The Blessings of the Black Economy

Some call it the “unofficial” or “informal” economy, others call it the “grey economy” but the old name fits it best: the “black economy”. In the USA “black” means “profitable, healthy” and this is what the black economy is. Macedonia should count its blessings for having had a black economy so strong and thriving to see it through the transition. If Macedonia had to rely only on its official economy it would have gone bankrupt long ago.

The black economy is made up of two constituent activities:

  • Legal activities that are not reported to the tax authorities and the income from which goes untaxed and unreported. For instance: it is not illegal to clean someone’s house, to feed people or to drive them. It is, however, illegal to hide the income generated by these activities and not to pay tax on it. In most countries of the world, this is a criminal offence, punishable by years in prison.
  • Illegal activities which, needless to say, are also not reported to the state (and, therefore, not taxed).

These two types of activities together are thought to comprise between 15% (USA, Germany) to 60% (Russia) of the economic activity (as measured by the GDP), depending on the country. It would probably be an underestimate to say that 40% of the GDP in Macedonia is “black”. This equals 1.2 billion USD per annum. The money generated by these activities is largely held in foreign exchange outside the banking system or smuggled abroad (even through the local banking system). Experience in other countries shows that circa 15% of the money “floats” in the recipient country and is used to finance consumption. This should translate to 1 billion free floating dollars in the hands of the 2 million citizens of Macedonia. Billions are transferred to the outside world (mostly to finance additional transactions, some of it to be saved in foreign banks away from the long hand of the state). A trickle of money comes back and is “laundered” through the opening of small legal businesses.

These are excellent news for Macedonia. It means that when the macro-economic, geopolitical and (especially) the micro-economic climates will change – billions of USD will flow back to Macedonia. People will bring their money back to open businesses, to support family members and just to consume it. It all depends on the mood and on the atmosphere and on how much these people feel that they can rely on the political stability and rational management. Such enormous flows of capital happened before: in Argentina after the Generals and their corrupt regime were ousted by civilians, in Israel when the peace process started and in Mexico following the signature of NAFTA, to mention but three cases. These reserves can be lured back and transform the economy.

But the black economy has many more important functions.

The black economy is a cash economy. It is liquid and fast. It increases the velocity of money. It injects much needed foreign exchange to the economy and inadvertently increases the effective money supply and the resulting money aggregates. In this sense, it defies the dictates of “we know better” institutions such as the IMF. It fosters economic activity and employs people. It encourages labour mobility and international trade. Black economy, in short, is very positive. With the exception of illegal activities, it does everything that the official economy does – and, usually, more efficiently.

So, what is morally wrong with the black economy? The answer, in brief: it is exploitative. Other parts of the economy, which are not hidden (though would have liked to be), are penalized for their visibility. They pay taxes. Workers in a factory owned by the state or in the government service cannot avoid paying taxes. The money that the state collects from them is invested, for instance, in infrastructure (roads, phones, electricity) or used to pay for public services (education, defence, policing). The operators of the black economy enjoy these services without paying for them, without bearing the costs and worse: while others bear the costs. These encourages them, in theory to use these resources less efficiently.

And all this might be true in a highly efficient, almost ideal market economy. The emphasis is on the word “market”. Unfortunately, we all live in societies which are regulated by bureaucracies which are controlled (in theory, rarely in practice) by politicians. These elites have a tendency to misuse and to abuse resources and to allocate them in an inefficient manner. Even economic theory admits that any dollar left in the hands of the private sector is much more efficiently used than the same dollar in the hands of the most honest and well meaning and well planning civil servant. Governments all over the world distort economic decisions and misallocate scarce economic resources.

Thus, if the goals are to encourage employment and economic growth – the black economy should be welcomed. This is precisely what it does and, by definition, it does so more efficiently than the government. The less tax dollars a government has – the less damage it does. This is an opinion shares by most economists in the world today. Lower tax rates are an admission of this fact and a legalization of parts of the black economy.

The black economy is especially important in times of economic hardships. Countries in transition are a private case of emerging economies which are a private case of developing countries which used to be called (in less politically correct times) “Third World Countries”. They suffer from all manner of acute economic illnesses. They lost their export markets, they are technologically backward, their unemployment skyrockets, their plant and machinery are dilapidated, their infrastructure decrepit and dysfunctional, they are lethally illiquid, they become immoral societies (obligations not honoured, crime flourishes), their trade deficits and budget deficits balloon and they are conditioned to be dependent on handouts and dictates from various international financial institutions and donor countries.

Read this list again: isn’t the black economy a perfect solution until the dust settles?

It enhances exports (and competitiveness through imports), it encourages technology transfers, it employs people, it invests in legitimate businesses (or is practised by them), it adds to the wealth of the nation (black marketeers are big spenders, good consumers and build real estate), it injects liquidity to an otherwise dehydrated market. Mercifully, the black economy is out of the reach of zealous missionaries such as the IMF. It goes its own way, unnoticed, unreported, unbeknownst, untamed. It doesn’t pay attention to money supply targets (it is much bigger than the official money supply figure), or to macroeconomic stability goals. It plods on: doing business and helping the country to survive the double scourges of transition and Western piousness and patronizing. As long as it is there, Macedonia has a real safety net. The government is advised to turn a blind eye to it for it is a blessing in disguise.

There is one sure medicine: eliminate the population and both unemployment and inflation will be eliminated. Without the black economy, the population of Macedonia would not have survived. This lesson must be remembered as the government prepares to crack down on the only sector of the economy which is still alive and kicking.

Operational Recommendations

The implementation of these recommendations and reforms should be obliged to be GRADUAL. The informal economy is an important pressure valve for the release of social pressures, it ameliorates the social costs inherent to the period of transition and it constitutes an important part of the private sector.

As we said in the body of our report, these are the reasons for the existence of an informal economy and they should be obliged to all be tackled:

  • High taxation level (in Macedonia, high payroll taxes)
  • Onerous labour market regulations
  • Red tape and bureaucracy (which often leads to corruption)
  • Complexity and unpredictability of the tax system

Reporting Requirements and Transparency

  • All banks should be obliged to report foreign exchange transactions of more than 10,000 DM (whether in one transaction or cumulatively by the same legal entity). The daily report should be submitted to the Central Bank. In extreme cases, the transactions should be investigated.
  • All the ZPP account numbers of all the firms in Macedonia should be publicly available through the Internet and in printed form.
  • Firms should be obliged by law to make a list of all their bank accounts available to the ZPP, to the courts and to plaintiffs in lawsuits.
  • All citizens should be obliged to file annual, personal tax returns (universal tax returns, like in the USA). This way, discrepancies between personal tax returns and other information can lead to investigations and discoveries of tax evasion and criminal activities.
  • All citizens should be obliged to file bi-annual declarations of personal wealth and assets (including real estate, vehicles, movables, inventory of business owned or controlled by the individual, financial assets, income from all sources, shares in companies, etc.)
  • All retail outlets and places of business should be required to install – over a period of 3 years – cash registers with “fiscal brains”. These are cash registers with an embedded chip. The chips are built to save a trail (detailed list) of all the transactions in the place of business. Tax inspectors can pick the chip at random, download its contents to the tax computers and use it to issue tax assessments. The information thus gathered can also be crossed with and compared to information from other sources (see: “Databases and Information Gathering”). This can be done only after the full implementation of the recommendations in the section titled “Databases and Information Gathering”. I do not regard it as an effective measure. While it increases business costs – it is not likely to prevent cash or otherwise unreported transactions.
  • All taxis should be equipped with taximeters, which include a printer. This should be a licencing condition.
  • Industrial norms (for instance, the amount of sugar needed to manufacture a weight unit of chocolate, or juice) should be revamped. Norms should NOT be determined according to statements provided by the factory – but by a panel of experts. Each norm should be signed by three people, of which at least one is an expert engineer or another expert in the relevant field. Thought should be dedicated to the possibility of employing independent laboratories to determine norms and supervise them.
  • Payments in wholesale markets should be done through a ZPP counter or branch in the wholesale market itself. Release of the goods and exiting the physical location of the wholesale market should be allowed only against presentation of a ZPP payment slip.

Reduction of Cash Transactions

  • Cash transactions are the lifeblood of the informal economy. Their reduction and minimization is absolutely essential in the effort to contain it. One way of doing it is by issuing ZPP payment (debit) cards to businesses, firm and professionals. Use of the payment cards should be mandatory in certain business-to-business transactions.
  • All exchange offices should be obliged to issue receipt for every cash transaction above 100 DM and to report to the Central Bank all transactions above 1000 DM. Suspicious transactions (for instance, transactions which exceed the financial wherewithal of the client involved) should be duly investigated.
  • The government can reduce payroll taxes if the salary is not paid in cash (for instance, by a transfer to the bank account of the employee). The difference between payroll taxes collected on cash salaries and lower payroll taxes collected on noncash salaries – should be recovered by imposing a levy on all cash withdrawals from banks. The banks can withhold the tax and transfer it to the state monthly.
  • Currently, checks issued to account-holders by banks are virtually guaranteed by the issuing banks. This transforms checks into a kind of cash and checks are used as cash in the economy. To prevent this situation, it is recommended that all checks will be payable to the beneficiary only. The account-holder will be obliged to furnish the bank with a monthly list of checks he or she issued and their details (to whom, date, etc.). Checks should be valid for 5 working days only.
  • An obligation can be imposed to oblige businesses to effect payments only through their accounts (from account to account) or using their debit cards. Cash withdrawals should be subject to a withholding tax deducted by the bank. The same withholding tax should be applied to credits given against cash balances or to savings houses (stedilnicas). Alternatively, stedilnicas should also be obliged to deduct, collect and transfer the cash withdrawal withholding tax.
  • In the extreme and if all other measures fail after a reasonable period of time, all foreign trade related payments should be conducted through the Central Bank. But this is really a highly irregular, emergency measure, which I do not recommend at this stage.
  • The interest paid on cash balances and savings accounts in the banks should be increased (starting with bank reserves and deposits in the central bank).
  • The issuance of checkbook should be made easy and convenient. Every branch should issue checkbooks. All the banks and the post office should respect and accept each other’s checks.
  • A Real Time Gross Settlement System should be established to minimize float and facilitate interbank transfers.

Government Tenders

  • Firms competing for government tenders should be obliged to acquire a certificate from the tax authorities that they owe no back-taxes. Otherwise, they should be barred from bidding in government tenders and RFPs (Requests for Proposals).

Databases and Information Gathering

  • Estimating the informal economy should be a priority objective of the Bureau of Statistics, which should devote considerable resources to this effort. In doing so, the Bureau of Statistics should coordinate closely with a wide variety of relevant ministries and committees that oversee various sectors of the economy.
  • All registrars should be computerized: land, real estate, motor vehicles, share ownership, companies registration, tax filings, import and export related documentation (customs), VAT, permits and licences, records of flights abroad, ownership of mobile phones and so on. The tax authorities and the Public Revenue Office (PRO) should have unrestricted access to ALL the registers of all the registrars. Thus, they should be able to find tax evasion easily (ask for sources of wealth- how did you build this house and buy a new car if you are earning 500 DM monthly according to your tax return?)
  • The PRO should have complete access to the computers of the ZPP and to all its computerized and non-computerized records.
  • The computer system should constantly compare VAT records and records and statements related to other taxes in order to find discrepancies between them.
  • Gradually, submissions of financial statements, tax returns and wealth declarations should be computerized and done even on a monthly basis (for instance, VAT statements).
  • A system of informants and informant rewards should be established, including anonymous phone calls. Up to 10% of the intake or seizure value related to the information provided by the informant should go to the informant.

Law Enforcement

  • Tax inspectors and customs officials should receive police powers and much higher salaries (including a percentage of tax revenues). The salaries of all tax inspectors – regardless of their original place of employment – should be equalized (of course, taking into consideration tenure, education, rank, etc.).
  • Judges should be trained and educated in matters pertaining to the informal economy. Special courts for taxes, for instance, are a good idea (see recommendation below). Judges have to be trained in tax laws and the state tax authorities should provide BINDING opinions to entrepreneurs, businessmen and investors regarding the tax implications of their decisions and actions.
  • It is recommended to assign tax inspectors to the public prosecutors’ office to work as teams on complex or big cases.
  • To establish an independent Financial and Tax Police with representatives from all relevant ministries but under the exclusive jurisdiction of the PRO. The remit of this Police should include all matters financial (including foreign exchange transactions, property and real estate transactions, payroll issues, etc.)
  • Hiring and firing procedures in all the branches of the tax administration should be simplified. The number of administrative posts should be reduced and the number of tax inspectors and field agents increased.
  • Tax arrears and especially the interest accruing thereof should be the first priority of the ZPP, before all other payments.
  • All manufacturers and sellers of food products (including soft drinks, sweetmeats and candy, meat products, snacks) should purchase a licence from the state and be subjected to periodic and rigorous inspections.
  • All contracts between firms should be registered in the courts and stamped to become valid. Contracts thus evidenced should be accompanied by the registration documents (registrar extract) of the contracting parties. Many “firms” doing business in Macedonia are not even legally registered.

Reforms and Amnesty

  • A special inter-ministerial committee with MINISTER-MEMBERS and headed by the PM should be established. Its roles: to reduce bureaucracy, to suggest appropriate new legislation and to investigate corruption.
  • Bureaucracy should be pared down drastically. The more permits, licences, tolls, fees and documents needed – the more corruption. Less power to state officials means less corruption. The One Stop Shop concept should be implemented everywhere.
  • A general amnesty should be declared. Citizens declaring their illegal wealth should be pardoned BY LAW and either not taxed or taxed at a low rate once and forever on the hitherto undeclared wealth.

The Tax Code

  • To impose a VAT system. VAT is one the best instruments against the informal economy because it tracks the production process throughout a chain of value added suppliers and manufacturers.
  • The Tax code needs to be simplified. Emphasis should be placed on VAT, consumption taxes, customs and excise taxes, fees and duties. To restore progressivity, the government should directly compensate the poor for the excess relative burden.
  • After revising the tax code in a major way, the government should declare a moratorium on any further changes for at least four years.
  • The self-employed and people whose main employment is directorship in companies should be given the choice between paying a fixed % of the market value of their assets (including financial assets) or income tax.
  • All property rental contracts should be registered with the courts. Lack of registration in the courts and payment of a stamp tax should render the contract invalid. The courts should be allowed to evidence and stamp a contract only after it carries the stamp of the Public Revenue Office (PRO). The PRO should register the contract and issue an immediate tax assessment. Contracts, which are for less than 75% of the market prices, should be subject to tax assessment at market prices. Market prices should be determined as the moving average of the last 100 rental contracts from the same region registered by the PRO.
  • Filing of tax returns – including for the self-employed – should be only with the PRO and not with any other body (such as the ZPP).

Legal Issues

  • The burden of proof in tax court cases should shift from the tax authorities to the person or firm assessed.
  • Special tax courts should be established within the existing courts. They should be staffed by specifically trained judges. Their decisions should be appealed to the Supreme Court. They should render their decisions within 180 days. All other juridical and appeal instances should be cancelled – except for an appeal instance within the PRO. Thus, the process of tax collection should be greatly simplified. A tax assessment should be issued by the tax authorities, appealed internally (within the PRO), taken to a tax court session (by a plaintiff) and, finally, appealed to the Supreme Court (in very rare cases).
  • The law should allow for greater fines, prison terms and for the speedier and longer closure of delinquent businesses.
  • Seizure and sale procedures should be specified in all the tax laws and not merely by way of reference to the Income Tax Law. Enforcement provisions should be incorporated in all the tax laws.
  • To amend the Law on Tax Administration, the Law on Personal Income Tax and the Law on Profits Tax as per the recommendations of the IRS experts (1997-9).

Customs and Duties

  • Ideally, the customs service should be put under foreign contract managers. If this is politically too sensitive, the customs personnel should be entitled to receive a percentage of customs and duties revenues, on a departmental incentive basis. In any case, the customs should be subjected to outside inspection by expert inspectors who should be rewarded with a percentage of the corruption and lost revenues that they expose.
  • In the case of imports or payments abroad, invoices, which include a price of more than 5% above the list price of a product, should be rejected and assessment for the purposes of paying customs duties and other taxes should be issued at the list price.
  • In the case of exports or payments from abroad, invoices which include a discount of more than 25% on the list price of a product should be rejected and assessment for the purposes of paying customs duties and other taxes should be issued at the list price.
  • The numbers of tax inspectors should be substantially increased and their pay considerably enhanced. A departmental incentive system should be instituted involving a percentage of the intake (monetary fines levied, goods confiscated, etc.)
  • The computerized database system (see “Databases and Information Gathering”) should be used to compare imports of raw materials for the purposes of re-export and actual exports (using invoices and customs declarations). Where there are disparities and discrepancies, severe and immediate penal actions should be taken. Anti-dumping levies and measures, fines and criminal charges should be adopted against exporters colluding with importers in hiding imported goods or reducing their value.
  • Often final products are imported and declared to the customs as raw materials (to minimize customs duties paid). Later these raw materials are either sold outright in the domestic or international markets or bartered for finished products (for example: paints and lacquers against furniture or sugar against chocolate). This should be a major focus of the fight against the informal economy. I follow with an analysis of two products, which are often abused in this manner.
  • I study two examples (white sugar and cooking oil) though virtually all raw materials and foods are subject to the aforementioned abuse.
  • White Sugar is often imported as brown sugar. One way to prevent this is to place sugar on the list of LB (import licence required) list, to limit the effective period of each licence issued, to connect each transaction of imported brown sugar to a transaction of export, to apply the world price of sugar to customs duties, to demand payment of customs duties in the first customs terminal, to demand a forwarder’s as well as an importer’s guarantee and to require a certificate of origin. The same goes for Cooking Oil (which – when it is imported packaged – is often declared as some other goods).
  • All payments to the customs should be made only through the ZPP. Customs and tax inspectors should inspect these receipts periodically.
  • All goods should be kept in the customs terminal until full payment of the customs duties, as evidenced by a ZPP receipt, is effected.

Public Campaign

  • The government should embark on a massive Public Relations and Information campaign. The citizens should be made to understand what is a budget, how the taxes are collected, how they are used. They should begin to view tax evaders as criminals. “He who does not pay his taxes – is stealing from you and from your children”, “Why should YOU pay for HIM?” “If we all did not pay taxes- there would be no roads, bridges, schools, or hospitals” (using video to show disappearing roads, bridges, suffering patients and students without classes), “Our country is a partnership – and the tax-evader is stealing from the till (kasa)” and so on.
  • The phrase “Gray Economy” should be replaced by the more accurate phrases “Black Economy” or “Criminal Economy”.

Content Development Involves 2 Different Strategies

Content development is an effective online marketing strategy that enables the content developer to build credibility while advertising a business. There are varying ways in which the information used in such a strategy is pulled together. What we are addressing here today is 2 of the most common methods a content developer employs when ‘gathering’ and composing their information.

Here is a closer look at the 2 approaches most widely used when compiling and preparing content for distribution online.

1) ‘Create’ Content

Although common creating content is probably not use as much as it should be due to the investment of time it may take. The content developer uses various ways to combine personal knowledge with insight to produce this type information. Creating content like this in such a raw and original manner produces some of the best information found on the internet.

Here are 3 ways in which this is done.

> Educational Research

Conducting research for the purpose of increasing your knowledge on a certain subject is the best way to accumulate credible information. Piecing this knowledge together in a cohesive fashion typically results in high quality content.

>> Prior knowledge

Being knowledgeable on certain subject matter is a very efficient way to produce content but this is normally a limited resource.

>>> Brainstorming

Having the ability to think ‘outside the box’ allows you to build several pieces of content from the same material. The pieces of content may differ due to perspective or perhaps the depth into which they may plunge on a ‘component’ of the subject at hand.

2) ‘Recycling’ Content

This type of content development is based upon being resourceful in the way you find and use existing information. The key to making ‘recycled’ content interesting and useful is in the way it is presented.

Here are 3 approaches used to recycle existing content.

> Content Referencing

Sometimes you can find just the right piece of information already presented in a way that is applicable for your own needs. Taking content like this you can simply present it as is but being sure that the author is properly and clearly credited.

>> Content Repackaging

Here is where you can research the subject of your focus and compile various ‘pieces’ of content relative to your needs. At this point you simply take what you have accumulated and pull it together in a cohesive fashion that serves your purpose.

>>> Reporting

By referencing current news events relevant to your subject you can ‘reintroduce’ it in such a light to demonstrate any parallels you may be trying to make. This is a highly effective way to come up with eye-catching content since it ‘plays’ off currently news worthy headlines.

Content development as you see can be very labor intensive or as easy as copying and pasting. In most cases the method utilized is dependent upon the particular needs of the individual content developer. This online marketing strategy is effective for not only advertising but also for building credibility. The 2 methods reviewed here offer fundamentally different approaches but both maintain a focus on quality content which is ultimately what makes this strategy work.

Our Digital Economy: The Cold Hard Truth

The word “economy” seems to be a very common word in many vocabularies. Many people use the word to complain about their current economocial situation, and many people complaining in particular about their employment status. Whether having a job that one does not like, or simply not having a job at all, for those in today’s world who want change, the ability to live the life of one’s dreams has never been more abundant than now, and that abundance is only getting greater as technology progresses, however, the question is, are you ready to transition to the digital economy?

The traditional economy which many people are shifting from is now beaten up, run down, and is a “thing of the past” for many people who are taking control of their life to make their dreams come true. Those who are making that change and are switching from the conventional and beaten-up economy which we had lived in are now shifting to the digital economy which is thriving like never before, and offers opportunities to anyone, regardless of a degree or experience. The only thing holding those people back from converting to this digital economy is themselves.

The Four Basic People in Our World

There are four basic categories of people in the world which we all live in. The four groups of people in our world are as follows:

  1. Employees – The largest group of people. Being an employee in 2013 is not a good position to be in, and that positioning will only get worse for people in this group as time goes on, and as more of our world coverts over to the ways of our thriving digital economy. First off, big businesses are going bankrupt and people are being laid off. The second reason is that all of the big businesses, and even small businesses, are migrating to the digital economy. The thought of self-checkouts never became a reality until lately. For example, since nearly one quarter to one half of all supermarket checkout lanes are now these self-operational machines, that same respective amount of people were laid off, simply because they were replaced by our digital world. This group of people are a part of our traditional economy.
  2. Specialist – These people typically work for themselves. Because they typically work for themselves, have it a little better off, however, there is very little leverage for specialists, as there is so much competition (competition consistently lowering prices, etc.). This group of people are yet again part of the traditional economy.
  3. Digital Experts – This group of people is our first category within the digital economy, and these people start online businesses. The appealing part of being a part of this group of people is that you have huge leverage. Once you learn a few new business principles, it is far easier to start a business in the digital economy than it ever was in the past. Most digital experts who start businesses and are successful were not born with a silver spoon in their mouth and did not spend thousands of dollars to get their business off the ground and profitable. Businesses in the digital economy can most often be started on a shoestring budget.
  4. Publishers – Product owners or creators who create these products in our digital economy are a part of this group. Because of the internet, they are able to grow at an astonishing speed. These people get more and more success, and more and more leverage. These people have much more freedom (financial, time, and geographical). People in this sector can work where they want, when they want, and how they want, and usually work just a couple hours per day to create and sustain a six, seven, or eight-figure income. The flexibility of time, money, and geographics is the most appealing aspect of being a part of this group.

The key to merging to the ways of, and becoming a part of, our digital economy is to first realize the opportunity in the digital economy, then learn the ways of it, and simply put those ways to succeed in the digital economy into practice.

The reason why it is essential to convert to our digital economy is because the traditional economy has no freedom. There is so much competition and the businesses in the traditional economy are in a constant battle of trying to cut each other’s throats to make ends meet and gain little leverage. Because of the lack of leverage in the traditional economy, there is little room for advancement. The other reason why the traditional economy is so inefficient is because everyone within is trading their time for money, and because there is only so much time in a day, most people do not want to work from 9-5 every day.

With regards to the digital economy, it is in the end much more efficient because you are able to put your business on autopilot, and do not have to be there to manage it, as you can leave all of the management to technology for the most part. The other appealing aspect to it is that with leaving all of that work for technology, the internet allows you to sift through people to find those who are searching for exactly what you are offering instead of cold-calling and other similar means of selling in the traditional economy.

More and more people are moving/migrating to this digital economy which allows all of these appealing benefits to become a reality. There is no reason why you should not migrate to the digital economy unless you are simply not motivated enough or do not have a strong enough want for that change to take place.

Different Strategies and Global Macro Trading

Many investors do not realize the plethora of different trading strategies that are used successfully by traders across the globe. There are more choices then just a day trader or a buy and hold investor. In fact if you look at the different hedge fund classifications neither of these even exist because they are not an actual strategy.

You can be a value investor that looks for businesses that you think the market is undervaluing. You can be a growth investor that looks for businesses that have rapidly accelerating earnings that you think have the ability to continue growing. Or you can be a GARP investor which looks for stocks where you are buying growth at a reasonable price. Of course we have only touched on stocks in the section and have totally left out the small cap and large cap classifications. But these are the classical types of investors that run most mutual funds.

Next up we have several other asset classes like fixed income, commodities, currencies, and real estate. There are a ton of different strategies and styles that only trade one asset class but there is also one strategy that combines the best of all worlds.

That strategy is global macro trading. A global macro trader does not wed themselves to just one strategy, instead they go and find the absolute opportunities from not only a reward standpoint but also from a risk standpoint. After all you don’t want to be swinging for the fences if the risk is a total loss.

Macro traders look at the investment landscape from the top down and try and figure out what type of economic environment we are in and how they can profit from it. They then drill down to the micro level to ensure that they are putting the trade on using the best instruments to get the highest risk adjusted return. Essentially the most bang for the buck.

By looking into the different strategies that are available to you, you will be better able to profit in different market regimes. Many people skip this step and it costs them dearly.

Sustainable Economy For USA

Sustainable economy is what North Americans are missing the most these days. Times are bad now and I can’t spare a cent out of my limited income, this phrase is so common now that sales people at hyper marts and every where else are being trained with rebuttals to cope up with such deal debarment signals. The real question maybe is, was there ever a sustainable economy in USA, if yes then what happened to the sustainability of that sustainable economy. May disagree and argue that the USA never enjoyed sustainable economy.

A sneak peek back into the past 3 decades of USA; shows the glimmering figures of a pliant economy which was misjudged in contrast with the September 11 terrorist attacks. Despite an estimated $120 billion of damage and a great deal of anxiety, one year following the 9/11 attacks considerable recovery was recorded in U.S economy. If we review the federal budgets between FY 1998 and FY 2001 $ 48.3 billion where available in surplus. Still these figures here are not answering the question about how sustainable economy has been in USA.

Sustainable economy by definition should be able to survive all economical jolts it come across, or at least rejuvenate naturally without any assistance from external control. One should not really be troubled while uttering that Sustainable economy never existed in USA; in fact it’s rather hard to differentiate North American economy from the economy of UAE. It’s about time that Americans should realize that the government can’t go on maintaining social welfare funds while funding war fronts in two different countries.

So who is going to develop a sustainable economy in USA? If Americans are expecting the government and the administration to do so, then it’s not going to happen; simply because governments develop central economies, if not federal then state based economies.

Sustainable economies are town based economies; they do not originate from Manhattan or Boston they are developed in back yards in suburbs. Sustainable economies are not dependent on huge financial centers they need home base local industry and consumer from the neighboring towns to thrive. Central grid stations, fossil fuel costs and energy crises don’t hinder there growth as sustainable economies use simple renewable energy resources to satisfy there energy needs, groceries are picked from local farm markets instead of super market shelves.

Why grow tulips and roses in the back yard and pick cabbage and carrots from the super market, why not pick flowers from the local florist and harvest food from our own gardens. Instead of getting another gas guzzler financed why not get a wind turbine or a photo-voltaic unit leased. Sustainable economies develop through garage sales and local service providers; they depend on surveying local markets instead of flipping the yellow pages.

Times are hard because excess of use is the back bone of AMERICAN economy, swapping plastic money is common and we don’t care about the origination of a product. Sustainable economy is based on human consciousness about the resources locally available waiting to be utilized. Sustainable economy USA, sustainable living, solar energy, wind energy, renewable energy, North American economy.

Forex Arbitrage – A Different Strategy to Make More Profits in Forex Trading

With all the necessary strategies needed to make sure that there is an available way to guarantee sufficient results for your forex needs, you may need also to become familiar with forex arbitrage. Forex arbitrage happens when one takes advantage of the inefficiency that is occurring between two currencies. While this is considered as one of the higher approaches in the forex trading industry, there are also some ways in order for you to get a better view of how this is going to work to provide you with all the necessary needs that you need to be able to make profits from this approach.

Using a forex arbitrage calculator the traders will be able to calculate and check if the trading of the pairs of currencies can accommodate and provide with the different techniques that can become applicable in the trading process itself. One requirement though to undergo forex arbitrage is to be able to have multiple accounts that are in different locations that one may be able to check on the different currency pairs and how this is also going to provide a good way in making sure there are the necessary ways in keeping up with this kind of situation.

Although there forex arbitrage is a more complex approach other that the other strategies and techniques, still it is one way of ensuring that this can become a possibility for you to indulge and make sure that you have the necessary skills in order to be able to accommodate this kind of approach to some people. In this way also it’s making it the best option for traders to go ahead and making use of this as a part of your strategy in trading will in the end lead you to some favorable results. This also would require and make way for you to be able to develop a good thing in making sure that what you have is the most appropriate approach to use in the forex market. With a lot of strategies that will be used in profiting from the forex market on e thing you need to know and take into consideration is on how this is going to be able to provide you with the things that you need to make sure that you can earn profits from this type of approach.

It’s no doubt that with a lot of strategies and ways on how to be able to learn from forex arbitrage, it can allow one of us to explore some other options and arrive at a certain conclusion that with these different ways we can have the most important ways in developing a profitable strategy known as forex arbitrage.

Human Resource Managers Follow Different Strategies to Employ People

Hiring the right employee in any organization or department is important and challenging as well. This is a challenge in the sense that if the right employee does not get selected it leads to a great loss for the company. Not only does it prove costly to the company in the monetary sense but it kills time and spoils the environment. It is particularly because of this reason that every company selects the required employees through its human resource department. This department consists of few groups of people who are responsible for the management and organization of the recruitment and selection of the staffs in the company.

When the right employee is hired it leads to a great boost for the company. Apart from that, it also contributes a lot to the improvement of the work culture which in turn can pay the company back lots of things. The human resource managers select the employee in such a way so that they can contribute a positive thinking and planning helping the company as a whole to meet its goals and aims at the turn of the year and make a great profit. Therefore, the department takes few steps to hire the right employee essential for the company.

The human resource managers try to define the nature of the job to the employee. This kind of job analysis helps not only these employee but the managers as well. For this they collect information about the necessary skills required as well as the duties and the responsibilities that the employee should take. The kind of work environment is also tried to be explained so that the recruited employee does not finds himself to be a misfit for the company as a whole. This is one of the strategy followed by the department to recruit people.

Two Titans of Industry – Two Markedly Different Strategies – Which Would You Have Chosen?

First Titan

While Henry Ford is best known as the inventor of the assembly line and modern mass production, these and some 161 other inventions were just part of his grander vision. It was that vision and its realization for which he was most proud — the democratization of travel. Ford envisioned his Model-T in every American garage and a world of travel round every corner.

Introduced in 1908 at a price of $825 the Model-T was an immediate success. By 1916 through continued innovation and efficiencies, the Tin Lizzy, as it was affectionately called was flying off show room floors for $360. Within two years half of all cars in America were Fords. By 1927 its final year, total production had reached 15 million, a record that stood for 45 years.

As Henry Ford wrote in his autobiography, “Any customer can have a car painted any color… so long as it is black”. While the color black became emblematic of Ford’s success, it was the paint’s fast drying time that made it the sole color of choice on the assembly line. And it was black that would eventually lead to Ford’s shortfall and to stubbornly revise his vision or go out of business. Was black Ford’s fatal flaw or his industrial genius?

Second Titan

The year was 1923, four years before the final Tin Lizzy left the assembly line. It was the year Alfred P. Sloan took the reins of a middling and befuddled manufacturing company called General Motors.

By the mid 1920s, Ford’s dream had been realized. Every American it seemed, either owned a Model-T or knew where they could borrow one. They were sturdy, easy to drive and comfortable. Most importantly, with Ford’s universal replacement parts they were easy to repair. While he created affordability through mass production, it came at an unexpected cost. There was no reason to buy a new Model-T when a repair would result in one equally the same — a black Tin Lizzy. With no reason to upgrade, sales began to suffer. While Americans loved their new found freedom, they demanded more than just democracy, they wanted identity.

Alfred Sloan had inherited, through takeovers and mergers, a misaligned assortment of automobile companies, ranging from Chevrolet to Cadillac, Pontiac to Oldsmobile and a few names, too short-lived to remember. But it wasn’t what he inherited from his predecessor that set him apart, it was his innate wisdom to see the American car buyer having a complicated set of needs and wants that could be served and sold. Unlike Ford, who saw the consumer as a monolith at the end of a supply chain. Sloan saw the market from the consumer’s perspective. His philosophy was, “A car for every purse and purpose.” And with that he carefully positioned each car model to attract a unique market segment and price point. This reduced cross line sales while encouraging upgrades from the economy priced Chevy to the luxury Cadillac. And he offered them in colors – lots and lots of colors.

He didn’t stop there. He was the first to introduce annual styling changes, design and engineering innovations and accessories to choose from. And to be sure customers kept coming back, he offered trade-ins on older models and created GMC financing to keep the system moving. All the while, Ford stubbornly resisted change until it was too late. General Motors led in sales for the next 70 years.

So which vision and marketing strategy would you choose?

Ford’s, with his grand vision and engineering genius, revolutionized manufacturing and indeed put America forever on wheels. But for his myopic and monolithic view of that America, he was felled by his own fatal flaw: any color, so long as it’s black.

OR

Sloan’s, who saw not technological advancement, but instead envisioned the crazy, mixed up, confounding, sometimes clearly contradictory, American public’s desire to be free. Free to choose. Free to sell when they wanted. Free to buy what they wanted. And free to finance what they couldn’t afford. Sloan married the automobile to America.

The Japanese Economy and the Forex Market

A huge earthquake recently hit Japan. The already stagnating economy of the Far Eastern ex-powerhouse country is facing major challenges. How will this country and its forex market perform? Below is an insider view.

Further adverse effects on the Japanese economy seem inevitable from these earthquake-related damages in addition to the financial problems to which Japan has already faced. Many foreign experts have expressed pessimistic opinions that self-recovery of Japanese economy is unlikely. At the same time, Barron has expressed a bullish view of its economy and certain stocks. Is the recovery of Japanese economy hopeless? Did Japanese yen become a currency that would not be worth investing?

Let us, first, analyze the commentaries of overseas expert on Japanese economy right after the earthquake, they all are pessimistic, such as Japanese economy would not be recovered as strong as before any more, or Japanese yen should not be bought, but should be sold.

Nobody would be able to deny the negative effects from the earthquake, the tsunami, radio contamination from the nuclear plant accident, and the electricity shortage in the greater Tokyo area. However, the opinions, such as hyper-inflation would occur due to excessive issue of national bonds, energy of the recovery would not be strong due to Japanese population aging, or human resources escaping from Japan to foreign countries, are the science-fiction-like imaginations, rather than economic analysis.

Those who imagine would have their freedom, but they would underestimate the power of Japan, an advanced country, whose living standard and education level are high. Japan has been and still is economic power whose expertise is high-tech with many experienced and skillful expert human resources. Japanese foreign currency reserve should not be also ignored.

There are reasons to believe that the Japanese economy will recover from the damage stronger than ever and begin another period of growth. This is because:

  1. There is a unique cooperative relationship between the Japanese financial sector and industrial sector. One of the characteristics of the Japanese economy is that the financial sector and industrial sector have kept their cooperative relationship, established during the recovery from the first energy crisis in the 1970s. Although the stock market right after the oil crisis had dropped to be 3,355 yen on October 1974, the market recovered and marked high, 4,564 yen, on May 1975, seven months later than the steep drop. This unique system has worked to enable recovery from past difficulties as the oil crisis. It should work well for similar recovery from the current damage.
  2. The world economy will not survive without the Japanese economy. The world has observed and recognized that components supplied by Japan, in fields such as automotive and electronics, could not be replaced very easily. American research institute, HIS Automotive reported on March 22, that due to short supply of auto parts from Japan, the production of automobiles worldwide would drop by 35%, equivalent to five million cars. In the electronics field, there was an announcement that one-fourth of silicon wafer supply was stopped because of the earthquake. Wall Street Journal on March 11 reported that Japanese share of the semiconductor market is 20.8%, and the share of electronics components is 13.9%. Therefore, the impact of the supply shortage by the earthquake on global electronics market shall not be underestimated. Japan is also an important market for exports from countries including China, the US, and many European nations. It is, therefore, useful for other countries to support the recovery of the Japanese economy.
  3. The Japanese outlook is effective with regard to overcoming difficulties such as the current earthquake situation. Japan has overcome many difficult situations including oil crises, higher-yen-evaluation, and previous natural disasters like the Kobe earthquake. The Japanese people are skilled in scheduling recovery, and focusing on their individual roles, and will continue their efforts until they attain their goals. Many enterprises have already proved this point by quickly re-opening production after the earthquake. According to The Institute of Statistical Mathematics in Japan, in its regular report issued on every five years, the top image of Japanese characteristics is diligence. It has been diligence which recovered Japanese economy from various crisis in the past. There is no reason it does not work this time. It will work this time, as well.

According to news sources from Japan, Japan has started to plan more than simple recovery from the damage. Tohoku District is planning to build a new city which is strong against natural disaster. Some of them have started drawing blue print to build new concept cities. Instead of plunging the Japanese economy, even this natural disaster would trigger the new recovery and growth of the economy of Japan.

The Japanese Yen continues to be one of the major currencies on the forex market. However, the country and its economy have not been well understood by the outside world. This country has a history of recovering well from disasters. The people have inherited strength through their genes. The current situation will once again prove this to be true.

Fundraising – Different Strategies For a Successful Fundraising

Are you in need of fundraising efforts in order to help out your child’s school or for a local family or perhaps a nonprofit organization? Whatever the reason is for needing to bring in some funds and to whomever the funds will go, there are several things you can do to ensure your fundraising project runs smoothly and meets (or exceeds) your financial goals.

Different Fundraising Events. Different Strategies.

There are several different routes you can go when it comes to producing a successful fundraising experience. Each of these fundraising events will have different strategies. Each will work better for one target group than another one does. But all of them have the same goal of bringing in the most funds for your mission.

The good part? Each and every one of them can at least in part, easily be done online. Even if you choose to only announce and give details online and manage the rest via a different method, you’ll find an online method brings much ease into your tasks. Simply go to Events Listed and see how easy it is to post your fundraising event, no matter which type of fundraiser you chose to execute.

Event fundraising can get quite fun, but you also have to consider the cost involved to host an event and make sure you’ll not only get that money back, but also meet your financial goals for you fundraiser. If not, it doesn’t matter how much fun you had, it’s pointless. Be smart when making your decision.
Here are a few ideas:

Event Fundraising

  • Host a dinner that includes a speaker that will educate your audience about your cause. Just be sure to get a lively speaker, not one that will put your audience snoring in their soup.
  • Host a trivia night and make the questions relate to your cause. Make the questions fun, lively, and possibly interactive.
  • Put on a golf tournament with incentives for your guests. Who doesn’t like incentives?

Sales Fundraising

  • Discount cards are not only easy to carry; they provide great value to your supporters. These usually hold coupons from local businesses and are great sellers.

Direct Donation Fundraising

  • Fundraising letters. Send out to a targeted mailing list and just flat out ask for donations after you’ve been informative about your cause.

Silent Auction Fundraising

  • A lot of fun and usually very profitable. You can have just a few highly quality, high bid items, or several low bid items. Just make sure all items are applicable to your guests. Remember who your audience is.

Raffle Fundraising

  • Who doesn’t love to get in on the chance to win? You’ve seen those who’ll buy 25 tickets at $1 each just for the chance to “win” a small basket of chocolates. Everyone loves to win and will even pay to win.

Online Fundraising

  • It just doesn’t get any easier than this. You can put your entire fundraising endeavors online. From the announcement to soliciting for and collecting the donations themselves can be done easily. Just go to Events Listed. So have fun, rake in some cash, and then do it again soon! Who says you can only do this once?