Understanding the economy

[SlyBoots]

I just don't understand economy at all so will someone explain to me in a simple lay man's language that for what reasons did the American economy got screwed up ?

Aisaa kyaa ho gayaa thaa kee American economy kee phat gayee .

Dot come bubble kyu burstho gayaa ?

Kyaa honay say sub kuch fir theek ho jaayegaa ?

I really don't undersatnd this econmy at all , so without making fun of me please explain to me everything .

[CyberKhiladi]

ha ha ha ha ha!!

i sell u sumthin for 4 bux and u sell it sumone for 3.....what happens......?

things FCUK up rit,.........!!

No sHit!!!

[Rahul]

Bhai Sly

Let me described in some of easy words to make it understandable for you

Economy is sometime like that your neighbor lady

[s_manjhi]

you think it is something so simple that you can understand it just by reading posts here?

[SlyBoots]

ABay explain karogay tabhi toh samjhegaa mai .dialoge baazi karrahe ho faaltu kee .

[Gr8_Hindustani]

Abay..yeah itni aasan cheez hoti too american economy dubtii he kyon.

But here let me explain in layman words: Economy is like a dick, which everyone hope they could grow for ever but then there is a limit to growth.

[SlyBoots]

SIGH , some people complain that , echarcha is becoming a milder version of gandmasti .

[Gr8_Hindustani]

Originally posted by SlyBoots
SIGH , some people complain that , echarcha is becoming a milder version of gandmasti .

Well it was a very sincere reply..I am sorry if I pissed off someone.

[Shringarey]

Sly, Let me try and explain this:

1. It started with DotCom. People thought that it was the greatest thing on earth and started investing. Now, if I pay $1 for a dotcom share, I expect to get atleast 10% every year. I can forego it for a few years if the returns are greater. People paid $100 for a share of $ 1. Why did they do that? Because they felt that there will be SUPER effeciency, and the $100 would make 10% pa. This happenned during the industrial revelution. $1 became $2000 because of productivity.


2. As more and more people started investing, the prices went up. Now you invested $1. It became $10. You felt rich, so you went and bought a house. The house was on loan, as you didnot want to sell your shares. Similarly, others did the same and house prices shot up. You bought houses at very high prices.

3. Since productivity did not increase as expected, the share prices came down. You saw the following happenning:

a) Your $1, which went up to $10, came down to $0.01
b) Your $ 500000house is worth $100000 and you have a $400000 loan on it!!

So you go bust. Ditto with everyone else. Economic collapse!!!

Easy eh??

Any questions, plz ask. Fancy myself a bit of an economics whiz.

Shring

[echarcha]

Basically when Internet boom came about the hype was that everything about regular business will change.

People thought and projected that internet will replace all the existing paradigms of business. Brick and Mortar stores were supposed to all close down.

Well some examples of just internet stores are Amazon.Com, BarnesandNobles.com which are still surviving today but they have not been able to completely replace book stores. Yes many small bookstores went out of business but neither did Amazon make tons of profits.

Similarly they tried with grocery delivery webvan.com The busines was going fine and thinsg were looking good but they expanded too much and too fast.

The internet prophets were all about forget profits get mindshare/marketshare and expansion first.

This may be true upto an extent but when shareholders invest in your company they cannot wait forever for you to turn up a profit.

Many internet websites used to sell items below their cost price in hopes of building a loyal customer base. Well, they were naive to believe that people shop at their store because of their great brand name or excellent website. People usually look for two thinsg when they shop online - Competitive prices and Good customer service.

Amazon has items which are not the most competitively priced but their customer support is excellent. Hence they have survived despite the downfall. One more thing they did smart was to offer their internet expertise to other brick and mortar stores like ToysRUs. So now Amazon helps these stores sell their merchandise via its own website. This way the core competencies of each business remain intact and provide more fruitful results. ToysRUs can focus on selling great toys and Amazon can focus on delivery via the web.

I remember the days when every other person in the Valley used to sit in front of the stock ticker and invest as if it was Las Vegas. People used to buy shares in the morning and sell them in the vening or next day. These day traders used to think that this was as simple as playing BlackJack or BackGammon or Slots.

Finally, all the internet ecommerce 'gurus' realised that Profit was and still is the main motivation and requirement of any business.

[tinda]

its stupid to sell pets on the internet. this is why most dot coms collapsed. you can sell books, music etc. but not physical things like pets, home furniture etc. because people want to feel and touch them before they buy them.

someone forgot to do market analysis before launching all these dotcoms.

[saverewaligadi]

Yaha par jo tippaniyan ki hain woh saral hain. aaj kal economy ke jo barah bje hain uska accha vishelshan kiya hain Shringarey aur Echarcha ne.

[SlyBoots]

for the proper replies .

WIll ask some more questions , about it when I log in next time .

[Gr8_Hindustani]

another mistake that tons of dotcoms made was the faulty business model. If a business model is based solely on advertising fee it is bound to fail. The examples yahoo.com and aol.

[SlyBoots]

1$ = 50 Rupees today .

Day by day the Rupee is loosing it's value .

Is it anyhow possible that 1Rs = 50 $ in the future.

I know it sounds absurd , but how can this happen atleast theoritically .

What needs to be done to make that possible.

Thanks

A LLKC as usual when it comes to understanding economy.

Shring and echarcha please explain to me like u wud have explained to a kid who knows nothing