Economic Environment of

Business

Rajesh Chavan(30) Abhimanyu Nikam (1) Piyush Chaudhari (25)

THE EUROPEAN UNION, AND GREECE
What happened in
Greece
• Budget Deficit Stands At 12.4%
• November 2009, Government Announcement
• December 7, Standard and Poor Cast A Negative
Forecast
• December 14, Desperate Measures Are Taken By
Government
• January 2010, EU Demands Answer
• February 2, Union Nationwide Strike
• February 11, Central Bank Of Europe Assures The
World
 SUMMARY

Greece’s current debt stands at a staggering

300 billion Euros.

It is 125% of their GDP.

In the year 2010 alone Greece needs to raise

an amount of 30 billion Euros.
 Potential Ways Of Bailout

OPTIONS COSTS Is It Legal?

•
1) Direct Bailout 30 Billion Euros In First Installment Probably No

2) Early Cohesion Funds 18.1 Billion Euros Yes

3) Extending BOP EU Taxpayers Liable No

4) Common Eurozone Bonds
5) Setting Up European
Monetary Fund
6) Bilateral or Multilateral
Loans
7) EU Gov Buys Greek Bonds
8) Interest Rate Bailout
9) Loans By EIB
10) Indirect Bailout By ECB
Punishing Fiscally Sound Countries Probably Not
EU Taxpayers Liable Probably Not
Place Burden On Few Member States Probably Not
Risk For EU Taxpayers Unclear
Unsuitable For Germany No
Risk For EU Taxpayers Unclear
Cost Of Borrowing Transfers To Eurozone No
 Alternative To The EU Bailout

• Let Greece Default

• Go To The IMF

• Attract Institutional Investors Outside Europe

• Withdrawal Of Germany And Splitting Up Into Two Zones

• Fiscal Federalism Light

• Other
 Recent Happenings
• Eurozone Finalises Rescue Package

• Opposition Opposes German Aid

• Extreme Social Unrest

What It Means To The World?
Dollar vs. Yuan
 Introduction
• The United States and China are now in a Hot
War
• This Hot War is named as such because it is a
money-centric conflict where speculative
money (Le., "Hot" money in FOREX) reigns as
an instrument of economic and financial
power
• Threat to U.S economy & U.S national security
 Methodology
• Seeking to maintain its export dominance, China is
engaged in a two-pronged effort: fighting
protectionism among its trade partners and holding
down the value of its currency.
• Beijing is exploiting a fundamental difference
between two major international bodies
• China had a $198 billion trade surplus with the rest
of the world last year, with its exports to the United
States outpacing imports by more than four to one
 CONTINUED…
• Beijing has filed more cases with the W.T.O.’s
powerful trade tribunals in Geneva than any
other country complaining about another’s
trade practices.
• Beijing has worked to suppress a series of
I.M.F. reports since 2007 documenting how the
country has substantially undervalued its
currency, the renminbi, said three people with
detailed knowledge of China’s actions.
 Yuan to replace $ ?
• The Chinese government is laying the ground
for the yuan's ascendance.
• China is better placed than the US to provide a
reserve currency for the 21st century because
it has a large current account surplus, focused
government and few of the economic worries
the US faces.
 CONTINUED…
• China will soon want to see the yuan included
in the International Monetary Fund's special
drawing rights "basket", he warns, as well as
seeing it "used as a means of payment in
bilateral trade."
 U.S Action
• President Obama called on Thursday for China
to introduce “a more market-oriented
exchange rate.” China’s defiant response keeps
the administration in a difficult position.
• U.S may list China as a currency manupulating
country
 Effects of U.S. action
• The Chinese products will cost more
• Americans need to cut down consumption a
little less, since no savings to accommodate
for the increased cost of goods
• Inflation in US will go high
• China will stop buying U.S treasury bills which
will limit U.S ability to repay its debts
 Effects on China
• This will be a double edged blade for china as well as US.
• Because this will cause dollar to go down in value as demand goes
down by huge Chinese sale of Treasury bonds..
• This will make the holdings worth less for china
• China’s exports will lose a market share from its biggest market US
• Chinese economy will get hurt- since exports down- lesser money
to spend on internal infra- etc.
• But for US , this will pose a better opportunity and a worse
situation. One, its dollar value goes down , and economy might
cripple, but on the other side, it will be easy for them to pay back
their huge debts.
 Headlines
• ULIP ban on 14 insurance majors: SEBI (T.O.I)

• SEBI bars insurance cos from selling ULIPs (B.S)

• SEBI ban on ULIP schemes of insurance cos to

stay (E.T)

• SEBI ban on Ulips may hurt foreign

investments (F.E)
 SEBI
• Formed in 1992

• Responsive to needs of three groups

1) Issuers of securities
2) Investors
3) Market intermediaries
 IRDA
• Constituted in 1999

• Frame regulations

• Objective :-Promotion of competition

 ??????
• ULIP came into play in the 1960s and is popular in
many countries in the world.
• In India investments in ULIP are covered under
Section 80C of IT Act.
• Unit Linked Insurance Plan (ULIP) provides for life
insurance where the policy value at any time varies
according to the value of the underlying assets at the
time. ULIP is life insurance solution that provides for
the benefits of protection and flexibility in
investment.
 CONTINUED…
• The investment is denoted as units and is
represented by the value that it has attained
called as Net Asset Value (NAV).
• ULIP provides solutions for insurance
planning, financial needs, and many types of
financial planning including children’s
marriage planning.
 CONTINUED…
• Unit Linked Insurance Plan - is a financial
product that offers you life insurance as well
as an investment like a mutual fund
• Part of the premium you pay goes towards
the sum assured and the balance will be
invested in whichever investments you desire -
equity, fixed-return or a mixture of both.
 Why there is a Fight
• IRDA is regulatory authority for insurance
companies in India
• SEBI controls Investment & Stock related
activities
• 70% income for insurance cos is through ULIPs
• An investment- SEBI & wants control.
 Conclusion
• The case is pending In Supreme court
• Government Intervention
 Quiz
• Which company Is being developed under the code
name pink?
• Which was the 2nd country in the world to set up
radio broadcasting services and when?
• Which Indian company was an equity partner of
Pepsi when it entered to India?
• Who is founder of Dr.Reddy’s Lab?
• What is current Fiscal deficit of U.S/
• With which country recently India has signed FTA?
 Quiz…
• When was Euro became Available to common man?
• Where will the forth coming G-20 summit to be
held in 2010?
• Which vehicle took its name from the fact that it
was made to be used for general purpose?
• Who had the 1st paper currency right in India in
1861?
• What is bailout package given by U.S president in 2
yrs?
THANK YOU