Focus on Sound Integrated Economics

Much has been written and continues to be written on sound economic integration and policy on global, regional, national, state and local levels. This includes, but not limited to, both public and private sector stakeholders (governments, companies, wholesale & retail consumers, and individuals, etc.).

As a “top-down” methodology & approach, sound monetary policy (interest rates, money supply, currency stability, and treasury bonds) drives basic fiscal & regulatory policy (taxes, duties, and levies) which in turn, directly impacts macro-economic policy/climate (commercial markets, supply-demand, price/income elasticity, infrastructure, etc.), structured finance (full recourse/balance sheet, limited recourse/hypothecation of assets, non-recourse/strength of contracts, and capital markets), micro-economic strategy and plans (business & functional operations strategy/plans, balance sheet, P&L, cashflow statements, and equity stocks).

As a “bottom-up” methodology & approach, for all asset classes; immovable assets (precious metals, natural resources, land, real estate, and intellectual property rights-IPR) are the basic foundation followed by movable assets (plant, facilities, machinery, equipment, vehicles, furniture, fixtures etc.), cash assets (currencies and bank accounts; checking/savings/deposits), paper assets (securities, stocks, bonds etc.) and e-assets (combinations/permutations of above).

It should be noted that sound economic integration and policy both directly and indirectly impact various stakeholders in making critical capital expenditure (CAPEX) and operating expenditure (OPEX) plans and decisions. Also, impacted are positive Enterprise Value (EV) and Earnings per Share (EPS) as well as viable Internal Rate of Return (IRR), Debt-Equity Ratio (DER), Debt Service Coverage Ratio (DSCR), Rate of Return on Equity (RROE), Payback Period and Break-Even Capacities.

In addition to sound economic integration, there is parallel correlation in maintaining sustainable balance between “Debt-Deficits-Demand” which in turn translates into structuring senior/subordinate/mezzanine debt securitization and collateralization and working capital credit financing.

As a going forward scenario, there is nearly $300-400 Trillion in debt and over $1.5 Quadrillion in derivatives prevailing in current markets. This massive debt burden requires combinations and permutations of definitive unwinding, deleveraging and/or liquidation of Collateralized Debt Obligations (CDOs) and Credit Default Swaps (CDSs). It will be important to maintain sound integrated economics in order to preclude any potential forthcoming effects of “Deflation-Inflation” scenarios.

References:

1.      http://en.wikipedia.org/wiki/Economic_integration

2.      https://www.imf.org/external/np/speeches/2000/082500.htm

3.      http://www.investopedia.com/terms/e/economic-integration.asp

4.      http://www.economicsonline.co.uk/Global_economics/Economic_integration.html

5.      http://www.britannica.com/EBchecked/topic/178433/economic-integration

6.      http://economics.about.com/od/useconomichistory/a/global.htm

7.      https://people.hofstra.edu/geotrans/eng/ch5en/conc5en/economicintegration.html

8.      http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2014/8/30_Stockman_-_Unprecedented_Global_Financial_Wipeout_Is_Coming.html