An Evaluation of the Significant Factors that Contribute towards the Success Of Companies Operating in the Bulgarian Property Market

There are several factors that had come together to give an exceptional boost to the real estate market in Eastern Europe. The major factor that contributed to the boom was the abandoning of central planning, which was a system that was embraced by all communist countries before the fall of the Soviet Union. After that every Soviet block and East European countries had started introducing the market economy. That automatically opened the door for property speculation and currently many investors are buying property in Eastern Europe with a mixed result.Among the East European countries Bulgaria had finished ahead simply because it became among the hot tourist destinations in a few years time and it started to attract both investors and tourists in a big number. The outcome was mixed and there are some who say that Bulgaria’s property market is saturated whereas there are others who say it is still possible to make money by investing in Bulgaria’s real estate. It was in l996 that Bulgaria was able to topple the communist regime.From then on, it had decided like many East European countries to introduce the market economy. While doing that, as European countries it was inevitable that they would join the EU. However, before doing that they had to go through a preparation phase that had a considerable amount of aid earmarked to it. Using whatever was getting into their system these countries were working to transform their economy that had been under a central planning for all those years and eventually they started showing some positive result. (Angelov, Ivan et al. 1992-2001)Bulgaria was not different from similar Eastern European countries in such a way that there was a lot of activity in the capital Sophia where there was some kind of a construction boom simply because the workforce was able to make more money hence they were able to afford to pay for better accommodations. The commercial sector also saw some activity where offices and other comm ercial properties were in high demand. This started attracting investors since the country had opened its doors for outsiders as long as they met certain requirements.What took place was a boom by any standard even if it was not different from what was happening in the other countries that were selling properties cheap simply because they were starting out from a system where property did not have any value since they were under communism. (Petrov, Georgi 1969) In all this Bulgaria got another advantage because of its tourist industry that became very popular to the point where it started to compete with other destination such as Spain, Greece and Portugal. One of the reasons for this was the low price that includes both cost of living and the price of buying property.The second one was Bulgaria has a tourist sector that has a ski resort, a mountain hiking trails and summer vacation spots in the coastal regions of the Black Sea. None of the other countries had all three facilities i n one location. In addition, there is a spa and mineral water that needed development. Once the location became popular, it started attracting tourists in big number. Some of them were only visitors attracted by the beauty of the surrounding area and the low price for the amenities.Some also started buying property because other locations such as Spain were very crowded and the price of property was not as cheap as it was in Bulgaria. In addition, property development companies were also attracted and they had been building apartments, hotels and houses for a while now. However, after all the buying and investing that took place the demand for housing is not accommodated and there is some distance to go before that becomes a reality. The value of property is not where it was at the beginning yet, it is still cheap even if it had been steadily appreciating.This means whether they are investors or people are buying homes for vacation or retirement it is still easy to get a good value for their money even if it is not going to be like those who invested earlier that had paid very cheap price for whatever they bought. Hence, since the demand for housing and other facilities that the tourist population needs is in short supply, especially companies and entrepreneurs who want to invest in the country will see a good return on their investment since the number of the tourist population is growing steadily.There are various sectors to invest into. The office, commercial and industrial sectors go in parallel to the kind of economic growth the country attains, because currently the capital city seems to be saturated and the cheapest properties could be bought around there. However, the development is reaching the other major cities, which means it is still possible to make money by investing in the office, commercial and industrial sector since there is always economic activity. The tourist sector’s demand for various amenities is not met.It means there is enough room for new entrants to make a hefty profit on their investment. What are hot now are apartment buildings, hotels, living accommodation around the spa and the spring water that are scattered around the country, luxury housing that is picking up, and golf courses are among the few areas that are requiring accommodation. Among the East European countries, Bulgaria has become one of the hot investment destinations. There are many reasons contributing for that and among them are its coastal, mountainous and recently its cities are attracting investors in a big number.Although, at this particular juncture it is possible to say there is an on and off signal since some of the markets have started cooling down simply because of the close to 31% annual property value growth that was attained in the last three years alone. Yet there is still a huge price advantage when compared to any European country as well as there is a capital growth that is unmatched anywhere else. The other obvious at traction factors are the sun, sand, sea, skiing, spa and mineral water. It also has a stunning landscape with a moderate temperature that goes with it.All this are coupled with a booming economy that started after the country abandoned its communist system and embraced a market economy. Bulgaria has similar size with Britain but its population is around 7. 45 million people. The country is located in the southern east of Europe and it borders Greece, Macedonian, Romania, Serbia, Montenegro and Turkey. Currently the investment business in properties has cooled off in Sofia the capital where the property price was the highest in the country and since the country had joined the EU the growth rate had accelerated requiring more housing and commercial properties.At the same time because of its 354 km of Black Sea coast and its 37,500 hiking path, mountain trails, blended with its ancient history, it has become among the best tourist destinations in Europe. Many people are buying property at this location as a vacation home, or for future retirement or simply to speculate on the booming and overheated real estate market. The Property Market The property market in Bulgaria had focused on the capital city even if it was taking place across the country. It is possible to buy a decent cottage for ?5000 whereas the average price could be between ? l0,000 and ? l80,000 yet ? 50,000 could also buy a well-maintained property in a good location. The nature of the property market focuses on various sectors. There is the tourist industry that needs accommodation that is not yet saturated, in fact, there are some areas that are not meeting the standard, yet they have become tourist attractions availing huge opportunities especially for property managing companies. The second area is for individual investors who want to buy a property whatever the reason behind it might be.It is possible to use the property as a cottage and renting it out when it is not in use. It is also possib le to plan for retirement or for speculation, because a property bought three years ago would have appreciated up to 30% in addition to the rental income it would generate. And it seems that the market is saturated with such a growth rate, but it is not, which means anyone who is buying property at this point in time certainly will see it appreciating in the coming years although there are a few caveats to look out for.(Property Showrooms) However, the other sector that had become lucrative was the capital Sofia where the demand was high simply because of what was taking place in the capital. The city was attracting a huge amount of investment from outside by creating a prevalence of young and educated work force that needed modern accommodation and it had taken a lot of building to meet the demand creating a lot of opportunities for companies to head that way. (Baytchinska, Krassimira et al.1998) It is not only that a huge amount of commercial development was required as the (Annua l Reports 1991-2000) demand was growing at a fast pace, another opportunity that was attracting big developers. Another reason why bigger, experienced, and well funded companies had a good chance to be successful in that area is it is only such companies that will be in a position to obtain permission as they can meet the strict environmental standards that is being put in place.As well, paying a particular attention to the natural beauty of the surrounding and the country parks is also important. What this meant was anyone that meets the requirements can go in there and buy built property and rent it out until the price appreciates and when it becomes profitable it is possible to put it on the market. While such opportunities are available even for individual investors, it is bigger developers that benefit more since they could be involved in a bigger scale development. (Due, J. M. and Schmidt, S. C. 1995) TourismThe other driver is tourism that has created an unprecedented opportu nity in the country by making it the newest attraction among the international tourist industry. Accordingly, the summer months see over 50% of the overall tourist population who are there to visit the coastal regions. The winter months come in second by attracting around l4% of the tourist population who are coming there to take advantage of the ski resorts. The forecast for 2010 estimates the number of tourists visiting the region would surpass 20 million making it among the emerging tourist attractions.One of the reasons that is contributing to the success displayed in the capital city was its close proximity to one of the popular ski resorts at Vitosha where visitors are looking for high quality accommodation that is creating the dual market advantage fuelling the property investment. (Polycontact) LITERATURE REVIEW Real Estate Cycle Real Estate cycle had always been influenced by how the economy was performing. At the same time the population growth also has a direct effect on the demand of real estate since they will need more amenities.It also requires accommodation, hence the amenities need to be at a given location to tend for all the needs. Because of that real estate is considered to be a cyclical industry that reflects what goes on in the economy. The first individual who discussed real estate cycle was Homer Hoyt in the year 1993 when he analysed the Chicago market scene. Prichett (1984) confirmed that there is a real estate cycle that always lag demand, but it was possible to determine the cycle when both demand and supply go the opposite direction.Accordingly, he stated that the best time for investors to go in is when there is a decline in the market and when the market starts to pick up. Witten (1987) continued on the same idea by saying that every location has its own unique cycle that it introduces into the market and stated that supply is mostly determined by the availability of capital. That is proven to be true in Bulgaria where the deman d is not met simply because the number of investors and developers is still very low even if the demand is already there and is growing.Brown (1984) was not different from the others in that he stated that the main determining factor as far as cycles are concerned was what was happening in the economy. But he stressed on the length of the time such studies will be conducted since he believes that the longer the time is the finding will be better. According to him if the aim is to avail a reliable feasibility analysis, investment advice or credible market analysis, trends and seasonal components will have to be removed from the study that will be conducted.Wheaton (1987) studied ten cities and determined markets for office space have 10 to 12 years time span and that had been demonstrated to be true in Bulgaria as it will be demonstrated later where the cycle is the outcome of how the economy performs and factors such as GDP, interest rate and employment growth have a direct effect o n the cycle. Wheaton and Torto (1988) studied both rent and the available vacancy and found out that it is possible that there is a drop of 2% on a yearly basis for the glut that will be created in space for rent.Phyrr, Born and Webb (1990) based their real estate analysis on a theoretical cycle model that focuses on demand, supply and the effect of inflation and arrived at a conclusion that the timing in acquiring and desposing off a property is crucial in realising profit for would be investors. Phyr, Born, Robinson and Lucas (1996) took their research further by comparing a traditional valuation model against what they called cyclical assumptions by taking into consideration demand, supply, absorption, occupancy rate and the rent difference between new and older units.The conclusion they arrived at was cyclical assumptions could affect how properties are valued, but the better method was the cyclical model, which is a better indicator for a long term investment when compared to k nowing the value of a property at one point in time. Mueller and Laposa (1994, 1995) took into consideration sub markets by stating, on the outset it seems that sub markets move differently, but in the long run they tend to fall back in place with the overall markets.The case in Bulgaria had been different simply because of the number of drivers that can function independent of each other and have their own unique characteristics that are not influenced by the others, yet they can be labelled as sub markets. Muller (1995) came up with two cycle types, a physical cycle that looks at the demand, supply and occupancy rate and the second one that looks at the capital flow into real estate that will affect the property price. If there is excess capital finding its way into the market it will bring down the price of both rent and property value.What is taking place in Bulgaria is the opposite simply because it is a new market and there is lack of capital coming into the country to satisfy the existing demand that is on the rise. It is also worth mentioning Grenadier (1995) who developed a theoretical option pricing model studying by how vacancy rate and rent are interacting. The finding was both follow the economic trend where when there are booms and growth rents will start to get higher as there is surging demand.That is exactly taking place in Bulgaria now where owners or investors that buy property to rent will always see their rent income appreciating simply because the demand is rising consistently. The Price Factor When examining the factors that are influencing the property market in Bulgaria they are not different from what the academician above touched on. Because of that the FDW Model that came into existence when DiPasquale and Wheaton (1992) published a diagrammatic integrated property and asset market model on the website of Curtin Business School is used on this research.The particular publication was followed by an article written by Fisher, DiPasqua le and Wheaton that became FDW Model that focuses on a given real estate market, asset market variables and factors that contribute in establishing the equilibrium of demand and supply of a particular market. This particular model is applied here to examine the factors that are influencing the Bulgarian real estate market. One fact that ascertains a good future for the country is it has managed to keep property prices reasonably low when compared to other European countries that have joined the EU recently whose cost of living had risen considerably.On top of that this particular country is managing to mix two sectors together in such a way that since what it avails for the tourist industry is vital there is a need for adequate and modern accommodation that is not met yet and that will be on the rise for as long as the number of tourists is on the rise. The other area is the country’s economy is also growing and it would create enough demand in the capital for now that will s pread to the other regions over time. The demand in the capital is somewhat met and is saturated currently yet, as a growing economy there will continue to be a surge in demand as the economy grows.Another area that is adding lustre to what is taking place is the new demand for secure and luxury development that is another challenge that has to be harnessed by companies that have specialisation in that area. (Eastern Europe Property) Hence, since it is possible to say the country is new in its endeavour it would mean that it still has more room and potential to grow its economy as well as raising the standard of living of its people that is not advanced yet, especially in the rural regions.(Minassian, Garabed, Totev, Stoyan 1996) When that takes place over the years any company that has a good presence will be in a position to spot the opportunities and capitalise on them. Since the country is already a member of the EU that has a master plan for all its members to attain a certain amount of growth in a given period of time, it cannot become stagnant until it meets that requirement that will take years.Moreover, as the living standard of the local people improves their demand for accommodation will be much higher than it is now creating a sustainable boom that is not easy to exhaust in the near future. In addition to that it is a tourist attraction that has seen an increase of 50% between the years 2000 and 2004 where 90% came from the EU countries. This means there will be a similar growth rate going forward into 2010 that is expected to reach 20 million and all that influx definitely requires accommodation that is going lacking now as there are busy destinations that are barely managing.This means a huge opportunity mainly for developers that can build bigger housing complexes that are available for rent as well as for sale by the unit. Big hotels are needed badly and the amount the best hotels are charging now is very low compared to what is happening in th e other part of the world, which means more opportunities for companies that want to open bigger hotels since there is an obvious shortage.

Financial Accounting

Veronica Bradley Financial Accounting August 12, 2012 Internal Controls Case Study 2 Internal Controls LJB Company, a local distributor, has asked your accounting firm to evaluate their system of internal controls because they are planning to go public in the future. The Company has to check the internal controls of a system of checks and balances designed to detect and prevent fraud and errors. The Sarbanes-Oxley Act requires U. S. companies to enhance their systems of internal control. The company hired has to detect the internal control system and meet the companies requirements.The internal control standards applicable to Sarbanes-Oxley (SOX) apply only to large public companies listed on U. S. exchanges. There is a continuing debate as to whether non-U. S. companies should have to comply with this extra layer of regulation. Debate about international companies (non-U. S. ) adopting SOX-type standards centers on whether the benefits exceed the costs. The concern is that the highe r costs of SOX compliance are making the U. S. securities markets less competitive. These activities are the backbone of the company’s efforts to address the risks it faces, such as fraud.The specific control activities used by a company will vary, depending on management’s assessment of the risks faced. This assessment is heavily influenced by the size and nature of the company. The principles of internal control activities are (1) establishment of responsibility, (2) segregation of duties, (3) documentation procedures, (4) physical controls, (5) independent internal verification, and (6) human resource controls. Advise the President of what the company is doing right (they are doing some things well) and also recommend to the President whether or not they should buy the indelible ink machine.When you advise the President, please be sure to reference the applicable internal control principle that applies. The things that the company is doing well are that using the pr e- numbered invoices. When the company was not using pre-numbering they violated the documentation procedures. If pre-numbered documents are not used, then it is virtually impossible to account for the documents. This will keep good documentation on some things for future reference to have on hand and things aren’t done more than one time by different people.Pre-numbering helps to prevent a transaction from being recorded more than once, or conversely, from not being recorded at all. Second, the control system should require that employees promptly forward source documents for accounting entries to the accounting department. This control measure helps to ensure timely recording of the transaction and contributes directly to the accuracy and reliability of the accounting records. With the information provided the company should invest in an indelible ink machine. This will put the company in more control of accounting procedures.And with this in hand will help reduce the chanc e of any fraud going on in the company with the checks being more manageable. Use of physical controls are essential. The accountant’s act of keeping the checks in a safe in his office is in accordance with the physical controls principle. This reflects the safeguarding of assets and enhances the accuracy and reliability of the accounting records. The President should also know what they are doing wrong like the petty cash situation. All employees have access to the petty cash in a desk drawer and are asked to only place a note if they use any of the cash.The company had a hard time getting the employee to admit it was him because the company does not assign individual passwords. The company is violating the establishment of responsibility, and segregation of duties, documentation procedures, independent internal verification and human resource controls. With the petty cash Internal control over a petty cash fund is strengthened by: (1) having a supervisor make surprise count s of the fund to confirm whether the paid petty cash receipts and fund cash equal the fund amount, and (2) canceling or mutilating the paid petty cash receipts so they cannot be resubmitted for reimbursement.With the establishment of responsibility the company is violating that responsibility by not assigning responsibility to specific employees. Control is most effective when only one person is responsible for a given task. Without doing this leave the door open for fraud and other possibilities to of things to occur. With the company hiring convicted felons and sex offenders with them having a human resources department this all would have been avoided.They wouldn’t have to worry about employees using the internet to view porn sites. When the company hires employees they should have an independent verification for each individual employee. This will track all the employees with their computer and signing in and out of the system and all things that require a verification to proceed. An accountant is not certifiable to interview everyone for certain positions unless it is involved with their position.The President of the company needs to do a big evaluation of the system of internal controls to make sure all the standards are being met for planning the future of the company. As discussed earlier in the requirements of the company in order for them to go public in the future. They are going to have to follow all the guidelines for the principles of internal control are: establishment of responsibility; segregation of duties; documentation procedures; physical controls; independent internal verification; and human resource controls. Financial Accounting Financial statements produced using FIRS were used to obtain startup fund. Current quarterly statements are produced using this format to maintain consistency and clarity for investors' sake. SUBS lists balance sheet items, revenue, liabilities, and share measurements. GIBBS follows FIRS rules when reporting their financial data in every month financial statements fairly and accurately. It is good to use FIRS in the accounting process for any business so that all financial are being reported fairly and accurately.SUBS records assets at their cost using cost principle. International revenue from customers that belong to various countries is tracked and reported using FIRS. SUBS combines GAP along with the FIRS so that largely impacts stock markets, investors, corporate management, accounting standards and accounting professionals' setters. Cubit's financial statement includes GAP and FAST principals to accommodate US based customers and accountants.FIRS is dynamic and it helps the com pany produce financial statements dynamically in a constant changing environment. The convergence of both these standards helped SUBS in producing financial statements with professionalism, uniformity, optimism and transparency. The major difference between GAP and FIRS comes down to being rules- based vs†¦ Reminisces-based; this poses a challenge in areas such as the income statement, consolidation, the earnings-per-share calculation, the inventory, and the costs. In consolidation, U.S. GAP prefers a risks-and-reward model where as the FIRS favors a control model. U. S. GAP shows extraordinary items as net income where as FIRS segregates. U. S. GAP provides the option of LIFO, average cost or FIFO where as FIRS does not allow LIFO for inventory valuation. Under the FIRS the PEPS calculation does not average the individual interim period calculations, but the U. S. GAP does. Regarding developmental costs, GAP considers them as expenses while FIRS capitalizes them based on speci fic criteria.Both FAST and FIRS have identified short- and long-term convergence projects, including 20 reporting areas where differences have been resolved and completed. 3. Pro Formal 4. Internal Controls SUBS needs internal controls to provide assurance in order to achieve forecasted financial reporting, compliance and operating objectives. These internal controls help SUBS to achieve its mission by ensuring that the policies, directions, practices and reoccurred approved and designed by management and board of directors are implemented properly and functions accordingly.It also ensures effectiveness is sustained in an ever changing dynamic environment. All of the five control components in the COCO integrated framework, Control Activities, Control Environment, Risk Assessment, Monitoring, and Information & Communication are very important. SUBS implements all the five controls as an essential internal control and doesn't compromise on any one of them. Of the five, the most impor tant two implemented as critical are control activities and control environment. Financial Accounting Veronica Bradley Financial Accounting August 12, 2012 Internal Controls Case Study 2 Internal Controls LJB Company, a local distributor, has asked your accounting firm to evaluate their system of internal controls because they are planning to go public in the future. The Company has to check the internal controls of a system of checks and balances designed to detect and prevent fraud and errors. The Sarbanes-Oxley Act requires U. S. companies to enhance their systems of internal control. The company hired has to detect the internal control system and meet the companies requirements.The internal control standards applicable to Sarbanes-Oxley (SOX) apply only to large public companies listed on U. S. exchanges. There is a continuing debate as to whether non-U. S. companies should have to comply with this extra layer of regulation. Debate about international companies (non-U. S. ) adopting SOX-type standards centers on whether the benefits exceed the costs. The concern is that the highe r costs of SOX compliance are making the U. S. securities markets less competitive. These activities are the backbone of the company’s efforts to address the risks it faces, such as fraud.The specific control activities used by a company will vary, depending on management’s assessment of the risks faced. This assessment is heavily influenced by the size and nature of the company. The principles of internal control activities are (1) establishment of responsibility, (2) segregation of duties, (3) documentation procedures, (4) physical controls, (5) independent internal verification, and (6) human resource controls. Advise the President of what the company is doing right (they are doing some things well) and also recommend to the President whether or not they should buy the indelible ink machine.When you advise the President, please be sure to reference the applicable internal control principle that applies. The things that the company is doing well are that using the pr e- numbered invoices. When the company was not using pre-numbering they violated the documentation procedures. If pre-numbered documents are not used, then it is virtually impossible to account for the documents. This will keep good documentation on some things for future reference to have on hand and things aren’t done more than one time by different people.Pre-numbering helps to prevent a transaction from being recorded more than once, or conversely, from not being recorded at all. Second, the control system should require that employees promptly forward source documents for accounting entries to the accounting department. This control measure helps to ensure timely recording of the transaction and contributes directly to the accuracy and reliability of the accounting records. With the information provided the company should invest in an indelible ink machine. This will put the company in more control of accounting procedures.And with this in hand will help reduce the chanc e of any fraud going on in the company with the checks being more manageable. Use of physical controls are essential. The accountant’s act of keeping the checks in a safe in his office is in accordance with the physical controls principle. This reflects the safeguarding of assets and enhances the accuracy and reliability of the accounting records. The President should also know what they are doing wrong like the petty cash situation. All employees have access to the petty cash in a desk drawer and are asked to only place a note if they use any of the cash.The company had a hard time getting the employee to admit it was him because the company does not assign individual passwords. The company is violating the establishment of responsibility, and segregation of duties, documentation procedures, independent internal verification and human resource controls. With the petty cash Internal control over a petty cash fund is strengthened by: (1) having a supervisor make surprise count s of the fund to confirm whether the paid petty cash receipts and fund cash equal the fund amount, and (2) canceling or mutilating the paid petty cash receipts so they cannot be resubmitted for reimbursement.With the establishment of responsibility the company is violating that responsibility by not assigning responsibility to specific employees. Control is most effective when only one person is responsible for a given task. Without doing this leave the door open for fraud and other possibilities to of things to occur. With the company hiring convicted felons and sex offenders with them having a human resources department this all would have been avoided.They wouldn’t have to worry about employees using the internet to view porn sites. When the company hires employees they should have an independent verification for each individual employee. This will track all the employees with their computer and signing in and out of the system and all things that require a verification to proceed. An accountant is not certifiable to interview everyone for certain positions unless it is involved with their position.The President of the company needs to do a big evaluation of the system of internal controls to make sure all the standards are being met for planning the future of the company. As discussed earlier in the requirements of the company in order for them to go public in the future. They are going to have to follow all the guidelines for the principles of internal control are: establishment of responsibility; segregation of duties; documentation procedures; physical controls; independent internal verification; and human resource controls.

Bailout shq

The research paper sheds light on George W. Bush $700 billion bailout package, the underlying cause of its release, expected effects, achieved results and future implication in mitigating the severity of US economy in particular and global in general What makes it important? Economy contaminated, debts and deficits escalating, spraining military, image tattering, all but accompanied with the emergence of a new league of Global contenders.Is the American capitalism on the recede, do we see the fading American way of life’ the demise of American dream, is the prodigious military might losing its edge, are the very foundations of democracy, freedom and justice debauched, has really the Global American leadership paled, is this the emanation of era of vacuity or does there lie hope of return anew? Thus the bailout package ‘last in line of Bush legacy’ bears importance not only from the economic recovery perspective but by shoring up the financial vessel’ it goe s a long way in retaining the unchallenged posture of USS enterprise globally.It holds importance as it allows continuance of strings of recovery initiatives taken year back, in the absence of which the policy posture would not only lose its luster but the effort being applied to buttress the confidence would rather lose its very ground. What’s going to be done in the paper? This paper would steer by discussing root cause that ruptured the great balloon while taking into account the amount and extent of damage the great spread have unfurled. This discourse would then lead by rounding up possible steps’ those have been taken and are about to be, lead by their results and possible ramification for the future.We would then highlight other venues and alternatives’ featuring their pros and cons’ thus rounding up our discussion with the present situation on ground lead by some anticipated prognostication about the future concurring outlook. What would be the ge neral conclusion? Our general conclusion would be as vague as had been and exists to be the statistical forecasting models across the financial colossal and economic capitals. We are lingering on bits of every day stats and results while hoping to gain and engender confidence across horizon of politics, consumers, producers and investors.We would be hanging around the ray of hope and light coming across the hazy fog of doubt and tentativeness. BODY Issue/problem In current situation when the Bail-out is out in the market to do wonders and clean up the mess created by all the wrongs and blunders of nearly a decade, just weeks into passing and the same ‘gurus’ conceive no less then a miracle from this quarter a trillion short’ to halt free fall of economy into an abyss of recession. Full scale implosion has rendered shock waves that have taken tool on global scale, the burst of sub-prime bubble, spiraling commodity prices, wide scale collapses and deafening bailout s.But pundits are still in a fix, as they state current spade of crumpling dominos as mere preliminary shock, precluding the greater quake yet to come. With nearly a trillion in bank losses, yet accounting for just a portion of the total conclusive damage’ has brought financial juggernauts of the likes of JP, Merrill, Lehs, Fan & Freds on their knees and a long queue still in waiting, followed by staggering multi trillion in bail outs, yet the spiral sees no end. The rootsFor the past two decades, Americans ‘distracted’ by the direction that its government showed, has been spending much more then they own or allowed by their means, which can be seen by a steady decline of their saving rates that stood at 11% in 80s to -1% today (Jeremy, 2009). The total debt owed by the public amounts to massive $2. 5 trillion without accounting the sub-prime fiasco (Stout, 2008). Of consumption patterns, last decade saw an enormous increase in spending’ bumped up by soari ng housing prices’ though this had been the era of shrinking real wages.Without the wage increases’ riches were being made by selling homes without ever thinking that for how long this cycle would swing, as the point would ultimately reach when stalemate would occur, when people would be left with no money to buy expensive properties. Without such logical thinking, things went on moving so much so that the American home owners extracted nearly $5 trillion since 2001 in various forms like refinancing their mortgages (Stout, 2008), home equity and selling till the dooms day occurred, when whole system based on faltered assumption on the lines of Dot Com collapsed.The reason it has been called ‘distraction’ is the fact that the policies engineered by the government wrongly encouraged the public to tow the dangerous path of callous burning up of goods and services while giving birth to a banking system that fueled this trend, thus slowly and gradually the stru cture moved away from the production and sales, to the addiction of free goods and manipulation of debts. Its severityBut what can been seen are just the ripples of a much greater storm brewing underneath. The enormity of discomfiture can be sensed from the fact that; much touted Financial Bulwarks which had been the symbols of robustness of Western financial system’ shattered one after the other under the weight of digressive mass that they them selves had accumulated. It’s not just a coincidence that all major heavy weights’ having Market capitalism worth economies of whole continents fell in a domino fashion.Chain reaction that imploded out of stray atoms of greed and insatiability, proliferated all out radiation that not only destroyed what ever came in its radius of hazard but contaminated the whole environment’ with effects ready to haunt for decades if not generations to come. From appalling fall of the Lehman to assuaging of Freddies, from taking over of Bears to engulfing of Lynchs, from engineering of Wachovia to warranting AIG, this is the League of Extraordinary Lineage that formed the first line of casualties and wiped out of the face of financial global map.Institutions that bore the brunt of world wars, civil unrest and the jolt of nine-eleven couldn’t hold onto the tremors of massive mortgage eruption. So immense had been the awe that the birth place of free market is forced to ‘nationalize’ the juggernauts of its economy, leaving far lasting scars on its own face. Whether they could ever be healed, doubt it! This patient needs an all out surgery†¦ Key players US is the economy that is run by banks and its derivative financial institutions’ thus it’s the bankers economy.This is the heartland of capitalism’ the motherland of free economy and the greatest champion of demos-cracy. All this comes into being and blends up when we have a strong financial system making up its ba ckbone. Banking industry spreading over a century has gradually formulated an environment where the resilience of economy rests on credit ‘the practice of lending’, thus making customers or more appropriately the consumers as being the second important tier of whole system.Third comes the government that regulates, governs and looks after the regulatory fabric under whose auspices the system works. Fourth comes the wealthy foreign governments that lend their excesses to the US government, financial institutions and its people, acting as investors willing to quench unsubsiding thirst of the whole nation. One way or the other’ the complicity of all four players is there behind spurring the situation out of control and ultimately collapse.And so is the ensuing blame game that is engulfing both the side of Pacific, where the Eastern coast (of pacific) blames the monetary glut of the west for the flow of excessive credit and hence slipping the market while commentator s on the western front criticizes lax regulations that let the wall street and its giant entities to wreck internal havoc to their economy but slipping nullifying their own regulatory frame works.Who ever was responsible’ but one ground on which every body concedes is the let-go attitude of US government that let the bubble grow out of proportion’ the blind eye they let to this fiasco to happen. On every front’ it’s the people (American tax payers) those are to suffer. They lost the credit, lost their homes, lost jobs, burdened their future and indebted their children. For all the follies committed on Wall Street ‘under the auspices of government’ and the preceding foreclosures and bailouts’ these are the ordinary people who are going to pay for each penny being spent’ form their own pockets.What are they trying to achieve To intoxicate the contaminated body. Over the years’ under lax or almost no rules and regulations, A merican banks and insurance and ‘pre-insurance’ industries accumulated charges worth trillions on their balance sheets, which were backed by literally nothing. Thus over the time’ as the mortgage advances climbed up’ it began to create a much bigger vacuum on their back that suddenly ended up in Boom! A shock that made the whole structure collapse under its own weight.Now the government is trying to cleanse this mess, by buying mountains of crap ‘bad assets’ to clear up bank’s balance sheets, keep them until the economy recovers and to sell them back to public when crap turns into something worthy! 5 Thus the underlying cause of this whole drill is to lighten up the bank’s load so that they could get stand again and start functioning by lending. This is vital as banking industry forms the very backbone of US economy and without it their can not be any recovery.This would lead of credit that serves as a fuel for other economic act ivities, the eased credit would halt the fall of other financial and industrial units thus containing the contagion from spread, this stabilization would enhance the investor’s confidence that would ease up the investing and buying constraint that is the cause of pain from other side of equation. Thus the whole bailout or Emergency Economic Stabilization act is a move to stabilize the economy and retort the keel to its original location. Approaches Let us first segregate the two approaches being proposed by two different sects of economists into plan A and B.The former being proposed by the Government and calls for its take over of the whole crisis, the later one to give market the stimulus to act and heal by its own forces. Intervention on such a colossal scale is inconceivable in a country which had been the forefather of free-market and founder of capitalism. Instead of protecting the American Tax Payers, the elected lot seems hell bent in protecting a few. Despising any s anity what so ever, the American government is ready to buy the unsecured assets (otherwise valued at zero) for $65, having a floating market value of mere 25 cents, thus paying 3200% more of their worth (Baker, 2008).RTC (Resolution Trust Corp) made to trace and capture companies before they begin to collapse (Wilson, 2009). It has been created in light of the current Bail out bill that would allow the government to buy bad loans directly from lenders at lower rates that would relieve banks from carrying dead weights, restructure them and sell them off gradually as the market heals and stabilizes, thus mitigating an immediate and blunt affect to the economy and public. Yes, it worked in 80s and banking on its legacy it should work according to Government speculations’ who says an agency is needed to oilify the chocked financial engine.But this agency would work if we tow for plan A, the Bail out etc. What conflicts exists Starting form the fact that United States is the most indebted nation, with a burden of $12 trillion and yearly obligations amounting $500 billion (Bebchuck, 2008), having Forex reserves less then the tiny Taiwan, followed by record budget and trade deficits. To square all, United States economy was in a quagmire already and it’s in ruination after the Big Bang. Various moves on part of Fed to lubricate the economic engine by throwing billions into the parched market seems of little or no help at all.Melting down of financial bulwarks one after the other is evidence of enormity of damage followed by the deafening bail out plan. Isn’t it absurd that US with no money of its own to even buy the Chinese toys is reeling towards this colossal move. From where all this money would come? Print it! No way; a near trillion worth of ‘printed’ Greenback into the market is going to burst yet another balloon of Inflation and nose dive the already struggling Dollar, leading to a chocking scenario. So what else? Borrow more !Already a single country like China holding nearly a trillion worth of US securities would further make America’ the world’s strongest democracy defer to the largest communists (Harvey, 2008). But would they be willing to buy more of the crap US assets? Let’s just forget the world, See who is borrowing. The US Government, but the Government earns nothing of its own. These are the taxes that make and run governments, so more borrowing means added obligations upon the people of United States and their Children and their Grand Children who are being held hostage for the blunders of their own obdurate corporations (Harvey, 2009).Look at the Horizon and see the doom and gloom ? Bears Stern taken over by JP Morgan, Bank of America taking over the 94 years old Merrill Lynch, world’s top insurer AIG pledging for its own insurance (Whalen, 2008), collapse of the 158 year legacy the Lehman Brothers, which had survived the Civil war, world wars, the 9/11 but couldn ’t hold on for this swap, all costing Fed hundreds of billions (Demyanyk, Yuliya S. and Van Hemert, 2008).? Fed Liquidity Program, Economic stimulus package, Federal Housing Admin scheme and further injections has already amounted to $1 trillion (Demyanyk, Yuliya and Van Hemert, 2008). ? The Bail out of Fannie and Freddie alone have price tag of $200 billion (Bardhan, 2008). All but excluding yet another $700 billion proposed bail out for ‘securing’ the faltering US institutions, amounting to a staggering total of $1. 8 trillion!! (Davidoff and Zaring, 2008)The new bill is being floated to each American citizen, with the liability of $5000 each, while keeping aside the $11. 8 trillion of ‘previous’ debt (Davidoff and Zaring, 2008). Now as far as the talk holds for going social or keeping the system capitalist, it doesn’t matter which one operates unless the operators are responsible and sincere to the people who let them operate on their behal f. It is said that the corporate America seems best in capitalist mode as long as the system churns profits and it immediately retorts to being Socialized when faults surfaces.In today’s scenario when all the elements of a healthy financial system are showing pathological signatures of ailments which had been there for long time, but was let to grow to extent of tumor. Yes the Government should move forward as it is their job to cleanse the system of toxics and let the body heal by itself, but wait what we are seeing? Instead of letting the body to recover and reform in its very own ‘natural’ way, the surgeon general is transplanting the whole organs with ‘expectations’ that they won’t be rebelled. What if they would!Then hope the patient would survive. Potential remedies/solutions †¢ Of all the argument, nothing said goes against capitalism and the market system whose strength can be seen in the spread of wealth and economic upheaval of billions of people out of poverty, but the most impressive of its geniuses is its greater healing capacity, the savior fair to purge itself of infections if any that might arise in its body. Today its like an ailing body which needs medication to the extent of strengthening itself and to mend in its own ‘natural’ way rather then forced ministration†¢ There needs to be a global ruling body on the lines of UN that should govern and check world economies and corporations from detracting into direction that would cause harm on global scale. So does the question that’ as to why despite all the warnings by European Central Bank officials, no pre emptive or lets say preventive step was taken at first to check the bubble to expand to such explosive levels and then from a sudden burst? (Bardhan, 2008) If so why wasn’t there no such levy erected to counter the incumbent tide of destructive tsunami†¢ There are more doubts then ever before that the market me chanism of supply and demand triggering ‘fears’ and the so called jolting of ‘confidence’ of investors, leading to massive buying or selling sprees have grown to be shadowy. Proven recently from the Oil price fiasco, its rise and maniac fall clearly shows the manipulative force acting in an unruly fashion. Check the trend which is drifting more towards exploitive ness then genuine speculation (Murphy, 2008).†¢ The whole banking system should be re organized and re founded on a more solid and sound foundations, with revised rules and regulations to halt such a scenario from erupting ever again. Reinvigorating this industry could include equity investment, recapitalization of the bank assets i. e. purchasing the bad assets for cash that would help the fledging industry with the much needed cash while letting the government to exercise a limited control to steer the institutions out of the doldrums (Schwarcz, 2008).†¢ And off course the US Tax payers should not have been dragged to bear the brunt of the debacle and wrong practices of corporate world, which had grown to be voracious and hoggish in its never ending appetite of leasing and lending for windfall profits. Instead of throwing trillions into this engulfing black hole, people should be given relief by letting them pay back through jobs, raised salaries, slashed interests and extended pay back periods. In this respect the Mortgage assistance is necessary’ this could be done in any form i.e either the home owners be given leverage to pay back the borrowed credit by lowering of interest rates, making the payment schedule long enough that should not hamper the life style or the credit for ownership be converted into something like monthly rent’ that would be nominal enough to ward off the burden and wouldn’t render homes unoccupied. CONCLUSION General conclusion & Internal/External forces An incident that took place inside the United States has become a global issue. Thus its not the US alone that is shaping its course’ there are multiple forces now acting on it.Internally the new US administration has taken a shift towards more of stimulating the economy then to put all eggs in caskets of fallen juggernauts. There’s more of realization in extending a helping hand to the Main Street then the Wall, as they believe in giving a push to the unconventional engines of economy to burn then to rectify the more conventional powerhouses’ demise of which lead to this failure. Externally’ all those capitals and their financial entities that had any link in one form or the other has bore the brunt of the great crumple.It’s the sheer size of US economy that can not be ignored, the after shocks of the quake that jolted this land are still being felt across the globe, that transpired into several global integrated moves and till now’ two G20 summits. Issues have now metamorphed and transpired into trade, barriers, national bailouts, global credit, energy†¦and is growing more complex. At the time when single combined stance is direly needed, there’s temptation across the horizon for receding back and protecting own borders by raising the levies across frontiers.The US with all its bailouts can not even come into being without foreign government’s nodes to finance them, America can heal without others lending life saving medicament on credit. And as the fears grow for more nationalistic approach by the US government getting protectionist while confining its bailout money only to the made by American’s industry, fears for back lash from across the shore’ specifically the Pacific would be harmful. Today America needs world more then the opposite, the current recession has already altered focus and has dragged it away.World has benefited and lately suffered from what came out of US shores, what matters now is’ what comes in! What’s the prese nt trend? ‘Glimmers of Hope’ can best describe the present situation as stipulated by the current US President’ supplemented by words of caution that the economy still needed time and a zealous effort to heal lest recoil. The statement might be true if put into context that the free fall is not that free now and things have begun to look less awry and not outwardly defiled.Stock exchange can be seen to trek towards damage attenuation, SMEs are showing desire for loans thus setting forth the signs that they have begun to trust the banking entity ‘again’, tax reductions announced in all of previous packages would soon bear fruit by leveraging pay checks to ease’ thus paving way for mortgage industry to palliate as it offers worthwhile deals because of the all-time-low prices (Spetalnick, 2009). Global economy has become immensely complicated to predict, overly complex to control and wild enough to steer, once disturbed’ it listens to its own.Economies have momentum; it can not be stopped and accelerated by the push and pull of pedals. So is the current situation, despite all the predictions and dooms day scenarios sketched by ‘eminent’ economist of the looming Depression’ the fall seems to lose it g! the burst seems to lose its steam and indications. Though the foreclosures are still there and so are the job and credit loses but they have simple lost the glitter. With bailout replaced by stimulus, the ointment has been replaced by healthy diet to kindle the body to heal on its own. What’s speculation for the future?â€Å"The American moment is not over, but it must be seized anew† Barack Obama, (McCain, 2009) divulging the very resolution that United States is not ready to subside rather it is there to retrieve the lost insight. USA stands to embark on a path to New Leadership with new vision suffused by common principles of humanity, security, justice and above all’ equality , but how can it assume the burden of Global Leadership amid haze of thickening economic extremity? The new commander-in-chief has got a colossal task on his hands’ would he be able to mould new leaf among the folio of history?Dispelling the Dooms day prognostication and economy-on-the-rupture speculations’ there exist a fair chance that the United States economy would be saved and so be the world. No matter how deep the fissures go’ sheer size of US economy would render it afloat, the world as we know today could not and would not let the economic colossal to collapse. Nevertheless on the realistic front, yes enormous amount of damage still roams across and severe confidence deficit exists both on the producer and consumer side’ that could only be addressed by bitter short term moves and bolder long term policies.References Admin, â€Å"World banks make emergency rate cuts. † 700billiondollarbailoutplan 08 Oct 2008 Web. 18 Apr 2009. http://www. 70 0billiondollarbailoutplan. com/2008/10/world-banks-make-emergency-rate-cuts/ Admin, â€Å"The 8 trillion dollar bailout. † 700billiondollarbailoutplan 06 jan 2009 Web. 19 Apr 2009. http://www. 700billiondollarbailoutplan. com/tag/700-billion-dollar-bailout-plan/ Baker, Dean. â€Å"An interview with Dean Baker on the US$ 700bn bailout of financial institutions. † global subsidies initiative 6 nov 2008 Web. 19 Apr 2009. http://www. globalsubsidies.org/en/subsidy-watch/commentary/an-interview-with-dean-baker-us-700bn-bailout-financial-institutions Bardhan, Ashok Of Subprimes and Subsidies: â€Å"The Political Economy of the Financial Crisis† SSRN (October 2008): http://ssrn. com/abstract=1270196 Bebchuck, Lucian. â€Å"A Plan for Addressing the Financial Crisis . † SSRN 28 Sep 2008 24. Web. 18 Apr 2009. . Christopher, Lamy. â€Å"The Financial Crisis of 2008:† SSRN 05 Oct 2008 Web. 17 Apr 2009. http://ssrn. com/abstract=1274337 Demyanyk, Yuliya S. and Van Hemert, Otto, â€Å"Understanding the Subprime Mortgage Crisis† SSRN 5 Dec 2008 http://ssrn.com/abstract=1020396 Davidoff, Steven M. and Zaring, David T. ,Big Deal: â€Å"The Government's Response to the Financial Crisis† SSRN (November 24, 2008). : http://ssrn. com/abstract=1306342 Harvey, Campbell. â€Å"The Financial Crisis of 2008: What Needs to Happen after TARP. † SSRN 05 Oct 2008 Web. 17 Apr 2009. http://ssrn. com/abstract=1274327 Jeremy, â€Å"Full Text and Details of the Proposed $700 Billion Government Bailout Bill – Draft Submitted Sunday Evening. † genxfinance 28 sep 2008 Web. 19 Apr 2009. McCain, John. â€Å"An Enduring Peace Built on Freedom Securing America's Future . † Foreign Affairs Dec 2007 Web. 19 Apr 2009. Murphy, Austin. An Analysis of the Financial Crisis of 2008: Causes and Solutions† SSRN (November 4, 2008): http://ssrn. com/abstract=1295344 Stout, david. â€Å"The Wall Street Bailout Plan, Explained. â €  the NYT 20 SEP 2008 Web. 18 Apr 2009. . Schwarcz, Steven L. â€Å"Understanding the ‘Subprime' Financial Crisis†SSRN (October 30, 2008). : http://ssrn.com/abstract=1288687 Spetalnick, Matt. â€Å"Obama sees signs of economic progess. † Reuters 11 apr 2009 Web. 19 Apr 2009. . Ryan , Stephen. â€Å"Accounting in and for the Subprime Crisis. † SSRN 26 March 2008 Web. 18 Apr 2009. http://ssrn. com/abstract=1115323 Whalen, Christopher. â€Å"The Subprime Crisis: Cause, Effect and Consequences. † SSRN 1 mar 2008 Web. 18 Apr 2009. . Wilson, Linus. â€Å"Debt Overhang and Bank Bailouts. † SSRN 02 Feb 2009 Web. 17 Apr 2009. http://ssrn. com/abstract=1336288

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Alternative energy sources Essay The age old question of how will we power our homes and lives in general moving forward when all the oil runs out, and one day it will. The world needs to move in a direction that will lead to energy independence however businesses and society is slow to move because we cannot see the impacts until it hits home in that all of sacred places, our wallets. Changes need to be made but can we afford it or can we afford not to make the move that will ensure our future for generations to come. Fist let us look at why we chose fossil fuels. The fossil fuels we largely depend on today are coal, oil and natural gas. They are called non-renewable energy sources. That description is actually another way of saying we use them faster than they form. Over 100,000 times faster to be exact! So how did we ever decide this would be the primary energy resource to power human development and progress? It all goes back to human mastery of fire to provide warmth, light and a means of preparing more palatable and easily digestible foods. To the early humans, fire was the equivalent of having a little sun with them wherever they needed or wanted to go. With this energy available at anytime and anyplace, humans could begin to spread about the world and thrive, regardless of the climate or amount of sunlight available. It provided the power for humans to begin their mastery of Earth as a species, less vulnerable to extinction than all other animal species, yet with a greater ability to bring about change — for good or bad. There are many alternative energy sources that we can see and put our hands on but they all have pros and cons. Some are either too expensive or not viable as a long term source of energy in comparison to oil. Our infrastructure is built around coal and oil dating back to the industrial revolution. From our cars to the power that runs the microwave in the kitchen fossil fuels are a part of our lives but they are running out, killing the environment in more ways than one and becoming more and more expensive to produce due either war or scarcity. Then when we complain about the price or the consequences of drilling or burning fossil fuels the best our governments can give us is talk with little action because those in  power are more about money which comes from the companies and people who spend money on their campaigns to get re-elected. When one thinks of alternative energies the first thing that springs to mind is solar energy and why not, we the sun is not going anywhere any tim e soon(at least we hope not) and there are very few places that don’t get sun for most of the 24 hours in a day. So why do we not all have a solar panel on our roofs and cars? One reason is because it is not cost effective and cannot produce enough energy for most people to make it worthwhile. Our mind set is always going to be one of why should we invest in something that does not do what oil and gas can? With the economies of the world in jeopardy and more and more people out of work, asking them to do their part to help the environment is just not realistic. Until science and business can make solar power more viable we as average citizens will not make the change while we have oil and gas still. Unless we either just run out or we can no longer afford fossil fuels we as a society will not make our lives any harder by switching to an alternative energy source that is still not viable nor is it cost effective. Another disadvantage to continuing with fossil fuels is the continued and escalating tension in the Middle East. The cost alone of defending the oil that we use and take for granted is astronomical not to mention the loss of life which cannot be measured. The thought that we as a society have not moved past killing one another for an inanimate objects is shameful. That we have no evolved morally past the point of killing for energy is a discredit to how far we have come as a race. If we would take the money that we spend on defense and guarding oil rigs and clean ups when things go wrong and put it toward improving solar and fusion nuclear power we might find yourself energy independence sooner rather than later. Wind is the next source of alternative energy that has people all a buzz with excitement but is it truly viable? This alternative can seem very attractive but again is the cost of a wind turbine and the land needed to build wind farms is substantial to produce enough energy. So then the question is just like with solar energy, we need so much space to make enough energy that it just cannot compete with fossil fuels no matter what the environmental impact. Alternative energy just does not have enough clout with governments to push their clean energy agendas that it just is not a short term solution. The main problem that we all can see is that  alternative energies cannot do what oil and gas do now. Wind will not let us drive 400 miles to where we want to go when we want to. Solar or battery power is unreliable because it takes time to recharge a battery with solar energy and no one has been able to come up with to date a viable mass producible car that uses solar power. Even hybrids and battery power cars just can give us the flexibility with which gas driven cars can. When something can’t make what we already have better and at an equil or lesser cost to us will not gain ground. We are a visual society and unless someone comes up to us and says that the earth is going to end in 50 years unless we all drive hybrids were not going to do it. It is not in our nature and thus it won’t make any difference what innovations businesses and science come up with. As for oil itself it is going to take something like nuclear fusion or a more advanced solar cell to move us a way from oil. Nuclear power has always been taboo or in simpler terms a ‘Not in my back yard’ energy source. Nuclear fission is a source of energy that is viable and being used to day however the need to increase nuclear fission sites has the environmental community in an uproar. It is a well-known fact that these types of reactions produce waste products that are extremely dangerous not to mention a nuclear fission plant can either be attached or have an issue that would cause an environmental catastrophe which makes the idea of building newer, safer plants an unrealistic idea. The consequences of nuclear fission just do not out way the ramifications of environmental issues that could come of a disaster like Chernobyl. Nuclear fusion is a far more environmentally safe way to produce nuclear power and produces no waste products unlike fission and if an issue were to arise the reaction of fusion just stops and no radiation is not leaked nor is there an explosion of any kind. The proble m again with nuclear fusion is at the moment costly and cannot produce enough power to out way the cost and energy it takes to produce power. This like solar power is where we need to be placing our faith in the future of power in our country and around the world because oil will run out or it will become too costly to produce or something is going to happen that will be so catastrophic that we as a race will say enough is enough but until that time comes were not going to change our ways. Despite nuclear energy’s role as a significant power supply source, it is highly unlikely it will survive past the 21st century, especially since the recent Japanese  disaster. Many people are against it, storage of its highly radioactive wastes is difficult and costly. There are not enough ores available to maintain continued production of nuclear energy, and most of today’s nuclear plants will reach the end of their life span within the next 50 years. McLamb, Eric(2010). Just another reason for moving towards fusion and putting the money that we might use to build new fission plants which could again like the Japanese r eactor disaster fusion will not have that problem. There are many other forms of alternative energies such as geothermal and hydro power as well but again just like all the other sources, it is not producing as much power as fossil fuels and we are not spending our time and resource to improve these more available and attainable but again we sit with oil still. At the end of the day something dramatic is going to need to occur to push humanity towards a different source of energy but until we can see positive results on a massive scale we are never going to change our ways. As stated before if our planet were to end tomorrow I still don’t think we would change how we do things because we as a people are selfish and only care about what goes on in our homes as opposed to what is going on around the world. Will alternative energy source replace fossil fuels and clean up the environment. The answer is yes but what is it going to take to push us over the edge. Will it be a major environmental disaster, a global shortage of oil, or a scientific advancement that will revolutionize our way of life in a way that oil did when we first started to use it for our day to day to day lives. We can only hope but we are going to have to do something because we cannot continue down this path of ruining our resources and our planet. References Berger, A.A (2008). Seeing is believing (J. Wetherington, Ed. 3rd ed), Boston: McGraw-Hill Mc,Lamb, Eric(2010). The Secret World of Energy(http://www.ecology.com/2010/09/15/secret world-energy//)

Business plan for PARAMOUNT SENIOR CARE SERVICES

Business plan for PARAMOUNT SENIOR CARE SERVICES Paramount Senior Care Services Inc. (Paramount) is a new home health care company in its start up stages. It will offer in-home care services to patients and clients from Halton-Peel region of the province of Ontario, Canada. Our value proposition is to offer quality, personalized, customized care, support and assistance to seniors and families to help them maintain their independence at the comfort of their own homes at reasonable cost. Paramount has a unique competitive advantage; it is offering a one-stop-shop home care service for senior: skilled home health care, companionship; cleaning and housekeeping services; home repair, renovation and maintenance at reasonable price. Paramount is providing the senior and families the benefits of living in an assisted facility in the comfort of their own homes. There is an expected growth in the demand of health care in Canada over the next 30 years, largely due to unprecedented growth in the number of seniors. According to Statistics Canada there will be a 30% increase in Canadas senior population annually from 2006 to 2016 or 4.3M to 9.0M respectively. The population based in Canada is aging, including residents of Halton-Peel Region, and more of the seniors opting to stay in their own homes as long as possible. Even after their hospitalization for example, they rather recuperate at home rather than proceeding to a nursing home or rehabilitation clinic. At the rate of 57% growth of senior population in Halton-Peel region from 1996 to 2016 as projected by Statistics Canada, the senior population aged 65 to 85+ in the region for the next five years will be from 222,921 to 242,459; trend is growing by 30% annually in succeeding years. Paramount customer base will be through referrals from physicians, social workers, other health care profess ionals and community care facilities in the region. There is a strong competition in the market, however, Paramount will position itself as unique one-stop-shop home care service for seniors with competent, caring caregivers and professional management. Our companys business model includes several revenue streams from services we offer such as skilled care-nursing care, physical therapy, speech therapy or occupational therapy; companionship; housekeeping; and home repair, renovation and maintenance. In the home care business, the terms of payment for services rendered usually takes up to 30 days. In this regard, Paramount is looking for additional funding to support the cash flow for the initial operation, in the form of a 5-year loan in the amount of $50,000 at the prevailing interest rate. The company will not take up any further loans, as it plans to support the growth through its cash flow. Company Overview Paramount Senior Care Services Inc. is a start-up company in its initial year of operation. Our company will be located in Mississauga. It will offer in-home care services to patients and clients, who prefer to be assisted and taken care of in the comfort of their own homes, from Halton and Peel District region which includes the cities of Mississauga, Brampton, Caledon, Milton, Oakville, Halton Hills Burlington. Offering: Skilled Care- Nursing, Physical Therapist, Occupational Therapist, Speech Therapist Personal Support Care Companionship Housekeeping Home Repair, Renovation and Maintenance Value Proposition Our value proposition is to offer quality, personalized, customized care, support and assistance to seniors and families to help them maintain their independence at the comfort of their own homes at reasonable cost. Mission Statement Paramount Senior Care Services strives to offer superior and reasonably priced home health care to individual and families in Halton-Peel Region providing with competent, reliable health care and professional management. Company Ownership Paramount Senior Care Services Inc. is a limited liability partnership owned and operated by: Severina Saliva-Parayaoan Arlyn Gardon, RN Ben Dimaano Business Model Our company have several revenue streams from services it offers that includes income from skilled care, companionship, personal support and services, housekeeping and companionship, and other special services in home repair, renovation, maintenance and security services as outlined in the diagram below. PARAMOUNT SENIOR CARE SERVICES INC. Business Model Profit Key Personnel /Resource Cost/Expenses Revenue Streams Customer Segments Strategic Goals Objectives Key Strategic Areas of Focus Year 1 Year 2 Year 3 Sales Revenue 10% annual growth 10% annual growth 10% annual growth Profit before Interest Taxes 40% of sales 40% sales 40% of sales Net Profit At least 20% of sales At least 20% of sales At least 20% of sales Geographic coverage- # of locations Focus in Halton-Peel Region Expand nationwide thru franchising the companys business in Edmonton and B.C. Expand internationally- US East coast and the Islands of Bermuda Customer satisfaction At least 80% customer retention At least 80% customer retention At least 80% customer retention Service Overview Paramount Care Services Inc. offers excellent home health care services such as skilled nursing care, nursing aide, speech therapy, physical therapy, or personal support services; companionship: personal hygiene, meals preparation, housekeeping, laundry, transportation and shopping. We also provide home repair, renovation, security and maintenance to upgrade home facilities adaptable to seniors changing lifestyle and physical mobility. The following are the list of services and its features. All aims to benefit the seniors and family with peace of mind, convenience and assurance of excellent personal health care and care of property- providing the benefits of assisted living facility in the comfort of their own homes. Skilled Care features: Nursing Care Physical Therapy Speech Therapy Occupational Therapy Personal Support Care features: Assist in personal hygiene and grooming Morning Care/Bedtime Care Catheter care Etc. Companionship features: Companionship on travel Respite care while in the hospital or at home Meals preparation Grocery shopping Medical appointment Beauty Salon or Barbers appointment Engage in interactive activities Pet Care Etc. Housekeeping features: Cleaning inside the house Cleaning windows Laundry, etc. Home Repair, Renovation and Maintenance features: Toilet and bathroom renovation Installation of handrails in bathrooms or stairs Plumbing Electrical Carpentry Gardening and Lawn Maintenance Snow removal Country Analysis- PEST PEST Analysis- Canada Establishing a senior home care business in a democratic country like Canada is projected to be successful. Canada has a strong and stable economy where seniors are protected and covered with health care insurance and benefits, and labor laws pertaining caregivers and health care professionals are in place to support the growing and changing needs of the countrys demographics, supported with highly advanced technological infrastructure with a general hospital in every major city and good route accessibility. Political and Legal Factors Democratic country Health insurance for seniors are mandatory and well-established Laws and regulations supporting and encouraging seniors home care health services Labor laws and immigration laws encouraging caregiver programs Economic Factors Strong, stable economy Senior citizens are provided with health care benefits and allowances Growing population of seniors at the rate of 30% annual growth rate Increase in demand in seniors home health care services Growth in immigration particularly in health care profession Socio-Cultural Factors Seniors in Canada are usually taken care of caregivers other than family members Family members are usually busy with careers and can afford to hire caregivers for elderly members of the family rather than to give up their work Seniors prefer to stay in the comfort of their own homes as long as there will be proper caregiver to assist Technological Factors Highly technological infrastructure with very good access to telecommunications including telephone, internet, etc. Service Business-Industry Analysis To summarize the industry analysis using Porters Five Forces: Barriers to Entry is low, considering home care services are considered as home-based business threats of new entrants is high. Suppliers Power is low, although nurses and health-care related professionals are in demand there are more people who are also getting qualifications in health care as second career as well as qualified new immigrants coming to the country. Buyers Power is high, considering there are many choices referrals and recommendation from key partners is highly important. Threat of Substitute is high, as there are many alternative service providers in the market. Competition/Rivalry is high, existing large private companies are dominating the market plus the presence of major franchise companies. Due to the increasing demand and growth of the industry, senior home care business is still consider to be an attractive industry even though the rivalry is high. Marketing Plan Market Analysis Summary There is an expected growth in the demand of health care in Canada over the next 30 years, largely due to unprecedented growth in the number of seniors. The forecasted numbers are below*. Year Number of Seniors Population Share Ratio of Seniors 2006 4.3 million 13.3% 1 in 7 people 2016 5.7 million 16.6% 1 in 6 people 2026 7.7 million 21.4% 1 in 5 people 2036 9.0 million 24.5% 1 in 4 people * Statistics Canada, CANSIM, Table 052-0004 and Catalogue no. 91-520-X. 2005. Based on the above information, there will be a 30% increase in senior population annually from 2006 to 2016. The consumer base for Paramount Senior Care Services Inc will be patients referred by social workers, physicians, health care facilities and other health care professionals as well as satisfied clients and their families. The majority of these patients will be covered by OHIP with a smaller portion being shouldered by the patients and/or families. Market Segmentation The population based in Canada is aging, including residents of Halton and Peel Region, and more of the seniors opting to stay in their own homes as long as possible. Even after their hospitalization for example, they rather recuperate from home than proceeding to a nursing home or rehabilitation clinic. Population Estimates and Projections by CSD for Halton-Peel Region, 2001-2016 Census Subdivision 1996 Population 2001 Population 2006 Population 2011 Population 2016 Population Peel Mississauga 563,000 613,000 653,000 676,000 694,000 Brampton 277,600 321,000 382,000 445,000 510,000 Caledon 41,200 49,000 58,000 67,000 76,000 Total 881,800 983,000 1,093,000 1,188,000 1,280,000 Halton Oakville 132,300 146,300 161,300 184,900 214,900 Burlington 141,100 154,800 164,300 172,200 178,900 Milton 33,100 37,100 58,000 71,000 84,200 Halton Hills 43,700 49,000 54,800 60,000 65,000 Total 350,200 338200 438,400 488,100 543,000 Grand Total 1,232,000 1,321,200 1,531,400 1,676,100 1,823,000 From 1996 to 2016, Halton-Peel regions population is projected to experience a growth rate of over 50%, compared to a provincial average of approximately 25%, as per Ontario Ministry of Health and Long-Term care Provincial Health Planning Database in 2001. Population in Halton-Peel Region, by Age and Sex, 2000 (Ontario Ministry of Health and Long-Term care Provincial Health Planning Database in 2001) Halton Region Peel Region Target Market Segment- Trends and Growth Based on the above data, at the rate of 57% growth of population from 1996 to 2016 as projected by Statistics Canada, the senior population aged 65 to 85+ in Halton-Peel region for the next five years will be as follows: Year Halton Region Estimated Population Peel Region Estimated Population Estimated Total Population Projected Senior Population (65 and above) (13.3% of Total) 2011 488,100 1,188,000 1,676,100 222,921 2012 497,862 1,211,760 1,709,622 227,380 2013 507,819 1,235,995 1,643,814 231,927 2014 517,976 1,260,715 1,778,691 236,566 2015 528,335 1,285,929 1,814,265 241,297 2016 543,000 1,280,000 1,823,000 242,459 The total size of the market representing projected senior population in the Halton and Peel region is 222,921 in 2011 to 242,459 in 2016; and expected to increase by 30% in the succeeding years. Out of the total market size, Paramount Senior Care Services, Inc target market share for the first three years of operation is 0.12%, 0.13%, and 0.14% or 276, 303 and 333 patients/clients respectively, at 10% sales annual growth as illustrated in the table below. Year Projected Senior Population (65 and above) (13.3% of Total) Target Market Share in % Target Number of Clients/Patients/day (year) Growth Rate 2011 222,921 1st-2012 227,380 0.12% 23 (276) 10% 2nd-2013 231,927 0.15% 25 (303) 10% 3rd-2014 236,566 0.20% 27.5 (333) 10% Our primary market segment includes those seniors 65 years old and above who require health care services or companionship by home health nursing staff or personal support workers. As well as, individuals who have suffered stroke, and other physical ailments resulting to personal injury requiring rehabilitation care, respite care, speech therapy, physical therapy, or care management from skilled nurse or therapist or personal support worker in their own homes. These patients and their families may also require other home services such as meals preparation, cleaning, housekeeping, transportation and shopping as well as home repairs, renovation, including property and lawn maintenance, home security and emergency alarm. Target Market Segment Strategy Initially, our company will focus on those market segments that require only home-based services where our services are mostly needed. This will greatly decrease overhead, since additional office or facilities will not be required. In the long term, maybe after five years of successful operation opening of an assisted living facility will be an option. Competition and Buying Patterns The following are key factors considered by the consumer and healthcare professionals when referring home health care services: Trust in the reputation of the service provider Reliability and timely delivery of services Quality of services by the service provider Price comparative to other providers Competitive Analysis Key Factors Paramount Care Services Home Instead (Private) Nurses Next Door (Private) Guardian Angel Care (Private) Public sector-i.e. Red Cross, Victorian Order of Nurses,etc Strength One-Stop-Shop care for seniors Franchise proven business and strong support Franchise proven business and strong support Hospice, palliative end of life care Community services and link with government/ Hospitals Weakness New company with no strong clients base yet Categorize as more expensive in the industry Categorize as more expensive in the industry Lack of personalize care Limited to health care service only (no cleaning/ housekeeping) Unique Selling Proposition One-Stop-Shop care for seniors Patented CAREgiver program Guaranteed nurses just next door of the clients Specialized in hospice, palliative end of life care Community service supported by the government Trust in the professional reputation Medium-as we are a start-up company High-due to brand image High-due to brand image High-due to number of years in the business High- due to established and proven organization and community service Reliability High-24/7 service High-24/7 service High-24/7 service High-24/7 service High-24/7 service Quality of Services High- regulated by law High- regulated by law High- regulated by law High- regulated by law High-regulated by law Price Lower than franchise competitors Expensive Expensive Competitive As per OHIP Notes: The table above shows a strong competition in the home health care industry. However, Paramount Senior Care Services Inc is positioning itself as health care company providing affordable rates for seniors and families having a limited budget which represents a majority of seniors in the target market areas with our unique offering of one-stop-shop services for seniors. Competitive Advantage Paramount Senior Care Services Inc. is a newly set up business that has a unique competitive advantage offering a one-stop-shop for senior care: home health care and companionship; cleaning housekeeping services; home repair, renovation and maintenance at reasonable price. Paramount Senior Care Services is providing the senior and families the benefits of living in an assisted facility in the comfort of their own homes. Strategy and Implementation Summary Paramount Senior Care Services Inc. will initially focus on Halton and Peel District within the province of Ontario, Canada. Within this geographical area we will target on senior home care program. Within this area we have two target markets: the individual client, and the regional physicians, hospitals and other health care facilities and insurance companies. Marketing Strategy Product/Services Our primary focus is home health care services to seniors. We will provide seniors a One-Stop-Shop in all their home health care services need; it will provide convenience for seniors and their families. Pricing Strategy Our company pricing system will be set according to OHIP and other private insurance regulations, and is reasonable and competitive. We will do so by developing a contracted service from health-care staff on hourly, daily or weekly basis and only limited full-time employees as full-time staff. Distribution Strategy Our company will focus in the Halton-Peel Region where the projected growth of seniors is higher than the national average. Our company will build strategic alliance with health care facilities in the region primarily Trillium Hospital in Mississauga, Credit Valley hospital, and the new general hospital in Milton as well as community centers and health care practitioners in the region. Promotion Strategy Marketing our company as a service-oriented business requires establishing a good reputation for expert care and superior quality service. It starts with our existing contacts currently in positions to make recommendations and referrals to us, and we will continue with our efforts to network, integrate with the community health care professionals in the region. We will participate in community events in the region to build contacts and generate more referrals. We will create marketing communications and promotion materials in a business, professional manner, as well as our marketing tools such as flyers, brochures, business cards and advertisements. Sales Strategy Our patients and their families, as well as referring physicians and healthcare professional must be satisfied with our service, as we sell superior care, 24/7 availability, reliability and good relationships. Growth in service industry often resulted to loss of quality control that causes client dissatisfaction, increase in complaints and eventually loss of customers. In this regard we will constantly focus on superior quality of service. Sales Forecast The companys projected annual sales for the first three years of operation are as follows based on the assumption: Using conservative estimates Assuming to acquire a share of only 0.12% to 0.13% of target market An average of six hours service per client An average rate of $25/hour Target growth rate of 10% annually Sales Forecast Year 1 Year 2 Year 3 Sales Target Market Size 227,380 231,927 236,566 Target Market Share 0.12% 0.13% 0.14% No. of Patients or Clients 23 25 28 Ave. Hours/Patient/Day 8 8 8 Total Service Hours/Day 184 200 220 Ave. Rate/Hour $25.00 $25.00 $25.00 Total Sales/Day $4,600.00 $5,000.00 $5,500.00 Total Sales/Month $92,000.00 $100,000.00 $110,000.00 Total Sales/Year 100% $1,104,000.00 $1,200,000.00 $1,320,000.00 Direct Cost of Sales at 6% of Sales 6% $ 66,240.00 $ 72,000.00 $ 79,200.00 Gross Profit 94% $ 1,037,760.00 $ 1,128,000.00 $ 1,240,800.00 Geographic Expansion Plan Year 1- Halton Peel Region in the Province of Ontario, Canada Year 2- To expand operation nation-wide by second year of operation by expanding in British Columbia and Edmonton. Year 3- To expand operation internationally by third year of operation; to start in the United States by entering New York City in US East Coast; and the Islands of Bermuda in the Atlantic. Operations Day-to-day Operations Office Location: Main office in Mississauga with sub-office in Milton Office hours: 8:30 am- 5:30 pm Mondays-Saturdays at the main office location in Mississauga. Operating hours: 24/7 on call in case of appointment schedule, clients visit or emergency. There will be an assigned manager to handle calls during out-of-office hours on rotation basis. Client call and visit schedule. Staff and sub-contracted parties work schedule and assignment making sure clients/patients will be attended as required. Office Requirements Telephone 4-in-1 printer, copier, fax and scanner machine Computer for office use Office table and chairs Office supplies- stationary, etc, Legal Compliance Business license and registration Incorporation Taxes Bond, security and liability insurance Legal documentations CPA retainer Health Compliance Accreditation and certification from government agencies Certification and qualification of staff and skilled professionals Management Information System QuickBooks software program for accounting, finance and payroll recording and management Company website Internet connection and email Data Base Management Customer Relationship Management Communications Brochures Print ads Presentation folders for clients and partners in health care Medical Supplies Equipments Basic supplies in handling patients such as clinical gloves and masks Risk Management There are several identified potential risks in home health care industry, our company have identified some of them and have established mitigation plan to manage the risk accordingly as described in the table below. Potential Risks Mitigation Plan Injury, accidents and/or death Loss/theft on clients property Internal breach of security (i.e. credit card use, unauthorized use of data by employees or third parties) Health care recording process quality control management in place to prove proper care or negligence Bond and insurance coverage Liability waiver Background check on staff and sub-contractors/partners is mandatory Bond and security liability insurance Liability waiver Organization policies and procedures in handling documentations must be in order Data encryption Electronic form and signature Offsite storage Management and Organization Summary Paramount Senior Care, Inc. initial management team will consist of a Managing Director, a Case Manager, a Maintenance Manager, six employees, and contracted caregivers and housekeepers, a contracted agency to fulfill the need for Physical Therapists, Occupational Therapists, and Speech Therapists. Initially, all managers will also provide direct service. Severina Saliva-Parayaoan has a Bachelors Degree in Business Administration major in Accounting and currently finishing a post-graduate certificate in Global Business Management. She has over ten years experience in business development, management and administration. She will provide all administrative direction and will perform most of the administrative functions with assistance from the Administrative Assistant. She will also supervise housekeeping service. Arlyn Guardon is a registered nurse and has experience as a Skilled Nurse and Care Manager for a Home Health Agency will be the Case Manager. She will also provide direct nursing services during the initial stages of the business, as well as supervising the nursing and caregiver staff. As the need for the service providers grows, both managers will assume primary roles in management and will delegate direct service to employees. Ben Dimaano is a licensed home technician in Ontario and has over 10 years of experience in home repairs, renovation and maintenance. He will be the Maintenance Manager responsible for the HRRM Department. Organizational Chart Personnel Plan Assumptions: Owners will not receive salaries rather it will be in the form of a draw. Number of full-time employees will be kept to a minimum, any increase in labour requirements will be fulfilled through contracting. 10% annual increase in cost of living allowance for the full-time employees. Managing Director- This full-time position will be held by Severina Saliva-Parayaoan. As owner compensation will be made in the form of a draw. Case Manager- this part-time position will be held by Arlyn Gardon. As owner compensation will be made in the form of a draw. Maintenance Manager- this part-time position will be held by Ben Dimaano. As owner compensation will be made in the form of a draw. Administrative Assistant (1)- this full time position is based on 40-hours per week reimbursed at $12.00 per hour, with benefits assume at 30% of total payroll. Skilled Nurse (1) this full-time position will be paid $22.00 per hour for direct service hours, with benefits assume at 30% of total payroll. Personal Support Workers (12)- This full-time position will be paid for $12.00 per hour for direct service hours, with cost of benefits assume at 30% of total payroll. Housekeepers (10)- This position will be paid for $10.25 per hour for direct service hours with cost of benefits assume at 30% of total payroll. Physical therapist/Occupational Therapist/Speech Therapist- these positions will be contracted at a rate of $30.00 per hours. There will be no benefits attached to these positions as they are contracted on a fee-for-service reimbursement only. Personnel Plan Year 1 Year 2 Year 3 Managing Director $ $ $ Case Manager $ $ $ Maintenance Manager Administrative Assistant $ 29,952 $ 32,947 $ 36,241.92 1-Skilled Nurse $ 54,912 $ 60,403 $ 66,443.52 12-Personal Support Worker $ 359,424 $ 395,366 $ 434,903.04 10-Housekeeper/Companion $ 255,840 $ 281,424 $ 309,566.40 Total People 23 23 23 Total Payroll $ 700,128 $ 770,164 $ 847,178 Personnel Summary Position Admin Assistant Skilled Nurse Personal Support Worker Housekeeper Qualification College Graduate At least one year experience Registered and license in Ontario At least 3 years of experience Certified in Ontario At least 2 years of experience Secondary School graduate At least one year of experience Type of employment Full time Full Time Full Time Full time Salary +Benefits $29,952 $54,912 $29,952 $21,320 No. of Positions 1 1 12 10 VIII. Start-up Capital Requirements The following is the summary of the start up costs which includes: Business Development Rental Expenses Office Equipment Nursing Supplies Start-up Capital Requirements Business Development Attorney Fees- Setting up a limited company $ 1,000.00 Business Licence $ 200.00 Medisoft Billing Program $ 5,000.00 Professional Liability Insurance $ 3,000.00 *Assuming 25% down of $12,000.00 Workmans Compensation Insurance Deposit $ 500.00 Premises and content Insurance Deposit