gordeeva_o_g_praktikum_po_perevodu_ekonomicheskih_tekstov_s

1990s, it was less than 40%. Today, it exceeds 50% of GDP and is rising towards 80%, perhaps 100% of GDP over the next 10 years. Even at today’s low interest rates, the federal government spent about $195 billion on interest in fiscal 2009, more than 10 times the entire NASA budget. A rising debt-to-GDP ratio means interest takes an evergreater slice of the budget, much of that going to the foreigners.

But the president has yet to offer a business plan to demonstrate how he will prevent the U.S. from becoming the world’s largest subprime borrower. “We will be showing more about what we intend to do about the deficit when the president’s budget comes out in February,” promised Peter Orszag, the president’s budget director.

Inside the administration, the policy wonks are divided. Those most pessimistic about the economy talk of more deficit-widening stimulus, arguing that reviving economic growth is the imperative. Deal with deficits later. Those who see an improving, if sluggish, economy say the deficit must be addressed before it causes a crisis of confidence among U.S. creditors and provokes a dollar crash or a sharp increase in bond-market interest rates.

The president’s political advisers are hardly deficit phobes by nature, but see rising public angst about the deficit and Republicans scoring points by talking about it. The latest Wall Street Journal/NBC News poll posed a choice: Should Washington “worry about keeping the budget deficit down even though it may mean it will take longer for the economy to recover” or should it “worry more about boosting the economy even though it may mean larger budget deficits now and in the future?” Some 62% chose deficit-fighting; only 30% picked economic revival.

The rub is that the deficit-fearing public doesn’t want tax increases or spending cuts. “Everyone dislikes the deficit, and everyone dislikes the specific steps you have to take to get out of it,” Mr. Orszag says. Any realistic attack on deficits will both restrain spending on benefits and raise taxes on Americans earning less than $250,000 a year, despite the president’s vow not to do that.

The if-I-were-king answer is to give the economy a little more carefully crafted stimulus now and enact spending restrains and tax increases that take effect in three or four years when the economy is healthier. But even if Mr. Obama could talk Congress into that, the fiscal

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credibility of the U.S. political system is so weak that few would believe that the promised belt-tightening actually would take effect.

1.Debt levels in advanced economies are projected to top 100% of gross domestic product in 2014 based on current policies, up 35 percentage points from before the crisis.

2.Sales of motor vehicles, clothing and furniture rose a seasonally adjusted 6.7%, 2.3% and 1.5% respectively.

3.With rates about as low as they can go, the central bank printing money and the government running a budget deficit of 12.9% of GDP, it’s no wonder the pound has been weakening.

4.The Bank of England predicted that annual CPI inflation, which targets at 2%, would start to rise sharply from October.

5.Exports are helping the euro zone’s manufacturing sector bounce back from recession, but a drop in retail sails in Germany suggests the region’s economic recovery is being held back by feeble domestic demand.

6.The British economy appears to have embarked on a broad-based recovery, with the construction industry expanding for the first time in over two years, the jobs market strengthening and businesses growing increasingly confident about the outlook.

7.Much of the recent hiring activity was in the state sector and the prospect of lower government spending and higher taxes in the next 12 months could derail the labor-market recovery.

8.A fourth straight monthly rise in industrial output in the euro zone, led by its three largest economies, provided further confirmation that the region’s severe recession ended around the middle of the year.

9.British consumer confidence weakened significantly in Marc as people became less optimistic about the outlook for the economy over the next six months.

10.With imports of commodities surging last month, China swung to a trade deficit of $7.24 billion in March from a surplus of $7.61

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billion in February, according to figures issued by China’s Customs agency.

11.After leading Europe’s gradual economic recovery since last summer, Germany unexpectedly stalled in the fourth quarter, as rising exports failed to offset weak private consumption and slack investment, the Federal Statistics Office reported last week.

12.German economic expectations improved considerably in April, indicating the recovery is gaining steam. Separately, the combined current-account deficit of the 16 countries that use the euro widened in February, despite signs of increasing strength in exports.

13.The U.K., which is struggling with sluggish growth and a huge budget deficit, has trailed many peers in recovering from the downturn. But a weaker pound, which makes exports more competitively priced, has manufacturers reporting higher export orders and export prospects in business surveys.

14.The number of people in the U.K. claiming jobless benefits dropped more tan expected in March, but overall unemployment rose above 2.5 million in the three months to February, its highest level for more than 15 years, official data showed Wednesday.

Exercise 3

Translate the following into Russian.

Current account surplus; trade deficit; to offset gains in exports; to rebound; to surge; to fill the gap; to narrow deficit; to trigger recession; to shrink the current account deficit; tax return; tax revenues; to be in surplus; to be in the red; to be in the black; fiscal year; fiscal deficit; fiscal policy.

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UNIT IV

BUSINESS AND BUSINESS STRATEGY

№ 4.0

A. Forms of Businesses

Have you ever wondered exactly what the difference is between a partnership, a business, and a corporation? Business is the all-inclusive term we use to mean, basically, a group of people working together to make profit.

Here are some of the different forms of businesses:

(Sole) proprietorship

This is a business owned by one person. It needs no charter, has few costs, and that person gets to be greedy and keep all the money to his/her self. Sounds great, right? The problem is, of course, that a oneperson business can’t make as much money as a large business, the owner will have to work very hard, and if the business loses money, the loss translates directly to the owner.

Partnership

This is a business that’s a lot like a proprietorship, but more than one person owns it. Again, there are fewer costs and regulations, but still it is difficult to raise as much money as a larger business. Also, the owners have unlimited liability, as does a sole proprietor: any debts incurred by the company must be paid by the owners, even if they have to use their own personal property.

Limited partnership

This is, again, composed of one or more partners, but some have only limited liability. That is, they can only lose the amount of money they invested. However, these limited partners are not involved in the day-to-day business of the company.

Corporation

A corporation is viewed as a separate "legal entity," meaning that the personal property of an owner is not at stake as in unlimited liability. Corporations have limited liability, so owners only lose what they invest. Corporations typically have many different owners. If you’re a stockowner, then you own part of a corporation! Typically, it’s just a very small part of the corporation. You can only lose the amount that you paid for your stocks, no more. Corporations are also able to raise much larger amounts of money than partnerships. However, there are a

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few downsides to corporations. They are usually very difficult to get started in the first place, requiring large amounts of money. Also, they are subject to more taxation than partnerships.

Subchapter S corporation

A "subchapter S" corporation is one in which stockholders pay taxes as if they were partners. Income is distributed directly to shareholders, so the company does not pay corporate income tax. Other than that, a subchapter S corporation is just like any other. In order to be a subchapter S corporation, there must be fewer than 35 shareholders and only one type of stock (i.e. not "common" and "preferred").

B. How to Raise Money to Start a Business

The issue of raising money to start a business has always been one of the major challenges faced by entrepreneurs. The ability to raise money to start a business is one of the tests you must undergo as an entrepreneur.

The first and the basic key to raise money is the feasibility of the business idea. This is always the first question any investor you approach will ask. All investors will want to know how profitable the business idea is. They will also want to know the expected return on investment and the time frame. Never embark on a quest to raise money without a viable business idea. Now how do you know the profitability of your business idea? You can know this by carrying out feasibility study on your business idea.

Another requirement in the process of raising money is a good business plan. Whenever you want to raise money to start a business, your first move should be to put together a comprehensive business plan.

Your business plan should have to explain in detail how the money you need is going to be utilized. If the money is being raised for an existing business, you will need to show the profit and loss statement for at least the previous six months. The plan should also show how the money you are raising will yield interest and profit. If it is a new business, you business plan will have to explain in detail your proposed business idea, expenditure, your market research, your financial projections and so on.

Your business plan should also describe in detail what makes your business unique and how it differs from that of your competitors. Your plan will have to state precisely what the investor's return on investment will be, when and how you are going to pay it.

One of the easiest ways to raise money for your business is by advertising in a newspaper, magazine or national publication featuring

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such ads. You can place ads in publications such as entrepreneur magazine, the intelligent investor, Wall Street journal or any other relevant publication.

Another way to raise money to start a business is by joining a network of entrepreneurs that link entrepreneurs with bankable business ideas to investors. So check in your community for such network organizations or better still, you can go online and search for one.

You can also raise money for your business from family and friends. You can go ahead to explain the business plan, the profit potential and how much you need.

The last method you can employ when raising money to start a business is to approach private investors, venture capitalist and angels. You can equally sell stocks of your company through investment bankers.

Make a proposal to venture capitalists. Venture capitalists are professional investors who contribute capital to new companies for higher returns than conventional investments such as mutual funds. Venture capitalists typically lend on bigger projects and demand equity or part of the company in exchange for investing capital.

Try pitching your business idea to angel investors. Angel investors are typically high net worth investors who invest in individual companies. Like venture capitalists they seek a higher return on their investments but unlike venture capitalists do not seek as much control of the company. They act as investors and offer guidance to the company.

Attempt to get a bank loan for your business. Banks offer the cheapest form of financing without giving up control of the company but it is difficult for new business to get financing. The banks like to see a history before loaning money to a company.

In conclusion, always bear in mind that your ability to raise money to start a business depends on two factors. One is the viability and profitability of the business idea while the second lies in your ability to convince the investors.

С. How Corporations Raise Capital

Large corporations could not have grown to their present size without being able to find innovative ways to raise capital to finance expansion. Corporations have five primary methods for obtaining that money.

Issuing Bonds. A bond is a written promise to pay back a specific amount of money at a certain date or dates in the future. In the interim,

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bondholders receive interest payments at fixed rates on specified dates. Holders can sell bonds to someone else before they are due.

Corporations benefit by issuing bonds because the interest rates they must pay investors are generally lower than rates for most other types of borrowing and because interest paid on bonds is considered to be a tax-deductible business expense. However, corporations must make interest payments even when they are not showing profits. If investors doubt a company's ability to meet its interest obligations, they either will refuse to buy its bonds or will demand a higher rate of interest to compensate them for their increased risk. For this reason, smaller corporations can seldom raise much capital by issuing bonds.

Issuing Preferred Stock. A company may choose to issue new "preferred" stock to raise capital. Buyers of these shares have special status in the event the underlying company encounters financial trouble. If profits are limited, preferred-stock owners will be paid their dividends after bondholders receive their guaranteed interest payments but before any common stock dividends are paid.

Selling Common Stock. If a company is in good financial health, it can raise capital by issuing common stock. Typically, investment banks help companies issue stock, agreeing to buy any new shares issued at a set price if the public refuses to buy the stock at a certain minimum price. Although common shareholders have the exclusive right to elect a corporation's board of directors, they rank behind holders of bonds and preferred stock when it comes to sharing profits.

Investors are attracted to stocks in two ways. Some companies pay large dividends, offering investors a steady income. But others pay little or no dividends, hoping instead to attract shareholders by improving corporate profitability -- and hence, the value of the shares themselves. In general, the value of shares increases as investors come to expect corporate earnings to rise. Companies whose stock prices rise substantially often "split" the shares, paying each holder, say, one additional share for each share held. This does not raise any capital for the corporation, but it makes it easier for stockholders to sell shares on the open market. In a two-for-one split, for instance, the stock's price is initially cut in half, attracting investors.

Borrowing. Companies can also raise short-term capital -- usually to finance inventories -- by getting loans from banks or other lenders.

Using profits. As noted, companies also can finance their operations by retaining their earnings. Strategies concerning retained earnings vary. Some corporations, especially electric, gas, and other

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utilities, pay out most of their profits as dividends to their stockholders. Others distribute, say, 50 percent of earnings to shareholders in dividends, keeping the rest to pay for operations and expansion. Still other corporations, often the smaller ones, prefer to reinvest most or all of their net income in research and expansion, hoping to reward investors by rapidly increasing the value of their shares.

D. The IPO Process for Companies

A company that is thinking about going public should start acting like a public company as much as two years in advance of the desired IPO. Several steps experts recommend include preparing detailed financial results on a regular basis and developing a business plan.

Once a company decides to go public, it needs to pick its IPO team, consisting of the lead investment bank, an accountant and a law firm.

The IPO process officially begins with what is typically called an "all-hands" meeting. At this meeting, which usually takes place six to eight weeks before a company officially registers with the Securities & Exchange Commission, all the members of the IPO team plan a timetable for going public and assign certain duties to each member.

Selling the deal

The most important and time-consuming task facing the IPO team is the development of the prospectus, a business document that basically serves as a brochure for the company. Since the SEC imposes a "quiet period" on companies once they file for an IPO, which generally lasts until 25 days after a stock starts trading, the prospectus will have to do most of the talking and selling for the management team.

The prospectus includes all financial data for a company for the past five years, information on the management team, and a description of a company's target market, competitors and growth strategy. There's a lot of other important information in the prospectus, and the underwriting team goes to great lengths to make sure it's all accurate.

In the meantime, the lead underwriter must then assemble a syndicate of other investment banks that will help sell the deal. Each bank in the syndicate will get a certain amount of shares in the IPO to sell to clients. The syndicate then gather so-called conditional offer from clients to see what kind of initial demand there is for the deal. Syndicates usually include investment banks that have complementary client bases, such as in certain regions of the country.

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On the road

The next step in the IPO process is the grueling whirlwind multicity world tour, also known as the road show. The road show usually lasts a week or two, with company management going to a new city every day to meet with prospective investors and show off their business plan.

How a company's management team performs on the road show is perhaps the most crucial factor determining the success of the IPO. Companies need to impress institutional investors so that at least a few of them are willing to purchase a significant stake.

The road show is also the most blatant example of how unfair the IPO market can be for the average investor. Only institutional investors and big money men are invited to attend the road show meetings, where statements regarding a company's business prospects -- discussed only minimally in a prospectus —are talked about quite openly. Such disclosures, according to the SEC, are legal, as long as done orally.

Once the road show ends and the final prospectus is printed and distributed to investors, company management meets with their investment bank to choose the final offering price and size.

Investment banks try to suggest an appropriate price based on expected demand for the deal and other market conditions. The pricing of an IPO is a delicate balancing act. Investment firms have to worry about two different sets of clients —the company going public, which wants to raise as much money as possible, and the investors buying the shares, who expect to see some immediate appreciation in their investment.

Investment banks usually try to price a deal so that the opening premium is about 15 percent. Many hot Internet IPOs, of course, have risen much more than that on their first day.

If interest in an IPO appears to be flagging, it's common for the number of shares in the offering or their price to be cut from the expected ranges included in a company's earlier registration statements. If a deal is especially hot, the offering price or size can also be raised from initial expectations. Somewhat rarer is when a company postpones an offering due to insufficient demand.

Let the games begin

Once the offering price has been agreed to —and at least two days after potential investors receive the final prospectus —an IPO is declared effective. This is usually done after a market closes, with trading in the

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new stock starting the next day as the lead underwriter works to firm up its book of buy orders.

The lead underwriter is primarily responsible for ensuring smooth trading in a company's stock during those first few crucial days. The underwriter is legally allowed to support the price of a newly issued stock by buying shares in the market or selling them short (meaning shares it doesn't have in its account).

An IPO is not declared final until about seven days after the company's market debut. On rare occasions, an IPO can be canceled even after a stock starts trading. In such cases, all trading is negated and any money collected from investors is returned.

CBS Marketwatch

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