"Finance World Special" BRICS to look at bid for top World Bank job

The world's major emerging economies rejected the tradition that an American automatically is selected to head the World Bank and they will look at putting forward their own candidate for the open job.

Finance chiefs from the BRICS group of emerging market powerhouses - Brazil, Russia, India, China and South Africa - met on the sidelines of a G20 meeting in Mexico City and agreed the top World Bank job should be open to all countries. "Candidates should be based on merit and not on nationality," Brazilian Finance Minister Guido Mantega told reporters. Another BRICS official said the group will discuss the possibility of putting up their own candidate to challenge whoever the U.S. government nominates. "Certainly it is a discussion we will have." Countries have until March 23 to submit names for the top post and a decision is likely by April meetings of the World Bank and International Monetary Fund. Americans have held the top job since the World Bank was set up at the end of the Second World War but the unwritten rule has in recent years faced more resistance, along with the tradition that a European heads the International Monetary Fund, as emerging economies gain more economic clout. "It is time we break the traditions of the U.S. and Europe sharing the two seats and amongst all of us we must try harder this time to find some consensus," said Pravin Gordhan, South Africa's finance minister. Robert Zoellick, the current World Bank president, plans to step down at the end of June after deciding against seeking a second five-year term. The United States has said it will nominate a replacement candidate but has not yet said who it will be. Possible candidates are thought to include former U.S. treasury secretary Lawrence Summers, current Secretary of State Hillary Clinton, and Susan Rice, the U.S. ambassador to the United Nations. The State Department has said Clinton would not be taking the job. The World Bank is the leading provider of development aid to poorer countries and its president is one of the world's top policymakers. "They can put forward their candidate," Gordhan said, referring to the United States. "But rather than it becoming a destructive exercise, it should be a constructive process so that we attempt to build consensus on who the candidate should be. It is idealistic but let's give it a shot."

"Eurozone Special" Bond markets wary as Greece offers debt deal

GREECE has announced plans to slash its outstanding debts by more than 50 per cent, even as a top credit rating agency warned that aspects of the deal could further destabilise Europe's government bond markets.

In what the International Monetary Fund has called the largest debt restructuring ever, the Greek Finance Ministry posted its offer to investors on a website set up to manage it. Under the terms of the deal, existing Greek bonds can be swapped for a new 30-year note worth 31.5 per cent of the face value, plus a second short-term security worth another 15 per cent that is backed by the entire euro zone and is meant to be as good as cash. Greek officials hope private investors will choose to accept a steep write-down in the value of their bond holdings to avoid even worse losses if the country were to default. If enough investors participate, the exercise would reduce the country's outstanding debts by as much as €107 billion ($134 billion) and help clear the way for a €130 billion package of new loans from the rest of Europe and the IMF. If the bond exchange falls short, the new international loans will be in doubt and Greece's economic crisis would intensify, with a government default likely by late next month. About 90 per cent of Greece's outstanding $260 billion in privately held bonds will need to be included in the bond exchange for the deal to move forward, according to the terms announced by the Greek Finance Ministry. Although the debt swap is meant to be voluntary, Greek MPs in recent days changed the law to require that any holdout investors be forced to participate if a majority of investors, representing two-thirds of the outstanding bonds, agrees to the exchange. The debt swap has been negotiated in recent weeks between Greek authorities and a committee representing banks, pension funds and other large investors who hold the bulk of the outstanding debts. Charles Dallara, managing director of the Institute of International Finance and a lead negotiator for the investors, said he was confident the debt swap would succeed. ''We remain quite optimistic that once investors study this proposal.there will be high take-up,'' said Mr Dallara, who is in Mexico this weekend for a round of meetings of G20 finance ministers. Standard & Poor's said Greece's debt exchange could harm other European governments. The deal exempts from losses some $80 billion in bonds accumulated by the European Central Bank early in the crisis. S&P argued that has created a new class of bond that in turn could discourage investors from buying the bonds of countries such as Italy or Spain.

New York-based Citi sold a total of 145.3 million shares of HDFC at Rs 657.56 apiece through multiple block deals

Citigroup Inc, the third largest lender by assets in the US,sold its entire 9.85 per cent stake in the country’s biggest housing finance company, Housing Development Finance Corporation (HDFC), for Rs 9,550 crore ($1.9 billion). The exit was meant to help the US bank shore up its balance sheet to meet the tighter Basel III requirements. According to a release, Citi made a pre-tax gain of $1.1 billion (Rs 5,490 crore) and an after-tax gain of approximately $722 million (Rs 3,550 crore).

“The after-tax gain reflects Citi's tax liability to the US government,” said a Citi spokesperson. The New York-based Citi sold a total of 145.3 million shares of HDFC at Rs 657.56 apiece through multiple block deals. “The sale of Citi’s remaining stake in HDFC is part of Citi’s ongoing capital planning efforts,” the bank said in a statement. HDFC shares closed 3.62 per cent lower at Rs 675.9 on the National Stock Exchange (NSE) on Friday. The stock fell to as low as Rs 657.5 intra-day. The transaction was at a six per cent discount to HDFC's closing price on Thursday, when Citi announced its exit plan. It had invited bids in the range of Rs 630-703.5 a share and received twice the demand than the shares of offer, according to brokers. The HDFC stock had gained 7.6 per cent this year, underperforming the benchmark Sensex (which has added 17 per cent). Citi, which was the largest foreign investor in HDFC, had first invested in 2005 but a significant portion was acquired when it bought Standard Life’s 9.3 per cent stake in HDFC for $673 million in 2006. “We are pleased with the results of our investment in HDFC,” Citi India CEO Pramit Jhaveri said in a release. In June 2011, Citi had pared its stake in HDFC from 11.4 per cent to 9.85 per cent. Besides Citi, private equity firm Carlyle had sold about 20 million shares in HDFC on February 1, raising about Rs 1,350 crore and nearly doubling the money from its 2007 investment in the lender. In the past few weeks, global financial institutions, including Singapore’s sovereign fund Temasek Holdings, have sold stakes in Indian financial firms. Warburg Pincus had sold about 17.5 million shares in Kotak Mahindra Bank this month through open market deals to raise about $170 million.

"Indian Budget 2012 Special": Exporters unlikely to get tax incentives

With the government hard pressed to reduce fiscal deficit, exporters are unlikely to get tax incentives in the Budget for 2012-13 to be presented by finance minister Pranab Mukherjee next month. "Finance ministry's fiscal room for manoeuvre has gone. They are in a tight fiscal situation, who is going to give you sops," a senior commerce ministry official said. In order to arrest deceleration in export growth, the Federation of Indian Export Organisations (Fieo) has urged the government to give complete exemption of excise duty on handmade carpets, reduction of excise duty on man-made fibres and service tax exemption on ECGC premium and on currency conversion for exports. The exporters are also demanding exemption of minimum alternative tax on special economic zones, key exporting hubs. From a peak of 82 per cent in July 2011, export growth has slipped to 44.25 per cent in August 2011, 36.36 per cent in September 2011, 10.8 per cent in October last year and 10.1 per cent in January.

Mukherjee, according to the official, may not provide tax incentives as his foremost priority would be to bridge the fiscal deficit, which is the gap between revenue and expenditure. During the current year, the fiscal deficit is expected to exceed the budget target of 4.6 per cent of the Gross Domestic Product (GDP), mainly on account of rising subsidy bill and poor realisation from sale of equity in state-owned companies. Commerce secretary Rahul Khullar has recently said that the country's exports are going to face difficulties during the coming months due to the global economic uncertainties. However, exporters too are not optimistic about announcement of fiscal incentives in the Budget. "Looking at the current revenue situation of the government, we are not expecting much in the Budget. It is not possible for the Finance Minister to extend fiscal benefits to us," Fieo Director General Ajay Sahai said. In the last Budget, the government had allowed exporters to do self-as customs authorities, a moved aimed at fastening the clearance of the cargo by customs authorities. The finance minister also allowed duty-free import of some inputs used in the manufacture of leather and textile products for export purpose.

Inflation and the Adoption of Financial Technology

Since the mid-1960's, computerized technology has been continuously changing payment systems world-wide. However, the level of technological sophistication in the banking sector, and the timing of the new computerized Financial technologies implementation, significantly differ across countries. Some of the observed cross-country variation can be traced to differences in the countries wealth. To examine the relationship between financial technology, wealth and the rate of inflation among countries with similar inflation histories, wealthier ones tend to have larger ATM networks. However, when wealth alone is used to predict the level of a country's technological sophistication in the financial sector, the results indicate that other factors, such as inflation, must be involved. For example, countries that have experienced hyperinflation, such as Turkey, have implemented more ATMs than their wealth per capita would predict while countries such as Saudi Arabia that have experienced long periods of deflation have purchased fewer ATMs, and at much later date, than would have been predicted by their wealth. In fact,demonstrates, both inflation and per capital income are significant predictors of the number of ATMs per 1000 persons in a country.

Inflation and its Positive and Negative effects.

In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time.When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation also reflects an erosion in the purchasing power of money – a loss of real value in the internal medium of exchange and unit of account in the economy.A chief measure of price inflation is the inflation rate, the annualized percentage change in a general price index (normally the Consumer Price Index) over time. Inflation's effects on an economy are various and can be simultaneously positive and negative. Negative effects of inflation include a decrease in the real value of money and other monetary items over time, uncertainty over future inflation may discourage investment and savings, and high inflation may lead to shortages of goods if consumers begin hoarding out of concern that prices will increase in the future. Positive effects include ensuring central banks can adjust nominal interest rates (intended to mitigate recessions),and encouraging investment in non-monetary capital projects. Economists generally agree that high rates of inflation and hyperinflation are caused by an excessive growth of the money supply. Views on which factors determine low to moderate rates of inflation are more varied. Low or moderate inflation may be attributed to fluctuations in real demand for goods and services, or changes in available supplies such as during scarcities, as well as to growth in the money supply. However, the consensus view is that a long sustained period of inflation is caused by money supply growing faster than the rate of economic growth.

Today, most economists favor a low, steady rate of inflation.Low (as opposed to zero or negative) inflation reduces the severity of economic recessions by enabling the labor market to adjust more quickly in a downturn, and reduces the risk that a liquidity trap prevents monetary policy from stabilizing the economy.The task of keeping the rate of inflation low and stable is usually given to monetary authorities. Generally, these monetary authorities are the central banks that control monetary policy through the setting of interest rates, through open market operations, and through the setting of banking reserve requirements

Capital Rationing

The act of placing restrictions on the amount of new investments or projects undertaken by a company. This is accomplished by imposing a higher cost of capital for investment consideration or by setting a ceiling on the specific sections of the budget. Companies may want to implement capital rationing in situations where past returns of investment were lower than expected. For example, suppose ABC Corp. has a cost of capital of 10% but that the company has undertaken too many projects, many of which are incomplete. This causes the company's actual return on investment to drop well below the 10% level. As a result, management decides to place a cap on the number of new projects by raising the cost of capital for these new projects to 15%. Starting fewer new projects would give the company more time and resources to complete existing projects.

Capital rationing is technique which is used with capital budgeting techniques. Capital rationing technique is used when company has limited fund for investing in profitable investment proposals. In other words Capital rationing is a strategy employed by companies to make investments based on the current relevant circumstances of the company. For example, Company fixes his priority to invest his money in more profitable projects. Suppose a company has $ 1 million dollar and after using the Profitability index technique of capital budgeting company found that three projects of $ 600000, $ 300000 and $ 400000 are profitable out of seven projects but if company has limited cash of $ 1 million only. With this money, company can use capital rationing technique. Under this technique, if company sees that First and third proposal’s profitability index is high than second, then they will select only two projects combination out of three projects. Read also second example of capital rationing.

'The world's 50 most innovative companies' list published by Fast Company.

No points for guessing this one. Apple has been ranked as the most innovative company in the world. "iPads dominate the tablet market; Apple is winning in greater China; and new CEO Tim Cook is reportedly bringing a more humane leadership style. Until someone outplays Apple, it’s the starter," Fast Company said.

India-based Narayana Hrudayalaya (No.36) and RedBus (No.48) have been ranked among 'The world's 50 most innovative companies' list compiled by US business magazine, Fast Company. "Narayana Hrudayalaya is Walmart meets Mother Teresa," Fast Company said. According to the magazine, the list is a “guide to the businesses that matter most, the ones whose innovations are having an impact across their industries and our culture.” Both Narayana Hrudayala and RedBus are based in Bengaluru. This choice may get many 'Likes'. Mark Zuckerberg-led social networking site ranks at No,2. But, there's a flip side. "We assign Facebook a few demerits for its habit of overreaching into users’ privacy, apologizing, and then only slightly rolling back the offending policy," Fast Company said. "Since returning to the big office last spring, CEO Larry Page has created an executive brain trust--and now they’re transforming Google from a single product into a diversified web power," says Fast Company about the third-ranked Google. Amazon grabbed the No.4 spot after "Kindle Fire grabbed the No. 2 tablet slot; the rapid expansion of Quidsi from diapers and drugstore goods to pet supplies, toys, and groceries; and the expansion of Amazon’s streaming-video service to include CBS and Fox programming". Square's (No.5) tiny product is changing the way people do business. According to Fast Company, it is a "simple credit-card reader that looks like a business-card holder with a headphone jack. Plug it into an iPhone, though, and anyone could accept credit-card payments." At 6 is mcroblg srvce Twtr! With more than 300 million users as of 2011, the online social networking service and microblogging service is generating more than 300 million 'tweets' per day. The Occupy Movement has been ranked at No.7. The protest movement that spread across US and Europe is primarily directed against economic and social inequality. It began on September 17, 2011 - and still continues. In China, Tencent dominates the internet messenger market. "It makes $1bn a quarter, much of it through virtual-goods sales, and is now the world’s third-largest publicly traded Internet company," according to Fast Company. California-based company, Life Technologies is ranked at No.9 on the list. Fast Company’s view: "The $3.6bn company introduced 2,000 products since 2009 and has incentive to work fast: It expects the market for its biowares to hit $30bn by 2015." At No. 10 is Solar City

, based in California, USA. Fast Company’s view: “Rather than just make panels, it is a full-service operation - designing, installing, financing, and maintaining every system. That’s how to ease new customers into an unfamiliar technology."

Capital Budgeting Techniques in Businesses

Capital budgeting is one of the most important areas of financial management. There are several techniques commonly used to evaluate capital budgeting projects namely the payback period, accounting rate of return, present value and internal rate of return and profitability index. Recent studies highlight that financial managers worldwide favor methods such as the internal rate of return (IRR) or non-discounted payback period (PP) models over the net present value (NPV), which is the model academics consider superior. In particular this research focused on small, medium and large businesses and investigated a number of variables and associations relating to capital budgeting.

The results revealed that payback period, followed by net present value, appears to be the most used method across the different sizes and sectors of business. It was also found that 64% of businesses surveyed used only one technique, while 32% of the respondents used between two to three different types of techniques to evaluate capital budgeting decisions. The findings show that the more complicated methods such as IRR and NPV are most favored by the large businesses as compared to the small businesses. The majority of the respondents believed that project definition was the most important stage in the capital budgeting process. Implementation stage appeared to be the most difficult stage for the manufacturing sector whereas Project definition, Analysis and selection and Implementation were generally rated as being the difficult stages by the retail sector. Project definition and Analysis and selection were found to be the most difficult stages by the service sector. Most businesses used the cost of bank loan as a basis in capital budgeting and more than two thirds of respondents used non-quantitative techniques to consider risk when making a decision on investing in fixed assets.

Importance of Capital Budgeting Decisions

Capital budgeting is a process used to determine whether a firm’s proposed investments or projects are worth undertaking or not. The process of allocating budget for fixed investment opportunities is crucial because they are generally long lived and not easily reversed once they are made. So we can say that this is a strategic asset allocation process and management needs to use capital budgeting techniques to determine which project will yield more return over a period of time. The question arises why capital budgeting decisions are critical?

The foremost importance is that the capital is a limited resource which is true of any form of capital, whether it is raised through debt or equity. The firms always face the constraint of capital rationing. This may result in the selection of less profitable investment proposals if the budget allocation and utilization is the primary consideration. So the management should make a careful decision whether a particular project is economically acceptable and within the specified limits of the investments to be made during a specified period of time. In the case of more than one project, management must identify the combination of investment projects that will contribute to the value of the firm and profitability. This, in essence, is the basis of capital budgeting.

Capital Budgeting and Financial Management

Capital budgeting is the planning process used to determine whether an organization's long term investments such as new machinery, replacement machinery, new plants, new products, and research development projects are worth pursuing. It is budget for major capital, or investment, expenditures. Many methods are used in capital budgeting, including the techniques such as Accounting rate of return Net present value Profitability index Internal rate of return Modified internal rate of return Equivalent annuity Businesses look for opportunities that increase their share holders’ value. In capital budgeting, the managers try to figure out investment opportunities that are worth more to the business than they cost to acquire. Ideally, firms should peruse all such projects that have good potential to increase the business worth. Since the available amount of capital at any given time is limited; therefore, it restricts the management to pick out only certain projects by using capital budgeting techniques in order to determine which project has potential to yield the most return over an applicable period of time. Capital budgeting is the process which enables the management to decide which, when and where to make long-term investments. With the help of Capital Budgeting Techniques, management decide whether to accept or reject a particular project by making analysis of the cash flows generated by the project over a period of time and its cost. Management decides in favor of project if the value of cash flows generated by the project exceeds the cost of undertaking that project. A Capital Budgeting Decision rules likely to satisfy the following criteria:

Must give consideration to all cash flows generated by the project. Must take into account Time Value of Money concept. Must always lead to the correct decision when choosing among mutually exclusive projects. Regardless of the specific nature of an investment opportunity under consideration, management must be concerned not only with how much cash they are expecting to receive, but also when they expect to receive it and how likely they are to receive it. Evaluating the size of investment, timing; when to take that investment, and the risk involve in taking particular investment is the essence of capital budgeting.

List of Stock Exchanges In India

Bombay Stock Exchange National Stock Exchange Regional Stock Exchanges Ahmedabad Bangalore Bhubaneshwar Calcutta Cochin Coimbatore Delhi Guwahati Hyderabad Jaipur Ludhiana Madhya Pradesh Madras Magadh Mangalore Meerut OTC Exchange Of India Pune Saurashtra Kutch UttarPradesh Vadodara

Stock Exchange

A stock exchange provides services for stock brokers and traders to trade stocks, bonds, and other securities. Stock exchanges also provide facilities for issue and redemption of securities and other financial instruments, and capital events including the payment of income and dividends. Securities traded on a stock exchange include shares issued by companies, unit trusts, derivatives, pooled investment products and bonds.

To be able to trade a security on a certain stock exchange, it must be listed there. Usually, there is a central location at least for record keeping, but trade is increasingly less linked to such a physical place, as modern markets are electronic networks, which gives them advantages of increased speed and reduced cost of transactions. Trade on an exchange is by members only. The initial offering of stocks and bonds to investors is by definition done in the primary market and subsequent trading is done in the secondary market. A stock exchange is often the most important component of a stock market. Supply and demand in stock markets is driven by various factors that, as in all free markets, affect the price of stocks (see stock valuation). There is usually no compulsion to issue stock via the stock exchange itself, nor must stock be subsequently traded on the exchange. Such trading is said to be off exchange or over-the-counter. This is the usual way that derivatives and bonds are traded. Increasingly, stock exchanges are part of a global market for securities

Stock exchange in India

India's oldest and first stock exchange: Mumbai (Bombay) Stock Exchange . Established in 1875. More than 6,000 stocks listed. Total number of stock exchanges in India: 22 They are in: Ahmedabad, Bangalore, Calcutta, Chennai, Delhi etc. There is also a National Stock Exchange (NSE) which is located in Mumbai. There is also an Over The Counter Exchange of India (OTCEI) which allows listing of small and medium sized companies. The regulatory agency which oversees the functioning of stock markets is the Securities and Exchange Board of India (SEBI), which is also located in Bombay. SEBI's website location is at http://www.sebi.gov.in but you need a password to access it.

Your future in top finance companies in India

The top finance companies are playing a key role in the huge growth of the economy of India. The sector of finance is passing through a rapid phase of alteration. The sustenance of the growth of economy

is the primary factor for the development of the India's financial sector. List of Top Finance Companies of India SBI Capital Markets Limited : It is one among the oldest organizations in the capital markets sector of India. It was established in the year 1986 as an ancillary of SBI.It ranks second in Asia's Project Advisory services. The company is a traiblazer in privatization and securitisation. The companies subsidiaries are SBICAPs Ventures Ltd., SBICAP Trustee Co.Ltd. And many others. Bajaj Capital Limited: The company offers best investment advisory and financial planning. It provides institutional investors, NRIs, corporate houses, individual investors , high network clients with investment advisory and financial planning services. It is also the largest provider of finance products offered by public and private organizations,several government bodies,investment products like bonds,mutual funds,general insurance etc. IDBI Bank: The Managing Director and Chairman of the bank is Shri R. M. Malla.It offers the services like personal banking,corporate banking,MSME finance,NRI services and much more.Browse the site to know more. UTI Mutual Fund: The company offers best investment advisory and financial planning. It is recognised as India's most trusted financial advisor. DSP Meriyll Lynch Limited : It is the key player of equity and debt securities in India. It renders financial advises to many corporations and institutions. It also offers a wide array of wealth management and investor services along with customized advices related to financial matters. This company is the pioneer to form research facility to research in financial products and services,improvements and innovations. The company also has its hand in the Government securities and holds an eminent position in the market of equity and debt in India. Birla Global Finance Limited : It is a subsidiary of Aditya Birla Nuvo Ltd. Their motto is to be the first choice of the customers as a major provider of financial services through technology and value creation. The primary activities of the company are Corporate Finance and Capital Market. Aditya Birla Nuvo has also formed alliane with Sun Life Financial of Canada which has given rise to the following financial services companies like Birla Sun Life Insurance Co Ltd., Birla Sun Life Distribution Co. and many others. Housing Development Finance Corporation : This company offers the best financial solutions and guidance for home loans,property related services,loans for NRIs etc. in India. The one stop destination for comprehensive information on personal finance is HDFC. The company has a wide network in India and abroad. HDFC overseas offices are in Singapore,Kuwait,Qatar,Saudi Arabia and many others. PNB Housing Finance Limited : This is completely owned by PNB and offers premium solutions to relieve the borrowers. This subsidiary of the PNB has recorded a growth a 73% and is a leading finance company of India. The Home Loan Life Insurance Plan of this company in association with TATA AIG offers the lowest premium in compare to others. The chart for loans of 5 lacs and tenure of 15 years is just premium. It renders other services like Deposit schemes,Loan schemes and many others. ICICI Group : ICICI offers a wide spectrum of financial products and services in India. The company provides solutions for all needs like Instant Banking,Online Trading,Insta Insure,ICICI Bank imobile etc. The company keeps up the financial profile healthy and diversify earnings across geographies and businesses. The company's philosophy is to deliver high class financial services for all the cross sections of the society. Their products are Mutual Fund,Private Equity Practice,Securities,Life Insurance etc. LIC Finance Limited : It is the leading player in the finance sector of India being the biggest Housing Finance Company of India. The function of the company is to provide finance to individuals for repair or construction or renovation of the old or new apartment or house. It also offers finance on the existing property for personal or business matters. The company has 14 back offices,6 regional offices and 126 units of marketing in India. L & T Finance Limited: This company was established in the year 1994 by the Larsen and Turbo group and now it is a significant name in the financial sector. The company offers schemes like funds for automobiles, funds for Agricultural Instruments,secured loans,funds for automobiles and many others. It offers loans for a long tenure and the loans are given in exchange of valuable items.

"Sunday special" Indian cos invested $26 bn in US

Indian companies have invested more than USD 26 billion in the US in the last five years and the IT companies employ more than one lakh people in that country, New Delhi's top diplomat in Washington has said. "Indian companies are now contributing strongly to local State economies in the US with a presence in 43 states and having invested over USD 26 billion in the last five years in several key areas of the economy, in manufacturing as also in services," the Indian Ambassador to the US. India's IT industry has in particular been a strong player in establishing value based mutually beneficial partnerships, Rao said in her address to Harvard's Kennedy School of Government, India-South Asia Programme. As per our estimates, Indian IT companies employ over 100,000 people in the US and the Indian IT industry supports over 280,000 jobs indirectly out of which about 200,000 are with US residents.

The steady growth of the Indian economy has not only helped improve the living standards of own people, but has also opened up new opportunities to expand mutually beneficial economic and commercial ties with the US. Two-way trade in goods and services continues to grow steadily reaching over USD 100 billion last year. The US businesses are becoming strong partners in India's economic growth story; and Indian businesses are creating value, wealth and jobs in the United States. In order to continue on the high growth trajectory, India will need to invest more than USD 1 trillion in the coming years in building a world class infrastructure that could cater to the demands of a billion plus population and ensure the availability of clean sources of energy, including nuclear energy, to fuel such growth. Noting that the Civil Nuclear Initiative that has become a symbol of India-US transformed relationship and was welcomed by both sides; she said there are immense opportunities for US companies in this sector and Indian and US companies are already engaged in a discussion to take cooperation forward in this crucial sector.

"Sunday special" The Euro Zone Crisis affect on U.S.

The Euro crisis affects U.S. Economy by different ways

1) Trade. There are two ways that a European catastrophe could hurt American exports. First, it could shrink our customer base in Europe. Europe buys 22 percent of our exports, according to the Bureau of Economic Analysis. If Greece and other countries implode, causing a severe recession in Europe, orders for American products and services would fall. Second, the crisis could shrink the United States customer base around the world. As investors become more concerned about the stability of the euro zone, they will stop investing in the euro. When there is less demand for euros, the value of the euro gets cheaper. By comparison, the dollar gets more expensive. That makes American-made products more expensive, so American products become less attractive to customers worldwide. 2) The stock market. European stock markets and American stock markets are strongly correlated, as shown by indices for both in the chart below: DESCRIPTION Of course, this chart doesn’t show what’s cause and what’s effect. A statistical analysis by economists at Deutsche Bank, however, has found that American markets seemed to drive European markets from the onset of the financial crisis in 2007 to March 2010, and since then the reverse has been true: movements in the European markets seemed to be leading movements in American ones. Additionally, many American companies depend on revenue from Europe, as you might have guessed from the export numbers noted above. Deutsche Bank analysts estimate that about 15 to 20 percent of corporate revenues of companies in the Standard & Poor’s 500-stock index are generated by Europe. For companies in the materials, energy and tech sectors, the share earned in Europe is even higher. When these companies do badly, and their shares drop, the pain is felt much more broadly in the United States. Declines in the stock market mean less valuable portfolios for Americans across the country, causing consumers to feel poorer and be less willing to spend money. This is known as the wealth effect. We saw it when housing values first plunged, leading Americans to realize they weren’t as rich as they thought they were. 3) Debt exposure and a contagious credit crisis. This is the biggest worry, since global financial markets are deeply interconnected. Europeans owe lots of money to one another — and to other countries — as you can see in this debt graphic. For example, American banks own a lot of French debt, and French banks own a lot of Italian debt. If Italy defaults, French banks are in trouble. If those French banks then default, American banks are likewise compromised. With these banks insolvent (or at the very least illiquid), it becomes harder for American companies and consumers to borrow. The contagion can also spread rapidly because once one country falls, investors get antsy about the fate of their investments in similarly indebted countries. So investors start selling off those assets en masse too, creating a self-fulfilling prophecy and causing those countries to implode. And so the domino effect continues. Even just worrying about these types of scenarios can seriously damage financial markets, because people stop lending if they suspect someone major somewhere won’t be able to pay the debt back. Already banks are tightening their lending standards for borrowers who have significant exposure to Europe, according to the Federal Reserve’s latest Senior Loan Officer Opinion Survey on Bank Lending Practices. Part of the reason the global Great Recession began (and was so devastating) was that healthy credit markets are crucial to the functioning of any economy. If there is a broad tightening of credit, economic activity seizes up as well.

"Saturday Special" Effect of euro debt crisis on India

As I sit here in leafy Surrey, just outside London, gazing over my garden pond to the fields beyond, it would be easy to imagine that this rural milieu is a reflection of the universe at large. Alas, of course, this is not the case. The UK and several other major Western economies are still wrestling with the aftermath of the 2008 credit crisis. Confidence remains desperately low, particularly within financial services, but also in public sectors, where much-needed spending limitations are contributing to current unemployment and spreading uncertainty regarding the future. Pressure on household spending is causing havoc on the high street too and many major retail brands have shut their doors. House prices, the bedrock of middle-class financial security, are stagnant at best and probably falling in real terms, in most places outside London's Grade A areas, which are propped up by foreign buyers. Many banks have been effectively nationalised and owe their continued existence to those hard-pressed taxpayers. The reversal in asset prices and the ongoing constrictions in bank lending have contributed to an extremely low level of money supply growth. To add insult to injury, the debt crisis, which has already engulfed the sovereign states of Ireland, Portugal and Greece now appears likely to affect other Eurozone economies in a significant way, starting with relative weaklings such as Spain and Italy and raising concerns of another wave of bank problems even before the 2008 issues are close to being overcome. BUYING BACK GREEK BONDS

The stronger economic powers within Europe are struggling to reach an agreement on how to cauterise the Greek problem, but there are bound to be significant losses and the need for ongoing financial help in the form of some type of support mechanism, which allows Greece to continue to fund vital services at a fraction of the open market rate. The German and French governments appear to have come together around the principle of buying back Greek bonds at a discount, a process which would probably cause an orderly, selective default. This could be good news in the short term for larger states such as Italy and Spain, which might be able to continue to borrow in bond markets at reasonable rates. STAGFLATION? However, let us step away from these albeit serious technical issues and consider the bigger picture. We have here a set of (erstwhile) leading economies which are suffering from a major debt hangover and which, despite extraordinarily low interest rates (UK 10-year bonds yield around 3 per cent, money market rates are hovering around 0.5 per cent), remain desperately short of demand. At the same time, inflation remains uncomfortably high in many countries (nearly 5 per cent in the UK). Causes include currency movements, global food and energy shortages and supply disruptions, with speculative premiums stoking prices further. It feels like stagflation and it represents a terrible tax on living standards. To the extent that this could be described as demand-pull inflation, the incremental demand is coming not from mature Western economies, but from Brazil, Russia, India and China (BRIC) and other emerging economies. Meanwhile, the US has its own much-debated debt problems to contend with. But the root causes are the same — too much overhanging debt and too little growth to service it. Let us now cast our eyes towards India. One would certainly not suggest that it is without its own problems — supply-chain dislocations, state and local government corruption concerns, a stock market down 10 per cent year-to-date, compared to a flat UK market and a buoyant 5-10 per cent return so far for the various US indices. Yet, in India, the problems are of a very different and arguably healthier hue. CYCLICAL SLOWDOWN GDP growth is slowing, but from a breakneck 9.3 per cent in last year's June quarter to just under 8 per cent now. Inflation stood at a worryingly high 9.74 per cent in the latest quarter and it would be no surprise to see continued rate increases slowing the economy further and bringing inflation to heel. In other words, we are dealing with a typical cyclical, managed slowdown in an economy where demand has outstripped supply in a number of areas. What impact are we seeing from the Western economies' problems? India's foreign trade account is hovering around a negative $10 billion per month, but that is no worse than several years ago and it is hard to detect a deteriorating pattern. Foreign direct investment flows are higher for April and May than for the same months last year, and they actually seem to have picked up. Foreign indirect investment flows do appear to have come down near term, which has clearly contributed to the recent stock market weakness. Yet this number set is highly volatile — flat in March, up by $3.7 billion in April, negative $1.7 billion in May. In short, there is little hard evidence to suggest any major economic slowdown, driven by trade or investment flows, although foreign portfolio investors appear to have taken some money off the table as a safety shot ahead of the widely predicted monetary tightening. To conclude, in the face of a near perfect economic hurricane in the West, India seems to be barrelling along on a better trajectory. The linkages of the past, when such markets were seen as warrant plays on the more mature economies, appear to be weakening .

Economic Crisis

When you hear the word “crisis,” the first thing that may come to your mind is the economy. The rise and fall of the economy has a significant effect on the condition of every nation. If the economic conditions are good, then investors will have more confidence in the company’s ability to grow while the economic climate is good. If the climate is negative then investors may not be confident enough to invest, resulting to the fall of its market share.

Global Financial crisis

Phase one on 9 August 2007 began with the seizure in the banking system precipitated by BNP Paribas announcing that it was ceasing activity in three hedge funds that specialised in US mortgage debt. This was the moment it became clear that there were tens of trillions of dollars worth of dodgy derivatives swilling round which were worth a lot less than the bankers had previously imagined. Nobody knew how big the losses were or how great the exposure of individual banks actually was, so trust evaporated overnight and banks stopped doing business with each other. It took a year for the financial crisis to come to a head but it did so on 15 September 2008 when the US government allowed the investment bank Lehman Brothers to go bankrupt. Up to that point, it had been assumed that governments would always step in to bail out any bank that got into serious trouble: the US had done so by finding a buyer for Bear Stearns while the UK had nationalised Northern Rock. When Lehman Brothers went down, the notion that all banks were "too big to fail" no longer held true, with the result that every bank was deemed to be risky. Within a month, the threat of a domino effect through the global financial system forced western governments to inject vast sums of capital into their banks to prevent them collapsing. The banks were rescued in the nick of time, but it was too late to prevent the global economy from going into freefall. Credit flows to the private sector were choked off at the same time as consumer and business confidence collapsed. All this came after a period when high oil prices had persuaded central banks that the priority was to keep interest rates high as a bulwark against inflation rather than to cut them in anticipation of the financial crisis spreading to the real economy. The winter of 2008-09 saw co-ordinated action by the newly formed G20 group of developed and developing nations in an attempt to prevent recession turning into a slump. Interest rates were cut to the bone, fiscal stimulus packages of varying sizes announced, and electronic money created through quantitative easing. At the London G20 summit on 2 April 2009, world leaders committed themselves to a $5tn (£3tn) fiscal expansion, an extra $1.1tn of resources to help the International Monetary Fund and other global institutions boost jobs and growth, and to reform of the banks. From this point, when the global economy was on the turn, international co-operation started to disintegrate as individual countries pursued their own agendas. 9 May 2010 marked the point at which the focus of concern switched from the private sector to the public sector. By the time the IMF and the European Union announced they would provide financial help to Greece, the issue was no longer the solvency of banks but the solvency of governments. Budget deficits had ballooned during the recession, mainly as a result of lower tax receipts and higher non-discretionary welfare spending, but also because of the fiscal packages announced in the winter of 2008-09. Greece had unique problems as it covered up the dire state of its public finances and had difficulties in collecting taxes, but other countries started to become nervous about the size of their budget deficits. Austerity became the new watchword, affecting policy decisions in the UK, the eurozone and, most recently in the US, the country that stuck with expansionary fiscal policy the longest. The morphing of a private debt crisis into a sovereign debt crisis was complete when the rating agency, S&P, waited for Wall Street to shut up shop for the weekend before announcing that America's debt would no longer be classed as top-notch triple A. This could hardly have come at a worse time, and not just because last week saw the biggest sell-off in stock markets since late 2008. Policymakers are confronted with a slowing global economy and a systemic crisis in one of its component parts, Europe. To the extent that they are united, they are united in stupidity, wedded to blanket austerity that will make matters worse not better. And they have yet to tackle the issue that lay behind the 2007 crisis in the first place, the imbalances between the big creditor nations such as China and Germany, and big debtors like the US. In the circumstances, it is hard to be wildly optimistic about how events will play out. Markets are bound to remain highly jittery, although it seems unlikely that American bond yields will rocket as a result of the S&P downgrade. Japan lost its triple A rating long ago and has national debt well in excess of 200% of GDP but its bond yields remain extremely low. The reason for that is simple: Japan's growth prospects are poor. So are America's, which is why bond yields will remain low in what is still, for the time being, the world's biggest economy. The dressing down given to Washington by Beijing following the S&P announcement was, however, telling. Growth rates of close to 10% mean that the moment China overtakes the US is getting closer all the time, and the communists in the east now feel bold enough to tell the capitalists in the west how to run their economies. Whatever it means for financial markets this week, 5 August 2011

will be remembered as the day when US hegemony was lost. All this is terrible news for Barack Obama. He has not delivered economic recovery. The US is drowning in negative equity and foreclosed homes. No president since Roosevelt has won an election with unemployment as high as it is today. Fiscal policy will be tightened over the coming months as tax breaks expire and public spending is cut. The Federal Reserve only has the blunt instrument of QE with which to stimulate the economy, and will only be able to deploy it after a softening up process for the markets that will take several months. On top of that, Obama will now be branded as the president who presided over the national humiliation of a debt downgrade. He looks more like Jimmy Carter than FDR. Not that the Europeans should get too smug about this, because what we are witnessing is not just the decline of the US but the decline of the west. One response to last week's meltdown was the announcement of talks between the G7 – the US, the UK, Germany, Italy, France, Canada and Japan – but while this would have been appropriate 20 years ago it is not going to calm markets today. Holding a G7 meeting without China today is like expecting the League of Nations without the US to tackle totalitarianism in the 1930s. There is no happy ending to this story. At best there will be a long period of weak growth and high unemployment as individuals and banks pay down the excessive levels of debt accumulated in the bubble years. At worst, the global economy will be plunged back into recession next year as the US goes backwards and the euro comes apart at the seams. The second, gloomier scenario, looks a lot more likely now than it did a week ago. Why? Because there is no international co-operation. There are plans for austerity but no plans for growth. Even countries that could borrow money for fiscal stimulus packages reluctant to do so. Europe lacks the political will to force the pace of integration necessary to avoid disintegration of the single currency. Commodity prices are coming down, but that is the only good news. We are less than halfway through the crisis that began on 9 August 2007. That crisis has just entered a dangerous new phase.

Myths About the European Debt Crisis

Europe consumed more than a fifth of America’s exports last year, yet U.S. markets seem to be ignoring Europe’s current economic turmoil. Much of Europe is heading into a recession, Euro-zone unemployment is at record highs, and Europe’s largest banks are struggling. With European governments imposing austerity budgets, a looming credit squeeze, and many countries facing shrinking tax revenues and overwhelming debt burdens, it is hard to see when growth will return. To understand how Europe poses a risk to the U.S. economy, it is important to dispose of some of the myths that surround Europe’s debt crisis. Germans are more fiscally responsible. To ensure fiscal discipline, the Maastricht Treaty restricts the amount of public debt that countries in the European Union can assume to 60% of their gross domestic product. Yet Germany has violated this limit every year since 2003. That has not stopped German politicians from bragging about German fiscal discipline. A few months ago Bavaria’s Christian Social Union party, a key member of German Chancellor Angela Merkel’s governing coalition, almost derailed Germany’s contribution to a European bailout fund because Bavarians do not abide debt. “We are not prepared to accept zero debt here and total debt elsewhere,” declared CSU party leader Horst Seehofer, to a standing ovation. But three years earlier the Free State of Bavaria secretly took a $2.4 billion bailout from the U.S. Federal Reserve, and a 94% Bavarian government-owned bank, Bayerische Landesbank, took another $10 billion secret bailout from the Fed, according to data uncovered by Bloomberg News. In fact, many other German and European banks secretly received $500 billion in secret bailouts from U.S. taxpayers during the same period, according to Bloomberg, all on top of the $50 billion they got from the U.S. government’s TARP bailout of AIG. American bailouts of European (including German) banks continue. The Fed is quietly extending currency swap lines via the European Central Bank, thereby funneling billions of more U.S. dollars to European banks whose identities remain undisclosed thanks to ECB privacy rules. The ECB has also increased its own bailouts for 523 banks to €489 billion ($640 billion), in the form of three-year, 1%-interest loans The European Union respects democracy. Because so many Europeans feared that larger countries would dominate the EU, the Treaty on European Union promised more than half a billion people that “every citizen shall have the right to participate in the democratic life of the Union,” that “decisions shall be taken as openly and as closely as possible to the citizen,” and that the “functioning of the Union shall be founded on representative democracy.” Despite that, Germany proposed that Greece’s receipt of a second bailout be conditioned on Greece surrendering its tax and spending sovereignty to a Euro-commissioner. Greece’s revenues were “to be used first and foremost for debt service,” and “only any remaining revenue may be used to finance” government activities, such as national defense or the judicial system. And in place of decisions made by democratically elected leaders, the Euro-commissioner would have “a veto right against budget decisions not in line with the set budgetary targets and the rule giving priority to debt service.” Germany backed down after France and other countries objected, but the assault on democracy and self-determination in the EU is not dead. In December, European Council President Herman Van Rompuy secretly proposed that EU countries that did not meet strict fiscal rules should be subjected to “intrusive control of national budgetary policies by the EU” as well as “political sanctions such as the temporary suspension of voting rights.” And of course both Greece and Italy voluntarily surrendered their governments to unelected ECB “technocrats,” because their embattled political parties had lost credibility with other European governments as well as their own citizens.

Why Finance is personally important?

Just like a company, we all need money. We need money to live (food, clothing, shelter) and we probably want money for a great number of things (concert tickets, cars, computers, etc.). Thus we need to get money. Finance helps us to have the money when we need it and even when we want it. Obviously finance is important if we run our own firm. Here we need to efficiently manage our resources and know what risks are worth taking. Further we need to know how to invest and how to raise money. Even if you never plan on owning your own business, Finance is still important to you. Finance teaches us to understand the other side of every transaction. If you understand what your employer wants, it is easier to achieve this and hence you are in a better position for raises and promotions. That said, few people will now work their entire life at the same firm. This can have dramatic financial implications. Knowing in advance your financial position and options dramatically reduces your stress in this time of change. Taxes can take 40% of what we earn. Making the right investments can cut this tax burden. This is yet another reason to study finance. Many people find themselves in financial ruin even though they may be extremely successful in their field. For example the news is constantly telling us of star athletes who have gone from making millions to flat broke. Most of these stories could have been avoided with some basic financial knowledge and financial discipline. Retirement planning is one of the most cited reasons of why finance is important. This is because it is so clear-cut. You must invest for your retirement. Knowing how can prevent needless heartache later. Ironically, Finance is important because we do not want to have to worry about money. Marriages are ruined, friendships crushed, and health destroyed over money worries. I do not want these things to happen to you. Financial knowledge can help prevent these problems.

Why Finance is important for economy?

From a macro perspective, Finance is merely the practical application of economics. The Financial System is the means by which an economy allocates money to its highest valued use. In English, it is how people, businesses, and governments raise the cash needed to do business. The goal of any financial system is to make sure that those with good ideas get the money necessary to implement the ideas. How this is accomplished in a market-based economy is through the stock and bond markets. In a market-based economy, investors invest in a firm (by firm here I am merely simplifying, the "firm" could be a government or organization as well) and the firm takes the investment and uses it to implement the business ideas. People do not give money without the expectation of getting something in return. (However, if you are the sort of person who merely likes to give money away, please contact me!) If money is given, something is expected back in return. In this case more money. The way to get the most money back is to invest in firms that will put the money to the best use. Of course others know this as well. As more invest with a firm the value of the firm's stock rises. In competition for more money, firms will strive to find better investments. This leads to economic growth, more jobs, and hopefully a higher standard of living.

why finance is important

Finance is important to business as without it businesses would not be able to start up or survive. In order to start a business sources of finance are needed such as grants or loans used to buy essential items such as a vehicles, premesis and other equipment. Finance is needed for a businesss to coninue running as money is needed to face running costs such as electicity and rent. Finance is also needed in expanding a business. If you plan the financial side of a business accurately you will be able to track the progress of your business in terms of profit and cash surpluses. Accurate financial documents will allow you to keep track of your cash flow and monitor how much of your loans you have paid off. You can measure your success through accurate fiancial planning. Financial documents will allow you to see when you have enough retained profits to expand and improve your business.

Field in Finance

1.Personal Finance

Personal finance is that field of finance in which tools and techniques of finance is used for effective use of an individual fund. In other words, personal finance refers to the all decisions which will be helpful for family for making good personal budget, investment and saving in different schemes. It also includes personal income tax management. Following are main categories of personal finance. 2.Corporate Finance Corporate finance is an area of finance dealing with financial decisions business enterprises make and the tools and analysis used to make these decisions. The primary goal of corporate finance is to maximize corporate value while managing the firm's financial risks. Although it is in principle different from managerial finance which studies the financial decisions of all firms, rather than corporations alone, the main concepts in the study of corporate finance are applicable to the financial problems of all kinds of firms. Main Categories of Corporate Finance are following a) Investment analysis b) Risk Management 3.Public Finance Public finance is that field of finance which deals with governmental financial decisions. In this field government has take the decision of relating to his fiscal policy, government budget and tax amendments for getting money from public for governmental expenditures. Followings are its main categories. a) Income Tax b) VAT c) Government Budget d) Government Bonds e) Fiscal Policy f) Government Investment g) Government Spending h) Government Debt i) Seigniorage 4.International Finance International finance is the branch of finance that studies the dynamics of exchange rates, foreign investment, and how these affect international trade. It also studies international projects, international investments and capital flows, and trade deficits. It includes the study of futures, options and currency swaps. International finance is a branch of international economics. 5.Educational Finance In Education Finance, we include the financial decision relating to provide educational loan easily. Education finance also helps to provide fellowship and scholarship to brilliant students for completing their higher studies without any financial problem. a) A student loan is designed to help students pay for college tuition, books, and living expenses. It differs from other types of loans in that the interest rate is substantially lower and the repayment schedule is deferred while the student is still in school. Before accepting any kind of student loan one should be familiar with its basic attributes. b) Fellowships are awards made either competitively or in recognition of achievement (or both). They generally carry the title "Fellow" and a financial award. c) Student financial aid refers to funding intended to help students pay educational expenses including tuition and fees, room and board, books and supplies, etc. for education at a college, university, or private school. General governmental funding for public education is not called financial aid, which refers to awards to specific individual students. Certain governments, e.g. Nordic countries, provide student benefit. A scholarship is sometimes used as a synonym for a financial aid award, although grants and student loans are also components of financial aid packages from students' intended colleges. d) A scholarship is an award of financial aid for a student to further education. Scholarships are awarded on various criteria usually reflecting the values and purposes of the donor or founder of the award. 6.Behavioral Finance It is that field of finance in which social and emotional factors are studied if market prices are changed. Large number of consumers, borrowers and investors decides according to their behavior. To study the psychology of investors are included in it. This study is used by company for taking benefits from them. 7.Structured Finance Structured finance is a broad term used to describe a sector of finance that was created to help transfer risk using complex legal and corporate entities. This risk transfer as applied to securitization of various financial assets (e.g. mortgages, credit card receivables, auto loans, etc.) has helped to open up new sources of financing to consumers. 8.Offshore Finance Offshore finance is that field of finance in which we study digital gold currency and offshore fund and other offshore law firms. a) Digital gold currencies are issued by a number of companies, each of which provides a system that enables users to pay each other in units that hold the same value as gold bullion. These competing providers issue independent currency, which normally carries the same name as their company. In terms of the most popular providers, e-gold has the greatest number of users. b) Many organization creates offshore fund in which international investors invests their money. 9.Mathematical Finance Mathematical Finance is that field of finance which studies the mathematics for using its rules and regulation for development of finance. In the financial market many numerical logics are on the base of mathematics rules. This subject creates close relationship between finance and mathematics. Thus, for example, while a financial economist might study the structural reasons why a company may have a certain share price, a financial mathematician may take the share price as a given, and attempt to use stochastic calculus to obtain the fair value of derivatives of the stock . In terms of practice, mathematical finance also overlaps heavily with the field of computational finance (also known as financial engineering). Many universities around the world now offer degree and research programs in mathematical finance.

What is finance?

Finance is often defined simply as the management of money or “funds” management. Modern finance, however, is a family of business activity that includes the origination, marketing, and management of cash and money surrogates through a variety of capital accounts, instruments, and markets created for transacting and trading assets, liabilities, and risks. Finance is conceptualized, structured, and regulated by a complex system of power relations within political economies across state and global markets. Finance is both art (e.g. product development) and science (e.g. measurement), although these activities increasingly converge through the intense technical and institutional focus on measuring and hedging risk-return relationships that underlie shareholder value. Networks of financial businesses exist to create, negotiate, market, and trade in evermore-complex financial products and services for their own as well as their clients’ accounts. Financial performance measures assess the efficiency and profitability of investments, the safety of debtors’ claims against assets, and the likelihood that derivative instruments will protect investors against a variety of market risks.

The financial system consists of public and private interests and the markets that serve them. It provides capital from individual and institutional investors who transfer money directly and through intermediaries (e.g. banks, insurance companies, brokerage and fund management firms) to other individuals, firms, and governments that acquire resources and transact business. With the expectation of reaping profits, investors fund credit in the forms of (1) debt capital (e.g. corporate and government notes and bonds, mortgage securities and other credit instruments), (2) equity capital (e.g. listed and unlisted company shares), and (3) the derivative products of a wide variety of capital investments including debt and equity securities, property, commodities, and insurance products. Although closely related, the disciplines of economics and finance are distinctive.

Origin of finance

The origin of the word "finance" has a fascinating history. In this case, as in so many others Aristotle provided a canonical definition of the word over two thousand years ago: "And statesmen as well ought to know these things; for a state is often as much in want of money and of such devices for obtaining it as a household, or even more so; hence some public men devote themselves entirely to finance.

Aristotle, Politics, Book I . Aristotle's definition was confined those involved with the financing operations of the Sate but a form of finance involving commercial maritime and other sorts trade lending flourished in the ancient world. The connotation of the word began to change over time as it migrated from Latin into Old French ("finaunce") and Middle English ("finance"). In France of the 1700's, the word began to have a vaguely negative sense as it was applied to the activities of those involved with Court Finance, the so-called "rentiers". These financiers were vilified by various social theorists because they were alleged to provide no tangible social benefit through their lending activities to the State. The Royalty of that era would not doubt beg to differ as they would not have been able to finance their endless wars without the rentiers. In England, an opposite pattern was seen with the connotation of the word as it quickly came to be associated with a prestigious activity. This happened because those engaged in the activity of Court Finance organized themselves politically in order to protect their interests against arbitrary royal confiscation. As was seen on a number of occasions the refusal of the financiers of the Court in England to offer new loans to a sitting monarch would force a royal succession. The sense of the meaning of the word finance expanded and became even more positive as the old class of Court Financiers expanded into the burgeoning area of trade and other commercial finance. As early as 1800 in the English speaking world, the word began to more or less congruent with the modern understanding of the term.