Thursday, November 3, 2011

When everyones darling runs a company


- draft – to be continued

Dear readers,

when you are familiar with how companies are being run successfully (stay within the market for years) you know the essentials of what is being needed in order to do so. Basically it is all about revenues vs costs where the former has to be a chunk bigger than the latter. Without such a balance at least a bit to the revenue side a company is doomed because the costs will eat up its potential reserves and no bank will grant a company loans after loans in order to pay running costs such as paying the wages for the employees. And even better .. try to get banks to accept down payments to their loans by taking up new loans each and every month or quarter or year even when you guarantee them a good yield. Banks would be interested in the balance sheets in order to see the assets+debts, revenues and costs therefore if the company is able to pay back the loans on new production assets producing extra revenues or at least promising to so in the future. Don't hope to go to your bank without those key figures in your suitcase if you don't want to exchange more than just friendly greetings with your bank folks and immediately afterwards receive some good advice such as „good luck“ and a lukewarm „Have a nice day !“ Let me assure you they won't fall for promises that in order to pay back the loans you ask them to give to you will be payed by making your debtors (clients, customers) just pay more whatever is needed once there is too little cash in the end of the day and they will be more than willing to pay a little extra so that you can further pay back your rates and even get new loans.

Of course there are neither such companies (I know of) nor such banks because in rel economy things are very tough and complex structures like organizations or bunch of people must be coordinated as well as other important things like keeping track eve planning ahead of finances. Well just to point out the basics of it it can be reduced to peoples households where there has to be a strict rule of income vs expenses in order to sustain the private household and a company involves just some people but basically must fulfill same strict balance with a little overshoot of the income side.


Compare those principles of „real life“ which means our capitalistic system where markets bring together human capacity (produce and deliver goods) and human needs (consumption of the desired goods) to the basic principles if you will of „public economy“ including finances by ponzi scheme like loans ever bigger being build up because basically the old rates are payed for by new credits. For years this system worked pretty well because both the ability for tax payers to cough up the necessary income needed combined with a otherwise not imaginable „generosity“ of the banks made it possible to build up piles of debt. But thats not the only basic difference !

Imagine a company is run by a figure who wants to run the company ..has no idea of what to do exactly because he/she never learned it ..neither in theory nor by years of practice … has lived his or her whole life on granted support by others and perhaps even worse did hang around with people who hated companies as such.
In order to get the job on the top only a combined talent of sympathy, friendliness, many promises of what to do better (for everyone!) and making everyone just feel good by shaking hands nd giving claps on the shoulder is needed. The promises for everyone would be: More money for employees (higher wages & pensions) , more employment of new colleagues for accounting, cleaning, decorating, refurbishing old buildings, building new ones with attached parks and lakes etc etc. In short a kind of heaven on earth and in order to being deliver it make customers pay much much more and lending from the banks much more. So if this even works for some time what are the chances for being REELECTED to continue this paradise ? 100% - contesters of power ?

Speaking of having „no idea“ & get elected i have to beg for an apology. This is not true for all those to propose themselves to get elected and furthermore there are countries like france where ENA or
École nationale d'administration is at least on option for future politicians to learn their basics. If they will use their knowledge and will not just handle out gifts for their electorate is written on another page. Of course things like personal views, character will make the final decision where to lean most. To the side of what's being needed in order to be a good CEO or just a figure of public admiration (Some even managed achieving the latter with the former which is good ;-))


Some might say public entities such like communities, cities, counties or states cannot be compared or even steered like companies in „real life“ I point out out that some big companies so called „global players“ have reached such proportions that their number of employees match or even surpass those of smaller states and their balance sheets sometimes outnumber those states with only small economies. So what is the difference except that companies are being forced by „market forces“ to make a good job.. have a lean cost structure and produce only the needs the markets (their customers) accept and on contrast the public „big companies“ could have endured only because of somehow being allowed to thrive on ever newer debt (upon old one) combined with ever increasing taxes (One has to differentiate again: Of course not necessarily in the USA ;-)) So now the time has come where the Eurozone has reached the „endgame“ of no longer being able to find any dumb creditor to hand out new portions of loan against lowest possible yields to perhaps rethink the system they are upholding for the most part. Most part because some newly „added“ states like Estonia, Slovenia, Slovakia seem to have tidied up their house pretty well after saying „goodbye“ to communism and therefore considered a „thread“ by those countries used to big spending over decades. The states with only small spending structures (left) offer the ability of lower taxtion to their people (which isn't that much of a thread except for the super rich choosing e.g. Monaco) but more importantly to the companies willing to invest in their countries therefore putting a strain on those „old countries“ used to balloon up their public spending habits and being assured of everlasting „milking“ of their citizens and „cash cows“ which are of course companies. So even on state level there is a certain kind of competition which makes it more urgent to rethink the current way of handling big inefficient systems. So debt and competitors on state level posing a thread to bulky inefficient states whose politicians now even come up with complete nonsense (again) ideas by banning the measurement instrument for inefficiency ! (Forbid ratings …) And you would have guessed it : Make those competitors raise their taxes ! (As it was voiced by German politicians)

...to be continued ...


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