Sunday, October 21, 2007

sexonomics explained

Open market economy – think about it.

Free capital inflows and outflows. No trade barriers. Fixed exchange rate, such that external investors know what they will get depending on what they spend. This will allow for easy market penetration. Policies are in place to prevent overheating of the market, and contrary to Paul Crompton, inflation is flavourabl—I mean favourable. There is a requirement to have elastic protection for firms entering the market. This open market is designed to reduce unemployment amongst firms. Every firm should have a place to go to. No firm should be marketless – that is the linchpin of our open market economy. Of course, there are some firms that will favour the Asian markets because they are small and have potential for expansion.

Not all firms have the desire to enter the market front on – they use more unorthodox methods of penetration. We will call these firms ‘back-door firms’. This method is less preferred as it can have painful outcomes, both for the firm and the market. Finding its origins in Ancient Greece, popularity of this method has skyrocketed in places like San Francisco. The Church frowns upon this.

Of course there are some firms who have such potential for capital outflows that they develop into very very large firms, and thus we call them ‘corporations’. These corporations (e.g. Starbucks, McDonalds) are prone to taking the market by force, being so big that they force the smaller firms out. Some of these large firms have trouble pulling out of the market due to consumer sentiment. Consumers, having gotten used to being satisfied by these large firms, will do whatever they can to keep the large firms from pulling out.

For locals wishing to enter an open economy liquidity is essential. Without liquidity market penetration can end painfully with much blood on the executive office floor. Liquidity can be found naturally within the internal workings of a firm, or from external private equity partners such as KKY.

Premature outflows lead to unsustainable growth. Contractionary gaps are favoured within Asian markets, as they allow for more market friction. Expansionary gaps are common when the market gets overheated, but they are favourable to large dominant corporations penetrating them.

There is a small group present in the market, but we do not class them as market participants. This small group prefers to watch the interaction between the market and the firms. They are called ‘economists’.

No comments: