Krystle Green asked:


Superheroes make great starring characters for action movies. Lately, movie theaters have been bombarded with movies based on comics. This is a good thing because the action scenes are indescribable, they keep us on the edge of our seats, and we fall in love with the characters that come alive off the pages and onto the movie screen. Another comic movie in the making, directed by Martin Campbell, is based on the Green Lantern series by DC Comics. It will be viewable in theatres during the summer of 2011. 

The world of comic books readers and movie enthusiasts are pleased to know that actor Ryan Reynolds will be the star of the new Green Lantern movie. The role was up for grabs and three actors were trying to land it. Ryan Reynolds beat out Bradley Cooper and Justin Timberlake for the starring role. He is no stranger to comic movies because he recently had a role in Wolverine: X-Men Origins. You may remember he played the Deadpool character. He also starred in comedies such as Harold and Kumar Go to White Castle, Van Wilder, and Waiting. He captured our hearts in the romantic comedy Definitely, Maybe as a single father who tells his daughter about his life before marriage. Besides starring in comedies he has been in action films Blade: Trinity and Smokin’ Aces. He has been nominated for two awards and has won two awards. One award was for The Amityville Horror, and the other was awarded to him as the next generation male actor of 2003.

In Ryan Reynold’s new role as comic book superhero, he’ll be playing pilot Hal Jordan who becomes a member of the Green Lanterns after an alien death makes him the successor of the lantern power. He is given the power ring which is considered one of the most powerful weapons in the world. The power ring can control physical elements in the world, and its power is based on the will power of the person wearing it. The stronger the will power, the stronger the control from the ring will be. Hal Jordan is one of several Green Lantern characters and appeared in volumes two, three, and four of the comic book series. The Green Lantern characters are a universal police force. Hal Jordan, like his father, is a test pilot. He was chosen to be a part of the Green Lantern police force because of his honesty and lack of fear for things. The movie will show how he became a part of the Green Lanterns and the action that followed his life after receiving the power ring.   



Caffeinated Content

lamara qoqiauri asked:


Important appropriateness of  development of modern economy is its cycled  character. Puriny every structural crisis of the world economy new opportunities are formed. Capital of the countries, which were leaders during last cycle, is being devaluated. Qualification  of lab our forces in field using old technologies are being ruined, while the countries, which managed to create innovational potential proved to be in the center of attracting capital which is independent from the old production. Consequently, the countries that implemented  scientific-technical and industrial capital investment policy in prospective fields will be given a competitive advantage. The realization of  this policy in the phase  of structural crisis gives its authors the opportunity to achieve  economic growth on the  basis of competitive advantage.

 

Basic scientific and radical innovations are recognized as the main means of overcoming structural crisis, that are implement thought acquiring new achievements and rising the effectiveness of traditional development .

 

In order to move to the stable stage of economic develop it’s important to increase innovational-investment act vitas and to involve new technological directions and basic technologies at trajectory  of firm economic development. The economic policy that is oriented at encouraging  investment, in innovations provide modernization of economy, also gives rise to its competitiveness.

 

Innovative way of development in investment policy. Thus, the main importance is given to the innovative type of development, that implies the growth of government role in exercising investment policy. Highly development countries. Take the responsibility of financing fields like fundamental  science and high-risk research, as well as the development of scientific research infrastructure. Spreading new ideas and educating population. The implementation of this functions takes place against the background of high-scale investments. that creates favorable conditions  for production growth on the basis of scientific innovations.

 

Currently, the government tries to develop institutions that will support vestment in new  technologies, stimulate innovative activities, encourage progressive technological changes, that unities financial tab our and informational recourses.

 

Currently government  tries to create development institutions , which will support investments in new technologies, stimulate innovative activities, encourage progressive technological changes, that unites financial, lab our and informational resources. The state may avoid the responsibility of developing   the production activities , where special markets and competitive relations are formed. At the same time it must encourage new, high-risk directions of investment activities, that pave the way to creating production on the   basis introducing scientific and technical achievements.

 

For example the wave of economic regulations that spread from developing countries in the late 8 th lost century covered the traditional branches of economy but it had no connection with high-technological sector, conversely the importance of direct state support institutions for innovation activities were risen. At the same time, the importance of working out state strategy for scientist technical and social economic development grows. The state aims at creating enterprises , that will manage to gain com putative advantage over the companies of inner and foreign markets. They  must consentrate their resourses on prospective  fields of production.

 

The direct instruments of state influence are oriented at supporting  private initiatives and innovative enterprises that will stimulate investment activities in certain fields and production initiatives.

 

The necessity of financing science and its current condition:

 

Active investment process, especially in scientific and technological fields, innovative and scientific-technical activities lays in the foundation for economic growth. Nowadays the decline in scientific technical potential is caused by  the fact that there is no more unity between scientific researches and their usage  former. scientific staff has been dismantled  and number of intellectuals have left the country.

 

Consequently, the country becomes more dependent on foreign trader.

 

So, in order to create favorable conditions for economic growth capital renewal is essential, but it’s very complicated, because of  the decrease in state financing and absence of ordering production, Science and education have no inner resources for development.

 

During the last few years there has been significant  reduction of scientific and educational research expenditures. As a result, the share of expenditures in GWP spent on science in 1999 amounted to 0,97%, which is twice less than in 1990. In 2006, the expenses spent on educational field amounted to only 1,5% of the GWP, which is the lowest index among the transitional countries.

 

Significant reduction of company’s demand on innovations resulted in increase of financing Scientific field from the state budget. Budgetary expenditures on scientific-research and construction work have been absolutely reduced and they are tend to decline against the GWP as veil as the budgetary share of the expenses. The degradation of Scientific potential is proved by sharp decline in expenditures used in research and construction work pond it resulted in dropping behind highly developed countries. Expenditures on Scientific research in the USA (1998) amounted to 794% per person, in Japan – 715. in Germany 511 and 611in Russia, whilst in Georgia it only amounted to 2,8%.

 

Due to the sharp decline in financing the Scientific field, renovation of scientific facilities detoriorated. The salaries in Scientific field were decreased, The coefficient of renewing main foundations in Scientific technical field significantly dicreased. According to the latest statistical data, 311 ml. Gel was invested in renewing main capital, that amounted to 60% of all the capital invested, in Georgia Instead of renewing Countrys technical market, most of the capital was invested  in activities connected to local market. 29% of this capital was invested in real estate and construction worth.24% in transportation and communications The problem of heeping, supporting and developing fundamental and research centers of science aggravated. During the Soviet era 20% of production was created in the USSR, but now Georgia’s shave in the  World scientific production in only 0,3%.Implementation of innovations require a wide range of activities, from doing research to producing new output. Priorities of innobative activities change at every stage of economic development.

 

In order to achieve economic growth in current conditions in the country. it is necessary to develop scientific innovations that create new and don’t take into consideration current directions of technological development This lays the foundation for putting so-called innobative multiplication into motion. which is connected to investments and results in production increase. that creates improved scientific innovations. They exchange old technologies. Introduction of this innovations is exercised by new investments, that encourage the further growth in production. Thus, innovative multiplication makes good influence on production growth and takes the economy out of depression and leads it to a long-term development stage.

 

Distribution of investments on Scientific – technical works.

 

It’s relatively typical for developed countries to distribute private and state capital investments even on scientific and technical works. For example, The USA’s private investment share in innovative market amounts to 50%. Similarly, according to the figures of state Expertise, 10% of innovations is given a strategically important status and accordingly they are financed from government sources. Japan finances 33% of all scientific research, 73% of scientific-research and constructive works is implemented on the basis of self – financing in the USA, in Germany this index amounts to 70%, in Japan and UK 62%, France and Italy 57%, So the only possible mechanism for promoting social and economic development is it’s technical modernization and move to innovative type of development.

 

Technical modernization of equipments and their reconstruction requires attracting important investments in innovative field. Here it is important to activate state policy on scientific and technical branches and to work out important directions for scientific-industrial development of economy. AT the same time, the state, that takes important part on technical modernization of the economic sector must take the responsibility of financing fundamental sector of science and high-risk researches, restore activity of  science financing from the state budget and develop scientific infrastructure. In order to define the proportions of sharing investments its essential to focus on cyclical development of economy and, on Intensive types of re-production, that is reflected on the statistical law of dividing expenditures, for example, spending on fundamental research, applied work, capital investment amounts to 1:3:9:27.

 

Statistical law of resource division in accordance with scientific-technical potential is used at the production development stage where scientific and technical progress is achieved by practical laws, which help to solve the problems of production stabilization and development.

 

The reason of decrease in scientific potential the decrease in scientific potential in post communist countries is  caused by lack of restructuring  scientific organizations privatization of research centers has   not brought any desirable results. The reason for this is that enterprises don’t order them to do research. Simultaneously,  scientific staff has got older, the last tend years science suffered from loosing its intellectual potential. In this case, it will  be reasonable to merge different scientific organizations and some research institutions must be transferred to enterprises to manage , in this way  scientific technical potential will become much  stronger.

 

The sources and ways of funding science restructuring research institutions and dividing it into firms with developed financial, economic marketing and commercial infrastructures will increase the practical use of research work results. Contract based applied science makes the realization of  scientific technical projects they will be implemented at the expense of the state budget, non state expenses attracted by Ventura, sharing  other financial mechanisms. The question of mobilizing these sources  can be solved on the basis of aimed, scientific and technical programs on regional and federal levels in accordance with the market demand.

 

They can be implemented in the    form of portfolio investments using stock marked tools. Providing  the state with grants and sale guarding institutions by investment agency and trust management has practical  us eye. For forming non budgetary recourses for financial    innovations it is necessary  to use amortization funds on renovation in the part, where production expenses, especially those. spent on research and innovations. are taken into consideration as well as the expenses of wearing out financial expenses , that is included  in the production cost and is reflected on the production prize. In addition to that revenues that  came from selling scientific-technical production, or having the right to own intellectual and industrial units as well as the revenues from scientific and technical units and selling the right to own them must  be considered, too.

 

The role of innovation foundations .

 

Practical usage of abovementioned sources is implemented according to the special rules and amounting , on the basis of used methods. The expenses received from these sources are transferred  to a separate  sub account `innovation foundation”  Greeting. State funds for innovations which is aimed at realizing prospective directions  of science  and technical development enables to  work out modern competitive production and organize its production. besides using state budgets expenses,   other  market mechanisms for attracting investments are used as well .

 

Nowadays mechanism for investing in innovations are used only in case banking structure , which mobilizes recourses and regulates this use in science is taken  into consideration banking  structures directed at investments, accumulate vast sums through creating consortiums and other financial and investment institutions, in order to attract own funds for innovative programs of investment. On condition of Budgetary deficit banks au the phases of innovative   cycle and provide insurance service. Participation of banks in the field creates extra   stimulus for different firms. No other structure manages and controls innovative recourses as the banks.

 

Effective use of stock market instruments provide opportunities  to attract investments in innovative field. Its main aim is to divide investment recourses among fields and provide inner and foreign  investment flows in more prospective sectors of national economy. Transitional economy doesn’t provide the conditions for populations to transform their savings  into innovative investments and provide economic growth. Monetary potential saved in the country is practically unused. According the same data the amount of savings is much more higher than in the USA and west European countries. In order to invest funds existing in the country in essential sectors of economy it is necessary to make the forms of collective investment perfect, it includes. investment share  funds, credit contacts joint stack and commercial funds . After that government should control their activity and they must draw their . attention to new forms of scientific-innovative and investment forms.

 

Main stages of innovative development.

 

Innovative development of economy as any process must be oriented at its stages, levels and phases. First of all the technological basis of the field  whose production has more demand on the market must be renovated. At the  same time the market is expanding  with importing goods, introducing innovations that is oriented at modernizing  recourse-saving technologies and improving consuming qualities. So at this stage our main aim is to create infrastructural and institutional grounds for firming scientific technological  potential. than we have to organize the enterprises that produce and sell new technological range-that enables the country  to restore its positions on the world market of scientific technologies.  Simultaneously the role of the country in production and investment activities that is directed at commercializing innovations must be strengthened. Little  by little of will move from supporting  quantity aspects of scientific technical field to quality aspects and to new  forms of engineering, that use  modern informational technologies.

 

Main directions of state investment innovative policy of the state in future main directions of  state innovative investment policy are: 1. choosing national priorities of innovative field development for realizing innovative projects, choosing the projects of technologies that influence production growth and rise in country’s  competitiveness. 2. Coordination of activities of  legislative and  executive bodies to work out complex approach to solve this question concerning country’s innovative development, effective functioning of innovative systems and implementation of state’s innovative investment strategy.

 

3. maintaining and developing scientific and industrial-technological potential of fundamental science, working out employee’s training system for maintaining and developing modern scientific and technological level and developing science to a higher level.

 

4. Providing favorable economic and financial conditions for activating innovative works, developing ventral, engineering and investment-industrial activities and for rising competitiveness creating  favorable conditions for investing in innovation field enables  modernization of scientific and technical basis of national industry as well as rising the competitions of the country.

 

New directions of innovative activities and priorities of innovation policy consists of three stages. At on initial stage the main goals are reproduction of the technical basis of the field whose production has stable demand on the market than market expands by producing the goods that replace the imported ones  innovations  are oriented  at modernizing the enterprises, that  use the recourse-saving technologies and improve consuming qualities. So at first it’s necessary to create economic infrastructural and institutional basis for moving to investment stages of state development. At the second  stage the enterprises  that realize the technological order are created. After that the production is introduced on inner and foreign markets that  makes production competitive in the sector where national product were not presented before, and it creates new scopes for demand, where national products dominates to must the demands. At this stage country’s activities are directed at attracting high-scale private investments, creating necessary infrastructure for investment-development their support and perfection.

 

At the third stage the following important questions must be solved. Country’s support for innovative infrastructure, creating conditions for demand on national products, informational support to enterprises making stable contact with science and industry.

 

New ways of implementing scientific-innovative  and engineering activities.

 

A State focuses on new forms of scientific innovation and engineering, that use modern informational technologies and little by little they move from quantity aspects to quality ones, that are implemented in the following way:

 

1. Maintaining and developing scientific and industrial potential and using them in achieving modern technological level.

 

2 Choosing rational strategy and priorities for developing innovative field. Implementation  of critical technology and innovative projects in the fields that  influence the effectivness of production and their competitiveness.

 

3. Creating favorable economic and financial condition for activating innovative works, legal industry and competitiveness.    

 

-           To implement this measures following practical activities must be exercised:

 

The process of providing information must be radically improved and commercial structures must be involved in developing scientific educational and innovative activities.

 

- reconstructing the part of research and project institutions and closing the places working ineffectively.

 

- Creating the system at venture investment. state support of venture business in scientific technical field is necessary until the industry get interested in them.

 

- Developing the system of noon. state innovative risk and private  supplly, creating insurance groups within the framework of financial-industrial groups, that will undertake high-risk insurance, that is linked with creating innovative production. insurance companies, together will share the risk.

 

- Using modern methods for prognosing engineering and scientific production marketing.

 

-  Developing small innovative business by creating favorable conditions and infrastructure for setting up small enterprises and their functioning.

 

- Creating suitable legislation, that will regulate relations in intellectual  property field, work out normative acts that are directed at exercising state policy. It foresees involving the results of scientific-technical results in industrial circulation, that is implemented at the expence of the state budget.

 

- making typical state contracts in order to balance legal interests of the participants in the process from the point of using scientific-technical results.

 

Thus, following the innovative way of development, must not be the only factor white  working out investment policy. In connection to that, the role of country is defined by creating the mechanisms, which forms national innovative system and develops innovative production.

 

Creating favorable conditions for developing innovations provides modernization of technological basis of the economy and grows the competitive of national production.

 

- Preparing typical state contract for balancing legal interests of those who participate in the process of using the results of scientific-technical work.

 

So the main factor while working out investment policy is to move economy to the innovative way of development. In this regard a country’s main role is to create the mechanisms, that will provide the formation of national innovative system and development of innovative business, that will make the modernization of economy’s technological market of the economy possible and will give risk to competitiveness of national production.

 

The formation of adequate investment activity model in the market system of economy provides replacement of investment recourse division with new forms of investments. For its part it has to work out the investment policy, that will accord with changed economic conditions.

 

Official concept of reforming Georgia’s market economy is based on simple monitory principles. Their realization was expressed in size minimizing the country’s role, robotizing foreign economic activities, privatizing state property and forming market structures.

 

The principles, boundaries and forms of state participation in investment activity

 

Analysis of Georgian-economic conditions shows that solving important problems in country’s investment development is impossible only on the basis of self regulation, that is distinguished with its low quality. A state needs to strengthen its role in the field of investments, correct economic policy.  At the same time state participation boundaries in the investment process must be defined by taking the way of economic development, that is characteristic to the period of moving to market economy, into consideration conditions of strengthening the state role in the investment process.

 

Analyzing the possibilities of strengthening state role in investment process, we must take into consideration the fait, that counting’s participation in the process has same boundaries, these boundaries are defined by real financial possibilities, on  the other hand the country must encourage the process of attracting investment rather than blocking them. State participation in investment process is not the same as turning economy to administration process. It implies the increase of a long-term policy of the state, effectiveness of particular activities in the conditions of encouraging investments.

 

The topic of state participation pineapples in the investment activities is closely linked with limiting necessary financial potential for investment promotion Approximate calculations show that in order to restore the amount of investment to the pre-reform level, foreign investment growth is possible. According to 2002-2012state program in the next five years 10 $ are expected.

 

As we have at ready mentioned the role of the country as the investor in the market economy is maintained for the fields that are vital and important. More importance is given to regulating the investment process in the way, that creates favorable regime for private investors activities.

 

The conditions existing in Georgian economic investment strategy is oriented at moving from stable investments to creating necessary investment environment for private investors. These two parts that are essential for the state investment policy must support prosperous fields of production and the policy must have systematic character. 

 

Defining strategic priorities of investments.

 

 On defining strategic priorities we must take into consideration competitive advantage exiting on the world market, that is reflected on high-technologies. The brunches which maintain potential advantages are: energy sector, turism, agricultural machines and technologies, food etc .

 

Investing in innovative production will encourage new directions for investment flow, rising production level and encouraging economic growth. This approach is well known in the world products. Our priority must be effective programs that meet inner needs in economy, in this regard we  have to support national enterprises, and the development of vital brunches of economy.

 

At the same time it must be taken into account that in the world integrated economy, development of investment cannot be stable and increasing source of profit in producing rival products only in the inner market.

 

Significant  condition of effectiveness in the state investment policy is to work out the conception of structural alteration in industrial sector. It’s especially concerns about such prioritative approaches according which must be defined the reform strategy and mechanism of industries from different groups, supporting forms and methods from the state, organization models of industrial structures in accordance with real, amongst them institutional conditions in the world economy.

 

The basis of economic growth and quick development can be large corporations, that have scientific – technical potentials in mobilizing resources and effective  integration possibilities in the world industrial unions. Small business industries, that have really important meaning for the function of market economy, nowadays are singled out with extremely low technical level and lack of investment resources, that make it necessary  to quest  their place in industrial chains of the large structures. The formation of stable and effectively developing, diversificational, corporative unions and financial-industrial groups demand state supporting reinforcement of corporative circle from the state, amongst  them even by means of participation of corporations in the capital. Development of corporative forms will help the realization of long term industrial programs, and create conditions for the stable economic growth.

 

Stirring to activity of stake investment politics. At a modern stage, stirring to activity of stake investment about the stable economic growth in the basic condition of Georgian economy. Essential approaches of stake investment politics are: the reinforcement of supporting in prroritative tendencies of economic development formation of justifiable and economic conditions of stimulating the interest of investments in the real sector of economy and the agreement between central and regional investment politics.

 

State investments and supporting in prioritative tendencies of economic development. The realization of up-to-date tasks of economic development demands more active state backing of investment field. Simultaneously, the importance of state investment must be growing up not as mush from the standpoint of size of centralized sources, but from the positions of state guarantees, insurance and orient list of private investors.

 

The problems of investment budgetary financing. Budgetary financing of investment activities has still been happening on the basis of these approaches that essentially limit the state influence on the course market alterations and structural changings in economy.

 

Herewith, these shortcomings are not as mush conditioned by restricted possibilities of budgetary system, as by complicated and wrong strategies of sharing centralized investments and the lack of effective control of their usage.

 

Failures in the state investment politics make it necessary to solve this problem, as afterwards not having orientation or having defective one becoming the problem investors. Analysis confirms the existence of distinct dependence between state priorities and investment motivations of private investors. that must surely be taken into account while working out on perspective tendencies of investment politics. Otherwise  it will be impossible to make ground for stake investment politics and for the agreement of investors’ interests of different levels. Reserved dimensions will again have more passive character and will not guarantee planned results. It must also be mentioned that insufficient or unsystematic backing of separate manufacturers or regions, falls down stimuli of accumulation and afterwards self-financing process and it prevents the formation of business executives market behavior.

 

While analyzing the problem about the possibilities of manufacturers’ investment support it is impossible not to take into consideration the extreme restriction of budget/ At the same time, modern conditions, the increase of levels in the realization clearness and confirmation of investment politics and consideration of budget planning reality are not less important.

 

In Georgian economy. where unreliable forms of calculation dominate. it is difficult to male real prognoses about the mass index of money. Budgetary politic is being worked out in the conditions of complicated factors, that aggravates the difficulty of real budget formation and fulfillment of the received one.

 

State investments, as in the realization of economic growth of prioritative factor; usage of international experience will not be perspective without mentioning up-to-date conditions of Georgian state finances and the inevitability of budget  system alternation. e.g. one of the successful example of economic reforms is the experience of Germany. Its budget system is well formed and it is manifested clearly in the distinction of current and investment expenses in the control of pure usage of budget sources in establishment and protection of maximum size of budget deficit financing at the expense of credits with the sum of for seen investments expenses. This method is called “golden rule” and is established the 115th article of the basic law of Germany.

 

In Georgian economy, as it is clear from the results of reforms, the compensation of the growth of state non-productive expenses was not happening, correspondingly with the growth of budget investment expenses. On the contrary, it was one of the factors, that conditioned the reduction of state centralized investments and weakening of state investment function. In accordance with, the usage of state investments as the factor of economic growth, requires essential changing’s in the organizations of budget politic and budget system.

 

While working on the budget, it is necessary to define the prioritative tendencies and use the forming principle of the normative that define the levels of budget, according to the singled out tendencies; division of current and investment budget on the normative basis, denial the possibility of exceeding expenses over incomes while planning the budget; strict definition of sources, how to cover the investment budget deficits. It is also necessary of budget on the usage of sources in control realization technology, in order to reinforce the frscal role of budget fulfillment.

 

An  important problem, connected to the usage of state investments is their low effectiveness compared with the private ones. While sharing the state Financial resources, used tendencies do not help to increase the effectiveness of investment and restructure national economy.

 

In the organization of investment process, lack of systematic ground and insufficient quality of budget planning caused permanent  failures in financing the state investment programmers.

 

This fact approves  that, it is necessary to reinforce the role of selective approach, gather state investments towards the strictly defined prioritative approaches, keep strict control and select competitive projecting during state investment.

 

Selecting mechanism of investment projects on the basis of competition/ In market economy, where basic criterion of investment is the effectiveness of investment, it is impossible to use the old technologies of sharing unpaidly, among enterprises in centralized capital investments, which don’t stimulate industries to improve their effectiveness, as direct state investments are less effective compared with the private ones. Thus, the most acceptable approach is the state supporting to private investments.

 

State supporting to private investments is realized in these investment  projects by means of the partial participation of the state, which have passed the competitive casting. The goal of centralized investment resources on the competitive basis is the reinforcement of investment assets, mobilization of private national and foreign investor’s capital towards the prioritative approach in economic development, and the growth of effectiveness in all forms of property such as commercial, budgetary and national-economic investments.

 

A new rule of financing investment projects in the financial ensuring of investment competent project, gives the right to investors to choose the participation forms. These forms can be as follows:

 

State investment revocable two year-term credit; its payment percent for the usage, compiles ¼ of central banks refunding rate;

 

to strengthen the port of these shares of an oncoming enterprise in the state property, that is sold in the market from the income of investment project during two years and the income obtained in this way goes to the state budget.

 

While taking decision about giving funds from central budget, a leading criterion is to insure the setting of object (industrial powers) into action in the given term, in the conditions of decreasing funds, attracted from the state budget and to increase the effectiveness of the usage of centralized resources.

 

The obligatory conditions, to present investment projects for the competition are:

 

In the total amount of money, spent on project realization, the share of centralized investment resources must not be exceeded more than 20%, it must be ensured at the expense of private investor’s own, attracted and borrowed funds.

 

In total amount of common expenses, investor’s own share mustn’t be less than 20%.

 

In the field of investors’ supporting, new approaches such as connection to the certification of investment projects, giving state guarantees, creating the budget for development are used.

 

Certification of investment projects, defines the possibility of increasing state supporting share up to 50%, while such analogies are not producing industrial products for exportation about 30% – for importation, with less price.

 

In the conditions of budget funds restriction, many investors consider the state guarantees of certified projects, as the most desirable form of state supporting. Guarantees secure about refunding not the total amount of money of risk, but part of it, in case of failure the effective investment project realization, due to the reasons that are not in investor’s compensation; On its side, investor must present counter-guarantees, amongst-mortgage.

 

Development budget can be formed as the special instrument, that collects investment resources of state budget in order to finance investment projects and attract the funds of private investors.

 

Development budget resources can be used for partial financing of investment projects, at the initial – competitive, valuable and refundable stages, also the borrowed funds for giving state guarantees on the competitive basis. (When upper limit of guarantees compiles 40% of borrowed funds).

 

In the competition of procuring the funds for development budget, such investment projects should be taken, that satisfy the following conditions:

 

Correspondence of development budget to the goals;

 

Security of positive meanings of pure discounting income;

 

In the total amount of money for project realization, investor’s own share mustn’t be less than 20%, but for large projects (more than 50 million $ – less than 30%.)

 

In the countries of developed economy, as a rule, examination of investment projects is made by experts, invited by investors themselves or by the participant financial institutes of project financing.

 

Selective, restricted supporting of prioritative approaches in industrial development by governments and the competitive selection of effective projects gives distinct results. Foreign experience proves that, such measures, as a rule is an efficacious stimulus of investment attraction and helps to realize projects.

 

Governance of state property in the state economic sector.

 

Governance of state property, as the factor of investment effectiveness in the state economic sector. Activation of the state role in the investment field, implies the development of state governance, reaching quantitatively higher level, restructurization of state sector and development for investment providence.

 

In must be said that, in the countries even under developed market economy, the governance of state sector is fulfilled under strict state governance control, from the interests of national economic development. State sector fulfillers the supporting function only for vitally important and unprofitable industries, but also stimulates local industries.

 

State sector, must distinctly occupy the leading positions in achieving priorities of economic development and form the potential of economic growth. Simultaneously, investment projects of state industries must be drawn up according to the demands of competition and effectiveness. It is essential that, invested funds to be used purposefully and the movement of financial flows be controlled strictly by the state.

 

Herewith, while realizing state activities in the real field (amongst in the field of investments), stimulation in  the activities of analogical faces in  non-state sector and not their restriction must surely be taken into account, as enterprises under  the state support are stable on the one hand, but less effective on the other side.

 

Activation of the state investment role must not be manifested only in effective investment projects of science-capacious industries, high technologies and vitally important fuelds by direct participation. More important constituent part of investment supporting of society in the conditions of market relation development is the encouragement of economic subjects’ investment activities and it must be oriented on progressive structural alteration. This implies the working out of optimum methods of economic regulation, development of accumulation mechanisms and active assistance to turn them into industrial investments.

 

Formation of institutional-legal and economic surroundings for the stimulation of investments in the real sector of economy.

 

Greating the available conditions for increasing investment actives by the state, requires purposeful influence on reproductive processes at macro and micro-economic levels. This. most important sphere, where the activation of the state investment role must be manifested effectively and in a new manner, at a new stage of economic reforms is – monetary-credit field.

 

Monetary-credit methods for investment stimulating. Insuring the growth of stable investments, first of all implies the augmentation of economic monetarism, era diction of money disproportions, reduction of interest rate, renewal of taxation system, depolarization of national currency and its role augmentation.

 

The increase of economic monetarism is possible by means of restriction of monetary-credit emission. While defining the level of danger of its inflation results, it must be mentioned, that inflation can also be caused by the other factors, besides emission. Thus, struggle against it, cannot be defined only at the basis of emission restriction. First of al it is necessary to provide the functioning of manufacture solidly. The growth of monetarism level in the real sector of Georgian economy is the most indispensable condition, that on its  side is the leading, deflationary factor.

 

Essential condition to protect against  the inflated results of monetary-credit emission is to create and put in motion such mechanisms, that change macroeconomic conditions and direct money-flows for supporting manufacture. During the process of using such approach, the size of emission defines the objective demand of industrial sector of economy, expert the funds moved to financial markets.

 

While defining the parameters of purposeful growth of money, calculation of the structure of money delivery is vitally important. Different channels of money emission have heterogeneous sensibility towards the inflation.  Therefore, expansion of money delivery is possible by payment of promissory notes of non financial industries, by means of banks refinancing and under the purposeful direction of emitted sources to finance the industrial investments. Less inflation channel of emission  is financing industrial investments by the state institutes of development.

 

Basic instrument for the regulation of money flows, is purposefully the state influence on the dynamic of interest rates. e.g Project supporting of the most importantly acknowledged industries for the purpose of investment activation is possible with preferential rates and by credits. Movement of preferential credits, this time must be realized by state banks system of development and the strict control establishment must expel the usage of funds aimlessly and financial speculations.

 

Experience of the countries under market economy shows that, regulation of interest rates is generally effective method to reinforce business activity in the period of crisis, when disbalance of economic systems situation is deepening. After achieving balanced progress in economic balance and financial sectors, generally the necessity of state interference in economy is lessening and accordingly the role of state influence on the dynamics of interest rates, formed on money markets is also decreasing.

 

The usage of state regulation is distinctly cyclic. In the conditions of sharp structural disproportions, when the working of market mechanism can’t provide the keeping, on the one hand, development  of surplus production and devaluation of main capital off, but  on the other hand augmentation of investment activity, the role of state influence on economy, amongst in the field of purposeful control on money flow is expanding, but while moving to the stable growth of economy-decreasing  . It is proved  by the practical analysis about getting over the structural depressants  (post war) in Western European countries and in the USA, and by the restoration of economy in France and Germany.

 

State regulation of interest rates was applied in the countries, under developed market economy (post war-in Japan, during along period –in France and in the USA during the period of so called `Roosevelt’s new policy, as well as the range of those developing countries , that showed the solid high tempers of economic growth (India, China, South – Eastern Asian countries etc). Important scales of accumulation here was reached for the purpose of national manufacture development, as a result of active influence on interest rates ( on its side, accumulation made it possible to hasten the speeds of economic development) also, for this purpose, direct and indirect methods for the purposeful regulation of money flow and inner accumulations convert into investment were used, namely for the formation of development state banks, loan-saving association and other  specialized credit institutes, through founding district  normative of credit politics for non-state banks and rates of preferential taxation.

 

For example, in Japan, investment financing and production growth conditions were formed through the state control strengthening on using the population savings and interest rates, which were gathered in postal-saving institutions and banks, afterwards their remittance to the state institutes, long-term crediting banks and truste savings banks took place.

 

Savings transt formation mechanism into investments in the USA was based on the wide development of loan-savings associations, that attracted the savings of private sector for giving purposeful credits to the range of housing construction and industrial branches.

 

In many developing countries, stable growth of economy was conditioned by localization of the greater share of money flow in the state banks, that locate mobilized savings in industrial investments and crediting resources, in accordance with the installed priorities of social-economic development.

 

Improving the structure  of mass of money is also connected to the cutting down  the share of cash, that is in circulation, for what it is necessary to set up strict  restrictions about the cash payment in all the field of economy, to continue calculation through computers and widen barren forms of  payment circulation. Taking these measures will expense the business economic field of banking sector and will be propitious for investment potential growth of the banks.

 

One of the basic task of payment system, at modern stage is its complete renewal, restriction of barter transaction, driving a great part of taxation means out of circulation, as they don’t  play a part of complete recourse in the formation of saving potential. Main ways to solve this problem are following: realization of inter imputation for financing fixed and circulating capitals, reduction the price of credit resources and security of plural debts.

 

For increasing the regulation effectiveness of money circulation and expel the activation possibilities of such emissive mechanisms, which are not accompanied with the expansion of goods delivery, it is necessary to strengthen the control and currency regulation.

 

Formation of effective infrastructure of financial market.

 

A) The influence on the investments activity of banks.

 

Looking through the previous system of regulation (in accordance with the selective priorities of economic politics) requires changings of the forms and methods in the banking sector and restructurization of banking system in economy, by meant realization of investment functions of the banks. Restructurized banking system must comply the requirements of armful investing  through high trustworthiness and guidance. It must also ensure the appropriate level of credit delivery resources by means of available interest rates for manufacturing fields.

 

In the growth of investment activity of banking system, it is essentially important to create the system of investment encouragement and insurance. State guarantees existence is one of the condition just for this. Cutting down the normatives of reserve assignments and preferential taxation are also belonged to these activities.

 

B) Creation of the system of deposit guarantees.

 

World experience shows that, the establishment of deposit guarantees is the inevitable component for vast mobilization of the population savings. It potentially increases separate institutes as well as the liquidity of the whole system and is the reliable means against taking deposits unexpectedly and frequently out of the banks.

 

One of the first systems for deposit insurance was formed in the USA in 1933-34, as a result of additional stabilizers investigation in marketing economy. Nowadays, these systems operate in the range of developing countries (Argentina, Colombia and so on).  Herewith in Great Britain, in the USA and in Canada, they are performed with independent state corporations, but in France and Sweden and private banking links. In Austria, Great  Britain and the Netherlands in the case of broken credit organizations, private deposits are given; In Germany deposit delivery of credit institutes are addressed to, while in Canada – deposit delivery, managing the property of bank and giving crediting guarantees are addressed to.

                                                          Economic Dr of Science,

 

                                                          professor Lamara Qoqiauri

 



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Andy West asked:


The recent downturn in the economy has many people playing armchair quarterback over decisions made by the Federal Reserve during the last few years. These guys are supposed to be geniuses when it comes to economics, right? It doesn’t take a rocket scientist to recognize that there may have been errors in judgment regarding interest rates and home financing. Think you could do better than Bernanke or Greenspan? Don’t even think about being considered for such a high ranking position until you have an MBA Business Economics Degree.

An MBA Business Economics Degree goes beyond basic economics. The person in charge of making decisions regarding one of the strongest economies in the world will be required to have knowledge and expertise in the following areas: monetary policy, advanced economic theories like macro and micro economics, international markets and foreign trading, an understanding of leading economic indicators, – just to name a few. This person would need to be able to analyze economic issues quickly and accurately, as well as be able to assess and consider alternative economic policies to help achieve stability in a tumultuous economy.

Still want to pursue your dream of chairing the Federal Reserve? Then you definitely want to start looking at schools that have serious MBA Business Economics programs. There are several institutions of higher learning that offer such a degree program. Take the time to investigate several of them and the coursework they offer to ensure that their curriculum is in line with your career goals. In addition to accounting and finance coursework, they should offer courses that cover trade and finance theory, past and current trade issues, international economic organizations and their agreements and impacts on the world economy, econometrics and statistics.

The program should also offer hands-on experiences which will allow you to experience real world obstacles and challenges in the world of business and finance. It should provide opportunities for you to work with companies that will teach about corporate mergers and acquisitions, supply chain management and product development. By the time you are finished obtaining your degree, you will have knowledge and expertise in all of these areas, along with managerial skills and a firm knowledge and understanding of business ethics and economic practices and theory.

If you decide you want to focus on a particular area of economics, look for MBA programs that offer areas of specialized interest, such as the study of poverty economics, which deals with the effect that poverty has on overall economic stability or economic crime investigation and management, which prepares graduates to deal with economic fraud and corporate crime. These types of specialized programs make an MBA graduate highly marketable.

If the Federal Reserve is not high on your priority list once you have finished obtaining the MBA business economics degree, start looking in areas such as economics research in both the government and private sectors. Most advanced degree holders will find themselves in high demand for upper management positions in both the government and private sectors, as well as with non-profit organizations. A person may also decide to pursue an academic career by becoming an Economics Professor at a university.

MBA Business economics graduates are ahead of the curve in terms of earning potential too, with starting salaries around 75,000 per year, depending on the area of study.

When all is said and done, obtaining an advanced degree can definitely help your career, especially if you really do aspire to helping set economic policy on a federal or global level. An MBA Business Economics degree will set you on the right path by giving you knowledge and expertise regarding economic practices, theories and issues that can have a great impact on a corporation’s bottom line. And who knows? Maybe your expertise will eventually put you in line for Bernanke’s seat as Chairman of the Federal Reserve. After all, knowledge is power.



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Paige Green asked:


When it comes to the green home, ratings matter. There are a number of eco certification for home based appliances and white goods. Plus you can get your home professionally assessed for energy efficiency.

Residential homes can be given a rating based on the National House Energy Rating (NatHERS) which is an index of the home’s thermal performance. It is done through a professional analysis by a qualified assessor working in conjunction with the builder of the home. NatHERS provides a baseline for assessment software to rate a home’s energy efficiency potential. Most homes in Australia currently fall below a 5 star rating, but the current tool has now been adapted to allow for a potential 10 star rating (which would be equivalent to zero conditioning energy). This system is based purely on the home’s infrastructure and does not include appliances or hot water systems. Find out more about energy ratings for your home.

Good insulation is a key feature in any energy efficient home. And homeowners are keen to take advantage of Kevin Rudd’s important announcement last week, with funds for ceiling insulation becoming available from the federal government. The Federal Government will be providing eligible homes wiht free ceiling insulation worth $1600. Landlords and renters can benefit too with rental properties being included in the package.

Yet with all the available insulation out there, which one should we consider?

Eco Home Tip #16 – Ask about the R value – the measure for insulation materials is the R value. A high R value means better insulation potential. For example, Pink Batts offers a range ceiling insulation products that have an R value of up to 6.0.

Eco Home Tip #17 – Natural insulation – Take your insulation innovation even further and look for ceiling insulation made from sustainable materials, such as Goldenfleece wool insulation. All natural wool fibre has great insulating properties, with the CSIRO claiming, “wool insulation performs better because of it’s ability to rapidly absorb and desorb moisture from the air.” And you’ll be helping out the rural farmers!

Eco Home Tip #18 – DIY insulation – there are lots of simple insulating ideas homeowners can adapt to protect their homes against the elements. Seal draughts with door snakes or hang some thick curtains on your windows to keep out the coming cold.

Insulation is the first step to a great energy efficient home that will save you money. Well designed homes that incorporate insulation, thermal mass design and sustainable energy alternatives, such as solar panels, can save some homeowners up to 50% on their annual energy consumption. Plus you get to enjoy the comfort of having a pleasant living environment year round.

You can find more great eco home ideas on the Green Pages.



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Paige Green asked:


An organic garden brings a vibrant and colourful touch to any eco home. But instead of just the run of the mill vegie patch out the back, having a garden professionally conceived by a landscape architect can add a unique aspect that highlights your own green passion.

“Landscape architecture is a combination of science and art,” says landscape architect Steve Batley from Sydney Organic Gardens. To Batley, the process of designing a sustainable garden for an eco home involves a world of creativity while employing good practical design that works with nature.

A well designed garden is a living ecosystem that encourages animals and people to interact with nature. Children love connecting with the earth and gardening is a great way to teach them to cherish the environment.

Here are some handy tips to consider for your own organic garden:

Eco Home Tip #12 – Save water – Use water wise plants that are native to the area. Water tanks are also great water saving devices.

Eco Home Tip # 13 – Organic smorgasbord – Mix in your vegies with native plants. Including edibles with native plants is “good for pest management,” says Batley.

Eco Home Tip #14 – Passive solar for the greens – consider passive solar principles in your garden. Make the most of sunnier areas for plants, while shady spots are great for benches and relaxing.

Eco Home Tip #15 – Farmer knows best – Farmers periodically rotate their crops to maximise the use of the soil. You can do the same in your vegie patch, try rotating your vegies through different parts of the garden to make the most of the nutrients in the soil.

With the right planning and care, your garden can be the perfect organic haven for both you and native wildlife. Find more great organic gardening tips in the Green Pages green directory.



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green-tea asked:


ef=”http://4greentea.blogspot.com/2009/05/rinking-green-tea-could-help-in-fight.html”>rinking green tea could help in the fight against HIV, research suggests.

rinking green tea could help in the fight against HIV, research suggests.

Scientists found a component called epigallocatechin gallate (EGCG) prevents HIV from binding to immune system cells by getting there first.

Once EGCG has bound to immune system cells there is no room for HIV to take hold in its usual fashion.

However, experts said the joint UK and US work, which appears in the Journal of Allergy and Clinical Immunology, was at a very preliminary stage.

Researcher Professor Mike Williamson, of the University of Sheffield, said: “Our research shows that drinking green tea could reduce the risk of becoming infected by HIV, and could also slow down the spread of HIV.

“It is not a cure, and nor is it a safe way to avoid infection, however, we suggest that it should be used in combination with conventional medicines to improve quality of life for those infected.

“Future research is also currently under way in order to determine how much effect can be expected from different amounts of tea.”

More work needed

Keith Alcorn, senior editor of the Aidsmap web service, said tests on animals would be needed before any conclusions could be safely drawn on the potential protective effect of drinking green tea.

“This study only looks at the ability of a chemical in green tea to block HIV binding to human CD4 immune cells in the test tube.

“Many substances shown to prevent HIV infection in the test tube turn out to have little or no effect in real life, so I think there’s a long way to go before anyone should rely on green tea to protect against HIV infection.”

Lisa Power, head of policy at the HIV charity, Terrence Higgins Trust said: “Condoms keep HIV at bay. Anything that boosts your immune system is beneficial for people with HIV, but green tea can’t be a substitute for proper medication and prevention techniques.”

Green tea has been linked to a positive effect on a wide range of conditions, including heart disease, cancer and Alzheimer’s

For more information about Green Tea cllick here



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Amer Naveed Raja asked:


FUNDAMENTALS of ECONOMICS

The Aim & Scope of Economics:

The study of economics is aimed at finding the natural law governing an economy and its scope is to find the ideal principles for the working of an economy based on those findings.

There is no such Thing as Free Lunch:

It is the most fundamental law of nature that every thing has either monetary or non-monetary value. Though generally things have both monetary and non-monetary aspects, never the less for the purpose of simplicity and understanding we only consider monetary aspect of things in economics.

INVISBILE HAND

This is the most vital as well as an extremely difficult idea to logically explain, and however absolutely impossible to mathematically prove it. Perhaps in order to understand it one needs to think beyond logic and one may comprehend it after one’s own peculiar experiences. How the invisible hand plays it role in making financial shifts among individuals, groups and even among nations can be understood by studying natural phenomenon viz., the animal world, the plant world, the rotation of the solar system, the rain, diseases, wars, natural disasters etc. Moreover the mental state of an individual changes continuously and mysteriously which affects one’s decision making and other faculties that results in changes in one’s economic/financial conditions. Uncontrollable and unpredictable invisible factors beyond human control brought financial changes.

Defining Economics:

Economics deals with the efficient management (by the individuals & entrepreneurs) of scarce resources to satisfy unlimited human wants by applying science & technology in the market.

* Efficiency can be defined as doing things in a best possible manner.

Basic Economic Problem:

Scarcity of Resources, Unlimited Wants & Choice:

It is a known fact that our resources (time, raw materials, land, human resources, machines, money etc.) are limited while our wants are unlimited and recurring therefore we have to make some choice among available alternatives to satisfy our wants.

Economic Resources:

Economic resources can be broadly divided into following four categories:

o Land & Raw Materials:

These are free gifts of nature. All things derived from nature are included in this category.

o Labor:

It consists of the contribution of human beings.

o Capital:

It consists of plant & Equipment.

o Mind/Entrepreneurial Ability:

Entrepreneurial ability refers to the ability to organize production and bear risks. Some people are more intelligent and have the gift of managing things better than others. It is due to their contribution that societies develop. Due to this reason we categorize this resource separately from labor.

Motivating Force – Self Interest:

It is the self-interest that makes us act. Here it is also very important to mention that economics cannot be separated from other fields of study. All knowledge is interrelated. Adam Smith, who has significant influence in formulating modern western economic thought, was a professor of moral philosophy, which deals with finding the ideal kind of life. It is a fact that every individual tries to gain best from his/her available resources to make one happy. It is assumed that individuals will follow his/her interest to make choice among different alternatives. It is also important to mention here that self-interest is entirely different from selfishness. As a general rule of life: “Enlightened Self Interest is the best interest”.

*Selfishness is a short term while enlightened self-interest is a long-term phenomenon.

Logic & Logical Fallacies:

All interpersonal communication is based on logic. Likewise all human knowledge, that is experiences and views of all human beings since inception, is also communicated on the base of logic. Though logic fails at very minute as well as very huge levels, still because of human limitation in our interpersonal communication we are dependant on logic. Logic can be defined as a science of correct reasoning.

o Logical Errors/Mistakes:

Here we will mention the two main fallacies of logic that makes human knowledge erroneous. They are:

§ post hoc, ergo propter hoc fallacy (association as causation)

It occurs when one incorrectly assumes that one event is the cause of another because it precedes other.

§ Fallacy of composition

It occurs when it is incorrectly assumed that what is true for each individual in isolation is also true for an entire group.

Demand & supply:

In any economy prices of goods are determined by the interaction of demand and supply. All study of economics revolves around these two fundamental concepts.

o Demand:

Demand is a relationship between price & quantity demanded of a good in a given period of time while keeping other factors like tastes, preferences, status etc. constant i.e., considering only price as a determining factor.

o Supply:

Supply is relationship between price and quantity supplied of a good in a given period of time while keeping other things constant i.e., considering only price as a determining factor.

CORE ISSUES IN ECNOMICS:

Role of Government:

The proper role of government should be as minimal as possible. For efficient management, civil society is much more important and efficient than political society.

The market, by the interaction of demand and supply, not the state, should set wages and prices. Similarly monetary policy should also be set by interaction of market forces. Taxes levied by the government should be minimal. Lower taxes would provide the fundamental incentive for the entrepreneurs and individuals to work hard and to reinvest for greater profits that would consequently raise economic activity. The role of government should be as minimal as possible so government should do only those things private citizens can’t do for themselves. The corruption level is extremely high in public enterprises and also the efficiency of public enterprises is much lower than that of private enterprises.

Government should control its expenditure and it should match expenses with revenue. Bigger government is the biggest problem. Therefore decentralization and only taking those tasks that private enterprise cannot perform; are highly desirable for efficient management.

Rules and regulations should be formulated with a view for maintaining justice among members of the society and law should be equal for all.

Tariffs and other barriers to trade should be completely abolished, gradually. Free trade can greatly and rapidly improve the general economic condition and consequently social condition of the society. In short, government governs best which governs least.

Entrepreneur & Entrepreneurship:

Entrepreneurship is a vital aspect for economic growth and development. Because of its importance this should be studied in depth. Entrepreneurs are gifted individuals who have the gift of managing resources and have keen foresight to visualize things much better than ordinary people. High growing economies provide viable environment and freedom for the entrepreneurship to grow that eventually led to the development and growth of economies.

Economic Growth:

An important element and field of study in economics is economic growth. Essentially the motive behind all economic activity is in raising the standard of living. We study that how standard of living is raised. Education plays a pivotal role in raising general standard of living in the long run. Capital formation results from prudently managing resources and by finding new ways to improve the present means of production by using new technology; that is a consequence of knowledge gained by acquiring education. Therefore capital formation is the key factor for economic growth.

Trade:

Exchange, monetary or non monetary, is an integral part of any human activity. Human exchange views/goods/services etc because they feel that they will gain by exchanging. However, in economics we are only concerned with monetary exchange of views/goods/services etc. It is wrongly assumed that our world is a zero-sum world where gain by some is loss of other. Factually and fortunately we are living in a positive sum world. If this had been the case then progress in our world would have never been possible. Never the less it does not entail that in all monetary exchanges both parties will equally gain. Moreover the value gained in an exchange between two individuals or groups can never be evaluated precisely by the third party because the value of an exchange is very different for different individuals.

Free and greater trade, free from force and coercion, would result in comparatively more fair deals and consequently the chances of greater gains by both parties are more realizable.

Factually accurate information is not fully known that results in greater imbalances from trade. As a hypothetical rule we can very easily infer that where accurate information is known both trading parties gain.

Competition:

The prevalence of competition in the filed of economics in world is universal, because of scarce resources and innumerous and recurring wants. Where competition has negative implications, it has also positive implications. It is the element of competition that drives different individuals to excel from others, which results in greater discoveries, technological advancements and pursuit for finding new ways to earn greater profits that consequently raise general prosperity level in the world. It is unethical aspects of competition where some individuals initiate force and fraud that causes violence in the society. Competition can never be eliminated from any society; rather any attempt to eliminate competition would result in regression and more violence. Therefore, check should only be imposed on negative effects of competition.

Cooperation:

For the efficient management of the resources (time, skills, natural etc) human need to cooperate to make optimal use of these resources. Moreover most of the natural resources need to be transformed for use and to make them valuable. Groups need to cooperate to be successful. Cooperation juxtaposed with positive competition is an ideal combination for efficiency.

Specialization & Comparative Advantage:

Natural inequality among humans is a fact of life. Economics aims at efficient management; therefore to make best use of human resources different individuals specializes in those particular fields in which they can be better than others because of their natural abilities. Due to this reason some individuals have comparative advantage over others.

Information:

Information is very important for making informed rational decisions. However accurate information is impossible by any individual because of the human mind, because every human being is unique, and also due to unpredictable future. Information about market behavior is extremely diverse and ubiquitous. Therefore it is not possible for any individual to accrue the available information and our decisions about future at best are mere estimate with enormous possibilities.

Profit & Loss:

The expectant and prevailing profit and loss are the determining factors for the investments. It provides the criteria for the goods and services to be produced. Where in the short run demand of the products is the primary factor in stimulating the investment trends, profit or loss is the litmus test for products produced in the long run.

Trade Off:

It’s a general principle that in order to gain something one needs to loose something. The most important resource for an individual, time is limited. Therefore no one can do all the things oneself, so a rational individual focuses one’s time on those tasks where one can perform best. However it is quite impossible to precisely quantify the time one put in some particular activity is equal to the forgone activity/activities. Nonetheless for the purpose of understanding this concept economists assume that the price of engaging in some activity is equal to the cost of the other activity/activities one has forgone.

Price Theory:

Demand for and supply of products determines their prices in the market. It is wrongly asserted by the majority of the people that cost of goods determines the prices of the product. In actuality it is the marketing activities of the producers and the perception of the consumers about the products that determine the prices of the products. As a general rule higher the prices lower will be the demand and vice versa. However in some cases due to the nature of the product and the marketing efforts of the producers higher prices lead to higher demand.

Causality — Cause & Effect:

Despite limitations of logic, causality is the most important phenomenon in understanding economic theory and practice. Excluding mega-microscopic and mega-macroscopic phenomenon, every cause has some effect and that effect is a cause of some other effect ad infinitum. Due to this cause and effect relationship in a world of numerous individuals and groups their actions has great impact on other elements in the economy. Despite the complexity of this relationship that is also chaotic, understanding this relationship can help enormously in making good estimates about the future and to form comparatively sound opinions about the market trends.

Labor Economics:

In this field we study that how wages are determined. Like all other markets the wages are set by the interaction of demand and supply. Higher wages can only be achieved by greater investment and economic activity in the long run. Employment and unemployment are also the key issues that we study in this field. Ups and downs in the economy are the facts that cannot be avoided. Higher consumption level asks for greater capital investments that will raise general wage level and results in lower unemployment.

Uncertainty:

No one knows the future. It’s the fear of future that is an integral part of our lives and also an impetus for human activity. This factor of uncertainty gave birth to the idea of risk. There is always degree of risk in all human activities. As a general rule: “higher the risk, higher the reward”. Uncertainty is also nature’s law of rewarding and punishing the human actions. Moreover it is also a way of nature of teaching

and making known new ideas to the new participants and making room for the new and efficient members.

Public Finance:

The filed of public finance is directly related with role of government. Bigger the government, larger the funds are needed to finance it. The accountability principle is of pivotal importance in public enterprises because the ownership of these enterprises has no personal owners. Moreover, fund should be received from those who get benefits from that service.

Money & Banking:

Banking in an economy is the determining factor for gauging its performance. Money is the medium of exchange that facilitates transactions among participants of an economy. Banks play the role of intermediaries. Interest rates and value of currency with relation to other international currencies is set by central banks. However ideally it is best that market forces of demand and supply determine them.

Consumption & Saving:

Raising the consumption level is key factor to all economic activities for reducing costs, creating employment, raising standard of living and eliminating poverty.

On the other hand, raising consumption greatly can result in undue depletion of resources in a given market and cause inflation. If this situation prolongs that would result in recession to depression. Therefore a sagacious policy of moderation is the ideal combination.

Marketing:

Marketing is the key for stimulating demand and consequently enhancing economic activity. Entrepreneurs have the sharp ability of marketing to understand the economic environment and knowing the customer demand ahead of time and finding new segments that would consequently raise general standard of living.

Cost & Production:

Every thing entails cost. Finding the best methods to produce goods at minimum possible cost is essential for firms to earn profits and compete successfully.

Technology:

Technology makes the difference between the present age and the previous one. The problems faced by humans in all times are quite similar yet the technology of their respective eras determines the mode of production as well as way of living. Technology is of utmost importance for understanding economics because by applying it we enormously reduce costs and even reach new markets that could not have been possible with out technology. Moreover it raises standard of living by simplifying the complex tasks.

Poverty:

The problem of poverty is the focal point in the field of economics. Ignorance is the main cause of poverty. The best way to eradicate poverty is by spreading knowledge.

(Lahore, Nov 16, 2003)



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Amit Kumar asked:


If we see the world economic history for the last 100 years, we will come across many important incidents that changed the course of world economy and politics. But we can very easily separate out three dates, which have impacted the course of world economy to the greatest extent.

 Just look at the impacts of these three dates:

 7th Nov 1917: Lenin has triumphed. Communism has arrived. The 70 yr. old philosophy of a Jewish revolutionary will rule half of the world for next 70 years and will threaten the most powerful and prosperous allied forces of the world. A utopian state is in sight, where nobody will be deprived of anything. No one would be allowed to exploit anyone; no one will loose his job. The state will not allow the greed of the rich to be satisfied by the flesh of the poor.

 The Russian revolution changed the way economic values were seen in the intellectual world. Those who believed that Marx’s philosophy cannot succeed in actual world were stunned by the massive industrialization of the Soviet State. The world powers were so threatened by once starved Russia, that they started appeasing Hitler, because communism was supposed to be the larger evil than Nazism. For the next 70 yrs USSR dominated the world both economically and militarily.

World was at the cross roads after World War-1. Europe was devastated. Germans were in hyperinflation and one piece of bread used to cost 24,000,000,000,000 Reichsmarks. Britian was no longer the undisputed leader of the world and it was sharing the status with USA. French were feeling lucky, because they survived the war and got some more lands in Africa and Far East. The Muslim world was outraged by the fall of Caliphate in Turkey.

The Chinese and Indians….. Who Cares?

And the future superpowers were developing fast, very fast. Russians were setting up more and more industrial complexes, building more and more arms and ammunitions, and Americans…..

They were drinking Coke, smoking “Camel” and…….buying STOCKS, more and more Stocks. The bubble was getting bigger and bigger.

 

Finally the day came…..

 

29th Oct 1929: The original Black Tuesday changed everything. What started with this day would ultimately engulf the whole world and pave way for the rise of “The Most Barbaric War”, the world has ever seen in Modern History.

It took three years for the recession to become depression. The government didn’t intervene and didn’t want to intervene, since it was a free market. Interfering with market forces was supposed to be a communist theory which was Haram in capitalist world. What started in USA, spread to Europe soon and the whole world economy was heading for a doom.

This was the time when Soviet Russia, began to be perceived as the ideal economic model, a state which controlled the “Commanding Heights” of the economy. A state where people were not prone to the devastating recession and depression caused by the greed of 20 something Harvard MBAs.

The great depression paved way for ****** and Mussolini. People, suffering from deep economic slowdown, supported these charismatic leaders. This was the time of aggressive nationalism. The third reich was in sight, which would include the Urals too. Germans had not seen anybody so charismatic since Bismark. Finally Germany had produced its own Nepolean. Whole Germany was swept by the popularity of “Herr Hitler”, doesn’t matter even if he vowed for “The Final Solution” for the minorities of his own country.

Soviets were flexing their muscles under the leadership of another legendry leader named Joseph Stalin. Britan was fighting with the uprising of people in its colonies. The sun of the empire was finally setting. French people were not ready to accept their status of the second rate power within their own continent. Overall, Europe was moving towards that one final war, which would change the world forever.

Americans were licking their wounds, since their economic model failed miserably. Millions of Americans were starving, whereas traders were burning the stocks of wheat, just to keep the prices stable. Almost one third of the American banks closed down. Millions of Americans lost everything. So much so, for the “land of opportunities”.

As they say, radical times need radical decisions. Troubled times need some leader to navigate the country through troubled waters. USA chose Franklin Roosevelt in 1933. First thing he did was to declare a bank holiday for 4 days, just to cool the system. Later “New Deal” was announced and USA started shifting towards socialism. Uncle Sam started building roads, bridges, freeways and what not. Govt started spending and providing job opportunities to the people. No one could even think of such acts in a capitalist economy till 4 years back. Surprisingly, the stimulus started to work, and people thought that the days of capitalism were over. “The color of the Cat is immaterial, as long as she can catch rats.” If socialism can uplift people out of poverty, so be it. The laboratory of capitalism had turned its back on free market.

 

Karl Marx had defeated Adam Smith. Keynes was beatified and Hayak has become a pariah.

 

The cold war was on for political reasons. Economically, it was accepted all over the world that socialism was the only way to go and states only should control the “Commanding Heights” of the economy.

The system worked well for 50 years. Then it started to show the strain. As the new generation took over, people started becoming more and more inefficient. They were no longer moved by the same emotion of war and depression. The official policy of governments to “Incentivize the Inefficiency” gave rise to a new phenomenon, named as “Stagflation.”

Stagnation and inflation cannot prevail together. This was suggested by Keynes and believed by everybody. The point was missed that human being are not machines, which can be assumed to work on a particular efficiency level every time, without any fear or drive. People work under two circumstances, either you give him some incentive or you put a gun on his head. Stalin believed in later and USSR became superpower.

As the communist government became little more tolerant and people achieved a little freedom, questions were being raised about the economic model. Why the worker in Russia cannot afford a lifestyle of an US worker? Why should the government waste its time fixing the taxi fare in Moscow rather than sending some more Sputniks in space? Why should I work if no one can fire me and no one can hold back my salary? Why should a company produce if the prices are artificially fixed?

Slowly and steadily, people started realizing that there is something wrong with the model being followed. It started to change with Ronald Regan, Margaret Thatcher and Mikhail Gorbachev. “Road to Serfdom” was back in the libraries. Hayek was awarded the Nobel Prize in 1974. 

One by one almost whole world adopted the free market theory of economics. Some countries adopted it smoothly, over a period of time like China, whereas others opted for “Shock Therapy” and paid a very heavy price for the same. The laboratory of communism- Russia adopted the change and fell into anarchy. The “Oligarchs” have replaced “Communists” as the new exploiters of the people.

Once again the world was changing its economic beliefs. “Free markets” was the buzzword. The statues of Lenin were removed from the streets in Russia. Stalingrad again became St. Petersburg.

This transformation created a new breed of entrepreneurs in the East Subcontinent, India. A country, where it used to take at least 3 years to get a telephone connection suddenly became the second fastest growing telecom market in the world. The Indian software professionals were employed, envied and poached all over the world. Suddenly the world started taking Bollywood seriously. Then people realized that almost 30 % of NASA scientists were Indians, never knew of such fact. Suddenly people started saying that IIT is equivalent to Harvard+ Stanford+ MIT. So much so for a “Third World Country” of snake charmers.

The system was working well. Now, nobody had an iota of doubt that “Free Market” is the way except Hugo Chavez and Fiedel Castro.

Then came 2008.

Although the effects of the excess Greed started getting felt in 2007 only, it was not until September 2008, when the world would see the pillars of capitalism crumbling one by one within such a short period of time.

One by one, the wizards of Wall Street, the dream of any MBA, the powerhouse of US economy, the flag bearer of capitalism lined up in front of White House with a begging bowl for “Bail Out”.

Initially it looked like some investment getting bad and financial institutions are in need of loan from the government. “Dubyaman” responded, either by providing loans or by instructing some other institutions to provide line of credit. After all, credit and loan is the part and parcel of the business.

Then came 15th September 2008.

The oldest i-bank filed for bankruptcy. The largest insurance company in the world was about to fall within two days.

And the world changed forever.

When I opened the newspaper on 16th Sep 2008, it was nothing less than a nuclear war. Lehaman Brothers has filed for bankruptcy; AIG might follow in two days. Needless to say, everybody lost heavily in stock market. Gold shot up, Oil tumbled and only one view was on air- “The Great Depression”.

AIG was bailed out by “The White House”. Within next few weeks, US will unveil a financial bailout package of 700 bn $. The amount is bigger than the GDP of Pakistan and Bangladesh combined. These two countries have the combined population of more than 300 million.

AIG was bailed out. The better word would be “Nationalized”.  In old days of cold war, countries used to nationalize profit making private sector companies, so that the profit would be distributed and used for the benefit of the society. Now the largest insurance company of the largest country in the world is being nationalized not for the same reason, but because the company was about to default. AIG defaulting on its payments would mean the end of American Dream. The financial system would collapse. Millions of Americans would loose billions of dollars invested in insurance policies. Hence AIG is “Too Big to Fail”.

But how big is too big? Wasn’t Lehman too big? What about LTCM? What about Pan Am?  Why should the govt pick and choose where to throw the exchequers’ money to bail out private enterprises? These companies took risks and the gamble didn’t pay off. They made good amount of money in last 4 years, riding on the boom cycle of market. The million dollar bonus for their 20 something traders came from where? The corporate jets, the yatch were financed by the same housing boom. They didn’t bother to care about stricter corporate governance and better financial reporting in those times. Now, when they are doomed, they are asking for a bail out from the same Fed, whom they always accused of tight regulations and curtailing the free markets.

Will this led to evolution of another round of socialist economic model as we saw last time late 40s? Is this the end of capitalism? Has Uncle Sam failed? Is Marx smiling in heaven?

The answer to all these questions are “It Depends….”

As it is said “Human beings are intelligent enough in finding patterns with random numbers and risking everything on such deceptive patters”.

 

We can just wait and watch, as history unfolds in front of our eyes.

 

 

 



Caffeinated Content

Paige Green asked:

According to the Australian Burean of Statistics, around 56 per cent of Australia’s greenhouse gas emissions are generated from the home. While it is important that we pressure business and government for sustainable initiatives, some of the easiest changes can be made in our own dwellings. From simple lifestyle changes such as adopting the Green Pages Top 50 tips to a more substantial investment in your home’s design features.

For many, building a sustainable home may seem too challenging, too daunting or just not feasible. Many people claim ‘we can’t afford it’, ‘I already own a home (and am still paying it off!)’, or ‘I’m renting’; these are all ready made excuses that make even the most die-hard greenie resistant to making a more substantial investment in a sustainable home.

‘Money is always one of the major impediments to investing in a sustainable home,’ says Julien Laclave, renewable energy promotions officer for Australian and New Zealand Solar Energy Society (ANZES). A green home can save a family thousands of dollars a year. ‘We can’t force people to invest in a sustainable renovation or a new home, but we can show them that it really pays off.’ Reduced energy bills from renewable energy sources and more comfortable living conditions that don’t require artificial heating or cooling are just some of the benefits of a sustainably designed home.

Lacave is also the project manager of the ANZES Sustainable House Day, a nationwide event that showcases a number of sutainable homes to the public. This year, over 100 homes were on diplsay and visitors could speak directly with the owners and get first hand information about the home and its sustinable features. Lacave finds taht many attendees come to sources ideas for their own projects. ‘People who visit the homes find it very inspiring. It’s very unique to be able to talk wiht the residents,’ he says.

So what’s behind good green design?

Essentially, building a ‘green home’ is to ensure a house is as ’self sustaining’ as possible. Key features include minimising energy use, rainwater harvesting, managing waste water disposal and even sustaining its inhabitants with a lush green garden. Renowned celebrities such as Csate Blanchett have brough popularity to green residences. Sustainable home design is reaching the mainstream. People are realising eco homes make good sense. Households can lower their energy bills by as much as 50 per cent and save on their water bills. Green homes stay comfortable throughout the year without the aid of artificial heating and cooling, which make them a real pleasure to live in. ‘A sustainable house is just a house that is well designed and cleverly thought out’, says Lacave.

For more information on the green home visit the Green Pages, Australia’s leading directory for all things green.

Caffeinated Content

C. Read asked:


Keynesian exuberance for the powers of stimulating demand or the ‘consumer’ has been in vogue since the 1930s. It is sheer nonsense which is taught in every school across the globe. Keynesian economics is little more than intellectual pablum used by those in power or by a technocratic and largely illiterate elite to increase their power; enhance government; print money and otherwise destroy normal economic relationships. Keynes’ theory, so believed by professors is in practice a disaster.

Keynes was a left wing wall flower and a member of the deranged Bloomsbury group of inter-World War British pacifists. He was an arrogant theorist who truly believed in the magical elixir of large government and in the technocratic dream of controlling billions of personal, business and economic decisions, to programmatically construct a perfect world order. Keynes gave intellect and jargon filled cover and rationale to politicians and demagogues who would cite his book, ‘The General Theory of Employment, Interest and Money’, to justify state interventionism.

According to this theory which has failed in practice every time it has been tried, governments can stimulate an economy through granting consumers, workers and businesses sums of borrowed money. This is termed a ‘stimulus’. This debt or current deficit financing stimulus, is then paid back or retired, when the economy strengthened by consumer spending and business investment, produces a surplus of tax revenues. The stimulus is needed, so argued Keynes, to overcome business cycles, downturns and unexpected events which would decrease jobs, increase unemployment and impact state revenues. By macro and micro-managing economic and production processes, the state, so thought Keynes, would avoid cyclical variations and ensure that the lowest level of unemployment could be maintained. Government power was thus indispensable to full employment and income equality.

There are many problems with such a counter-rational plan to economic management. None of Keynes’ core assumptions make sense when they are analysed either separately or together. Business cycles have historically been caused by governments, and they are usually a response to government policies to increase the size of the state through trade barriers, higher taxation, more spending, more regulation and programs of fear and compliance. The Great Depression, the 70s Stagflation and the current financial crisis are all obvious examples of this fact. Government causing economic malaise would appear to mean that government programs are not the solutions required to either get out of an economic downturn, nor to prevent future derailments from taking place.

The main impact of Keynesian economic stimuli is to increase debt; raise future tax rates and distort the normal functionings of economic markets and personal and corporate decision making. Governments choose winners and confirm losers. The winners will include companies which get bailed out, those receiving welfare, unions and others having their jobs protected, those receiving redistributed incomes and those paid off for political support. The losers invariably include firms both domestic and international who want fair and free trade; higher income families; small businesses who are classified under high income categories; future generations who must pay off the debt; and consumers who pay a higher costs for all products and services.

Under Keynesian philosophy, government and technocrats assume the role of God. Given the poverty of God heads throughout history, this is probably not a noble supposition to support.

Brian Reidl from Heritage Institute wrong an excellent article recently on the fallacy that government spending, or what is termed Keynesian deficit spending, run by God-heads, is beneficial (see Reidl

http://www.frontpagemag.com/Articles/authors.aspx?GUID=220a4261-b3c8-4338-a5be-62bcc3f3b8d3). In this article he makes the following important points about demand-side management and the Keynesian ****** for economic control.

“Government cannot create new purchasing power out of thin air. If Congress funds new spending with taxes, it is simply redistributing existing income. If Congress instead borrows the money from domestic investors, those investors will have that much less to invest or to spend in the private economy. If Congress borrows the money from foreigners, the balance of payments will adjust by equally reducing net exports, leaving GDP unchanged. Every dollar Congress spends must first come from somewhere else.

This does not mean that government spending has no economic impact at all. Government spending often alters the consumption of total demand, such as increasing consumption at the expense of investment.”

When stimulus packages are created the money has to come from someone via taxes, or be printed. Both are net negatives to the economy. Economic growth only results from producing more goods and services (not from redistributing existing income), and that requires productivity growth and growth in the labor supply as productivity not only increases wealth but also wages and wage opportunities.

Historically of course government spending has reduced productivity and long-term economic growth due to some obvious reasons. As government spends more it raises taxes which reduces profits, productivity and wage and job creation. As government incurs more debt through stimulus and demand side packages it reduces the incentive to produce and displaces money by removing the more productive private sector from the economic equation and replacing it with a far less effective state dollar, taxed or printed on government printing press. The inefficiency of government policy in health, housing, education, and general industry are obvious creating huge costs which must be borne by ordinary taxpayers – ineffective solutions at a higher price one can say.

And as Reidl sources and proves:

“Mountains of academic studies show how government expansions reduce economic growth:

1.Public Finance Review reported that “higher total government expenditure, no matter how financed, is associated with a lower growth rate of real per capita gross state product.”

2.The Quarterly Journal of Economics reported that “the ratio of real government consumption expenditure to real GDP had a negative association with growth and investment,” and “growth is inversely related to the share of government consumption in GDP, but insignificantly related to the share of public investment.”

3.A Journal of Macroeconomics study discovered that “the coefficient of the additive terms of the government-size variable indicates that a 1% increase in government size decreases the rate of economic growth by 0.143%.”

4.Public Choice reported that “a one percent increase in government spending as a percent of GDP (from, say, 30 to 31%) would raise the unemployment rate by approximately .36 of one percent (from, say, 8 to 8.36 percent).”

It is obvious that Keynesian economics and demand management are tools for fools. Wealth, a better society, a cleaner world, a higher level of development is not coerced by government. It only occurs when free people operating in free markets are allowed to interact and determine the price and supply of various goods and services. Government involvement ensures the opposite and is a theory mired in cultish theological absurdity.



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