps meet the goal of a living wage where employees earn enough income for a satisfactory standard of living they also claim that a boost increases worker productivity reduces income inequality spurs economic growth and improves employee retention 2223many companies have increased their hourly rate to at least 15 per hour independent of a mandatory federal minimum wage increase they include bank of america amazon costco chipotle cvs and starbucks 24critics argue that companies not the government should decide how much their employees are paid and that a minimum wage doesn t always boost the spending power of a population and can instead lead to higher unemployment a small change in the price for low wage labor could have a large effect on employer demand they say leading to increasing unemployment among low wage workers 25 critics note that minimum wage laws may also lead to job outsourcing in which companies may decide to move their facilities to countries where labor costs are lower minimum wage vs living wagethe minimum wage is sometimes contrasted with the living wage an hourly salary that would allow someone to live comfortably if they are working full time the minimum wage is established by law but a living wage is calculated based on factors such as average rents costs of living transportation and childcare costs the federal minimum wage was much closer to a living wage when it was first established in 1938 the buying power of a minimum wage worker peaked in 1968 according to the seattle times 26 inflation and price increases after that point caused the real earnings of a minimum wage worker to fall as productivity increased | |
what are efficiency wages | efficiency wages are the level of wages paid to workers above the minimum wage to retain a skilled and efficient workforce efficiency wage theory posits that an employer must pay its workers highly enough that workers are incentivized to be productive and that highly skilled workers don t quit | |
which state has the lowest minimum wage | georgia and wyoming both have a minimum wage of just 5 15 but employers in these states that are subject to the fair labor standards act must pay their employees the 7 25 federal minimum wage the same rules apply to the five states that have no minimum wage alabama louisiana mississippi south carolina and tennessee 14 | |
is the minimum wage meant to be a living wage | a living wage is the minimum income deemed necessary for a worker to meet their basic needs the u s poverty level for a family of four was an income of 30 000 in 2023 which works out to 14 42 per hour well above the minimum wage at the federal level critics argue that the federal minimum wage has failed to keep up with the cost of living since the late 1960s 27the bottom linethe fair labor standards act flsa established the minimum wage which is 7 25 per hour as of january 2024 the government periodically assesses the federal minimum wage level but the rate has not increased since july 2009 individual states cities and localities can pass minimum wage requirements that are different from the federal rate as long as their rate is higher than the federal minimum wage 7 | |
what is a minority interest | a minority interest refers to a stake in a company that is otherwise controlled by a parent company this usually occurs in subsidiaries where the parent company owns more than 50 of the voting shares minority interests generally come with some rights for the stakeholder such as participation in sales and certain audit rights minority interests are also referred to as non controlling interests under u s gaap non controlling interests are listed on the equity section of the parent company s consolidated balance sheet but separate from the parent company s equity 1 this represents the proportion of the subsidiary owned by minority shareholders investopedia nono floresunderstanding minority interestsminority interests usually refer to the portion of a company or stock not held by the parent company which holds the majority interest most minority interests range between 20 and 30 while the majority stakeholder in most cases the parent company has voting rights to set policy and procedures the minority stakeholders generally have very little say or influence in the direction of the company that s why they are also referred to as non controlling interests ncis in some cases a minority may have some rights such as the ability to take part in sales there are laws that also entitle minority interest holders to certain audit rights they also may be able to attend shareholder or partnership meetings in the world of private equity companies and investors with a minority interest may be able to negotiate control rights for example venture capitalists may ask to negotiate for a seat on the board of directors in exchange for their investment in a startup in the corporate world a corporation lists minority ownership on its balance sheet in addition to being reflected on the balance sheet minority interest is reported on the consolidated income statement as a share of profit belonging to minority equity holders 2the consolidated income statement must have a clear distinction between the net income from the parent company and that of the minority interest 1example of minority interestabc corporation owns 90 of xyz inc which is a 100 million company in its consolidated balance sheet abc will record its 90 million shares in xyz as well as the 10 million non controlling interest to represent the shares of xyz that abc does not own xyz inc generates 10 million in net income as a result abc recognizes 1 million or 10 of 10 million of net income attributable to minority interest on its income statement correspondingly abc marks up the 10 million minority interest by 1 million on the balance sheet the minority interest investors do not record anything unless they receive dividends which are booked as income in 2007 the financial accounting standards board introduced the phrase non controlling interest as a synonym for minority interest although they mean the same thing the new phrase reflects the fact that there are situations where a non majority shareholder can still act as a controlling interest 3types of minority interestsa minority interest can either be passive or active passive minority interests are those where a minority shareholder owns less than 20 of the equity in a subsidiary company giving them no material influence on the company s decisions in accounting terms only the dividends received from the minority interest are recorded for those with minority passive interests this is referred to as the cost method the ownership stake is treated as an investment at cost and any dividends received are treated as dividend income 4active minority interests owning 21 to 49 are when a minority shareholder can materially influence the company where it holds a minority interest unlike passive interests dividends received and a percentage of income are recorded for those with active minority interests 4 this is referred to as the equity method dividends are treated as a return on capital decreasing the value of the investment on the balance sheet the percentage of income attributable to the minority interest is added to the investment account on the balance sheet as this effectively increases its equity share in the company special considerationsthe most common examples of minority interests occur in subsidiaries where a parent company holds over 50 of voting shares however it is also possible for a parent company to exert a controlling interest without a majority stake this may be the case with variable interest entities that exert control through a contractual obligation rather than ownership regardless of the type of control a parent company consolidates the financial results of the subsidiary with its own as a result a proportional share of income shows up on the parent company s income statement attributable to the minority interest likewise a proportional share of equity in the subsidiary company shows up on the parent s balance sheet attributable to the minority interest prior to 2008 minority interest could be reported as either equity or a noncurrent liability under the rules of u s generally accepted accounting principles gaap this ambiguity was later eliminated by a requirement to report minority interests with the parent company s equity 1 the international financial reporting standards ifrs also require that minority interest must be recorded in the equity section of the balance sheet | |
in finance and investing a sudden and catastrophic collapse of asset prices after a period of growth and stability is known as a minsky moment named after economist hyman minsky 1911 to 1996 this label has been applied to some of the most devastating economic crises in history minsky mostly wrote during a period when he thought economists were lulled into complacency by the relative stability of the mid 20th century his work was meant to wake them from their slumber as such there is an irony that an economist who dedicated his life s work to developing policy solutions to avoid financial crises has his name applied to the very moments he sought to prevent several decades after his death after so many crises we might not now be in a minsky moment but we seem to be in a minsky era | below we show you how analysts diagnose a minsky moment also minsky s suggestions for preventing or recovering from it understanding the minsky momentthe phrase minsky moment was coined in 1998 by paul mcculley of pimco fame while referring to the asian debt crisis of 1997 the concept derives from the view that periods of bullish speculation if they last long enough will eventually lead to a crisis and the longer the period of speculation lasts the more severe the eventual crisis will be hyman minsky worked for much of his career in relative obscurity but that would change when his work on economic crises became unfortunately relevant minsky thought these events were the result of a new form of capitalism which he called money manager capitalism what others would later call financialization in the last decades before he died in 1996 here minsky gives a succinct summary of his views in short minksy was a keynesian or neo keynesian arguing that markets tend to produce crises that good institutions and policies can prevent minsky believed that financial markets move through cycles of boom and bust emphasizing that once there s a transition from stable investment to speculative finance the chance for a crash heightens when the time comes that investors can no longer afford their spiraling debt two crucial points are worth emphasizing minsky s work describes how periods of economic stability can paradoxically lead to greater instability in the long run according to minsky more investment generates higher profits at the aggregate level all else being equal while this is a positive sign for most investors and the public it can make the financial system more unstable when profits continually exceed expectations servicing debt becomes easier encouraging firms to borrow ever more sums after all in a booming economy profits from speculation outpace the interest to be paid as janet yellen put in 2009 when optimism is high and ample funds are available for investment investors tend to migrate from the safe hedge end of the minsky spectrum to the risky speculative and ponzi end this leads us to minsky s famous categories of credit hedge speculative and ponzi let s define these once an economy reaches the third stage if prices don t go up and lenders stop lending then the minsky moment arrives drawing on the work of other economists minsky s theory also describes a debt deflation process that s not the result of overleveraged firms purposely going way over their skis the events that trigger the start of a debt deflation are normal results of the financing relations that lead into and take place during an investment boom minsky wrote the bankruptcy of one major borrower can bring down its creditors who then default on their own debts creating a cascade of defaults as uncertainty and pessimism spread investment declines and through a multiplier effect income and demand drop as a recession or worse arrives the crisis that made the notion of minsky moment more widely known at least among analysts and regulators was the 2008 financial crisis also called the great recession during this period a wide range of markets reached all time lows triggering a wave of margin calls a massive sell off in assets to cover debts and high default rates the minsky moment and the financial instability hypothesisgiven the massive changes in finance and the economy there s something of a parlor game among analysts theorists and practitioners to name the current period neoliberalism financialization post keynesian postmodern finance and so on and to mark its beginnings whether 1945 1980 2007 8 or the pandemic minsky used the phrase money manager capitalism for the postwar period to describe changes in the american financial system he argued that the rise of institutional investors such as pension and mutual funds had fundamentally changed the nature of capitalism he thought such a system was inherently volatile which was his financial instability hypothesis to understand the changes in capitalism which to many of us is simply the natural state of capitalist markets we need to look at the prewar period as minsky saw it before the era of money manager capitalism there was for minsky commercial capitalism we can think broadly of the period from when the depression era regulations took effect through the 1950s and beyond under this system banks were the dominant financial institutions and their primary role was to provide financing to businesses and households for productive investments they had long term relationships with their customers and were more focused on the soundness of their loans than on maximizing short term profits the government played a more active role in regulating the financial system and promoting economic stability through deposit insurance and bank supervision policies this was a period of stability that economists he later argued took for granted under money manager capitalism on the other hand the primary goal of financial institutions is to maximize returns for their clients rather than to support the broader economy this leads to a focus on short term profits a tendency toward speculation and ever more financial innovation producing new speculative investment products here are some primary features of this kind of capitalism according to minsky putting this all together minsky s concept of money manager capitalism highlights how the evolution of the financial system has transformed capitalism itself creating minsky thought new risks and challenges for policymakers and society | |
are we near a minky moment of financial crisis | a search of academic journal and newspaper databases shows that prognosticators are seemingly always working on articles about how the present is perhaps ripe for a minsky moment that doesn t make these analysts wrong after all minsky thought this was to be a period of instability here we review some major recent events that brought minsky to mind for some starting in about 2017 experts issued warnings of an approaching minsky moment in china as debt levels increased while equity values kept up their bullish trend the chinese government warned investors of an impending crisis or minsky moment if debt levels continued to rise | |
when covid 19 arrived in 2020 it exacerbated chinese companies already high debt levels as it lowered macroeconomic growth with overleveraged balance sheets many chinese companies struggled to service debts which had fueled speculative investing while china tried to manage the crisis in 2024 the bankruptcy of evergrande group the chinese real estate looked to some as if it was finally setting off the minsky moment meanwhile the pandemic aftermath in china unfolded largely as minsky s framework would predict more inefficient construction projects lower interest rates financial firm bailouts and the squeezing of private corporations | for readers of minksy revelations about evergrande s and other developers apparent ponzi financing schemes were perhaps a bit on the nose given the name of his third credit cycle with real estate demand declining the system has unraveled some analysts predict the scale of the crisis resembling japan s 1990s lost decade could impede china s growth and competitiveness for years in early 2023 experts quickly reached for minksy s terms worried about the hit the u s financial sector took as several regional banks collapsed and faced bank runs the events surrounding the collapse of silicon valley bank among other troubled financial institutions caused some to diagnose a minsky moment as these banks were taking ever riskier bets with their lending and financing fortunately though painful for those involved the episode turned out largely self contained more recently the international monetary fund has joined a chorus of those issuing warnings of high global debt levels and the potential for a financial crisis while this has not yet come about there are warning signs the u s has had an extended period of economic prosperity rising debt levels and speculative market activity as the s p 500 and dow jones industrial average have broken all time records nevertheless speculation does not yet seem to be at the extreme levels that presage a minsky moment though time will tell | |
what should be done in a minsky moment | minsky argued for policy interventions during a minsky moment to stabilize the economy and prevent a financial crisis here are some of his recommendations in the midst of a crisis responsive measures include swift central bank interventions to provide liquidity government bailouts to stabilize key financial institutions and international cooperation to manage cross border financial crises these actions he thought might cushion the economic blow | |
what are real world examples of minsky moments | the market crash and great depression of the 1930s and the 2008 global financial crisis great recession are the most cited examples the 2008 crisis was triggered by the bursting of the u s housing bubble and subsequent failure of financial institutions overexposed to mortgage backed securities another instance is the 1997 asian financial crisis starting with the collapse of the thai baht and spreading to other east asian economies exacerbated by high levels of private debt can a minsky moment be predicted predicting a minsky moment is inherently difficult because of the complexity of market forces investor psychology and external economic factors or shocks while economists and analysts can try to identify speculative bubbles and overleveraging as warning signs the precise timing and trigger of a minsky moment are often unpredictable | |
what are common critiques of the minsky moment | critics argue that minsky s theories are too focused on financial markets and neglect the role of real economic factors some also argue that his model is too deterministic suggesting that financial crises are inevitable which is not always the case others criticize the lack of empirical evidence supporting his hypotheses the bottom linea minsky moment is a sudden market collapse after a prolonged period of speculative investment it s named after economist hyman minksy who proposed that contemporary financial markets are inherently unstable cycling through periods of prosperity speculative excess and then crisis his theory emerged from observing that investors tend to take on more risk during boom times using borrowed money which becomes unsustainable minsky moments for many highlight the need for financial stability measures from governments and regulators reminding us that speculative bubbles can lead to devastating crashes and economic downturns without proper oversight | |
what is the misery index | the misery index is a measure of economic distress felt by everyday people due to the risk of or actual joblessness combined with an increasing cost of living the misery index is calculated by adding the seasonally adjusted unemployment rate to the inflation rate since unemployment and inflation are both considered detrimental to one s economic well being their combined value is useful as an indicator of overall economic health the original misery index was popularized in the 1970s with the development of stagflation or simultaneously high inflation and unemployment understanding the misery indexthe misery index has two components they are the unemployment rate and the inflation rate u s unemployment is the number of able bodied adults who are actively looking for work as a percentage of the total workforce inflation refers to the rate at which money loses buying power due to the rise of consumer prices in most cases these numbers are inversely correlated when the unemployment rate goes down prices tend to go up and vice versa the misery index is calculated by adding the seasonally adjusted rate of unemployment and the annual inflation rate misery index seasonally adjusted rate of unemployment annual inflation rateeconomists generally consider full employment to mean an unemployment rate of 4 5 the federal reserve fed targets an inflation rate of 2 therefore a satisfactory misery index rating would be in the range of 6 7 components of the misery indexthe unemployment rate is adjusted to remove seasonal employment patterns so that it can provide good insight into the relative level of employment the seasonally adjusted unemployment rate is measured as a percentage it reflects the portion of the workforce that is able to work and seek employment actively but can t find a job workers who are retired but working and those who have stopped trying to find a job are excluded from the seasonally adjusted rate the bureau of labor statistics bls reports unemployment data each month 1the annual inflation rate is the percentage increase in the prices of the goods and services consumed by the buyers in short it measures the prices of all goods and services existing in the economy the bls reports inflation data each month in its consumer price index cpi release 2misery index 9 95unemployment rate 3 5 inflation rate 6 45 3history of the misery indexthe first misery index was created by economist arthur okun in the 1970s when he was a scholar at the brookings institution he had previously served on president lyndon johnson s council of economic advisers 4okun combined the nation s annual inflation rate and unemployment rate to provide an easily understood snapshot of the economy s relative health the higher the index the greater the misery felt by the average citizen 4during the 1970s after president nixon restricted and then severed the final links between the u s dollar and gold the u s experienced several years of simultaneously elevated price inflation and unemployment known as stagflation the american people were caught in a squeeze between the hardships of joblessness as the economy hit a series of recessions and a rising cost of living as the dollar rapidly lost value this phenomenon did not fit with dominant macroeconomic theories at the time based on the phillips curve it led economists to explore alternative ideas to describe and explain what was going on at the time the misery index was novel because mainstream economists had previously believed that inflation and unemployment would offset one another rather than rise at the same time during the 1976 campaign for u s president candidate jimmy carter popularized okun s misery index as a means of criticizing his opponent incumbent gerald ford by the end of ford administration the misery index was a relatively high 12 7 during the 1980 presidential campaign ronald reagan in turn pointed out that the misery index had increased under carter limitations of the misery indexwhile it is a convenient shorthand for economic misfortune the misery index should not be considered a precise metric for economic health for one thing both components of the misery index have inherent blind spots the unemployment rate only counts the unemployed who are actively looking for work it does not include those who have given up looking for work as might be the case for long term stretches of unemployment likewise low inflation can also be accompanied by unexpected misery for example no inflation or even deflation can be signs of a stagnant economy which can be a hardship for many due to the potential for rising unemployment and falling equity and real estate valuations however the low rates would produce a very low misery index in addition the misery index treats unemployment and inflation equally however a 1 increase in unemployment likely causes more misery than a 1 increase in inflation the okun misery index is considered a convenient but highly imprecise metric due to the inherent flaws of inflation and unemployment as measurements of economic health criticisms of the misery indexthe okun misery index has faced some criticism from economists there have been several attempts to modernize the misery index by including other metrics newer versions of the misery indexthe misery index has been modified several times first by harvard economist robert barro in 1999 barro created the barro misery index which adds consumer lending interest rates and the gap between actual and potential gross domestic product gdp growth to evaluate post wwii presidents 5in 2011 johns hopkins economist steve hanke modified barro s misery index and broadened its application to be a cross country index hanke s annual misery index is the sum of unemployment inflation and bank lending rates minus the change in real gdp per capita 6hanke publishes his global list of misery index rankings annually for the countries that report relevant data on a timely basis for 2021 his list included 156 nations with libya being identified as the world s least miserable country and cuba as the world s most miserable country 7the concept of a misery index has also been expanded to asset classes for example tom lee co founder of fundstrat advisors created the bitcoin misery index bmi to measure the average bitcoin investor s misery the index calculates the percentage of winning trades against total trades and adds it to the cryptocurrency s overall volatility the index is considered at misery when its total value is less than 27 8a variation of the original misery index is the bloomberg misery index argentina south africa and venezuela countries beset by widespread inflation and unemployment topped the index in 2020 9on the other end thailand singapore and japan were considered the happiest countries according to economist estimates but low inflation and low unemployment rates can also mask low demand japan is a textbook case of persistently low demand due to an economy that has suffered from stagflation for the last two decades it s smart for investors to build an emergency fund in case of an economic downturn or job loss misery index under different presidentsalthough the misery index was first popularized in the 1970s it is possible to evaluate the economic misfortunes under different presidents by comparing their inflation and unemployment figures unsurprisingly the most miserable year on record occurred during the great depression the misery index reached 25 7 in the first year of franklin roosevelt s presidency 1933 it fell to 3 5 by 1944 likely due to full employment during the second world war richard nixon 1969 1974 and jimmy carter 1977 1980 have the unenviable distinction of presiding over the most miserable economies of the post war period the misery index rose to 20 under nixon and 22 under carter the index fell sharply under ronald reagan and it continued to trend downwards during the george h w bush and clinton presidencies 10during the presidency of george w bush the misery index again trended upwards it reached a peak of 12 7 under president obama due to the ongoing great recession the index fell to a low of 5 06 in 2015 and remained low through most of the trump presidency 2017 2020 however the covid 19 pandemic caused a sharp increase in unemployment pushing the misery index to 15 10source united states misery index11 | |
what is a recent misery index | the misery index as of december 2022 is 9 95 unemployment rate of 3 5 inflation rate of 6 45 3 | |
what is a misrepresentation | a misrepresentation is a false statement of a material fact made by one party which affects the other party s decision in agreeing to a contract if the misrepresentation is discovered the contract can be declared void depending on the situation the adversely impacted party may seek damages | |
how misrepresentation works | misrepresentation applies only to statements of fact not to opinions or predictions misrepresentation is a basis for contract breach in transactions no matter the size a seller of a car in a private transaction could misrepresent the number of miles to a prospective buyer which could cause the person to purchase the car if the buyer later finds out that the car had much more wear and tear than represented they can file a suit against the seller in higher stakes situations a misrepresentation can be considered an event of default by a lender for instance in a credit agreement meanwhile misrepresentations can be grounds for termination of a mergers and acquisitions m a deal in which case a substantial break fee could apply special considerationsin some situations such as where a fiduciary relationship is involved misrepresentation can occur by omission that is misrepresentation may occur when a fiduciary fails to disclose material facts of which they have knowledge 1a duty also exists to correct any statements of fact that later become known to be untrue in this case the failure to correct a previous false statement would be a misrepresentation types of misrepresentationsthere are three types of misrepresentations innocent misrepresentation is a false statement of material fact by the defendant who was unaware at the time of contract signing that the statement was untrue the remedy in this situation is usually rescission or cancellation of the contract 2consider a situation where a seller of a piece of land mistakenly informs a buyer that there is planning permission granted for a new housing development nearby the seller genuinely believed this to be true based on information received from a neighbor unfortunately unknown to the seller that planning permission had since been denied because the buyer relied on this information in deciding to purchase the land the seller may be liable due to innocent misrepresentation since they made a mistake even though it was an honest mistake negligent misrepresentation is a statement that the defendant did not attempt to verify was true before executing a contract this is a violation of the concept of reasonable care that a party must undertake before entering an agreement the remedy for negligent misrepresentation is contract rescission and possibly damages 3suppose a real estate agent while showing a property to potential buyers states that the roof was recently renovated it turns out that the roof needs significant repairs despite not intending to deceive the agent s negligent statement about the roof s condition played a part in the buyers making an offer on the property if the buyers later discover the true state of the roof they may have grounds to claim damages from the agent for the costs of repairing the roof as the agent was negligent in sharing incorrect information fraudulent misrepresentation is a statement that the defendant made knowing it was false or that the defendant made recklessly to induce the other party to enter a contract the injured party can seek to void the contract and recover damages from the defendant 4imagine a scenario where a seller knowingly advertises a used car as having only 50 000 miles on the odometer however the car actually has 150 000 miles on it and the seller has rolled back the odometer the buyer relies on this false information and would buy the car based on the misrepresented mileage in this case the seller s fraudulent misrepresentation gives the buyer grounds to rescind the contract return the car and potentially seek damages for any losses suffered due to the deception | |
how to prove misrepresentation | in order to recover damages due to misrepresentation there are six legal bars for the plaintiff to overcome the plaintiff must be able to show that all six of these requirements must be met in order for a plaintiff to win a case for misrepresentation a defendant in one of these cases need not disprove all six of these claims misrepresented financial statementscompanies and their financial statement preparers can falsify knowingly or unknowingly their financial performance misrepresentations in financial statements can impact various stakeholders including investors creditors regulators and the broader public here s how each group can be affected auditors have a responsibility to provide an objective assessment of a company s financial position and performance making sure that the information presented is reliable and follows accounting rules to do this auditors conduct detailed audit procedures to examine the financial statements and supporting documentation this includes looking through financial transactions reviewing accounting records and testing the effectiveness of internal controls through these procedures auditors try their best to identify any discrepancies that could indicate potential misrepresentations they focus on both quantitative things like the accuracy of financial figures and qualitative things like the disclosure of significant risks as part of the audit auditors communicate their findings and observations to management an audit committee and potentially to regulatory authorities in the end an auditor strives to make sure no misrepresentation is happening within a company s financial statements example of misrepresentationin 2022 tesla ceo elon musk offered to purchase x platform formerly twitter for 43 billion an offer which the company at first resisted and then accepted a few weeks later and after a substantial fall in the company s share price musk attempted to back out of the deal claiming that x misrepresented the number of human users on the platform according to his termination letter musk alleged that the company knowingly misrepresented the number of live users on its platform and that he had relied on those false representations when he made his takeover offer in response the social media company claimed that musk s allegations were factually inaccurate and that the billionaire was simply trying to back out of the merger that he himself had initiated 6 | |
what is a material misrepresentation | a material misrepresentation is a promise false statement or omission of facts that would cause another party to act differently if the whole truth were known an example of a material misrepresentation is incorrectly stating one s income on a mortgage application or omitting key risk factors on an application for insurance coverage | |
what is misrepresentation in insurance | in insurance a misrepresentation is a lie or concealment of facts that can void an insurance contract if the insurer discovers the misrepresentation for example if a homeowner installs a pool but tells their insurer that they do not have a pool the insurer may be able to void the policy if they discover the misrepresentation | |
what is misrepresentation in real estate | in real estate misrepresentation is a lie or reckless untruth that affects the market value of a home or property a common example of this is misrepresenting the square footage of a property since sales prices are often based on square footage a buyer can often sue for misrepresentation even after a purchase is finalized | |
what are the legal consequences of misrepresentation | the legal consequences of misrepresentation vary based on the type and severity of the misrepresentation the innocent party may have the right to cancel the contract if the misrepresentation is material damages may be awarded to compensate the innocent party for any losses suffered in cases of fraudulent misrepresentation punitive damages may be awarded to punish the party responsible | |
what steps can companies take to prevent misrepresentations | companies can take proactive steps to prevent misrepresentations they can establish and enforce ethical standards that promote honesty integrity and transparency they can provide training and education to employees while also implementing robust internal controls companies can conduct independent reviews to verify the accuracy of the information it is reporting while also conducting due diligence and verifying information before formalizing it or communicating it the bottom linemisrepresentation is a legal term for any type of falsehood or omission of fact that affects the behavior of a contractor or other party contrary to popular belief misrepresentation does not just mean deliberate lies it can also include accidental omissions or reckless statements without certainty of the facts misrepresentation can void a contract and in some cases allow the misled party to seek damages | |
what is a mission statement | a mission statement is used by a company to explain in simple and concise terms its purpose s for being the statement is generally short either a single sentence or a short paragraph | |
how a mission statement works | mission statements serve a dual purpose by helping employees remain focused on the tasks at hand and encouraging them to find innovative ways of moving toward increasing their productivity with the eye to achieving company goals a company s mission statement defines its culture values ethics fundamental goals and agenda furthermore it defines how each of these applies to the company s stakeholders its employees distributors suppliers shareholders and the community at large these entities can use this statement to align their goals with that of the company the statement reveals what the company does how it does it and why it does it prospective investors may also refer to the mission statement to see if the values of the company align with theirs for example an ethical investor against tobacco products would probably not invest in a company whose mission is to be the largest global manufacturer of cigarettes it is not uncommon for large companies to spend many years and millions of dollars to develop and refine their mission statements in some cases mission statements eventually become household phrases mission statements aren t just for small or large companies many successful individuals professionals and investors have taken the time to craft a personal mission statement these personal mission statements often incorporate the financial professional spiritual and relational aspects of life this in turn helps an individual maintain a healthy work life balance that increases their personal achievement in all of these areas drafting a mission statementwhile it may be difficult to narrow down the focus of your company in a single statement here are some tips to help you write a good mission statement after you ve drafted it remember to look it over edit it and have someone else give it a once over after you ve approved it you ll need to find a way to incorporate it wherever you can in addition be mindful to periodically review your mission statement although it s never ideal to constantly pivot your image and change your mission statement your company may outgrow or shift directions resulting in the need of a new statement a company s mission is its identity and its vision is its journey to accomplishing its mission a company should take as long as it needs to craft the right statement to describe its mission displaying a mission statementonce a mission statement is crafted it s up to the company to make it publicly known a mission statement only holds value if it is shared with existing and potential customers vendors donors or employees because a company s mission statement is often pretty short it is easy to incorporate into marketing material a mission statement should always be found somewhere on a company s website in addition it can also be used in marketing documents a company may solicit employees to incorporate adding its mission statement as part of a company wide standard e mail signature block a mission statement is also a perfect elevator pitch sentence that key members of your company should know because it s so brief it is easy to memorize in addition it s a perfect introduction for someone who has never heard of your company or wants to know more whether it s at a networking event social gathering or bus ride to work a mission statement is an easy way to captivate a stranger s interest in your company should they ask what your company does advantages and disadvantages of mission statementscompanies can benefit from having a mission statement first it outlines a company s goals and position in the industry for its customers competitors and other stakeholders it also helps the organization focus and stay on track to make the right decisions about its future furthermore the mission statement helps clarify a company s purpose with a mission statement a company s customers and investors can rest assured that the company is fully committed to achieving its goals and maintaining its values it is also useful to guide and motivate employees keeping them in line with the company s values last a mission statement adds validity to an organization from the outside looking in a mission statement demonstrates that a company has considered the big picture and the major goals it wants to accomplish it demonstrates thoughtful leadership reputability and inspiration to potential investors employees or donors there are drawbacks to having a mission statement mission statements may sometimes be very lofty and far too unrealistic which can distract employees from the company s goals management may become too distracted with high level targets that shorter term necessary steps to get there become neglected even though a mission statement is short and concise it may take a lot of time and money to develop the resources spent on a bad mission statement could be better spent elsewhere creating an opportunity loss the difficulty of crafting such a concise statement is many parties often have ideas and there s not room for many of them after the bulk of the work has been done companies may struggle with wordsmithing or simply rearranging words instead of trying to generate value last by publicly announcing to the world the company s mission some people on the outside or even the inside may disagree with the mission in the examples below some individuals may be skeptical of alternative sources of energy and may be scared away when learning of tesla s mission statement a mission statement doesn t give much opportunity for a rebuttal to clarify or further explain what a company is all about a mission statement is not required though it may be a grant application for a nonprofit or asked for by an interested investor of a company mission statement examplesmission statements vary considerably from company to company the following examples are the mission statements of some of the world s largest companies mission statements vs other statementsa mission statement is often confused or grouped with other types of organizational statements here are some other types of content and how they vary from a mission statement a company s mission statement differs from its vision statement while the mission statement remains unchanged for the most part and represents who the company is or aspires to be for the entirety of its existence the vision statement can change the latter outlines what the company needs to do to remain the way it has presented itself to be in effect a company s mission is its identity and the vision is its journey to accomplishing its mission a company s value statement is also centered around a company s core principles and philosophy however it is more direct in guiding how decisions will be made and what will impact the daily culture of the organization a value statement often includes actionable direction such as taking ownership acting ethically doing what is right or being transparent whereas a mission statement describes the highest level of purpose a vision statement starts to describe how that purpose will be achieved a company s goals or business plan may be publicly disclosed or kept private internal in general a company s goals are often even more specific potentially referring to specific business lines growth percentages geographical regions or new initiatives while a mission statement often does not mention a specific aspect of the business company goals are often measurable relating to departments or products so a company can track progress a company s mission statement should drive the goals that are set a brand is an suite of elements that encompasses a company s identity this includes its marketing materials engagement in community events reviews from current and former employees and its logo presence a company s brand is also shaped by its mission statement though a small component a mission statement helps customers employees and investors form an opinion of a company a slogan is a very brief often memorable phrase that people primarily outside of your company can remember utter a great slogan such as just do it can invoke memories commercials logos brand ambassadors and emotions through a successful ad campaign although a mission statement is brief it is longer and relatively more detailed compared to a slogan a mission statement isn t meant to necessarily be catchy it s meant to be informative and useful for guiding high level decisions alternatively a slogan is a very pointed marketing phrase used to be memorable even if it is less informative | |
what is a mission statement | a mission statement is a brief description of the overarching meaning of the company or nonprofit a mission statement does not explain what a company does or how it does it it attempts to succinctly explain why a company exists and what its purpose is | |
what is an example of a mission statement | microsoft s mission statement is our mission is to empower every person and every organization on the planet to achieve more 6 | |
what is in a good mission statement | a good mission statement is concise it should be limited to one sentence though it shouldn t be too limiting as it should encompass the entire company s purpose a good mission statement also focuses on the long term goal it wishes to deliver to customers | |
how do you write a mission statement | there s no single best way to come up with a mission statement in general the mission statement writing process should start with considering what a business does for the customers employees and general public it s often best to begin by collecting more content than needed then later refining the mission statement into a single sentence one method of brainstorming ideas of a mission statement is to think about personal experiences from the company this could also include soliciting ideas or memories from employees instead of focusing directly on the narrow business element of your company embrace the broader aspect for example microsoft did not craft its mission statement around delivering windows 98 rather it crafted its mission statement around the possibilities it presented through its product | |
what is a mixed economic system | a mixed economic system is one that combines aspects of both capitalism and socialism a mixed economic system accepts private property and permits economic freedom in the use of capital but also allows for governments to interfere in economic activities in order to achieve social aims according to neoclassical theory mixed economies are less efficient than pure free markets however proponents of government intervention argue that the base conditions required for efficiency in free markets such as equal information and rational market participants cannot be achieved in practical application investopedia nez riazunderstanding mixed economic systemsmost modern economies feature elements of multiple different economic systems in mixed economies the public sector works alongside the private sector though they may compete for the same limited resources mixed economic systems do not block the private sector from profit seeking but they do regulate business and may nationalize industries that provide a public good for example the united states is a mixed economy as it leaves ownership of the means of production in mostly private hands but incorporates elements such as subsidies for agriculture regulation on manufacturing and partial or full public ownership of some industries like letter delivery and national defense in fact all known historical and modern economies fall somewhere on the continuum between pure socialism and pure capitalism which represent theoretical constructs 1mixed economy vs free marketsmixed economic systems are not laissez faire systems because the government is involved in planning the use of some resources and can exert control over businesses in the private sector governments may seek to redistribute wealth by taxing the private sector and by using funds from taxes to promote social objectives trade protection subsidies targeted tax credits fiscal stimulus and public private partnerships are common examples of government intervention in mixed economies these unavoidably generate economic distortions but they are instruments aimed to achieve specific goals countries may also intervene in markets to promote targeted industries such as by creating agglomerations or reducing barriers to entry this was common among east asian countries in the 20th century which saw a development strategy known as export led growth today the region has turned into a global manufacturing center some nations have come to specialize in textiles while others are known for machinery and others are hubs for electronic components these sectors rose to prominence after governments protected young companies as they achieved competitive scale and promoted adjacent services such as shipping mixed economy vs socialisma key element of socialism is common or centralized ownership of the means of production 2 proponents of socialism believe that central planning can achieve a greater good for a larger number of people socialists do not trust that the free market outcomes will achieve the efficiency and optimization posited by classical economists so socialists advocate the nationalization of all industries and the expropriation of privately owned capital goods lands and natural resources mixed economies rarely go to this extreme instead they identify only select instances in which intervention could achieve outcomes unlikely to be achieved in free markets such measures can include price controls income redistribution and intense regulation of production and trade this also includes the socialization of specific industries known as public goods that are considered essential and that economists believe the free market might not supply adequately such as public utilities military and police forces and environmental protection unlike pure socialism however mixed economies usually otherwise maintain private ownership and control of the means of production characteristics of a mixed economya mixed economy typically combines the features of a market based economy with a strong public sector while most prices are set by supply and demand the government may intervene in the economy by enforcing price floors or ceilings for certain goods or by directing public funds to certain industries at the expense of others 3the following are common examples of mixed economy policiesmost mixed economies even heavily market oriented ones offer benefits to those living at or near the poverty level in the united states the federal government provides snap benefits medicaid and public housing to low income individuals while many state governments provide their own benefits many countries in western europe have extremely generous social welfare programs as well as government provided health care and strong labor protections while prices in a mixed economy are generally set by the market the government may intervene to prevent the prices of certain commodities from rising or falling below a certain level for example most mixed economies have minimum wage laws to prevent exploitation of the workforce and they may use subsidies to support farmers or other key industries while most business activity is guided by the free market governments may use regulations to protect the public from dangerous products pollution or monopolistic business practices many mixed economies have anti trust laws to ensure that the marketplace remains competitive advantages and disadvantages of a mixed economya mixed economy combines several of the desirable qualities of both capitalist and socialist economic systems the capitalist principles of free enterprise market based prices and private property create incentives for innovation and efficiency while elements of a welfare state and price controls guarantee a minimum standard of living however social welfare programs can create a high tax burden and distort the market price controls such as minimum wage laws can have the unintended effects of reducing employment according to the philips curve other interventions such as housing guarantees or free healthcare can sometimes result in shortages because pricing does not reflect availability a mixed economy also allows the government to set its strategic priorities through selective interventions in the economy for example the united states gives favorable tax treatments to certain agricultural and manufacturing industries because they are considered crucial for the country s long term economic health mixed economies can also result in less competition or regulatory capture as private interests lobby for favorable regulations and tax treatment this can have the perverse effect of regulations being determined by industries rather than policymakers increased efficiency and productivity due to market based incentives welfare protections for the poorest members of the population allows the government to set strategic priorities through economic policy | |
does not avoid the market distorting effects of government intervention | may succumb to regulatory capture as business interests campaign for favorable regulations higher taxes to pay for welfare state policies history and criticism of the mixed economythe term mixed economy gained prominence in the united kingdom after world war ii even though many of the policies associated with it at the time were first proposed in the 1930s many of the supporters were associated with the british labour party critics argued that there could be no middle ground between economic planning and a market economy and many even today question its validity when they believe it to be a combination of socialism and capitalism those who believe the two concepts don t belong together say either market logic or economic planning must be prevalent in an economy classical and marxist theorists say that either the law of value or the accumulation of capital is what drives the economy or that non monetary forms of valuation i e transactions without cash are what ultimately propel the economy these theorists believe that western economies are still primarily based on capitalism because of the continued cycle of accumulation of capital austrian economists starting with ludwig von mises have argued that a mixed economy is not sustainable because the unintended consequences of government intervention into the economy such as the shortages that routinely result from price controls will consistently lead to further calls for ever increasing intervention to offset their effects 4 this suggests that the mixed economy is inherently unstable and will always tend toward a more socialistic state over time beginning in the mid 20th century economists of the public choice school have described how the interaction of government policymakers economic interest groups and markets can guide policy in a mixed economy away from the public interest economic policy in the mixed economy unavoidably diverts the flow of economic activity trade and income away from some individuals firms industries and regions and toward others 5not only can this create harmful distortions in the economy by itself but it always creates winners and losers this sets up powerful incentives for interested parties to take some resources away from productive activities to use instead for the purpose of lobbying or otherwise seeking to influence economic policy in their own favor this non productive activity is known as rent seeking real world examplestechnically almost every country can be considered a mixed economy since it is difficult for a country to sustain economic activity without some degree of government intervention or free market activity even north korea allows a limited number of private markets but the best examples of mixed economies are those countries where the government takes a significant role in directing the course of the market economy many countries in western europe are considered mixed economies because the government offers generous welfare programs and tight regulations on business activity the united states for example has many social programs to benefit the poor as well as several government owned enterprises conversely many socialist oriented countries can be considered mixed economies because of their large private sectors both china and vietnam have successfully privatized many of their state owned enterprises while retaining a leading role for the government in economic affairs | |
what are the characteristics of a mixed economy | the characteristics of a mixed economy include allowing supply and demand to determine fair prices the protection of private property innovation being promoted standards of employment the limitation of government in business yet allowing the government to provide overall welfare and market facilitation by the self interest of the players involved | |
what are the disadvantages of a mixed economy | mixed economies stress profit above all else including the well being of citizens there tends to be mismanagement at various levels it creates economic inequality throughout the population as wealth is not distributed evenly inefficiency occurs due to government involvement and the working class can be exploited |
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