Dr. Periklis Gogas
Department of Economics, Democritus University of Thrace
The Greek debt crisis led to an unprecedented reduction in the country’s real GDP by 26.5%. This recession is one of the largest crises that the world economy has ever seen. For comparison, the Great Depression in the US in the later 1920’s resulted in a GDP reduction between 25% to 30%. Moreover, the Great Depression lasted for four years, while the Greek crisis reaches almost 8.
Simply stating that Greeks lost 26.5% of their income paints a gruesome picture. The true impact of the crisis is even worse. We compare current Greek real GDP to the one in 2009 just before the crisis. By doing so we are not taking into account a very significant stylized fact of every economy: growth. All economies show a strong positive trend in their GDP time series. This is the result of a steady growth in the factors of production, i.e. human and physical capital. The available human-working-hours increase due to population growth and the amount of physical capital stock also increases over time as a result of investment in fixed capital. Last but certainly not least, an additional very important factor for continuous growth is the improvement in technology. Technology significantly increases the productivity of both human and physical capital.
Continue reading What is the real cost of the Greek crisis?
George A. Haloulakos, CFA, is a university instructor, author and entrepreneur [DBA Spartan Research and Consulting]. His published works utilize aviation as a teaching tool for Finance, Game Theory, History and Strategy.
Value is the key performance measure in a market economy because it encompasses the long-term interests of all stakeholders in a company. In highly competitive global businesses – especially with diversified companies — it is essential for a firm to be effective in all three phases of managing cash flow — operations, investing and financing – to generate cash at a return exceeding its cost of capital. The concept of stakeholder management has broadened the responsibility of management to include financial stakeholders (i.e., equity owners and creditors) and non-financial stakeholders such as customers, employees and suppliers. This task is magnified for diversified companies whose corporate structure is based on a mix of different types of product or business groups having a variety of financial requirements. Corporate financial strategy for diversified companies based on a portfolio management style may benefit from a stakeholder approach in order to cope with a myriad of challenges including, but not limited to, achieving economy of scale, diversification and growth in difficult or less predictable environments. Two different eras – the “stagflation” period from the mid-1970s to the very early 1980s and the “globalization” decade of the 2000s – provided extremely competitive market conditions where diversified companies achieved mixed results with divergent stock price performance. The case studies reviewed here offer a study in contrast in how the stock market values diversified firms with different corporate financial strategies.
Continue reading VCFS-4DC: VALUATION AND CORPORATE FINANCIAL STRATEGY FOR DIVERSIFIED COMPANIES
George A. Haloulakos, CFA, is a university instructor, author and entrepreneur [DBA Spartan Research and Consulting, 1995-to date]. His published works utilize aviation as a teaching tool for Finance, Game Theory, History and Strategy.
The Convair B-58 Hustler, a pioneering aircraft that helped usher advancement in aeronautics while providing object lessons in Finance, Strategy and Game Theory makes for a compelling story. Finance explains how capital is employed to create added-value. Strategy explains how resources are mobilized to capitalize on opportunities while achieving victory. Game Theory embodies strategies and tactics in situations of conflict or competition in which participants are faced with choices of action in which they win or lose based on what others choose to do or not to do. Statistics may provide guidelines or rules of thumb but in the midst of conflict where human behavior comes into play, actions and outcomes do not necessarily conform to a statistical norm or numeric formula. The long-retired supersonic B-58 is a unique teaching tool for these disciplines made all the more interesting by its remarkable achievements during its service life from 1960-1970. In the following excerpt from my forthcoming book CALL TO GLORY, basic principles in Game Theory are demonstrated in this historic case study that are useful in evaluating two major public policy issues facing our nation today: the merits of launching a new strategic bomber and dealing with adversaries that have publicly declared their intention to destroy us.
Continue reading CALL TO GLORY– How the Convair B-58 Hustler Helped Win the Cold War