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DISINTERMEDIATION: A general deterioration in the profitability of a bank because it pays high interest rates on short-term borrowing, but earns relatively low interest rates on long-term lending. This was a big, BIG problem for savings and loans (S&Ls) during the 1970s and ultimately caused many of them to fail in the 1980s. S&Ls were designed (by law) to make long-term (30-year) home loans to consumers, but to get the funds for these loans using standard savings accounts. When inflation and interest rates shot up in the 1970s, S&Ls found it necessary to pay savers higher rates to get the funds. But, they still had a bunch of home loans--with low interest rates--that were 15, 20, or 25 years from being repaid. For several years, S&Ls received 6 percent on many of their loans, but paid out something like 12 percent. This gradually eroded their profitability until many were forced to close their doors.
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TOTAL COST The opportunity cost incurred by all of the factors of production used by a firm to produce a good or service, including wages paid to labor, rent paid for the land, interest paid to capital owners, and a normal profit paid to entrepreneurs. Total cost is most important in the analysis a firm's short-run production decision and is frequently separated into total variable cost and total fixed cost. Two other cost measures directly related to total cost are marginal cost and average total cost. Total cost is half of the information a firm uses to determine profit, the other half is total revenue.
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BLACK DISMALAPOD
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Today, you are likely to spend a great deal of time browsing about a thrift store seeking to buy either a genuine fake plastic Tiffany lamp or a microwave over that won't burn your popcorn. Be on the lookout for small children selling products door-to-door.
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This isn't me! What am I?
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In his older years, Andrew Carnegie seldom carried money because he was offended by its sight and touch.
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"A winner is someone who recognizes his God-given talents, works his tail off to develop them into skills, and uses those skills to accomplish his goals. " -- Larry Bird, basketball player
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GNMA
Government National Mortgage Association
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