Kaivalyam

Last week, I wrote about how printing money can be a viable solution to boost economic growth of a nation . If implemented properly, it can help in eliminating the debt of a nation. However, it comes with its own set of challenges. I will also discuss about addressing these challenges.  Challenge 1 – Excessive printing of money We all know that excessive printing of money can cause an alarming inflation. This was faced in countries of Zimbabwe, Germany and Weimar. Recommendation - Money financing should be used sparingly, and for specific situations such as to pull an economy out of a lengthy slump or to write off excessive public debts. If we accept money finance as a normal operation there is a danger that future governments will abuse it greatly.   Challenge 2 - “Printed money takes the form of credit which mostly goes to investors or the government” (Osama Diab,2017) The first beneficiaries of the printed money are financial institutions, who have access ...

Yesterday, I was talking to my husband about my dream home with big beautiful quartz island, a large custom closet, an elegant fireplace and other never-ending list of wishes. He sarcastically laughs out loud and tells me that we need a “money printing machine” to make my dreams come true. “Printing money” - that word caught my attention and we begin a new conversation about it from economic point of view. Both of us had different perspectives (obviously! 😉 ) on how it will affect economic growth of a nation and so we ended the argument without any conclusion. Still curious, I did my research and here are my conclusions. According to me printing money could probably be a feasible solution for economic growth of a nation if done correctly. Of course, they are many challenges associated with it but, before we talk about challenges, we should first start from the enormous debt that our economy is facing today and how can printing money can be helpful. United States has enor...

In my last blog entry about shareholder activism , I mentioned that activists, particularly, hedge fund investors have short term horizons and aggressively push the companies to focus on temporary profits. But where do hedge funds get money to invest in these organizations? What is their motive? Hedge fund raises its money from wealthy individuals, corporations, endowments etc., Hedge fund has a manager who makes decisions for the fund. The manag ers are usually investments advisers and the performance of hedge fund depends on them. The mangers convince investors that they can manage their funds in a profitable manner. They attempt to do so in order to attract many other huge investors to form partnerships with them. Two and twenty is a commonly used fee practice in hedge fund business. This means an annual maintenance fee of 2% is charged by hedge funds to maintain assets irrespective of whether the investment makes a profit or not. If any profits are made, 20% of those profit...

According to Ernesto Hernández-López,  shareholder activism   refers to any action a shareholder may take, based on his/her right as a shareholder, with the objective of influencing the management of the corporation. An activist shareholder’s role is to exert push onto management when they believe management is doing a poor job. They can do so by asking the management to disclose issues and urge action either by suggesting them to change a procedure/policy or even demand to substitute the board of directors. Some economists favor activism and consider it to be an essential aspect for long term success of an organization (if employed properly). Even if the activist investor is dormant, the company stays vigilant. Recently, AT&T board was attacked by a hedge fund manager at Elliot Management Corporation, also recognized as one of the aggressive activist investors in the market. Elliot laid out its concerns to the board about its expensive acquisitions...