How Microeconomic Factors Contribute to Changing Global Market Positions

Written By Ted Cacciola Copyright 2012 Hamilton Financials

Copyright 2012 written by Theodore Cacciola, published via the outlet of Hamilton Financials, Inc. Fairfield, Connecticut. All Rights Reserved. Except as permitted under the United States Copyright Act of 1976, no part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without the prior permission of the publisher. Inquiries can be sent to the publisher at publishing@hamiltonfinancials.com TERMS OF USE: This is a copyrighted work and Hamilton Financials reserve all rights in and to the work. Use of this work is subject to these terms. Except as permitted under the Copyright Act of 1976 and the right to store and retrieve one copy of the work, you may not decompile, disassemble, reverse engineer, reproduce, modify, create derivative works based upon, transmit, distribute, disseminate, sell, publish, or sublicense the work or any part of it without Hamilton Financials prior consent. You may use the work for your own noncommercial and personal use; any other use of the work

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Chapter 1: Foreword
Within this book you will learn how microeconomic factors in the market contribute to global market positions. We start our eBook here with a short nonfictional case study, being that Greece used the microeconomic factor of not paying their taxes and turned it into a 700 billion dollar deficit which affected Macroeconomic positions. In Greece, the Microeconomic Factor of not paying their taxes, averaging 50 vacation days per year, and living laggard lifestyles resulted in global macroeconomic

catastrophe in 2011, the solution became to bail out Greece at Germanys expense, which the Greeks rioted in the streets for, took up arms, and their laggard lifestyle was not portrayed in their third occupation by Germany.

This is a type of an example we will indulge in within this reading. Within this text, we will look at tradeoffs and diversification. Looking at tradeoffs, we look back to our small case study of how Greece took the tradeoff of not paying taxes which resulted in a regional depression. Looking at diversification, we will look into the writings of Benjamin Graham and transpose them into the concepts of microeconomics. We will look at the concept of people acting rational, reiterating the concept that the Greeks were not rational when thinking that short workdays, not paying taxes, and averaging 50 vacation days per year would result in a high yielding macroeconomic perspective. We will look into, when looking at this concept, the concept of the question in What is the/this economies

future and how should I go about building wealth.

Finally we will go onto the global market subsector of incentives. We will look at how there was an influx of participants in the Greek economy due to the incentives of low cost, easy, laggard living. We will look into the concepts of global trade and where it is headed in the future and look into another concept of how crude oil is in the declining growth stage of its lifecycle. We will do this all while using the long run principles of microeconomics and juxtaposing them within macroeconomic perspectives.

Chapter 2: The Affect within the Concepts of Trade-Offs within Global Market Perspective
We begin this book upon concepts aforementioned within the foreword in that the Greeks faced trade-offs when looking within the global market perspective. These trade-offs were not ever-apparent, they were slow and slowly stagnating on the Greek economy until they faced what a Greek Economist described as The Equivalent to the United States Great Depression.

According to Thomas Mun, philosopher and economist, within trade we must follow this rule: To sell more to strangers yearly than we consumer of theirs in value. Much can be said by this timeless quote. It is very simple, yet very well put, essentially, is the cornerstone of trade-off ideals within modern day philosophy. You may be well

understood upon Muns aforementioned quote, but his essence is within what he goes onto say within his writing Englands Treasure by Forraign Trade within the Greeks perspective. He goes into the numbers, he speaks of how each person must contribute their fair share into the economy and within their fair share pay their dues, or their taxes, when he writes: For in this case it cometh to pass in the stock of a Kingdom, as in the estate of a private man; who is supposed to have one thousand pounds yearly revenue and two thousand pounds of ready money in his chest: if such a man through excess shall spend one thousand five hundred pounds per annum, all his ready money will be gone in five years; and in the like time his said money will be doubled if he take frugal course to spend but five hundred pounder per annum (or per year), while rule never faileth life-wise in the commonwealth.

This yet again is a basic, but well put quote. Within his words you understand his meaning in that in Greeces case, we

reiterate a concept by the author himself in Ted Cacciola in that you must see what you spend within trade. Trade coincides and correlates within the concept of money and trade, seeing that spending 50% more than you have dictates a timeframe of 5 years, based on Muns figures, before you go bankrupt. While spending half of what you make doubles your income per year.

We digress to the concepts of debt as a percentage of GDP within this case, clearly, Greece was not seeing the average figure of 60% debt as a percentage of GDP within their case, in fact, they were seeing debt as a percentage of GDP more so, to their liking, which commiserated in their downfall.

Chapter 3: How the Definitive Value Investors Concepts of Diversification Coincide with Changing Global Market Positions

We start within our next phase of this book within the concepts of diversification as written by Benjamin Graham and how they correlate within the concepts of how microeconomic factors contribute to global market positions in a macroeconomic perspective.

We start with the diversification rule within Grahams Rules for Common Stock Component where he writes, There should be adequate though not excessive diversification (when looking at the selection of common stocks). This might mean a minimum of ten different issues and a maximum of about thirty. Within the concepts of Greece, conscribe the concept that There should be adequate though not excessive diversification; Within this Concept think of how the Greeks diversified within hedged bets that their pristine dollar would outlast the diversification which nullified the same dollar. This hedging within diversification was comprised of, but not limited to, a large margin of space within intelligence between the rich and the

poor, similar dollar tendencies between the rich and the poor, and similar, yet adverse desires in parliament for a laggard lifestyle which offset itself and let to economic catastrophe on a Macro and Micro level.

Within looking at tradeoffs within diversification Graham writes, It often appears good business for such an enterprise to acquire an existing company in the field it wishes to enter rather than to start a new venture from scratch. In order to make such acquisition possible, and to obtain acceptance of the deal by the required large majority of shareholders of the smaller company, it is almost always necessary to offer a price considerably above the current level. Such corporate moves have been producing interesting profit-making opportunities for those who have made a study of this field, and have good judgment fortified by ample experience.

When looking at this quote we look at the capitalistic position of Greece within their

acquisition by Germany. How was Germany looking to diversify by acquiring Greece?

Heres the put: Germany, in essence, held good judgment in acquiring Greece through their potential for outsiders to visit the country. It was a long thought decision to bail out Greece but in addition to the plausibility of sustainable capital at the expense of re-positioning the Greek dollar, which at this point coincided as the same dollar held by the Germans, in the Euro, but a re-positioning of Greece is completely deemed plausible. They have a high yielding travel capitalistic position, they are well taught within their schooling system, they have weak, but sustainable exports, and had a good overall services economy. The bet was held within the concept of a repositioning of tightly held values of the Greek society.

Think of the United States depression when the stock market dropped from almost 150 Points to just 28 in 1929.

The U.S. capitalized on cheap labor costs, a strong position within trade, and changed the values, similar to that of which the Greeks held in overspending, underworking, and underperforming and within itself the United States learned from the past which is, in fact, the hedge to which Germany saw in sustaining the Greeks from bankruptcy.

Chapter 4: How Incentives Change Market Positions:

When looking at Incentives we look at how there was an influx of participants in the Greek economy due to the incentives of low cost, easy, laggard living. Alfred Marshall wrote: We must take account of the fact that a stronger incentive will be required to induce a person to pay a given price for anything if he is poor than if he is rich. This concept coincides with the tax evasion issue in Greece which led up to its default and necessary bailout by Germany in 20112012. Regardless of the fact, within Marshalls quote whether you are rich or poor, there was no incentive to pay taxes and tariffs in Greece, a better put, there was no need, yes need to pay taxes in Greece due to poor government regulation of taxes.

In the United States we often hear of tax evasion, more over overall wealth related scandals and the USs position is what it should be, the value of a dollar in 2012 is similar to that of which is summated by not tax evasion, but tax delusion. The United States may have a strong economy but what I mean by tax delusion is that corporations bid low taxes due to high cost per unit of Accounting worked, if you missed that point, re-read the put in that you will understand how incentives affect global market positions.

Marshall goes onto write; A bank failure has taken 200,000 (Pounds) from the people of Leeds and 100,000 (Pounds, or British Dollars) from those of Sheffield, we may fairly assume that the suffering caused in Leeds has been about twice as great as in Sheffield; unless indeed we have some special reason for believing that the shareholders of the bank in the one town were a richer class than those in the other ; or that the loss of employment by it pressed

in uneven proportions on the working classes in the two towns.

It is said that increase of material means sometimes a fair measure of real progress. Look at our aforementioned example, think of incentives, the Greeks were not suffering, in fact they were living fairly humorous, in one put, life styles. Calling in sick, taking fifty days or more of vacation per year, eating two hour lunches, and so on, in doing so they did not think of the loss of employment which pressed in uneven proportions on the working classes in the two towns, an adverse put, we think not and ask you to think, here, there was an uneven proportion of work distributed within Greece from the rich to the poor, more so, there in fact; was. This was due to the proportion of work being distributed to the upper-middle class families in Greece and those who did what was right in paying their taxes. This case, case in point, led the upper-middle class in Greece to in fact leave Greece, when looking at University Graduates.

In essence, the Greeks did not think of their ultimate downfall and suppositional suffering due to their lack of understanding the concept of Incentives. Had the Greeks thought of the suffering they were due to face afore having dealt with that ultimately due suffering, they could have abided from the most realistic case of suffering modern day Greece had ever seen.

Chapter 5: Creating a Summation on Greece within a Diction:

In a concluding summation upon aforementioned facets which lead to Greeces almost apparent complete collapse and what can only, at the least be regarded as a downfall, using the Greek crisis as an example to which we ponder How Microeconomic Factors Contribute to Changing Global Market Positions. We conclude on a somber note looking at the tragedy which was Greece in 2011.

Greece violated the rules of the European Union to what has been described as persistently and blatantly. We earlier talked about debt as a percentage of GDP and how the average company, the United States, for example, to which is not in the best aggregate macro fiscal position, is about 60%, on average, while most countries in Europe held about 60% debt as a

percentage of GDP from 1990 to 2009 Greece held a Public Debt at exactly 94% of GDP, or Gross Domestic Product. Which means, in essence, that every year they were spending twice as much as they took in, in an arbitrarian sense.

Not only was Greece never penalized, but it was actually succumb to the opposite per the adversity you would have pondered it would have seen being a beneficiary of European Union Structural Funds in the latter part of the 20th and beginning of the 21st Centuries.

As Greece, aggregately remained a namesayer, its production costs rose significantly. To the point where Greeces intermediary costs to middle men became uncompetitive and accumulated a large current account deficit.

Once the crisis began to take form around 2009, instead of cooperating with the successes of the International Monetary

Fund the European Monetary Union, in conjunction with the laggard Greek parliament, delayed crisis treatment.

Looking at a more macro perspective, the Eurozone governments told Greece not to go to the IMF or International Monetary Fund for help, at the point which came in 2010 the Greek parliament were on track with the views of the European Monetary Union which went against sub-parliamentary advice in the second and third quarters of 2010.

Crisis was imminent, and in 2011 it struck and held throughout strongly within Greek debt and an almost collapse of the Euro until Germany agreed to bail out Greece in late 2011.

Cant you see that the Greek crisis was imminent now. We will now conclude this textual hypothesis in summating an answer to our title text of How Microeconomic

Factors Contribute to Changing Global Market Positions.

Chapter 6: Summating an answer to our title text of How Microeconomic Factors Contribute to

Changing Global Market Positions.

Microeconomic factors which contribute to changing global market positions seek out the character traits, per say, of a company, industry, market segment, or in our case studies case, aggregate federal reserve or a countries summated fiscal position.

There are a number of factors within stock evaluation according to Benjamin Graham which effect on a Macro basis, global market positions which are month to month changes in the dollar price of a countries currency, the yearly changes in the dollar price in comparison to other countries of a countries currency, the current earnings in relation to influxes and out fluxes of capital, services, and products, the specific country, on a Micro levels bond notes return on Equity and finally the aggregate GDP of the country on a yearly basis.

We must remember that there is an inherent amount of risk involved in one countries investing in another, as did Germany invest in Greek default, and near bankruptcy in 2011. You must remember that trends are what evolve within the risk of a country. What the Greeks did not have is the long run cycles of trends of the Euro in its mortar of being a recently established Union & Currency.

In conclusion, an economy must evolve if it expects to create things like job surpluses, profit surpluses, and secure fiscal positions. We must remember that there are social and private costs and benefits involved. People, legislature, entrepreneurs, and the like all need to share the responsibility that coincides in being a part of an economy, the un-infirmity that the Greeks deemed themselves greater than the practices of the Euro, in conjunction, countries on a Macro level must work to reinforce the relevance of advancements in things like production and GDP from their position in legislature all the way down to the fieldsmen. Acting rational,

supersedes acting traditionally as in traditional countries, or businesses per say will consistently be overtaken by rational, up trending countries. The final point we will make is in the pretense that all members of a society from a micro perspective trimming plants to a macro perspective making legislative decisions are all responsible to deter from adversity and change global market positions in an in fluxional manner.

About the Author:

Theodore Cacciola studied Finance and Business Administration at Eastern Connecticut State University with honors, a Deans list student. He is the head Analyst and owner of Hamilton Financials where he provides Financial News and Advice (*Disclaimer for Advice) in a web-based financial advisor atmosphere. He seeks to provide the reader with well put financial analysis. The type to which the reader is engaged, not offended. In his spare time Theodore loves to play rugby, where he has played semi-pro rugby league for the Connecticut Wildcats, is an avid snowboarder, having lived in Burlington Vermont during his youth acting as a selfproclaimed ski-bum, and is a Category 1 Downhill Mountain Biker.