Saturday, 25. May 2013 - 10:05
23. 10. 12. - 12:45
Why canít countries act like companies asks Clem Chambers, CEO of leading investment site ADVFN.com and author of Amazon best-selling investment guides '101 Ways to Pick Stock Market Winners' and 'A Beginner's Guide to Value Investing' and the new financial thriller, ĎThe First Horsemaní. If the US was an incorporated company instead of a sovereign nation, it would be bust and filing for bankruptcy. Many European countries - including Croatia, on the verge of joining the EU proper - are in a similar financial position. First world finances are so topsy-turvy that the USís fiscal deficit is practically equal to its total collections of Federal income Tax. So why donít countries act like companies? Why canít they stay in the black? After all, the laws of economics are the same for them as for any other enterprise. The countries concerned are monopolies, so they always have an income. They have, at least in recent years, had no one to take them over and break them up. So, when they get into financial trouble, they act like all corporate monopolies; abusing 'customers' and jacking up prices of services. If Europe or the US were companies, what would each company have to do to get the 'business' back into the black? First off, the 'nation as company' would sack all its dead weights, cutting its loss-making and core divisions. Out would go anything that wasnít front and centre necessary, including all the frills and fancies that youíd typically find at a large, profitable corporation. Simplifying its offerings to focus on its most popular 'merchandise' the country-as-company would cut the inert overhead supporting everything non-essential to delivering the key products its customers valued. It would then flatten it 'head office' the one stuffed with people with non-jobs, large salaries and nothing better to do than play politics. This new, leaner enterprise would then look for ways to take its core processes and make them leaner. The goal would be to do more with fewer employees. It would then need to refinance. Refinancing is supposed to be the core process right now for developed nations strapped for cash, yet the restructuring of enterprise is not really happening. The best they can do, rather than cut the waste, is to ask their employees to take a pay cut at least in inflation-adjusted terms. Meaningful spending cuts are just not happening - although there is plenty of talk about it taking place. However you wish to measure state austerity, it is certainly not on the scale a corporation would suffer to get it back on the rails. The consequence is the sovereign government must borrow more money. A weak company will do likewise until it dies, but it doesnít have the borrowing power of a first world economy - a sovereign can keep the faÁade up for longer. Rather than restructure, the developed world is simply borrowing more on the bond market. A company would do this but it would also issue equity (in laymanís language, sell new shares for cash). But what is sovereign equity? Are its citizens the equity holders? They should be, but they arenít, they are merely 'the customers'. Who are the shareholders of a country? An answer to this question might lead to a solution for many of the Western world's problems. It would certainly give these hard up sovereigns a chance to recapitalise. ~Visit www.ADVFN.com for free, real-time stock prices ~ Clemís latest news and articles at www.clemchambers.com ~Follow Clem on Twitter: @ClemChambers The First Horseman(http://clemchambers.com/books/horseman/index.html) '101 Ways to Pick Stock Market Winners' (: http://www.amazon.com/Ways-Pick-Stock-Market-Winners/dp/1907616276/ref=la_B0034OKF36_1_4?ie=UTF8&qid=1343819636&sr=1-4) A Beginnerís Guide To Value Investing http://www.amazon.com/ADVFN-Guide-Beginners-Investing-ebook/dp/B007HAZV0K/ref=la_B0034OKF36_1_7?ie=UTF8&qid=1343819636&sr=1-7
Croatia to take part in building two pipelines
Representatives of the Governments of Croatia, Montenegro, Albania, and Bosnia and Herzegovina signed a memorandum highlighting their intention to construct two new pipelines - the Trans-Adriatic (Trans Adriatic Pipeline, TAP) and the Ionian-Adriatic (Ionian Adriatic Pipeline, IAP), the news agency RIA Novosti reports.
Anas Sharbini returns to Rijeka
Professional football forward Anas Sharbini has returned to Rijeka FC.
Dukat acquires more shares in Ljubljanske Mlekarne
Croatian dairy firm Dukat has bought another 46.23 percent of the Slovenian diary producer Ljubljanske Mlekarne.
Angry fans damage coffee shop of former Sibenik FC director
Football fans in the Croatian coastal town of Sibenik have expressed their anger following the relegation of the local football club into 3rd division.
Tony Blair is the new ambassador of Youth Sports Games
Former British Prime Minister Tony Blair has accepted to become the latest ambassador to the Youth Sports Games.
Unions urge for the privatisation of 3. maj shipyard
Unions of the 3. maj Shipyard in Rijeka have urged the Croatian government to speed up the privatisation and to agree new business deals.
Transport Minister sees future for Croatia Airlines
Croatian Transport Minister Sinisa Hajdas Doncic has revealed national airliner Croatia Airlines is going to survive.
Hajduk needed to open their stadium in the middle of the night to let fans celebrate the cup
Hajduk Split football club needed to open its Poljud Stadium at 4.30 AM when thousands of fans wanted to greet their team upon a return from Zagreb where they won the national football cup on Wednesday night.
Missing woman married Facebook friend
A woman reported missing by her friends for more than a month turned up safe after 44 days to tell them she'd run off with a man she'd met on Facebook.
Mayor saves a woman in Senj
The mayor of the western Croatian coastal town of Senj has spread a good image of his town in a direct way.
The most popular stories –
last 7 days
|Pirates attack Croatian ship Segesta on Danube in Serbia|
|Croatian cities to get 30 million Euro from EU|
|Serbian tycoon wants to invest in Croatian hotels|
|Croat accused for insurance fraud in Germany|
|Policemen in coma after trying to stop violence in a family|